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									The Mauritius Commercial Bank Ltd.



  REPORT AND ACCOUNTS
    30 T H J U N E 2002




          INCORPORATED BY
       ROYAL CHARTER IN 1838
         AND REGISTERED AS
     LIMITED LIABILITY COMPANY
        ON 18th AUGUST 1955
                                                   CONTENTS




                                                              PAGES
2 0 0 2
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          Notice of Meeting                                       3
JU




          Board of Directors                                     4-5
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          General Management                                      6
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          Group Profile                                         7-10
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          Statement on Corporate Governance                      11
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          Report of the Directors                              12-13
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          Company Secretary’s Certificate                        14
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          Management Report                                    15-30
AN




          Report of the Auditors                               32-33
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          Balance Sheets                                       34-35
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          Profit and Loss Accounts                               36
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          Statement of Changes in Equity (Group)                 37
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          Statement of Changes in Equity (Bank)                  38
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          Cash Flow Statements                                   39
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          General Information                                    40
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          Index to Notes to the Accounts                       41-42
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          Notes to the Accounts                                43-63
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          Group Financial Summary                                64
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          Administrative Information                             65
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          Head Office, Branches & Bureaux de Change              66
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2
                                        NOTICE        OF    MEETING




  Notice is hereby given that the Annual General Meeting of the Shareholders of the Company will be held at




                                                                                                                       2 0 0 2
MCB Centre (13th Floor), on Friday the 18th October 2002, at 11.00 hrs.




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AGENDA




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      1.   To receive the report of the Directors.




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      2.   To adopt the Group’s and the Company’s Accounts made up as at 30th June 2002.




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      3.   To elect five Directors for three years in accordance with the provisions of the Articles of Association,




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           to replace those retiring by rotation.




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      4.   To elect one Director for three years in replacement of Mr. Derek Taylor who resigned in October 2001.




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      5.   To elect one Director for one year in replacement of Sir Maurice Latour-Adrien who resigned in




                                                                                                                        A
           September 2002.




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      6.   To reappoint Mr. Cyril Lagesse, Sir M.B. Kailash Ramdanee and Mr. Adolphe Vallet whose term of office




                                                                                                                       A
           have not expired but who, having attained the age of 70, need to seek re-election under section 138
           of Companies Act 2001.




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      7.   To fix the Directors’ remuneration.




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      8.   To appoint Messrs. De Chazal du Mée & Co. as Auditors and to authorise the Board of Directors to fix




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           their remuneration.




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                                                                         By order of the Board
                                                                 Jean-François DESVAUX DE MARIGNY
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                                                                                                                        A


                                                                                Secretary
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                                                                               Head Office
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                                                                    9 – 15, Sir William Newton Street
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                                                                                Port Louis
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                                                                         18 th September 2002.
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N.B. Members entitled to attend and vote at the meeting may appoint proxies to attend and vote for them. The
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     instrument appointing a proxy or any general power of attorney shall be deposited at the Head Office not
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     less than forty-eight hours before the day fixed for the meeting or else the instrument of proxy shall not be
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     treated as valid.
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                                                                                                                       3
                                              BOARD       OF    DIRECTORS




          DIRECTORS                                             KEY
2 0 0 2




                                                                      POSITION AND MAIN DIRECTORSHIPS




          PRESIDENT
 E




          Jean Paul ADAM, C.B.E., K.C.S.G., G.O.S.K. - Age 68
 N
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          First joined the Board in 1995                        Chairman: General Construction Ltd.
J




                                                                Director: Mauritius Union Assurance Co. Ltd.
                                                                & Policy Ltd.
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3 0




          VICE PRESIDENT

          F. Jacques HAREL - Age 68
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          First joined the Board in 1965                        Director: Harel Frères Ltd. and Harel Mallac Ltd.
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          MEMBERS
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          Raymond AH CHUEN - Age 69
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          Joined the Board in 2000                              Chairman: ABC Motors Co. Ltd.
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          Peter BRUNSDEN - Age 59
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          Joined the Board in 2001                              Former Financial Institutions Director at
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                                                                Lloyds TSB Bank (London)
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          Arnaud DALAIS - Age 47
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          First joined the Board in 1991                        Chief Executive: CIEL and
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                                                                Beau Champ Group of Companies
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                                                                Chairman: Ireland Blyth Ltd.
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                                                                Director: Sun Resorts Ltd.

          Sir Marc DAVID, C.B.E., Q.C. - Age 77
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          First joined the Board in 1976                        Barrister at law
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                                                                Legal adviser to the MCB Group
B




          Pierre DOGER DE SPEVILLE - Age 64
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          First joined the Board in 1995                        Former Notary Public
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                                                                Chairman: Medine S.E.
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                                                                Director: Swan Insurance Co. Ltd.
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          Hector ESPITALIER NOEL - Age 44
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          First joined the Board in 1988                        Chief Executive: Espitalier Noël Group
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                                                                Director: Mon Désert Alma Ltd.,
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                                                                Savannah S.E. Co. Ltd. and G.I.D.C.
                                                                Chairman: Rogers Group and New Mauritius Hotels
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          Patrick M. J. GIBLOT DUCRAY - Age 51
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          First joined the Board in 1995                        Chief Executive: Union S.E. Group of Companies
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                                                                Director: MDIT and United Docks Ltd.
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          Sanjiv GOBURDHUN - Age 37
MA




          Joined the Board in 2001                              Transport Consultant
                                                                Managing Director: Rose-Hill Transport Ltd.
TE
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4
                                   BOARD   OF   DIRECTORS




DIRECTORS                                       KEY




                                                                                                        2 0 0 2
                                                      POSITION AND MAIN DIRECTORSHIPS




MEMBERS (CONTINUED)




                                                                                                         E
J. M. Patrick GUIMBEAU - Age 43




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Joined the Board in 2001                        Director: The St Aubin and Riche en Eau Group of




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                                                Companies and Mon Trésor Mon Désert Ltd.




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Cyril LAGESSE - Age 70




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First joined the Board in 1967                  Chairman: CIDL Group of Companies




                                                                                                        3 0
                                                Director: CIEL and Floréal Groups,
                                                IBL and Sun Resorts Ltd.




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                                                                                                         R
Sir Maurice LATOUR-ADRIEN - Age 87




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First joined the Board in 1980,                 Former Chief Justice of Mauritius




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resigned in September 2002                      Legal Adviser to the MCB Group




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                                                Chairman: Mauritius Union Assurance Co. Ltd.




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Jean Pierre MONTOCCHIO - Age 39




                                                                                                         A
Joined the Board in 2001                        Notary Public




                                                                                                         U
                                                                                                         N
                                                Director: Rogers and Co. Ltd.




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Sir M. B. Kailash RAMDANEE - Age 75




                                                                                                        A
First joined the Board in 1985                  Former Chairman of Mauritius Telecom




                                                                                                        •D
Simon Pierre REY - Age 50




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First joined the Board in 1994                  Finance Director: Ireland Blyth Ltd.




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                                                Director: A number of IBL subsidiaries and




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                                                Sun Resorts Ltd.




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Derek TAYLOR - Age 68
First joined the Board in 1986,                 Former Chief Executive and former Chairman of



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resigned in October 2001                        the Rogers Group


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Adolphe VALLET - Age 72                                                                                  L

First joined the Board in 1975                  Chairman: Constance Group of Companies and
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                                                Belle Mare Holdings
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                                                Director: Swan Insurance Co. Ltd., United Docks Ltd.,
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                                                Ireland Blyth Ltd. and MCFI
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AUDIT COMMITTEE

Peter BRUNSDEN (Chairman)
                                                                                                         S
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Jean Paul ADAM
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F. Jacques HAREL
                                                                                                        MR
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SECRETARY       TO THE     BOARD

Jean-François DESVAUX DE MARIGNY
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                                                                                                        5
                                        GENERAL MANAGEMENT




          GENERAL MANAGER
2 0 0 2




          Pierre-Guy NOEL
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          ASSISTANT GENERAL MANAGER
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          Philippe A. FORGET
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          CHIEF MANAGERS
3 0




          Vincent ANNIBAL                        Information Technology
          Jean-François DESVAUX DE MARIGNY       Group Finance and International
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          Hassam M. VAYID                        Corporate Finance
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          SENIOR MANAGERS
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          Patrice BESTEL                         Risk Monitoring
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          Jean-Marie D’ESPAGNAC                  Assistant General Manager - BFCOI
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          Michaël GRANT                          Corporate Finance and Cards
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          Ramapatee GUJADHUR                     Import Financing
          Alain LAW MIN                          Project Finance and Planning
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          Edwin MARION                           Information Security, Internal Audit and Legal
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          Cyril PROVENCAL                        International
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          Jacques TENNANT                        Premises and Equipment
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          MANAGERS
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          Paul CORSON                            Corporate Finance
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          Michaël FLORENS                        Branch Network
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          Gilbert GNANY                          Group Research and Strategy
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          Steve LEUNG SOCK PING                  Marketing
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          Denis MOTET                            Manager - BFCOI Seychelles
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          Cyril NICOLE                           International
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          Cyril PERRIER                          Information Technology
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          Thérèse PILOT                          Public Relations and Communication
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          Kreshna RAMDHONY                       Corporate Finance
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          Jean-Marie STEPHEN                     Human Resources
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          Noël SULLIVAN                          Retail Lending
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          André WONG TING FOOK                   Accounting and Finance
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          ADVISER
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          Jocelyn DE CHASTEAUNEUF                Adviser to Executive Committee
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6
                                            GROUP PROFILE




CORORATE CULTURE




                                                                                                                           2 0 0 2
                                                            x Teamwork – illustrating our approach towards
                                                              enhancing synergistic potential among our people
VISION                                                        and between the companies of the Group
                                                              alongside leveraging individual skills and
   “T




                                                                                                                            E
        o be the obvious choice for financial services in     competencies.




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the region and beyond”




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                                                            x Innovation – testifying to a long-standing in-house




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    Our Vision statement epitomises our ambition to           tradition of proactively seeking for opportunities at




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establish the MCB Group as the reference partner in           the technological, operational and managerial




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financial services at the regional level while taking up




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                                                              levels. In this respect, a proud record of market
the challenges posed by increasingly competitive              firsts and significant strides in technology have
market conditions and evolving customer demands.              contributed to the MCB being a major regional




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                                                              player.




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MISSION




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                                                            x Knowledge – representing a strong commitment




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“Pursuing the voyage towards excellence”




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                                                              to nurture our human capital through lifelong
                                                              development and learning towards achieving our




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    Against the backdrop of creating shareholder              Vision.




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value, our Mission statement translates our long-




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standing commitment to standards of best practice in        x Excellence – portraying our ability to constantly




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the delivery of financial services and what this              rethink ourselves and reflecting our effort to instil,




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represents in terms of nurturing human capital,               collectively and individually, behaviours tuned to




                                                                                                                           •
revisiting business processes and upgrading                   outstanding performance.
technology. Our renowned and trademark ability to




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continually adapt to and even provoke change is             HISTORICAL




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                                                                              BACKGROUND




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embodied in our Mission statement. This




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organisational competency helps us ensure the                  B



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                                                                  eside our prominent position on the local market




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consolidation of our leadership position in Mauritius       and in the region, the MCB Group is the longest




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while making the MCB one of the most respected and          serving financial institution in this part of the world. Our
trusted brands locally and regionally.



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                                                            164 years of existence can be analysed into three main



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                                                            periods.


                                                                                                                            A
CORE VALUES
                                                            1838 – 1955: THE EARLY YEARS                                   B
   Our six mutually reinforcing core values constitute
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                                                                                                                            A



the foundation of our corporate culture that will enable       I  n 1838, following the setting up of a petition by a
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us to achieve our Vision. As such, we take pride in the     group of traders, the then Governor of Mauritius
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espousal by our people of desired behaviours linked to      proclaimed the founding of La Banque Commerciale
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these values.
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                                                            de Maurice. On September 1st of the same year, the
                                                                                                                            M




                                                            MCB started business and was later granted a Royal
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x Integrity – referring to our commitment to the            Charter by Her Majesty the Queen Victoria under
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  highest standards of business ethics and our              the name of The Mauritius Commercial Bank.
  alertness in the protection of the necessary trust
                                                                                                                            S




                                                            Subsequently, the charter was renewed every 20 years
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  required of a financial institution. Our 164 years of     until 18th August 1955 when the bank was registered as
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  untarnished track record is testimony to our
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                                                            a limited liability company.
                                                                                                                            I




  compliance with best practices.
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                                                            1956 – 1990: CONSOLIDATION AND
                                                                                                                            A




x Customer care – symbolising the assurance of              DIVERSIFICATION
                                                                                                                           M




  quick and dedicated services to our valuable
  customers. Indeed, as a dedicated financial                  This second phase of our history, marked by a
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  partner, one of our objectives since in business has      number of innovations and strategic ventures,
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  been to cement customer relationships through the         witnessed the consolidation of our leadership position
  provision of high value-added services.                   on the local market. The key milestones of this period         7
                                                    GROUP PROFILE
                                                             CONTINUED




          include the very first rural banking operations of the   extends to seven territories. On the financial side and
2 0 0 2




          island and the setting up in 1957 of the Mauritius       indicative of the considerable growth momentum
          Commercial Bank Finance Corporation, now Fincorp         gathered throughout its history, the MCB broke through
          Investment Limited, to provide medium-term finance       the Rs 1 billion profit mark in 2001, another landmark
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          to our customers. The creation in the early 70s of an    event in the local banking sector. The 90s witnessed
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          Industrial Loans Division was instrumental in suppor-    further diversification into non-bank financial services
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          ting the development of the export, manufacturing        with the setting up of leasing and factoring while a
J




          and tourism sectors which boosted our economy to a       number of ICT-based delivery channels were intro-
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          higher growth path. In 1989 and 1990 the MCB             duced including telephone banking services, PC-
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          Stockbrokers and MCB Registry and Securities were        based corporate banking services and internet
3 0




          respectively incorporated. Moreover, the MCB pio-        banking facilities. Throughout its history, the MCB has
          neered the introduction of ATMs in Mauritius and was     demonstrated a proactive stance, dedication and an
 T




          the first local bank to issue credit cards in the late   enterprising spirit for our ambition is no less than to
 R
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          80s.                                                     establish ourselves as the obvious choice for financial
 P




                                                                   services in the region and beyond.
RE




          1991 TO DATE: STRENGTHENING, MODERNISATION
          AND REGIONAL EXPANSION                                   AN OVERVIEW        OF THE     MCB GROUP
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            T
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                he MCB initiated its regional expansion strategy   GROUP LEGAL STRUCTURE
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          with the opening in 1991 of representative offices in
                                                                         T
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          Paris and Antananarivo. A major step was achieved in           he holding structure of the MCB Group translates
A




          1992 when the MCB purchased a majority stake in BFC      our two-fold strategy namely diversification into
•




          (OI) and opened the Union Commercial Bank in             financial services through our local subsidiaries and
          Madagascar. The current network of our subsidiaries      associated companies and regional expansion through
 D




          and associated companies, local and foreign, now         our foreign subsidiaries.
L
B
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8
                                             GROUP PROFILE
                                                       CONTINUED




BRANCH NETWORK




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   E   xclusive of the Head-Office situated in the Central
Business District of the capital, our branch network




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consists of 40 branches strategically situated in




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residential and business areas, both urban and rural,




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across the island and one branch in Rodrigues, the




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latter being operational since 1990. In line with our




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commitment to better serve the specific requirement of




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our customers and competitively respond to their




                                                                                                                      3 0
growing demands, we are organising our branch
network on a regional basis with Main and Satellite




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branches.




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INTERNATIONAL NETWORK




                                                                                                                      RE
   O  ur outbound expansion strategy has equipped




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us with a comprehensive network comprising 23




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branches and offices spread across the region with




                                                                                                                       N
one in Paris. Banque Française Commerciale (Ocean




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Indien) in which the MCB has an 88.88% stake, has its        Commercial Bank, where MCB has a 78.88% stake.




                                                                                                                      A
registered office in France and operates in Réunion,         The most recent venture at international level was the




                                                                                                                      •
Mayotte and Seychelles. Our regional venture in              opening in 1999 of União Comercial de Bancos
Madagascar started in 1992 with the opening of Union         (Moçambique) SARL in Maputo.




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                                                                                                                      9
                                                      GROUP PROFILE
                                                                CONTINUED
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          BUSINESS LINES
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             Over     the years, we have invested heavily in          financial strength at D+, with our long-term bank
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          people, processes and technology to enhance our             deposit rating standing at Baa2, while our short term
 M




          competitive edge in our core business while extending       deposit rating is P2. Furthermore, the MCB Group
LI




          our domestic activities into the provision of non-bank      ranks among the Top 1000 banks worldwide and in the
          financial services. Our aim to serve as a one-stop-shop     Top 10 banks in Sub-Saharan Africa.
 K
 N




          providing a full range of financial services involves
 A




          generating market demand while responding to the            OUR SENSE         OF   COMMUNITY
B




          growing need for integrated financial solutions.
                                                                            The MCB believes that business growth should go
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          HUMAN RESOURCES                                             hand in hand with community development. In this
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                                                                      respect, the opening of the Blue Penny Museum in
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             A
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               s at the end of June 2002, the Group’s workforce       2001 represents a landmark event in our aspirations to
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          stood at 2,108 of which 1,523 were attached to the          preserve the national heritage through the gathering
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          Bank, 541 to its foreign subsidiaries and 44 to its local   and public exhibition of an extensive collection of
 M
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          subsidiaries.                                               historical and artistic masterpieces. On the social front,
C




                                                                      we are well present in the education sector namely
              It is well recognised that our people have a strong     through the ‘MCB Education Scheme’, providing
 S
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          sense of belonging to the Group, a well-appreciated         assistance to pre-primary and primary schools where
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          organisational competency which we consider as a            necessary, and through annual MCB scholarships,
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          source of competitive advantage. Building on this           sponsoring the tertiary education of students from
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          strength, and to the benefit of all stakeholders, our key   Mauritius and Rodrigues. Furthermore, the MCB has
 U
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          people strategies are to foster greater employee            shown a keen interest in environmental protection as
M




          empowerment and to review HR processes accordingly.         testified by our financial support to various organi-
                                                                      sations involved in this field. Besides, the MCB has
 E




          CREDENTIALS                                                 sustained its corporate image through sponsorships of
TH




                                                                      major events in areas of arts, culture and sports.

10
             T  he MCB is among the best rated banks in the
          region. Moody’s investors service currently rates our
                       S TAT E M E N T       ON     C O R P O R AT E G O V E R N A N C E




                                                                                                                         2 0 0 2
    In what can only be called an eventful year, the          channel of communication with the auditors, reviewing
question of corporate governance was brought to the           risk management practices within the Group and
forefront by a series of disastrous revelations involving     making regular reports to the Board. The Committee,
such household names as Enron, Xerox and                      which comprises three independent Directors, has met




                                                                                                                          E
WorldCom amongst others. These revelations served             three times through the 2002 financial year. It has




                                                                                                                          N
                                                                                                                          U
to severely shake the capitalist structure and to             reviewed both full year and half-year figures before




                                                                                                                         J
undermine world markets. Against this background, it          submission to the full Board. In complying with its
is useful to reflect, as we stated last year, that “what is   mandate, it has also considered the impact of




                                                                                                                          H
                                                                                                                          T
crucial is not so much the breast beating and the             international events including the Madagascar crisis on




                                                                                                                         3 0
speechmaking but the actual practice of good                  the Group’s business and has received regular reports
corporate governance standards”. Indeed, if the most          from internal and external auditors.




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successful economy in the world and the instigator of




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sound corporate governance can witness such                       Finally, in the wake of the revised Companies Act




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shortfalls in basic integrity, one can only conclude that     2001 and of a whole range of operating regulations, the




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reams of regulations and lengthy statements of intent         Board of Directors is currently actively engaged in




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in annual accounts can never replace the exercise of          reviewing its Articles and Memorandum of Association.
good faith in the day to day running of a company.            Greater harmony between our corporate statutes and




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                                                              the evolving regulatory environment will make good




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   The Board of Directors has the ultimate direct             governance that much easier to ensure.




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responsibility of setting the standards of corporate




                                                                                                                         AN
governance and does so through an array of formal                 Your Board is happy to report that the other
and informal guidelines, practices and sub-                   standing arrangements underpinning its daily practice




                                                                                                                         •
committees. Your Board comprises a mix of                     of good corporate governance have proceeded




                                                                                                                          D
independent directors, selected with the principal            satisfactorily. This has happened through the activities




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objective of being at the forefront in exercising sound       of the Executive Committee which handles all day to




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corporate governance.                                         day management issues including, critically, all credit




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                                                              sanction responsibilities, the Administration and Staff




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    Three main initiatives have been put in place over        Appraisal Committees, the Internal Audit and




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the last year to formalise and further strengthen             Information Security departments as well as the various




                                                                                                                          K
corporate governance within the Group. Firstly, an            Compliance Officers who make sure that prescribed



                                                                                                                          N
MCB Code of Conduct, largely inspired by upstream             regulations are satisfied.

                                                                                                                         BA
work carried out by the Joint Economic Council, was
presented by the CEO as an operational document to                Our fellow Directors are happy to join us in            L

which all employees are to conform. This Code of              renewing their pledge towards those highest standards
                                                                                                                          A
                                                                                                                          I




Conduct reinforces and expands upon existing                  of corporate governance that have fuelled our progress
                                                                                                                          C




requirements of our Employees Guide and the Code of           and determined our success over the years.
                                                                                                                          R
                                                                                                                          E




Banking Practice. It is also to be taken as one with our
                                                                                                                          M




stated corporate values. We are pleased to say that we
                                                                                                                          M




are among the leaders in Mauritius in having
                                                                                                                         CO




implemented such a code, which was well received by
the personnel. Secondly, the Audit Committee referred              Jean Paul ADAM            Peter BRUNSDEN
                                                                                                                          S




to in last year’s Annual Report has now been set up                 President of the          Chairman of the
                                                                                                                          U




with the mandate of establishing an independent                    Board of Directors         Audit Committee
                                                                                                                         M
                                                                                                                         TI
                                                                                                                          T
                                                                                                                          I
                                                                                                                          R
                                                                                                                          U
                                                                                                                          A
                                                                                                                          E
                                                                                                                          H




                                                                                                                         11
                                             REPORT          OF THE       DIRECTORS
2 0 0 2




                                                                        banking network. Additionally, these results were
             T  he directors are pleased to submit their Annual         achieved after absorbing all the costs relating to our
          Report to the shareholders, together with the accounts        major re-engineering projects. Apart from the staff and
          of the Group and of the Bank for the year ended               other direct costs associated with our Business
 E




          30th June 2002.                                               Process Re-engineering and HR project teams,
 N
 U




                                                                        consultancy fees alone stood at Rs 145.4 million for the
J




          REVIEW OF ACTIVITIES AND RESULTS                              year. As a result, cost income ratios increased to 54.2%
                                                                        for the Group and 45.5% for the Bank. However, if the
 H




             The current year’s results were affected, on the
 T




                                                                        exceptional consultancy costs were discounted, these
3 0




          one hand, by the exceptional level of provisions              ratios would be substantially down from the previous
          resulting from the crisis in Madagascar and its impact        year at 51.1% for the Group and 40.8% for the Bank (as
 T




          on the local textile sector and on the other, by the          against 53.5% and 43.7% respectively).
 R




          increased operating expenses linked to our major
 O




          re-engineering projects aimed at making the MCB a                 In the wake of the Madagascar crisis and its knock-
 P
 E




          more dynamic and efficient provider of financial              on effects on the industrial sector in Mauritius, it has
R




          services.                                                     been considered prudent to consolidate provisions
                                                                        across the Group. At the level of the Bank, specific
 L
 A




             Profits after tax increased by 16.7% for the Bank          provisions directly linked to the Malagasy situation
 U




          to reach Rs 1,111 million while, at Group level,              amounted to Rs 138 million. Furthermore, a charge of
 N




          growth was much slower, with net results reaching             Rs 52 million was booked in the current financial year
AN




          Rs 1,154 million, a progression of only 2.7%. However,        against the risks associated with the EPZ exposure,
          underlying profitability is still very healthy and, were it   bringing total general provisions on this sector to
•




          not for the exceptional circumstances described               Rs 200 million compared to an overall direct EPZ
 D




          above, the Group would have achieved a substantial            performing portfolio of Rs 3.1 billion. Additionally,
 E




          growth in post-tax results.                                   provisions of Rs 47 million were taken against Union
 T




                                                                        Commercial Bank’s profits. At Group level, it was
 I
 M




              At the level of the Bank, net interest income             decided to write down by 50% (i.e. Rs 108 million) our
 I




          reached Rs 2.0 billion, up by 24.6% from last year. This      share of the net assets of UCB. Total Profit and Loss
L




          growth can be explained by increased volume, both on          charges associated with the EPZ/Madagascar crisis
 K




          the lending and deposit-taking sides, coupled with            thus amounted to Rs 190 million for the Bank and
 N




          improved margins resulting from lesser pressure on            Rs 345 million for the Group.
BA




          MCB’s cost of resources during the year. Moreover, the
          gradual redemption of tax-free debentures subscribed          DIVIDENDS AND RESERVES
 L




          by the MCB is having further positive effect on interest
 A




                                                                          A
 I




          margins, whilst increasing the income tax bill. Non                  n interim dividend of Rs 2.45 per share was paid
 C




          interest income increased by only 8.6% mainly as a            in December 2001 and the Board has declared a final
 R
 E




          result of a 14.1% drop in profits arising from dealings in    dividend of Rs 3.45 per share, paid in July. Total
 M




          foreign currencies, brought on by increased                   dividends paid for the year totalled Rs 344 million with
 M




          competition and unfavourable foreign exchange                 undistributed profits of Rs 767 million for the Bank and
CO




          market conditions. However, this decrease was                 Rs 810 million for the Group carried to reserves.
          compensated by commissions and fees, which grew               Group shareholders’ funds reached Rs 7,886 million
 S




          by 16.8% and other income which more than doubled             at 30th June 2002 representing a net asset value of over
 U




          to reach Rs 150 million.                                      Rs 135 per share. The Group’s capital adequacy ratio
 I
 T




                                                                        stood at a very satisfactory level of 13.99%.
 I
 R




              Profit before provisions reached Rs 2,131 million for
 U




          the Group and Rs 1,693 million for the Bank, an               PROSPECTS
 A




          increase of 16.6% and 14.6% respectively. This growth
M




          was achieved in spite of the slowdown in economic                T   he overall strategy of the MCB Group as applied
 E




          activity in Mauritius and the political events in             over the last decade will remain unchanged. The Bank
 H




          Madagascar which severely affected the operations of          will continue to promote diversification of its range
T




          our subsidiary in that country. Elsewhere, there were         of financial services with emphasis on non-bank
12        healthy contributions from all the members of our             products, while our policy of regional expansion, which
                                  REPORT         OF THE          DIRECTORS
                                                     CONTINUED




                                                                                                                     2 0 0 2
has been the backbone of our asset growth over this        and the Bank and for ensuring that the financial
period, will be pursued in the same prudent manner.        statements comply with the provisions of the Banking
While our re-engineering project is still on going, we     Act 1988 and with the Companies Act 2001 as
expect to start reaping its benefits, both in terms of     applicable to banks, taking into account the Order




                                                                                                                      E
revenue generation and improved efficiency, as from        dated March 27, 2002 made by the Registrar of




                                                                                                                      N
                                                                                                                      U
next year. Furthermore, the situation in Madagascar        Companies under section 224(2) of the Companies Act




                                                                                                                     J
seems to have stabilised thus favouring a return to        2001, authorising directors to prepare and present
normal economic activity. However, the collateral          financial statements in relation to an accounting




                                                                                                                      H
                                                                                                                      T
damage done to the manufacturing sector in Mauritius       period commencing prior to 1st December 2001 in




                                                                                                                     3 0
will take some time to be repaired. But the MCB            accordance with Mauritius Accounting and Auditing
certainly believes it has taken a prudent view on          Standards Act 1989. They are also responsible for




                                                                                                                      T
provisions associated with the Madagascar crisis and       safeguarding the assets of the Bank and hence for




                                                                                                                      R
under normal circumstances should start releasing          taking reasonable steps for the prevention and




                                                                                                                      O
some of these provisions within the next few years.        detection of fraud and other irregularities.




                                                                                                                      P
                                                                                                                      E
Short-term growth of our asset base in Mauritius is




                                                                                                                     R
projected to be modest, in line with the reduced growth    AUDITORS
rate of the local economy. However, our commitment to




                                                                                                                      L
                                                                 T




                                                                                                                      A
the region, coupled with optimisation of operations             he Auditors, Messrs De Chazal du Mee & Co.




                                                                                                                      U
should enable the Group to achieve profit growth more      have expressed their willingness to continue in office




                                                                                                                      N
in line with our underlying performance.                   and a resolution proposing their re-appointment will be




                                                                                                                     AN
                                                           submitted to the Annual General Meeting.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN




                                                                                                                     •
RESPECT OF THE ACCOUNTS                                    MANAGEMENT AND STAFF




                                                                                                                      D
    C                                                            T




                                                                                                                      E
       ompany law requires the Directors to prepare              he Board wishes to congratulate the




                                                                                                                      T
accounts for each financial year which give a true and     management and staff of the Bank and of the Group




                                                                                                                      I
                                                                                                                      M
fair view of the state of affairs of the Bank and of the   for their dedication and hard work and for the good




                                                                                                                      I
Group and of the Balance Sheet, Profit and Loss            results achieved during the year and their confirmed




                                                                                                                     L
Accounts and Cash Flow Statements for that period. In      commitment in implementing the major BPR and HR




                                                                                                                      K
preparing those accounts, the Directors are required       projects currently being undertaken by the Bank.



                                                                                                                      N
to:

                                                                                                                     BA
                                                           BOARD OF DIRECTORS
x   Select suitable accounting policies and then apply                                                                L

    them consistently;                                           The President wishes to record his thanks and
                                                                                                                      A
                                                                                                                      I




                                                           gratitude to all his fellow members of the Board and,
                                                                                                                      C




x   Make judgements and estimates that are                 more particularly, to the Vice President, for their
                                                                                                                      R
                                                                                                                      E




    reasonable and prudent;                                unrelenting support and guidance during his term of
                                                                                                                      M




                                                           office.
                                                                                                                      M




x   State whether applicable accounting standards
                                                                                                                     CO




    have been followed, subject to any material
    departures disclosed and explained in the
                                                                                                                      S




    accounts and
                                                                                                                      U
                                                                                                                      I
                                                                                                                      T




x   Prepare the accounts on the going concern basis                       BY ORDER OF THE BOARD
                                                                                                                      I
                                                                                                                      R




    unless it is inappropriate to presume that the Bank              Jean-François DESVAUX DE MARIGNY
                                                                                                                      U




    will continue in business.                                                Company Secretary
                                                                                                                      A




                                                                                   Head Office
                                                                                                                     M




    The Directors confirm that they have complied with                  9 – 15, Sir William Newton Street
                                                                                                                      E




the above requirements in preparing the accounts. The                               Port Louis
                                                                                                                      H




Directors are responsible for keeping proper                                 18th September 2002.
                                                                                                                     T




accounting records which disclose with reasonable
accuracy at any time the financial position of the Group                                                             13
                                   C O M PA N Y S E C R E TA R Y ’ S C E R T I F I C AT E
2 0 0 2




            I   certify that, to the best of my knowledge and belief, the company has filed with the Registrar of Companies
          all such returns as are required of the company under the Companies Act 2001 in terms of section 166(d).
JE
 N
 U




                                                               Jean-François DESVAUX DE MARIGNY
 H
 T




                                                                        Company Secretary
3 0




                                                                             Head Office
                                                                  9 – 15, Sir William Newton Street
 T




                                                                              Port Louis
 R




                                                                       18th September 2002.
R
A
•
L
B
C
M
TO
 P
 E
 L
 A
 U
 N
 N
 D
 E
 T
 I
 M
 I
 K
 N
 A
 L
 A
 I
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 R
 E
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 M
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 U
 I
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 I
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14
                                        MANAGEMENT REPORT




                                                                                                                             2 0 0 2
                                                                  With competition stiffening, consolidating our
   To the shareholders,                                       position as market leader within the context of ever-
                                                              increasing expectations of our stakeholders calls for a
    I have pleasure in submitting herewith our                continuous improvement in the allocation and use of




                                                                                                                              E
Management Report for the financial year ending               resources. To this end, the MCB has embarked on a




                                                                                                                              N
                                                                                                                              U
30th June 2002.                                               major synchronised restructuring initiative of its




                                                                                                                             J
                                                              business, focused on human resources, business
                                                              processes and IT. Aware that our people are our most




                                                                                                                              H
                                                                                                                              T
HIGHLIGHTS                                                    valuable assets, we are investing in a comprehensive




                                                                                                                             3 0
                                                              development programme to equip our staff with the
   T   he financial performance of the MCB Group bore         required skills to thrive in a dynamic and increasingly




                                                                                                                              T
the brunt of adverse developments in Madagascar               competitive environment. We are confident that




                                                                                                                              R
while relatively subdued activity in some sectors of the      fostering greater employee empowerment within a




                                                                                                                              O
Mauritian economy contributed to somewhat restrain            learning institution will be beneficial to all stakeholders.




                                                                                                                              P
                                                                                                                              E
our lending business opportunities. Despite these un-         The launching of the BPR project in parallel is a major




                                                                                                                             R
favourable exogenous developments and considerable            step towards further increasing the efficiency of our
investments in our on-going comprehensive in-house            processes, enabling us to deliver quality products and




                                                                                                                              L
                                                                                                                              A
Business Process Re-engineering (BPR) and Human               services quicker and cheaper. The re-engineering of




                                                                                                                              U
Resource (HR) projects, results were satisfactory both        our HR and business processes is being fully




                                                                                                                              N
at Group and at Bank level. Although earnings per             supported by developments at the IT level.




                                                                                                                             AN
share increased by a modest 2.7% on account of our
prudent approach to provisioning, growth of operating




                                                                                                                             •
profit before provisions remained healthy at 16.5%            BUSINESS ENVIRONMENT




                                                                                                                              D
highlighting strong underlying fundamentals.




                                                                                                                              E
                                                              INSTITUTIONAL FRAMEWORK




                                                                                                                              T
    The last financial year has also been marked by a




                                                                                                                              I
                                                                 F



                                                                                                                              M
number of significant occurrences. These include the                 urther progress has been achieved during the




                                                                                                                              I
signing of protocols for lines of credit of USD 100 million   last financial year in the reform process triggered some




                                                                                                                             L
and EUR 20 million with the African Development Bank          years back to reinforce the regulatory and supervisory




                                                                                                                              K
and PROPARCO respectively. These loan agreements,             framework of financial services in Mauritius. In the field



                                                                                                                              N
contracted at very competitive rates, highlight the           of corporate and business laws, the Companies Act

                                                                                                                             BA
goodwill enjoyed by the MCB Group at international            2001, aimed at aligning domestic legislation to
level and are intended for the medium-term financing          international standards, came into force on 1st                 L

of both the investment projects of our clients and the        December 2001. Furthermore, following the adoption
                                                                                                                              A
                                                                                                                              I




expansion of our own business.                                of the Financial Services Development (FSD) Act 2001
                                                                                                                              C




                                                              as a stepping stone for an integrated regulatory
                                                                                                                              R
                                                                                                                              E




    Besides, the formal setting up in October 2001 of         framework for financial services, the Financial Services
                                                                                                                              M




the Audit Committee has been a major step towards             Commission came into operation. As the regulatory
                                                                                                                              M




consolidating corporate governance at the MCB. On the         body for non-bank financial services, the latter has
                                                                                                                             CO




other hand, continuous efforts to render our operational      taken over the functions of the Mauritius Offshore
framework even more customer oriented include the             Business Activities Authority, the Stock Exchange
                                                                                                                              S




revamp of our web-site towards a more user-friendly           Commission and the Insurance Division of the Ministry
                                                                                                                              U




access to our products and services and the                   responsible for financial services. Forthcoming
                                                                                                                              I
                                                                                                                              T




introduction of a foreign currency ATM at the airport,        legislative reforms include an overhaul of the Insurance
                                                                                                                              I
                                                                                                                              R




unique so far in Mauritius. As regards our participation      Act, the introduction of a Retirement Benefits Schemes
                                                                                                                              U




in the development of the functional structure of the         Bill, the enactment of a Securities Legislation and a
                                                                                                                              A




banking sector, the Bank has secured Primary Dealer           Collective Investment Schemes Legislation as well as
                                                                                                                             M




status to trade in Government securities in the wake of       amendments to the Companies Act 2001 and the FSD
                                                                                                                              E




the setting up of the Primary Dealer System, while            Act 2001. For banking in particular, the new Banking Bill
                                                                                                                              H




taking the lead in the issue of Magnetic Ink Character        and Bank of Mauritius Bill are being finalised. These will
                                                                                                                             T




Recognition (MICR) encoded cheques.                           confer greater powers to the Bank of Mauritius (BoM)
                                                              for the supervision and regulation of banking activities.      15
                                                  MANAGEMENT REPORT
                                                                 CONTINUED
2 0 0 2




               In its efforts to reinforce the regulatory framework,   been marked by the inception of a Primary Dealer
          the BoM issued a Guideline on Related Party Transac-         System as from 1st March 2002 and the introduction of
          tions, a subject that came into the limelight with the       MICR encoded cheques. Through the establishment of
          revocation of the licence of a banking institution in        the Primary Dealer System, the authorities hope that,
 E




          March 2002. The objective of the Guideline, which            unlike past initiatives, liquidity in the market for
 N
 U




          became effective on 4th January 2002, is to ensure that      Government securities would significantly improve with
J




          self-dealing situations do not put at stake the safety       primary dealers providing two-way prices on a
          and soundness of the institution and are dealt with in       continuous basis. Following the implementation of the
 H
 T




          line with good corporate governance practices. Actually,     Mauritius Automated Clearing and Settlement System
3 0




          the importance of sound corporate governance has             back in December 2000 to cater for the real time
          been greatly emphasised in recent years as evidenced         transfer and settlement of large and time-sensitive
 T




          by provisions of the Companies Act 2001 and the              instruments, the introduction of MICR encoded
 R




          Listing Rules 2000 as well as guidelines issued by the       cheques to increase the processing speed of cheques
 O




          BoM. Furthermore, the Government has solicited the           marks the second phase in the automation of the
 P
 E




          expertise of the World Bank to undertake two ‘Report         payment and settlement system in Mauritius. The issue
R




          on Observance of Standards and Codes’                        of these cheques is a clear illustration of the endeavour
          assessments: ROSC on Corporate Governance and                of the banking sector to constantly uplift its functional
 L
 A




          ROSC on Accounting & Auditing Practices in Mauritius.        structure with a view to enhancing customer
 U




          The adoption of the Prevention of Corruption Act and         satisfaction. In line with its market leader position, the
 N




          the Financial Intelligence and Anti-Money Laundering         MCB has been at the forefront of the two above-
AN




          Act is another welcomed step towards further                 mentioned events namely by securing Primary Dealer
          promoting good governance. These Acts provide for            status, currently held by only three other institutions, all
•




          the establishment of new institutions to fight corruption    being commercial banks, and by taking the lead in the
 D




          and money laundering, including the Independent              issue of MICR encoded cheques.
 E




          Commission Against Corruption and the Financial
 T




          Intelligence Unit. At the private sector level, the ‘Model       With the adoption of the Finance Act 2002, some
 I
 M




          Code of Conduct for Directors and Employees of the           banking services namely those relating to merchant’s
 I




          Private Sector Companies’ proposed by the Joint              discount, safe deposit lockers, issue/renewal of credit
L




          Economic Council was overwhelmingly supported by             and debit cards and the keeping and maintenance of
 K




          CEOs of top companies. Having always advocated               customers’ accounts will be subject to VAT as from the
 N




          good corporate governance at the MCB, in line with our       10th January 2003.
BA




          Core Values, we pride ourselves not only in our
          involvement in various working groups on this issue,         ECONOMIC ENVIRONMENT
 L




          but also in being among the very first to formalise our
 A




                                                                             T
 I




          own internal Code of Conduct.                                       he economy registered an overall growth rate of
 C




                                                                       5.8% in 2001 down from 8.9% in 2000. Given that
 R
 E




              Reflective of our concern to continuously enhance        expansion in the sugar sector is highly dependent on
 M




          transparency and be aligned to international norms of        climatic conditions, a more pertinent indicator of the
 M




          best practice, the MCB welcomes the spirit attendant         underlying trends in economic activity is growth
CO




          to the various new legislations and is actively pursuing     excluding sugar, which was estimated at 5.4% in 2001
          adaptations where required by a small island economy.        compared to 7.2% in 2000. Albeit at a reduced pace,
 S




          In this respect, appropriate steps have been adopted         overall expansion in 2001 has remained quite robust,
 U




          to ensure conformity with applicable International           with positive growth rates in all economic sectors. The
 I
 T




          Accounting Standards (IAS) by the relevant date as           expansion rate for FY 2001/02 is estimated at 5.6%.
 I
 R




          required by Companies Act 2001. In the same vein,            The rate of inflation edged up from 4.4% as at June
 U




          testifying to our proactive stance, we are already           2001 to 6.3% last June, on the back of an upward
 A




          carrying out assessment exercises of implications of         revision in the rate of VAT and increases in the prices of
M




          guidelines expected to be contained in Basle II              some administered products. On the other hand, the
 E




          currently in the finalisation process.                       budget deficit for FY 2001/02 was estimated at 6.5% of
 H




                                                                       GDP compared to 6.7% for the previous financial year.
T




              Insofar as the domestic financial operational            As regards unemployment, the upward trend was
16        framework is concerned, the last financial year has          maintained with the jobless rate rising from 8.8% as at
                                        MANAGEMENT REPORT
                                                        CONTINUED




                                                                                                                            2 0 0 2
June 2000 to 9.2% as at June 2001. We estimate that           jumped by 27.6% last year implying a significant rise in
the rate of unemployment has reached double digits as         expenditure per tourist both in rupee and dollar terms.
at June 2002. On the external front, the current account
surplus improved from 2.5% of GDP in FY 2000/01 to                ‘Business and financial services’ sustained its




                                                                                                                             E
an estimated 3.9% of GDP in the last financial year.          growth momentum to expand by 12.7% in 2001, the




                                                                                                                             N
                                                                                                                             U
Consequently, the balance of payments is estimated to         banking segment, including banks with Class B




                                                                                                                            J
have improved by some Rs 2.2 billion to a surplus of          licences (previously known as offshore banks),
Rs 7.4 billion in FY 2001/02.                                 growing by 16.5%. On the other hand, the construction




                                                                                                                             H
                                                                                                                             T
                                                              sector performed below expectations with a growth of




                                                                                                                            3 0
   SECTORAL   ANALYSIS                                        1.0% on account of delays in the implementation of
                                                              some large-scale projects. Activity was subdued in
   W




                                                                                                                             T
       ith 645,598 tonnes of sugar produced from the          domestic oriented industry and in the trade sector with




                                                                                                                             R
2001 crop, the highest level since 1987, the sugar            growth rates standing at 4.0% and 3.0% respectively,




                                                                                                                             O
sector recorded a 13.4% growth last year. Beside the          reflecting the downward pressures on domestic




                                                                                                                             P
                                                                                                                             E
above-normal production, the salient event in the last        demand resulting from rising unemployment, a higher




                                                                                                                            R
crop year remains the fact that the sector has                VAT rate and increasing import costs on the back of
embarked on the consolidation process as per the              high rupee depreciation. The performance of these two




                                                                                                                             L
                                                                                                                             A
Sugar Sector Strategic Plan (SSSP) namely with the            sectors is also likely to have been adversely affected by




                                                                                                                             U
application of the Voluntary Retirement Scheme (VRS).         the growing size of the informal sector, which is not fully




                                                                                                                             N
Although stretching the finances of the industry initially,   captured by National Accounts statistics.




                                                                                                                            AN
the more so that related costs should exceed earlier
estimates, such a course of action is essential for the             DOMESTIC   BANKING




                                                                                                                            •
medium to long term viability of the sector within the
                                                                    C




                                                                                                                             D
context of global trade liberalisation.                                                                     ,
                                                                    ontributing directly to around 3% of GDP onshore




                                                                                                                             E
                                                              banking remains the main component of financial




                                                                                                                             T
     The EPZ sector has been adversely affected last          intermediation, accounting for more than a third of its




                                                                                                                             I
                                                                                                                             M
year by some exogenous factors such as the                    value added. This sub-sector has once again




                                                                                                                             I
prolonged relative weakness of the euro and economic          registered a robust performance in 2001 with a near




                                                                                                                            L
slowdown in our main markets thereby compounding              double-digit growth rate.




                                                                                                                             K
the financial woes of many firms against a backdrop of



                                                                                                                             N
rising unit labour cost. Reflecting these difficulties,            Total assets of commercial banks stood at Rs 134.7

                                                                                                                            BA
growth in the sector fell to 4.0% in 2001. Prospects for      billion at the end of June 2002, representing an
2002 have been seriously weighed down by the                  increase of 14.2% over the last financial year. Over the       L

political turmoil in Madagascar. Indeed, whilst some          same period, total deposits increased from Rs 91.7
                                                                                                                             A
                                                                                                                             I




production has been shifted back to Mauritius from            billion to Rs 104.3 billion. Local demand, savings and
                                                                                                                             C




Malagasy units, the sector’s strategic links with             time deposits respectively represented 8.5%, 43.0%
                                                                                                                             R
                                                                                                                             E




Madagascar through outsourcing of some lines of               and 35.6% of total deposits as at June 2002, with
                                                                                                                             M




production might imply significant adverse impact on          foreign currency deposits accounting for the
                                                                                                                             M




the financial situation of many domestic firms.               remainder. Total gross loans, inclusive of fixed dated
                                                                                                                            CO




However, there have been some encouraging news                securities, increased by some 8.9% between June
lately with the rally of the euro against the dollar          2001 and June 2002, reaching Rs 84.5 billion. The
                                                                                                                             S




particularly in the second quarter of 2002, the easing of     gross loans to deposits ratio of commercial banks as
                                                                                                                             U




the crisis in Madagascar and the adoption of                  at June 2002 stood at 81.0% compared to 84.5%
                                                                                                                             I
                                                                                                                             T




amendments to the Africa Growth and Opportunity Act           in June 2001 namely reflecting subdued investment
                                                                                                                             I
                                                                                                                             R




(AGOA II).                                                    demand.
                                                                                                                             U
                                                                                                                             A




    In 2001, the tourism sector achieved an under-par             From July 2001 to June 2002, total credit to the
                                                                                                                            M




performance in terms of arrivals with an adverse trend        private sector rose by nearly Rs 5 billion or 6.5% with
                                                                                                                             E




discernible since the early months of the year, that is,      the highest nominal increase of Rs 2.0 billion and
                                                                                                                             H




well before the September 11th events. Overall, growth        growth of 31.2% being recorded in the tourism and
                                                                                                                            T




in the sector stood at a mere 1.0%. Notwithstanding           new economy sectors respectively. As regards the
the quasi-stagnation in arrivals, tourism receipts            portfolio mix, the share of tourism rose to 14.8%             17
                                                  MANAGEMENT REPORT
                                                                 CONTINUED
2 0 0 2




          marginally overtaking those of traders and                   proposed by unit trusts and non-bank financial
          construction, inclusive of housing and property              institutions relatively more attractive than traditional
          development, which stood at 14.2% and 14.0%                  banking deposits. The recent coming into play of a
          respectively. The share of loans to the sugar & other        micro-credit institution and the forthcoming
 E




          agriculture sector was stable at 9.4% while that of the      consolidation of two local branches of foreign banks
 N
 U




          industrial sectors fell slightly by 0.5 percentage points.   should increase the level of competition within the
J




          As a result of a 19.8% increase in loans to the financial    banking sector.
          & business services sector, its share rose by a full
 H
 T




          percentage point to stand at 9.3%. The Bank Rate                  On going trends and at pace with the growing
3 0




          during the last financial year averaged 10.17% with a        sophistication of the financial industry, the credit card
          minimum of 9.55% on the 22nd March 2002 and 24th             business, trade finance and foreign exchange will in all
 T




          May 2002 and a maximum of 11.15% on the 27th July            likelihood see further domestic financial and non-
 R




          2001.                                                        financial entrants engage in these activities, for long
 O




                                                                       generally the preserve of banking institutions in
 P
 E




             MONETARY    POLICY                                        Mauritius. Overall, we retain our leadership positions in
R




                                                                       both core and non-core business activities, and are
             I n line with the general decline in international        consolidating where necessary. Moreover, we are
 L
 A




          interest rates in response to global economic                upgrading our market intelligence capabilities with
 U




          slowdown, the BoM proceeded with two cuts in the             growing emphasis on the region in the context of the
 N




          Lombard Rate in August 2001 and November 2001                current business process re-engineering initiative
AN




          respectively, bringing the rate down from 12.0 per cent      which,     in   essence,      should     enhance      our
          to 11.5 per cent. These cuts were also intended to           competitiveness.
•




          boost domestic activity in the context of low investment
 D




          and high unemployment. However, despite these signs
 E




          of loosening, monetary policy remained tight, with high      BUSINESS REVIEW
 T




          real interest rates being observed. Indeed, although
 I
 M




          the real Bank Rate declined, on an annual average            FINANCIAL REVIEW
 I




          basis, from 6.4% in FY 2000/01 to 4.6% in the last
L




          financial year, it remains high compared to historical             RESULTS
 K




          averages. Growth in M2 stood at 13.0% in FY 2001/02
 N




          compared to 9.9% in the previous financial year.                   Financial year ending June 2002 was marked by
BA




                                                                       the unforeseen political turmoil in the Malagasy
          COMPETITION                                                  Republic which has had an adverse impact on the
 L




                                                                       financial performance of the MCB Group, particularly
 A




             R
 I




                 eflecting the relative slowdown in economic           UCB Madagascar, while on the domestic front relatively
 C




          expansion and the subdued investment climate,                subdued activity in most sectors contributed to
 R
 E




          growth in banking sector gross lending fell to 8.9% over     somewhat restrain our lending business opportunities.
 M




          the last financial year as compared to 9.9% in FY            Despite these unfavourable exogenous factors and the
 M




          2000/01. However, while ensuring that our overall risk       one-off investment expenditure associated with our on-
CO




          profile remains in line with our established rules and the   going comprehensive in-house BPR and HR projects,
          regulator’s guidelines, the MCB managed a 12.7%              results were satisfactory both at Group and at Bank
 S




          increase in its gross lending in FY 2001/02, up from         level.
 U




          10.8% in the preceding financial year. Deposit taking
 I
 T




          activity continues, albeit more moderately, to bear the            Net Interest Income
 I
 R




          pressure from non-bank institutions such as leasing
                                                                             T
 U




          companies. Added pressure on the banking sector’s                   he Bank’s Net Interest Income (NII) broke
 A




          funding resources has come in the form of the BoM            through the Rs 2.0 billion mark for the year ended
M




          sale of OTC Treasury Bills and the trading in general of     30th June 2002 with a healthy 24.6% increase as
 E




          Treasury Bills on the newly introduced Primary Dealer        compared to 21.5% in FY 2000/01. This acceleration
 H




          System. Moreover, the relative monetary easing               reflects an efficient management of resources in
T




          through cuts in interest rates in the recent past may        increasingly competitive markets against a backdrop
18        have contributed to make some savings schemes                of rather inauspicious business conditions. Gross
                                                        MANAGEMENT REPORT
                                                                          CONTINUED




                                                                                                                                                                                              2 0 0 2
Interest Income, which includes mainly interests                                                foreign currencies. At Bank level, the main component
derived from credit facilities and investments in gilt-                                         of Operating Expenses, that is Staff Costs inclusive of
edged securities, grew by Rs 335.4 million                                                      Employee Benefits, was contained to Rs 687.8 million
representing a 7.4% rise over FY 2001/02. Contributing                                          for FY 2001/02, up by only 9.7% as compared to an




                                                                                                                                                                                               E
to this expansion has been a significant increase in the                                        average increase of 11.2% over the last 5 years.




                                                                                                                                                                                               N
                                                                                                                                                                                               U
Bank’s earning assets namely through a 74.6%                                                    However, despite this slowdown, Operating Expenses




                                                                                                                                                                                              J
increase of investment in Government securities and                                             went up by 23.7% and 20.0% at Bank and consolidated
Treasury Bills and an 11.4% rise in net loans over the                                          level respectively on the back of investments in




                                                                                                                                                                                               H
                                                                                                                                                                                               T
period under review. Subsequent to reductions in the                                            ongoing BPR and HR projects which cost Rs 145.4




                                                                                                                                                                                              3 0
Lombard Rate and reflecting our policy as regards the                                           million in consultancy fees alone. As a result, our cost
maturity structure of our deposits, Interest Expense                                            to income ratio slightly deteriorated both at Group and




                                                                                                                                                                                               T
again contracted albeit by a lesser 2.4% as compared                                            Bank level from 53.5% and 43.7% to 54.3% and 45.6%




                                                                                                                                                                                               R
to the 6.5% decrease recorded in FY 2000/01. NII                                                respectively. However, excluding those consultancy




                                                                                                                                                                                               O
growth at Group level remained resilient at 24.2% with                                          fees, cost to income ratios would have dropped to




                                                                                                                                                                                               P
                                                                                                                                                                                               E
enhanced efficiency as measured by an increase in net                                           51.1% and 40.8% respectively. Indicative of the MCB’s




                                                                                                                                                                                              R
interest margin from 4.16% to 4.48% over the FY                                                 strong underlying fundamentals, Operating Profit
2001/02.                                                                                        before provisions posted healthy growth rates of 16.5%




                                                                                                                                                                                               L
                                                                                                                                                                                               A
                                                                                                and 14.6% at Group and Bank level respectively.




                                                                                                                                                                                               U
                                                                                                                                                                                               N
                                                                                                                                                                                               N
                                    Group




                                                                                                                                                                                              A
        7                                                           180
        6
                                                                          FY 1997/98 = 100




                                                                                                                                                                                              •
        5                                                                                                         Operating profit before provisions
                                                                    150
                                                                                                        2.5                                                         215




                                                                                                                                                                                               D
        4
Rs bn




                                                                                                                                                                                               E
        3                                                                                               2.0                                                         190




                                                                                                                                                                                               T
                                                                                                                                                                          FY 1997/98 = 100
                                                                    120




                                                                                                                                                                                               I
        2
                                                                                                                                                                    165




                                                                                                                                                                                               M
                                                                                                        1.5
        1




                                                                                                                                                                                               I
                                                                                                Rs bn




                                                                                                                                                                                              L
        0                                                           90                                  1.0                                                         140
            1997/98    1998/99     1999/00    2000/01    2001/02
                                                                                                        0.5                                                         115




                                                                                                                                                                                               K
                                 Interest Income



                                                                                                                                                                                               N
                                 Interest Expense                                                                                                                   90
                                                                                                        0.0

                                                                                                                                                                                               A
                                 Growth Index - NII (right scale)                                             1997/98   1998/99    1999/00   2000/01    2001/02 *

                                                                                                * excluding BPR                    Group               Bank                                   BL
                                                                                                consultancy fees
                                                                                                                                   Growth Index - Group (right scale)
                                                                                                                                                                                               A



                                     Bank                                                       amounting to
                                                                                                Rs 145.4 m
                                                                                                                                                                                               I




                                                                                                                                   Growth Index - Bank (right scale)
        5                                                           210
                                                                                                                                                                                               C
                                                                                                                                                                                               R




        4                                                           186
                                                                                                                                                                                               E
                                                                             FY 1997/98 = 100




                                                                                                                                                                                               M




        3                                                           162
                                                                                                                                                                                               M




                                                                                                                  Profit attributable to shareholders
Rs bn




                                                                                                                                                                                               O




        2                                                           138                                 1.2                                                         190
                                                                                                                                                                                              C




        1                                                           114
                                                                                                                                                                                               S




                                                                                                        0.9                                                         165
                                                                                                                                                                           FY 1997/98 = 100




                                                                                                                                                                                               U




        0                                                           90
                                                                                                                                                                                               I
                                                                                                Rs bn




             1997/98    1998/99     1999/00    2000/01    2001/02                                                                                                   140
                                                                                                        0.6
                                                                                                                                                                                               T




                                  Interest Income
                                                                                                                                                                                               I
                                                                                                                                                                                               R




                                  Interest Expense                                                      0.3                                                         115
                                                                                                                                                                                               U




                                  Growth Index - NII (right scale)
                                                                                                                                                                                               A




        Operating Profit Before Provisions                                                                                                                          90
                                                                                                                                                                                              M




                                                                                                        0.0
                                                                                                              1997/98   1998/99    1999/00   2000/01   2001/02
                                                                                                                                                                                               E




    Growth in Operating Income was up by 18.4% and                                                                         Group              Bank
                                                                                                                                                                                               H




18.6% at Group and Bank level respectively over                                                                            Growth Index - Group (right scale)
                                                                                                                                                                                              T




FY 2001/02 notwithstanding lower expansion in Other                                                                        Growth Index - Bank (right scale)
Income with reduced profit arising from dealings in                                                                                                                                           19
                                                      MANAGEMENT REPORT
                                                                     CONTINUED
2 0 0 2




                                 Cost/Income ratio                               Dividends and MCB share price
              65

                                                                                 Dividends paid during the year totalled Rs 343.7
              55                                                           million representing a pay-out ratio of 29.8% up from
 E




                                                                   *       25.9% in FY 2000/01. Earnings per share improved by
 N




          %
 U




                                                                           52 cents to reach Rs 19.81 as at 30th June 2002. Over
              45
J




                                                                           the last financial year, stock exchange performance
                                                                   *
                                                                           was uneven. During the first six months the SEMDEX
 H
 T




              35                                                           and the SEM-7 lost 11.9% and 16.5% respectively on a
                     1997/98    1998/99    1999/00   2000/01   2001/02
3 0




                                                                           point-to-point basis. This was followed by a rally at the
                   * excluding BPR consultancy        Group       Bank
                   fees amounting to Rs 145.4 m                            beginning of 2002, when the market recouped these
 T




                                                                           earlier losses with the SEMDEX culminating at 388.91
 R




               Profit Attributable to Shareholders                         points on the 7th February. However, this bullish trend
 O




                                                                           was short-lived with subsequent losses leading to both
 P




              T
 E




                 he MCB maintained a conservative provisioning             indices falling by 7.3% and 11.4% respectively on a
R




          stance in the wake of the political crisis in Madagascar,        point-to-point basis over FY 2001/02. Starting last
          which brought the latter’s economy to a virtual                  financial year at Rs 87.00, the MCB share price
 L
 A




          standstill. At Group level, the Charge for Bad and               reached Rs 93.00 at the height of the market rally.
 U




          Doubtful Debts for FY 2001/02 stood at Rs 666.8                  However, in line with losses borne by other blue chips,
 N




          million compared to Rs 479.9 million for FY 2000/01,             our share price fell to Rs 79.00 on the 27th June 2002.
AN




          representing a hefty 38.9% increase. At Bank level,              It experienced an unexpected 5.1% drop, to Rs 75.00,
          provisions grew by only 1.1% given the high base in FY           during the last trading minutes of the financial year,
•




          2000/01, a consequence of an exceptional general                 which, coupled with opposite share price movements,
 D




          provision of Rs 105.0 million to account for the                 led to the MCB share losing for a few minutes its status
 E




          worsening risk profile of the EPZ in the context of the          as the largest market capitalisation on the local stock
 T




          relative weakness of the euro during that financial year.        exchange. With the resumption of trading in the new
 I
 M




                                                                           financial year, our share price rapidly rallied to reach
 I




              In the wake of the Madagascar crisis and its knock-          Rs 86.00 on the 25th September 2002. Reflective of the
L




          on effects on the industrial sector in Mauritius, it has         persisting bearish market conditions, it is largely
 K




          been considered prudent to consolidate provisions                acknowledged, on the basis of underlying funda-
 N




          across the Group. At the level of the Bank, specific             mentals, that the MCB share is being traded at a
BA




          provisions directly linked to the Malagasy situation             significant discount reflected by a price-to-book value
          amounted to Rs 138 million. Furthermore, a charge of             standing at 0.55 as at 30th June 2002. Nevertheless,
 L




          Rs 52 million was booked in the current financial year           should market conditions improve, we believe that the
 A
 I




          against the risks associated with the EPZ exposure,              MCB share price will rapidly align with fundamentals.
 C




          bringing total general provisions on this sector to Rs
 R
 E




          200 million compared to an overall direct EPZ                          LIABILITIES
 M




          performing portfolio of Rs 3.1 billion. Additionally,
 M




          provisions of Rs 47 million were taken against Union                   Deposits
CO




          Commercial Bank’s profits. At Group level, it was
          decided to write down by 50% (i.e. Rs 108 million) our                 Against a backdrop of lower interest rates and
 S




          share of the net assets of UCB. Total Profit and Loss            increased competitive pressure especially in the time-
 U




          charges associated with the EPZ/Madagascar crisis                deposits segment, the Bank saw an improvement of its
 I
 T




          thus amounted to Rs 190 million for the Bank and Rs              market share of rupee-denominated deposits over
 I
 R




          345 million for the Group.                                       FY 2001/02. Indeed, deposits grew by 13.5% ahead of
 U




                                                                           the overall banking sector rate of 11.8%. In fact,
 A




              Overall, at Group level, Profit Attributable to              deposits growth was more pronounced over the
M




          Shareholders grew moderately by 2.7% over FY                     second half of 2001 than during the first semester of
 E




          2001/02 compared to 17.5% over the previous period               this year on account of the lagged effect of the two 25
 H




          whilst Bank earnings again posted a double-digit                 basis points Lombard Rate cuts in August and
T




          growth rate, breaking through the Rs 1 billion mark for          November 2001. The expansion of our deposits was
20        the first time.                                                  more than twice higher than in FY 2000/01, where the
                                        MANAGEMENT REPORT
                                                        CONTINUED




                                                                                                                                                        2 0 0 2
effect of a 150 basis points cut in interest rates in June                  Breakdown of deposits by type - Bank
2000 was largely felt. Foreign currency deposits
                                                                                                                    17.2%
increased by around 20% in FY 2001/02 representing a                  35.5%
market share of above 50%. Skipping several




                                                                                                                                                         E
instances where price wars might have been engaged




                                                                                                                                                         N
                                                                                                                                                         U
on fixed deposits, the shares of savings and demand




                                                                                                                                                        J
deposits increased to 47.3% and 17.2% of total
deposits respectively. As regards Group deposits, they




                                                                                                                                                         H
                                                                                                                                                         T
totalled some Rs 70 billion as at financial year-end,                                                                         47.3%




                                                                                                                                                        3 0
recording a healthy 20.7% growth rate over the period
                                                                       Demand                     Savings                     Time
under review.




                                                                                                                                                         T
                                                                                                                                                         R
   Borrowings from the Bank of Mauritius




                                                                                                                                                         O
                                                                                                                                                         P
   R




                                                                                                                                                         E
     efinance facilities of the order of Rs 990 million




                                                                                                                                                        R
were obtained from the Bank of Mauritius and utilised
primarily towards financing voluntary retirements in the                                       Deposits




                                                                                                                                                         L
                                                                      75                                                        180




                                                                                                                                                         A
context of the Sugar Sector Strategic Plan.




                                                                                                                                                         U
                                                                      60                                                        160




                                                                                                                                                         N
                                                                                                                                      June 1998 = 100
   Capital Resources




                                                                                                                                                         N
                                                                      45                                                        140




                                                                                                                                                        A
                                                              Rs bn




   G  roup Shareholders’ Funds reached Rs 7.9 billion                 30                                                        120




                                                                                                                                                        •
as at 30th June 2002 compared to Rs 6.8 billion one
                                                                      15                                                        100




                                                                                                                                                         D
year earlier thus further consolidating our capital base.




                                                                                                                                                         E
As such, the net asset value per share attained Rs                     0                                                        80




                                                                                                                                                         T
                                                                           June 98   June 99    June 00   June 01   June 02
135.36 up from Rs 116.86 at the end of FY 2000/01.




                                                                                                                                                         I
                                                                                                                                                         M
Whilst the equity to total assets ratio slightly contracted                             Group               Bank




                                                                                                                                                         I
to 9.1% in FY 2001/02 from 9.7% previously, the                                         Growth Index - Group (right scale)




                                                                                                                                                        L
Group’s risk-weighted capital adequacy ratio remained                                   Growth Index - Bank (right scale)




                                                                                                                                                         K
at a satisfactory level, standing at 13.99%, well above



                                                                                                                                                         N
the minimum BIS requirement.

                                                                                                                                                        BA
                                                                       ASSETS
                                                                                                                                                         L

                                                                      W
                                                                      ith low investment levels in most sectors of the
                                                                                                                                                         A


       Maturity pattern of deposits - Bank
                                                                                                                                                         I




                                                              economy weighing down upon demand for credit,
                                                                                                                                                         C




                     7.5%                                     rupee loan portfolio growth at Bank level picked up
                                                                                                                                                         R




 13.0%                                          79.6%
                                                                                                                                                         E




                                                              marginally to 10.8% last year despite healthy increases
                                                                                                                                                         M




                                                              in resources. In effect, the bulk of the increase in
                                                                                                                                                         M




                                                              funding was channelled into lower-yielding Treasury
                                                                                                                                                        CO




                                                              Bills which soared by 238.5% to stand at Rs 4.0 billion
                                                              as at end of June 2002 thereby strengthening our
                                                                                                                                                         S




                                                              liquidity position. In fact, our liquid assets, that is Cash
                                                                                                                                                         U




                                                              in Hand, Balances with Central Bank, Investments in
                                                                                                                                                         I
                                                                                                                                                         T




 < 6 months        > 6 months < 3 years        > 3 years
                                                              Government Securities and Treasury Bills net of inter-
                                                                                                                                                         I
                                                                                                                                                         R




                                                              bank borrowings, reached 21.4% of our rupee deposits
                                                                                                                                                         U




                                                              on 30th June 2002 up from 15.2% as at end June 2001.
                                                                                                                                                        MA




                                                                  At Group level, Loans and Advances net of
                                                                                                                                                         E




                                                              Provisions for Bad and Doubtful Debts rose by 14.3%
                                                                                                                                                         H




                                                              as at end June 2002, well above the growth rate
                                                                                                                                                        T




                                                              of 8.6% recorded over the previous year while
                                                              Investments in gilt-edged securities grew by 63.1%.                                       21
                                                                MANAGEMENT REPORT
                                                                                 CONTINUED
2 0 0 2




          These assets together represented some 80% of the                                            Loan portfolio mix
          balance sheet total and contributed to the overall
          22.8% expansion of Total Assets as at financial year-                                        T   he MCB continued to provide financial support
          end.                                                                                      towards the strategic initiatives of its customers while
 E




                                                                                                    optimising the risk-return profile of its portfolio. The
 N
 U




                                                                                                    share of the four main productive sectors of the
J




                                                                                                    Mauritian economy rose to 45.9% of total credit mainly
                          Maturity pattern of gross loans - Bank                                    driven by the Sugar sector on account of restructuring
 H
 T




                                   10.3%                        55.5%                               costs and the Tourism sector with ventures in the
3 0




                  34.2%                                                                             region and the renovation of hotels domestically. On
                                                                                                    the other hand, the financial duress of some firms in
 T




                                                                                                    the export-oriented industry affected by euro weakness
 R




                                                                                                    over most of FY 2001/02 has been compounded by the
 O




                                                                                                    crisis in Madagascar. Whilst credit to the sector has
 P
 E




                                                                                                    contracted by around 5.2%, the Bank has nevertheless
R




                                                                                                    sustained its commitments towards EPZ customers at
                   < 6 months        > 6 months < 3 years             > 3 years                     large while curtailing risks where appropriate with the
 L
 A




                                                                                                    share of loans falling below 10%. On a more positive
 U




                                                                                                    note, prospects in the EPZ are brightening with the
 N




                                                                                                    relative strengthening of the euro, the adoption of
AN




                                                                                                    AGOA II and the easing of the political crisis in
                                                                                                    Madagascar. Growth of credit to Traders and the
•




                       Breakdown of gross loans by type - Bank                                      Personal and Professional sectors, two other important
 D




                                                  4.2%                                              constituents of the loan portfolio, was mitigated by
 E




                                                                        44.9%                       lower demand for finance in line with subdued activity
                  50.9%
 T




                                                                                                    in the trade sector and domestic oriented industry
 I
 M




                                                                                                    resulting mainly from the growing importance of the
 I




                                                                                                    informal sector and the revised VAT rate.
LK




                                                                                                       PROVISIONING AND ASSET QUALITY
 N
 A




                       Local bills and foreign bills purchased & discounted                            T
B




                                                                                                          he non-performing portfolio of the Bank has
                       Advances repayable on demand
                                                                                                    increased by about 8% during the year, a lower growth
 L




                       Term loans & debentures
                                                                                                    rate than that of performing loans. However, the
 A
 I




                                                                                                    substantial demand for credit over the last decade and
 C




                                                                                                    the cash flow shortages witnessed in the economy
 R
 E




                                                                                                    over the period from 1999 up to the middle of 2001
 M




                                                                                                    have led to an increase in the number of retail non-
 M




                                                                                                    performing loans over the last two years. Moreover, the
 O




                                  Net loans & advances
C




                                                                                                    economic crisis in Madagascar has had knock-on
                  65                                                       180
                                                                                                    effects on the textile sector in Mauritius with the result
 S




                  52                                                       160                      that some of the EPZ loans in our portfolio could no
 U




                                                                                  June 1998 = 100




                                                                                                    longer be serviced. Consequently, net non-performing
 I




                  39                                                       140
 T




          Rs bn




                                                                                                    loans represented 5.5% of the Bank’s net advances at
 I




                                                                           120
 R




                  26                                                                                30th June 2002, up from 5.1% last year. We believe,
 U




                                                                           100                      however, that the right steps have been taken to
 A




                  13
                                                                                                    reverse this trend. The drive to reinforce monitoring
M




                   0                                                       80                       procedures, which was started last year by the creation
                       June 98   June 99    June 00   June 01    June 02
 E




                                                                                                    of a Credit Risk Committee, will continue over the
 H




                                    Group                Bank
                                                                                                    coming years. In the course of our current Business
T




                                    Growth Index - Group (right scale)
                                                                                                    Process Re-engineering project, the Credit Risk
22                                  Growth Index - Bank (right scale)
                                                                                                    function is being formalised within the Bank, with a
                                               MANAGEMENT REPORT
                                                              CONTINUED




                                                                                                                                       2 0 0 2
                                                      Loan portfolio mix - Bank



                                                                                                    Sugar & other agriculture




                                                                                                                                        E
                          10.8%                                   13.7%




                                                                                                                                        N
                                                                                                    Export oriented industry




                                                                                                                                        U
         9.5%




                                                                                                                                       J
                                                                                    9.8%            Domestic oriented industry




                                                                                                                                        H
                                                                                                    Tourism
10.9%




                                                                                                                                        T
                                                                                                                                       3 0
                                                                                                    Construction

                                                                                                    Traders
                                                                                       7.4%




                                                                                                                                        T
                                                                                                    Financial & business services




                                                                                                                                        R
                                                                                                                                        O
           11.4%                                                                                    Personal & Professional
                                                                            15.0%




                                                                                                                                        P
                                       11.6%




                                                                                                                                        E
                                                                                                    Others




                                                                                                                                       RL
                                                                                                                                        A
direct line of reporting to General Management, both at                      FOREIGN SUBSIDIARIES




                                                                                                                                        U
retail and corporate levels. This will ensure better




                                                                                                                                        N
control at the onset of the credit granting process




                                                                                                                                        N
                                                                             BANQUE FRANCAISE COMMERCIALE (OCEAN




                                                                                                                                       A
while, at the other end of the chain, we are strengthe-                   INDIEN) – BFC (OI)
ning internal friendly recovery procedures with the




                                                                                                                                       •
setting up of a special unit to deal with out of court                       T  his subsidiary, which operates a retail branch




                                                                                                                                        D
settlements. This should compensate for the apparent                      network in the Indian Ocean islands of Réunion,




                                                                                                                                        E
lack of success of the small claims tribunal in                           Mayotte and the Seychelles and also has a branch in




                                                                                                                                        T
speeding-up recovery time.                                                Paris, progressed satisfactorily during the year. Profits




                                                                                                                                        I
                                                                                                                                        M
                                                                          for the calendar year 2001 reached EUR 5.2 million,




                                                                                                                                        I
     At Group level, following a very prudent reclas-                     23% up from last year. Results for the first six months of




                                                                                                                                       L
sification exercise at BFC (OI), non-performing loans                     2002 reached EUR 3 million, with profits accruing from




                                                                                                                                        K
increased by about 10% over the year. However, we are                     all parts of the network. Contribution to Group profits



                                                                                                                                        N
already noting a drop in these figures with an increase                   for the current financial year were, at Rs 133 million,

                                                                                                                                       BA
in the recovery rate while some large accounts are in                     more than 50% up from the previous year.
the course of being reversed back to the performing                                                                                     L

portfolio. Additionally, the situation in Madagascar has                      Deposits have continued to grow at a healthy
                                                                                                                                        A
                                                                                                                                        I




led to a substantial increase in non-performing loans at                  rate, reaching EUR 690 million at 30th June 2002, an
                                                                                                                                        C




Union Commercial Bank. The ratio of Group net non-                        increase of 13% over the previous year. Growth of the
                                                                                                                                        R
                                                                                                                                        E




performing advances to net loans was, at 5.6%,                            loan book, at around 3%, has been much slower with
                                                                                                                                        M




marginally higher than that of the Bank but up from                       the strong showing of the Seychelles branches
                                                                                                                                        M




5.0% in 2001.                                                             compensating for the poor performance of Réunion,
                                                                                                                                       CO




                                                                          BFC (OI)’s main market. As a result, the overall liquidity
                                                                          situation of the Bank is much improved, with positive
                                                                                                                                        S




                   Net NPLs as a % of Loans                               effects on all prudential ratios.
                                                                                                                                        U




    10
                                                                                                                                        I
                                                                                                                                        T




     8                                                                       UNION COMMERCIAL BANK (MADAGASCAR) – UCB
                                                                                                                                        I
                                                                                                                                        R




                                                                             U
                                                                                                                                        U




     6
                                                                                 CB’s operations have been, unsurprisingly,
                                                                                                                                        A
%




                                                                          deeply affected by the political and economic crisis in
                                                                                                                                       M




     4
                                                                          Madagascar since January 2002. Banking transactions
     2
                                                                                                                                        E




                                                                          were down to a trickle during that period but our
                                                                                                                                        H




     0                                                                    subsidiary managed to stay open throughout these
                                                                                                                                       T




         June 98     June 99      June 00   June 01     June 02
                                                                          difficult times and maintain near-normal service to our
                               Group        Bank                          customers.                                                   23
                                                MANAGEMENT REPORT
                                                               CONTINUED
2 0 0 2




               Results attributable to MCB were consequently               LOCAL   SUBSIDIARIES
          down after accounting for a substantial increase in
          provisions in UCB’s accounts. Profit and loss charges            MCB STOCKBROKERS
          for doubtful debts were up nearly eight times to about
 E




          FMG 10 billion (Rs 47 million) during the year to                This subsidiary’s profits were 15% up on the last
 N
 U




          30th June 2002. Furthermore, it was decided, at Group      year’s, contributing Rs 30 million to Group results.
J




          level, to write down 50% of MCB’s share of UCB’s           However, a substantial part of this surplus is
          assets to reflect the increased risk associated with       attributable to dividends received from Sun Resorts
 H
 T




          Madagascar, thus adding a further charge of Rs 108         Ltd., in which the company has an interest.
3 0




          million to Group provisions. The Bank considers that
          the Malagasy risk is adequately covered. Moreover,             During the year under review, the stock market has
 T




          with the situation in Madagascar gradually coming          continued to show a somewhat bearish trend, with low
 R




          back to normal, provisioning levels will be re-assessed    volumes and very undervalued shares. MCB
 O




          in the course of the coming year and appropriate           Stockbrokers has nonetheless continued to play a
 P
 E




          corrective action taken if necessary.                      major role in the provision of brokerage and related
R




                                                                     services, with a market share of about 23% in value
              Balance sheet growth was quite important during        traded on the stock exchange for the year ended
 L
 A




          the year with loans and deposits growing 30% and 40%       30th June 2002. With investors and stockbrokers still
 U




          to reach FMG 238 billion and FMG 363 billion               waiting for measures aimed at boosting the level
 N




          respectively at 30th June 2002. However, these growth      of transactions on the stock exchange, MCB
AN




          rates were in effect abnormally high due to the            Stockbrokers, which can count on the network of MCB
          particularity of the situation whereby export-oriented     to promote its services, is ideally placed to capitalise
•




          companies were maintaining foreign currency deposits       should the market rally.
 D




          which could not be sold for lack of a proper market,
 E




          while loans in local currency were correspondingly               MCB REGISTRY & SERVICES
 T




          building up.
 I




                                                                           M
 M




                                                                            CB Registry & Services, which provides
 I




                                                                     administration services to fund managers and registrar
L




             UNIÂO COMERCIAL DE BANCOS (MOÇAMBIQUE)
                                                                     services to quoted companies, made a small profit of
            T
 K




                 his subsidiary, based in Maputo, has registered     Rs 1.5 million during the year under review.
 N




          very positive results for the calendar year 2001, with
BA




          profits up 67% to MZM 30.8 billion (Rs 40 million). The          MCB INVESTMENT MANAGEMENT (MCBIM)
          trend in profitability has been maintained for the first
 L




          half of 2002 with half year results reaching MZM                 MCBIM posted very good results in FY 2001/02,
 A
 I




          19.7 billion bringing UCB’s contribution to Group          its fourth full year of operations. Several new client
 C




          profits to Rs 38 million compared to Rs 27 million at      mandates, plus additional mandates from existing
 R
 E




          30th June 2001. Balance sheet growth was less              clients, helped to boost results. The local stock market
 M




          spectacular with deposits increasing 29% to MZM            remained subdued during the first six months of the
 M




          355 billion and total assets reaching MZM 555 billion,     period, though coming under some pressure in late
CO




          up 30% from the previous year. Loans to customers          2001. The first six months of 2002 have been far
          were 6% down on the 30th June 2001, the result of          brighter however and prospects look encouraging.
 S




          seasonal fluctuations in crop financing to the
 U




          agricultural sector. The Balance sheet structure is             The pension fund market is continuing to undergo
 I
 T




          very healthy with shareholders’ funds representing         significant changes and several large companies in
 I
 R




          33% of total assets, thus providing good scope for         Mauritius have launched new schemes or reorganised
 U




          future expansion. Furthermore the local currency,          existing arrangements. Against this backdrop, MCBIM
 A




          while still slowly depreciating, seems to be more          has been successful in picking up several investment
M




          stable of late with a depreciation rate of about 7%        mandates from funds with significant growth potential.
 E




          noted against the Mauritian rupee over the year to         It is particularly satisfying to note that the strategic
 H




          30th June 2002.                                            assessment of the market opportunities that was
T




                                                                     undertaken at launch has proved essentially accurate.
24                                                                   As a result, MCBIM currently holds some Rs 1.6 billion
                                       MANAGEMENT REPORT
                                                      CONTINUED




                                                                                                                        2 0 0 2
of assets under management for a growing number of          OPERATIONAL REVIEW
institutional clients. With share valuations on the local
market looking cheap, the prospects for asset growth              The MCB strives to sustain its leadership position
look promising over the next five years. MCBIM              in a competitive environment where speed and




                                                                                                                         E
achieved a profit of Rs 2.6 million for the year to         efficiency enabled by operational skills are essential.




                                                                                                                         N
                                                                                                                         U
30th June 2002, contributing Rs 1.6 million to the MCB      The range of products and services provided by the




                                                                                                                        J
Group results.                                              Bank has been growing over the years in our quest to
                                                            generate market demand while catering for the rising




                                                                                                                         H
                                                                                                                         T
   ASSOCIATED COMPANIES                                     financial sophistication of our local and foreign




                                                                                                                        3 0
                                                            customers, individuals and businesses alike. Indeed, in
   FINCORP INVESTMENT                                       line with our diversification strategy, the range of




                                                                                                                         T
                                                            financial products and services provided by the Group
   T




                                                                                                                         R
       his company’s consolidated operating results at      has broadened beyond traditional banking activities to




                                                                                                                         O
30th June 2002 were stable at around Rs 57 million,         cover asset and fund management, leasing,




                                                                                                                         P
                                                                                                                         E
which included a substantial contribution from              stockbroking, factoring, offshore banking, and




                                                                                                                        R
FINLEASE. This wholly owned subsidiary of FINCORP           registrar, secretarial and custody services.
achieved net profits of Rs 38.2 million for the year, 11%




                                                                                                                         L
                                                                                                                         A
up on the previous year. However, attributable profits of       Alongside widening the spectrum of our product




                                                                                                                         U
the FINCORP Group were down from Rs 107.2 million           lines, we have endeavoured to enhance accessibility




                                                                                                                         N
in 2001 to Rs 66.3 million at 30th June 2002 due to a       and efficiency in their provision. Indeed, in addition to




                                                                                                                        AN
much decreased contribution from an associated              offering customer-oriented services through traditional
company, Promotion and Development, which had               outlets, the MCB is pursuing its investment policy in




                                                                                                                        •
realised an exceptional profit of Rs 123 million on         state-of-the-art technology to enhance user




                                                                                                                         D
disposal of shares during the year 2000/2001. The           satisfaction particularly through ICT-based delivery




                                                                                                                         E
profitability of the FINCORP Group is still quite healthy   channels.




                                                                                                                         T
and the company’s share is trading at a substantial




                                                                                                                         I
                                                                                                                         M
discount of about 60% to net asset value.                         BRANCH   NETWORK




                                                                                                                        LI
   OTHER ASSOCIATED COMPANIES                                     C
                                                                  ommunity banking remains a key feature of our




                                                                                                                         K
                                                            business strategy, with a network of 41 branches



                                                                                                                         N
   B  anque Internationale des Mascareignes in which        inclusive of the Head-Office and one branch in

                                                                                                                        BA
MCB has a 35% stake did not perform as well as              Rodrigues. This represented a significant 27% of the
expected during the year. Its results were affected         country’s banking sector network as at the end of the        L

essentially by the depressed market following the           financial year. In addition, the MCB has 10 foreign
                                                                                                                         A
                                                                                                                         I




continuing fall in international interest rates after       exchange counters operating beyond normal banking
                                                                                                                         C




11th September, 2001. Contribution to MCB profits fell      hours.
                                                                                                                         R
                                                                                                                         E




to Rs 7 million from Rs 10 million the previous year.
                                                                                                                         M




                                                                Starting January 2003 and proceeding in phases,
                                                                                                                         M




    Mauritius Fund Management Company (MFMC),               our branch network will be re-organised on a regional
                                                                                                                        CO




was wound up during the year following the take over        basis with Main and Satellite branches. This
of the assets of the Mauritius Fund by a separate entity.   decentralisation of our activities aims at improving
                                                                                                                         S




The undistributed assets of MFMC were taken over by         accessibility to our full range of financial services in
                                                                                                                         U




MCB Investment Management, a 60% subsidiary of              each region with an approach tailored to the profile of
                                                                                                                         I
                                                                                                                         T




MCB.                                                        the customer base. The new policy orientation will
                                                                                                                         I
                                                                                                                         R




                                                            foster greater autonomy of branches while enhancing
                                                                                                                         U




    Venture Capital Partners, the only other associate      speed and efficiency in the delivery of our financial
                                                                                                                         A




of the Group, achieved satisfactory results, in line with   services.
                                                                                                                        M




those of the previous year.
                                                                                                                         E




                                                                  ATMS   AND CARD-BASED SERVICES
                                                                                                                         H




    Contribution of associated companies to MCB
                                                                                                                        T




Group profits was down 34% to Rs 46.5 million at                  C
                                                                omplementing its extensive branch network, the
30th June 2002.                                             MCB offers a 24-hour, 7 days a week service and real-       25
                                                  MANAGEMENT REPORT
                                                               CONTINUED
2 0 0 2




          time account information via Automated Teller Machines     gathered considerable success as evidenced by a
          (ATMs) in 56 locations in Mauritius and Rodrigues,         three-fold increase in the number of visits on the web-
          including 15 offsite ATMs. In FY 2001/02, a further        site.
          6 ATMs were installed extending our network in
 E




          Mauritius and Rodrigues to a total of 118 machines,            As regards internet banking per se, further
 N
 U




          accounting for 48% of the country’s network. In this       functionality enhancements and customisation
J




          respect, it is worth mentioning that 15 years after        have been carried out during the year. In keeping
          pioneering ATM installation in Mauritius, the MCB once     with norms of global best practices in information
 H
 T




          again innovated by launching the country’s first foreign   security, the MCB uses the latest and strongest
3 0




          currency ATM in December 2001. During the last             cryptographic standards to protect information being
          financial year, some 18 million transactions were          transferred over the internet. While mcb@home, to
 T




          effected on MCB ATMs, a 14% increase over FY               which registration is free of charge, provides a wider
 R




          2000/01.                                                   array of services to individual customers, mcb@work
 O




                                                                     now enables businesses to carry out various
 P
 E




              Moreover, a wide range of cards including cash         transactions against a competitive monthly fee. These
R




          cards (Mr Best), debit cards (MCB-Maestro) and credit      improvements, coupled with a strong marketing
          cards (Classic, Gold and Business) is available with the   campaign, have contributed to new registrations nearly
 L
 A




          Bank being the largest domestic issuer. Following          doubling on average following the launch of the
 U




          effective marketing efforts, the number of Mr Best         redesigned site.
 N




          cards grew by some 13% over the past financial year to
AN




          exceed 300,000 against the backdrop of our                     Another internet-based facility, MCBe-com, set up
          expanding ATM network. Up by around 21% to reach           in November 1999, provides a secure environment for
•




          some 38,000 over FY 2001/02, our MCB-Maestro               businesses wishing to sell their products through the
 D




          cards, which offer a wider range of banking facilities,    web. The market for this service is very promising as
 E




          are also growing increasingly popular.                     electronic trading is set to grow in importance
 T




                                                                     especially with fast developing authentication
 I
 M




              The MCB dominates the merchants’ network               methodologies.
 I




          allowing holders of some 75,000 credit cards to settle
L




          their bills at over 3,400 stores in Mauritius of which         With momentum gathering in terms of pace of
 K




          more than half possess Point of Sales terminals. Being     usage, the more so with forthcoming developments in
 N




          a member of both the Visa and MasterCard payment           the ICT sector, we can expect notable operational cost
BA




          systems, the MCB offers the possibility of performing      savings through the promotion of internet-based
          transactions at over half a million ATMs and at around     banking services, an area where we have already built
 L




          18 million locations worldwide in addition to those that   up capacity.
 A
 I




          can be carried out via the internet. Moreover, Fleetman
 C




          cards provide credit facilities for vehicle expenses at          TELEPHONE   BANKING
 R
 E




          100 accredited petrol dealers as well as a growing
                                                                           T
 M




          number of approved garages and other traders all over            elbest allows customers, through a secured
 M




          the island.                                                access, to check the balances of their various
CO




                                                                     accounts and their latest transactions, carry out inter-
             INTERNET-BASED   DELIVERY CHANNELS                      account transfers, order chequebooks and obtain the
 S




                                                                     exchange rates for major currencies. The number of
 U




            O   ur electronic window shop at www.mcb.mu              calls recorded a notable increase by some 25% to
 I
 T




          has been recently revamped to provide more user-           above 187,000 in FY 2001/02.
 I
 R




          friendly access to MCB products and services as
 U




          well as a whole range of financial and economic            SYSTEMS REVIEW
 A




          information. The portal offers increased ease of
M




          navigation and enhanced user interactivity. Moreover,            T
                                                                          o achieve our Vision, our mutually supportive and
 E




          online application is now available on a wider range of    synchronised key strategies concern our human
 H




          products and services with appropriate follow-up           resources, our business processes and our infor-
T




          within 3 working days. An aggressive marketing             mation technology. This adds up to a comprehensive
26        campaign conducted since mid-June 2002 has                 reshaping of how we do business.
                                        MANAGEMENT REPORT
                                                       CONTINUED




                                                                                                                         2 0 0 2
    By tradition, change is an MCB strength for having       currently engaged in a comprehensive and deep
made innovation central to our competitiveness. Hence,       business process re-engineering exercise. The spirit
the changes occurring or forthcoming as we reshape           guiding the process teams involved in this initiative is
the way we do business are in fact business as usual;        the need to deliver quicker, cheaper and readily




                                                                                                                          E
if only that the scope and scale of the current synchro-     accessible products and services of a wider range to




                                                                                                                          N
                                                                                                                          U
nised changes commands matching management and               our customers in line with their ever-increasing needs.




                                                                                                                         J
co-ordination. As such, the encasing framework               As such, the guiding principle underlining the BPR
supporting our initiatives flows from a Super User network   effort is to focus on our customers and generate




                                                                                                                          H
                                                                                                                          T
to secure involvement of the entire organisation to a        market demand through improved operational




                                                                                                                         3 0
Steering Committee validating the changes.                   efficiency thus allowing resources to be reallocated to
                                                             a more commercial and knowledgeable network.




                                                                                                                          T
   HUMAN RESOURCES                                           Indicative of the importance of this project to the Bank,




                                                                                                                          R
                                                             in excess of 50 employees have been detached to




                                                                                                                          O
   A    t the level of human resources our strategic         work full time on the process teams with the




                                                                                                                          P
                                                                                                                          E
initiatives aim at fostering greater employee                consultants.




                                                                                                                         R
empowerment while re-engineering the HR processes.
Developing the MCB into an empowering and learning              Our redesign phase is now completed and our new




                                                                                                                          L
                                                                                                                          A
organisation is key to achieving our Vision and it is all    business processes, after thorough testing and




                                                                                                                          U
the more meaningful in the knowledge economy where           appropriate staff training, should be implemented in




                                                                                                                          N
competition commands organisations to have an                phases from January to September 2003.




                                                                                                                         AN
adaptable, innovative, customer focused and
entrepreneurial workforce. In support of the required              INFORMATION TECHNOLOGY




                                                                                                                         •
culture shift, the Bank has initiated a comprehensive
                                                                   O




                                                                                                                          D
skill building programme including management                        ur steady technological investment efforts over




                                                                                                                          E
workshops, leadership and empowerment seminars at            the years have secured the Bank a sophisticated IT




                                                                                                                          T
all levels of the organisation. Our development              plateau from which to build on. Indeed, this is enabling




                                                                                                                          I
                                                                                                                          M
programmes give due credit to the need of reinforcing        the re-engineering of HR and business processes to




                                                                                                                          I
the living of our Core Values in our daily dealings with     be fully supported by technological developments.




                                                                                                                         L
all stakeholders.                                            Consider the introduction of an HR system, which has




                                                                                                                          K
                                                             centralised all existing HR databases and has been



                                                                                                                          N
     The re-engineering of the HR department and             and will be continuously customised to meet the needs

                                                                                                                         BA
processes involves shifting from a personnel                 of holistic HR management. At the level of business
department to a comprehensive business focused HR            process re-engineering the process teams are working         L

service centre demonstrating the best practice roles of      in close collaboration with IT support teams, readying
                                                                                                                          A
                                                                                                                          I




an HR department as a strategic partner, a change            our IT function to support the redesigned processes for
                                                                                                                          C




agent, a process expert and an employee champion.            implementation. Combined, there are no less than 60
                                                                                                                          R
                                                                                                                          E




Towards this end, from the introduction of new               IT specialists representing more than half of the IT
                                                                                                                          M




processes such as business focused performance               department alongside external consultants working on
                                                                                                                          M




management, the entire range of HR functions is being        the different projects. One of the projects that
                                                                                                                         CO




reviewed, completed and upgraded in a phased                 demonstrate the interplay of human resources,
manner. As an extension of this approach, line               business processes and IT is the technological
                                                                                                                          S




managers will be trained in the new processes and            initiative to support business unit balanced scorecard
                                                                                                                          U




work in partnership with HR to assume greater                planning, associated budgeting and performance
                                                                                                                          I
                                                                                                                          T




responsibility in the portfolio of team management. As       management.
                                                                                                                          I
                                                                                                                          R




can be seen, our HR strategies are designed to equip
                                                                                                                          U




the Bank with the human capital power increasingly               Moreover, towards aligning our IT performance to
                                                                                                                          A




tailored to its ambitions.                                   our Vision and given the growing strategic impact of IT
                                                                                                                         M




                                                             in business, this year saw the launch of the Information
                                                                                                                          E




   BUSINESS PROCESS RE-ENGINEERING                           Technology Transformation (ITT) project. The expected
                                                                                                                          H




                                                             results of the latter are improved cost effectiveness,
                                                                                                                         T




   L aunched in August last year and proceeding in           quality and capability of IT Service Delivery and IT
phases on the basis of business priorities, the Bank is      Development. Overall, ITT will involve the revamp of our    27
                                                  MANAGEMENT REPORT
                                                                  CONTINUED
2 0 0 2




          IT processes and an associated realignment of the IT          merging of our risk functions into three categories
          department organisation structure to better serve all         namely credit, treasury and operational risks.
          our internal and external customers.                          Moreover, besides upgrading our existing risk
                                                                        processes, we have taken advantage of the overall re-
 E




             ENHANCING                                                  engineering project to reinforce inter-linkages and thus
 N




                          GROUP SYMBIOSIS
 U




                                                                        generate synergies between risk and non-risk
             O
J




                 ne important feature of our regional strategy is to    functions. These improvements should increase the
          harmonise our operating environment in Mauritius,             efficiency of our risk framework and enable us to
 H
 T




          Réunion, Madagascar, Mozambique, Seychelles, and              ensure that while optimising returns, risk levels of the
3 0




          Mayotte. This task has been assigned to ‘Groupe               Group are maintained at levels congruent with
          Synergie’, a high profile committee comprising top            stakeholders’ risk appetites and consistent with
 T




          executives from across the Group which meet regularly         regulatory limits.
 R




          to explore and exploit avenues of co-operation
 O




          involving the MCB and its foreign subsidiaries. Our           CREDIT RISK
 P
 E




          project of developing a sophisticated telecom-
                                                                              T
R




          munications network linking all the sites of the Group is            he overall integrity of the credit risk framework is
          nearly completed with UCB Mozambique connected to             ensured by the Credit Risk Manager who reports to the
 L
 A




          the network during the year. Our Malagasy subsidiary is       Executive Committee through Top Management. All
 U




          the only site not currently on the network as progress in     transactions involving a likely loss arising from a credit
 N




          this respect has been hampered by the political crisis        event, that is the failure of a business partner to
AN




          in Madagascar. Moreover, the committee is currently           perform, are managed within this framework. This type
          working on several projects including the harmoni-            of risk, which encompasses issuer risk, counterparty
•




          sation of our ICT-based applications within the Group,        risk and country risk, is the most significant one to
 D




          further to our strategy of fostering greater utilisation of   which banks are exposed to and, accordingly,
 E




          cards and card-based services in our foreign subsi-           significant resources have been devoted in the re-
 T




          diaries and rationalisation of our correspondent banks        engineering process towards its improved
 I
 M




          network to enhance treasury management at Group               management.
 I




          level. As regards the implications of the ongoing re-
L




          engineering initiative on group synergy, the committee            The Executive Committee discharges all the credit
 K




          is exploring possibilities for the implementation of BPR      risk and credit sanction functions of the Bank for all
 N




          decisions and findings group-wide.                            banking facilities in excess of a set level, with the
BA




                                                                        responsibility for approving lesser amounts being
                                                                        entrusted either to a Management Credit Committee or
 L




          RISK REPORT                                                   to Account Executives within their own individual
 A
 I




                                                                        delegations. This function has been decentralised to
 C




             C   ognisant that risk management is a key                 ensure that the analysis and approval of loans and
 R
 E




          component to achieving high and stable returns for            advances is made at the proper level. Indeed,
 M




          stakeholders, the MCB has always endeavoured to               depending on the profile and requirements of each
 M




          improve the monitoring and control of its exposures. In       customer or customer group, the most appropriate
CO




          this respect, building on previous efforts to formalise       representative from top executives, branch managers
          our risk governance framework, the latter is being            and corporate finance loan officers is assigned the
 S




          revamped within the context of the BPR project. In            authority for credit sanctioning.
 U




          accordance with the BoM Guideline on Corporate
 I
 T




          Governance, the central responsibility for risk lies with         For advances on credit cards and housing loans
 I
 R




          the Bank’s Board of Directors with the stewardship of         not exceeding a certain amount, a credit scoring
 U




          the overall risk governance framework lying with the          system will be established to facilitate the decision
 A




          Executive Committee which establishes relevant                making process. To support and advise Account
M




          guidelines     encompassing      all    the    required       Executives on risk aspects, all credit requests need to
 E




          fundamentals and monitors compliance thereof.                 be processed by Credit Risk Executives who carry out
 H




                                                                        independent risk assessments prior to extending credit
T




              One of the key BPR proposals on risk management           facilities. Based on qualitative information and on
28        is the rationalisation of our structure through the           quantitative analysis of risk parameters and with the
                                        MANAGEMENT REPORT
                                                       CONTINUED




                                                                                                                          2 0 0 2
support of legal experts from our legal advisory unit,       bank’s portfolio. The exposure of the Bank is monitored
Credit Risk Executives proactively assess potential          within the specific policies, guidelines and limits
default risks. For our foreign exposures, this exercise is   approved by the Executive Committee. In addition to
supplemented by internal sovereign risk ratings based        the management of traditional banking operations on a




                                                                                                                           E
on economic, financial and political variables.              regular basis, currency risk management involving




                                                                                                                           N
                                                                                                                           U
                                                             trading operations is an information-intensive day-




                                                                                                                          J
    Whilst emphasis is laid on identifying default risks     in/day-out process under close scrutiny by relevant
at source, a close monitoring of our loan book on an         officers with respect to internal exposure restrictions




                                                                                                                           H
                                                                                                                           T
on-going basis enables us to further ensure that our         such as net open position limits per currency and stop-




                                                                                                                          3 0
credit risk levels remain under control. In this respect,    loss provisions.
keeping with the provisions of the forthcoming Basle II,




                                                                                                                           T
we have formalised our internal rating system used to            Risks relating to mismatches in the re-pricing of




                                                                                                                           R
estimate probable losses on credit transactions during       assets and liabilities as a result of interest rate




                                                                                                                           O
the business cycle. On the other hand, our recovery          fluctuations, though not overlooked, are deemed




                                                                                                                           P
                                                                                                                           E
process in case of default, for long hampered by             immaterial at the MCB. Indeed, it is an established




                                                                                                                          R
lengthy judicial procedures, is being strengthened with      policy to peg the prices of most assets and liabilities of
more stress laid on out of court settlements.                funding operations to the same variable.




                                                                                                                           L
                                                                                                                           A
                                                                                                                           U
TREASURY RISK                                                OPERATIONAL RISK




                                                                                                                           N
                                                                                                                           N
   For enhanced efficiency, an integrated system to                Our operational risk framework is geared towards




                                                                                                                          A
manage liquidity risk and market risk, particularly in       ensuring the integrity of banking operations, internal




                                                                                                                          •
relation to currency and interest rate movements, is         controls and management information systems. At the




                                                                                                                           D
currently being finalised. The objective of the              MCB, internal operational procedures have been




                                                                                                                           E
framework is to ensure that various related operations       designed to minimise the risks of errors or frauds while




                                                                                                                           T
are carried out optimally within set rules with              strictly complying with relevant legislation or




                                                                                                                           I
                                                                                                                           M
compliance being monitored by an independent                 guidelines. The Board, via the Audit Committee,




                                                                                                                           I
officer, the Treasury Risk Manager. In addition to this      regularly assesses the adequacy of internal controls




                                                                                                                          L
overarching framework providing appropriate                  while ensuring that protocols remain aligned to




                                                                                                                           K
safeguards, the Bank also has in place an explicit           international standards of best practice. The duty of



                                                                                                                           N
contingency plan in the event of a liquidity-related         monitoring compliance with internal control procedures

                                                                                                                          BA
crisis.                                                      is discharged on a daily basis by the Internal Audit
                                                             Department. Furthermore, external auditors provide            L

     In broad terms, liquidity risk management ensures       additional safeguards within this framework by way of
                                                                                                                           A
                                                                                                                           I




that the Bank is able to meet all its current and future     independent assessments. As regards the integrity of
                                                                                                                           C




obligations namely by minimising uncertainties arising       our management information systems, ground rules
                                                                                                                           R
                                                                                                                           E




from a mismatch between the use and procurement of           are firmly established through a comprehensive set of
                                                                                                                           M




funds. Beside the mandatory minimum cash ratio, the          manuals on related policies such as Corporate
                                                                                                                           M




Executive Committee sets its own prudential limit in the     Security Policy and Information Security Standards.
                                                                                                                          CO




form of a floor to the liquid asset ratio. Under the new     These are defined and enforced by the Information
framework, further guidelines should also be provided,       Security Management Unit. Concerning technology
                                                                                                                           S




for instance, in relation to the maturity structure of our   risk per se, MCB has well-organised contingency plans
                                                                                                                           U




holdings in T-Bills. To refine liquidity risk management,    and disaster recovery systems to guard against risks of
                                                                                                                           I
                                                                                                                           T




the information support system to assess the                 disruptions.
                                                                                                                           I
                                                                                                                           R




adequacy of the Bank’s liquidity position is being
                                                                                                                           U




upgraded with the continuous provision of in-depth
                                                                                                                           A




analyses of historical funding requirements and current            THE WAY FORWARD
                                                                                                                          M




position as well as projected cash flows and the need
                                                                   T
                                                                                                                           E




for borrowed funds.                                               he MCB Group can pride itself on an appreciable
                                                                                                                           H




                                                             performance against the backdrop of a relative
                                                                                                                          T




  Changes in foreign currency may lead to adverse            slowdown in economic growth. However, at the MCB,
movements in the value of specific components of a           we believe that success is a journey, not a destination.     29
                                                 MANAGEMENT REPORT
                                                                CONTINUED
2 0 0 2




          We strive to ensure that we are sailing on course at the    and providing our staff with a learning environment
          right speed. This spirit is embodied in our Vision and      propitious for self-development, amongst others, the
          Mission, with our Core Values aligned to ensure we          MCB is currently investing heavily both in financial and
          carry forward what has made us a trustworthy,               human capital in terms of its people, business
 E




          entrepreneurial and customer focused financial              processes and technology. By embracing change
 N
 U




          partner.                                                    successfully, we are pursuing a long-standing tradition
J




                                                                      of being an innovating market leader.
              Our regard for continuous improvement, which has
 H
 T




          meant taking bold initiatives, has enabled us to ride the
3 0




          waves and respond to major challenges in a proactive
          manner. Today, growth in our core banking function is
 T




          being supported by our strategy of expansion into non-
 R




          banking financial services and by the strengthening of
 O




          our presence in foreign markets. We have thus been
 P
 E




          able to pursue our mutually reinforcing relationships
R




          with all stakeholders.
 L
 A




             In the same spirit of continuously exceeding                                         Pierre-Guy NOEL
 U




          customer expectations, increasing shareholder value,                                    General Manager
A
•
L
B
C
M
TN
 N
 D
 E
 T
 I
 M
 I
 K
 N
 A
 L
 A
 I
 C
 R
 E
 M
 M
 O
 S
 U
 I
 T
 I
 R
 U
 A
 E
 H




30
                                            REPORT             OF THE          AUDITORS
                                       TO THE   SHAREHOLDERS   OF THE   MAURITIUS COMMERCIAL BANK LTD




             We have audited the financial statements set out on pages 34 to 63, which have been prepared on the basis
2 0 0 2




          of the accounting policies set out on pages 43 to 47.
 E
 N




          RESPECTIVE RESPONSIBILITIES                OF   DIRECTORS            AND   AUDITORS
JU




             The directors are responsible for keeping proper accounting records which disclose with reasonable
 H
 T




          accuracy at any time the financial position of the Group and the Bank and for ensuring that the financial
3 0




          statements comply with the provisions of the Banking Act 1988 and with the Companies Act 2001 as applicable
          to banks, taking into account the Order dated March 27, 2002 made by the Registrar of Companies under section
 T
 R




          224(2) of the Companies Act 2001, authorising directors to prepare and present financial statements in relation to
 O




          an accounting period commencing prior to 1st December 2001 in accordance with Mauritius Accounting and
 P
 E




          Auditing Standards Act 1989. They are also responsible for safeguarding the assets of the Group and the Bank
R




          and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. It is our
 L




          responsibility to form an independent opinion, based on our audit, on those financial statements and to report our
 A




          opinion to you.
AU
 N
 N




          BASIS    OF   OPINION
•




             We conducted our audit in accordance with International Standards on Auditing.
 D




                                                                                                        Our audit includes an
 E
 T




          examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It
 I




          also includes an assessment of the significant estimates and judgements made by the directors in the preparation
 M
 I




          of the financial statements, and whether the accounting policies are appropriate to the circumstances of the Group
L




          and the Bank, consistently applied and adequately disclosed.
 K
 N
 A




             We planned and performed our audit so as to obtain all the information and explanations which we considered
B




          necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial
 L




          statements are free from material misstatements. In forming our opinion we also evaluated the overall adequacy
 A




          of the presentation of information in the financial statements. We believe that our audit provides a reasonable
 I
 C




          basis for our opinion.
 R
 E
 M




             We have no relationship with, or any interests in, the Bank or any of its subsidiaries other than in our capacity
 M




          as auditors, tax and business advisers and other than dealings with the Bank in the ordinary course of business.
CO
 S




          OPINION
 U
 I
 T




             We have obtained all such information and explanations which we considered necessary.
 I
 R
 U
 A




             In our opinion,
ME




             a) proper accounting records have been kept by the Group and the Bank as far as it appears from our
 H




                 examination of those records;
T




32
                                  REPORT         OF THE         AUDITORS
                                                    CONTINUED




   b) the financial statements give a true and fair view of the state of affairs of the Group and the Bank as at




                                                                                                                      2 0 0 2
       30th June 2002 and of their profit and cash flows for the year then ended, comply with the provisions of the
       Banking Act 1988 and with the Companies Act 2001, as applicable to banks, taking into account the Order
       dated March 27, 2002 made by the Registrar of Companies, and have been properly prepared in




                                                                                                                       E
                                                                                                                       N
       accordance with and comply with Mauritius Accounting Standards.




                                                                                                                      JU
                                                                                                                       H
                                                                                                                       T
                                                                                                                      3 0
                                                                                                                       T
                                                                                                                       R
                                                                          DE CHAZAL DU MEE & CO.




                                                                                                                       O
                                                                                                                       P
                                                                             Chartered Accountants




                                                                                                                      R
                                                                                                                      AE
                                                                                                                       L
                                                                                                                       A
                                                                                                                       U
                                                                                                                       N
                                                                                                                       N
                                                                            Per Désiré Elliah - FCCA




                                                                                                                      •
Port Louis
Mauritius




                                                                                                                       D
                                                                                                                       E
18th September 2002




                                                                                                                      L
                                                                                                                      B
                                                                                                                      C
                                                                                                                      M
                                                                                                                      TT
                                                                                                                       I
                                                                                                                       M
                                                                                                                       I
                                                                                                                       K
                                                                                                                       N
                                                                                                                       A
                                                                                                                       L
                                                                                                                       A
                                                                                                                       I
                                                                                                                       C
                                                                                                                       R
                                                                                                                       E
                                                                                                                       M
                                                                                                                       M
                                                                                                                       O
                                                                                                                       S
                                                                                                                       U
                                                                                                                       I
                                                                                                                       T
                                                                                                                       I
                                                                                                                       R
                                                                                                                       U
                                                                                                                       A
                                                                                                                       E
                                                                                                                       H




                                                                                                                      33
                                                   BAL ANCE SHEETS
                                                         AS AT   30TH JUNE 2002




                                                                            GROUP                         BANK
2 0 0 2




                                                                         2002    2001                 2002    2001
                                                        Notes           RS’000  RS’000               RS’000  RS’000
 E




          ASSETS
 N
 U




          Cash and balances with Central Banks           2            3,654,953        3,287,532    2,848,903    2,308,514
JH




          Due from other banks                           3            6,745,411        3,139,817    3,006,889    1,867,213
 T
3 0




          Investments in Government securities

            and Treasury bills                           4            9,954,946        6,103,273    5,416,040    3,101,826
 T
 R
 O




          Loans and advances to customers                5           60,023,437       52,529,960   42,599,547   38,248,179
 P
 E




          Other investments                              6              557,959         466,661      198,123      135,949
RL




          Investments in associates                      7              668,535         586,206       45,178       47,693
 A
 U




          Investments in subsidiary undertakings         8                        -            -    1,473,174    1,347,719
AN
 N




          Goodwill arising on consolidation              9              145,265         159,972             -            -
•




          Property, plant and equipment                  10           2,624,341        2,436,197    2,048,760    1,958,655
 D
 E




          Deferred tax assets                            11              23,525          23,416       23,587       23,416
 T
 I




          Other assets                                   12           2,095,391        1,711,318    1,199,695    1,051,417
LM
 I




          TOTAL                                                      86,493,763       70,444,352   58,859,896   50,090,581
BK
 N
 A




          MEMORANDUM ITEMS
 L




          Letters of credit, guarantees, acceptances,
 A
 I
 C




            endorsements and other obligations           20          14,597,624       14,229,506   10,842,170   10,958,640
 R
 E




          Inward bills held for collection                              586,102         725,150      421,316      571,034
 M
 M




          Outward bills sent for collection                             525,642         353,022      517,783      334,705
CO
 S
 U
 I
 T
 I
 R
 U
 A




                                                                                                      Pierre-Guy NOEL
M




                                                                                                      General Manager
TE
 H




          The notes on pages 43 to 63 form part of these accounts.
          Auditors' report on pages 32 and 33.
34
                                           BAL ANCE SHEETS
                                                AS AT   30TH JUNE 2002




                                                                   GROUP                      BANK




                                                                                                                  2 0 0 2
                                                                2002    2001              2002    2001
                                              Notes            RS’000  RS’000            RS’000  RS’000




                                                                                                                   E
LIABILITIES




                                                                                                                   N
                                                                                                                   U
Due to other banks                             13            5,047,566    2,351,835     3,116,846    1,367,073




                                                                                                                  JH
Deposits                                       14           69,598,782   57,657,339    46,899,687   41,077,661




                                                                                                                   T
                                                                                                                  3 0
Other liabilities                              15            2,627,148    2,516,949     1,902,479    1,530,432




                                                                                                                   T
Outstanding lease obligations                  17               70,718       89,800       70,718       89,800




                                                                                                                   R
                                                                                                                   O
Proposed dividend                                              200,989     171,860       200,989      171,860




                                                                                                                   P
                                                                                                                   E
Current tax liability                                          250,713     201,404       189,920      141,986




                                                                                                                  RL
CAPITAL RESOURCES




                                                                                                                   A
                                                                                                                   U
Subordinated loans                                             538,475     447,925              -             -




                                                                                                                  AN
                                                                                                                   N
Minority interest                              18              273,772     199,033              -             -




                                                                                                                  •
Share capital                                  19              582,578     582,578       582,578      582,578




                                                                                                                   D
                                                                                                                   E
Reserves                                                     7,303,022    6,225,629     5,896,679    5,129,191




                                                                                                                   T
                                                                                                                   I
SHAREHOLDERS’ FUNDS                                          7,885,600    6,808,207     6,479,257    5,711,769




                                                                                                                  LM
                                                                                                                   I
TOTAL                                                       86,493,763   70,444,352    58,859,896   50,090,581




                                                                                                                  BK
                                                                                                                   N
                                                                                                                   A
                                                                                                                   L
                                                                                                                   A


These accounts were approved by the Board of Directors on the 18th September 2002.
                                                                                                                  CI
                                                                                                                   C
                                                                                                                   R
                                                                                                                   E
                                                                                                                   M
                                                                                                                   M
                                                                                                                   O
                                                                                                                   S
                                                                                                                   U
                                                                                                                   I
                                                                                                                   T
                                                                                                                   I
                                                                                                                   R
                                                                                                                   U
                                                                                                                   A




                        Jean Paul ADAM, G.O.S.K., K.C.S.G., C.B.E.                         F. Jacques HAREL
                                                                                                                  M




                                                                           Directors
                                                                                                                  TE
                                                                                                                   H




                                                                                                                  35
                                           PROFIT & LOSS ACCOUNTS
                                                FOR THE   YEAR   ENDED   30TH JUNE 2002




                                                                              GROUP                          BANK
2 0 0 2




                                                                           2002    2001                  2002    2001
                                                    Notes                 RS’000  RS’000                RS’000  RS’000
 E
 N




          Interest income                             21                 6,417,439        5,849,058    4,840,610     4,505,198
JU




          Interest expense                            22             (3,318,216)      (3,353,838)      (2,800,485)   (2,868,463)
 H
 T




          Net interest income                                            3,099,223        2,495,220    2,040,125     1,636,735
3 0




          Other income                                23                 1,560,409        1,440,110    1,071,139       986,495
 T
 R




          Operating income                                               4,659,632        3,935,330    3,111,264     2,623,230
 O
 P




          Operating expenses                          24             (2,528,681)      (2,106,845)      (1,417,966)   (1,146,078)
RE




          Operating profit before provisions                             2,130,951        1,828,485    1,693,298     1,477,152
 L
 A




          Charge for bad and doubtful debts           25                 (666,754)         (479,893)    (393,560)     (389,426)
 U
 N
 N




          Operating profit                                               1,464,197        1,348,592    1,299,738     1,087,726
A




          Share of profits in associates                                   46,456           70,348              -             -
•D




          Profit before taxation                                         1,510,653        1,418,940    1,299,738     1,087,726
 E
 T




          Taxation                                    26                 (301,260)         (247,497)    (188,529)     (135,759)
 I
 M
 I




          Profit after taxation                                          1,209,393        1,171,443    1,111,209       951,967
LK




          Minority interest                                                (40,726)         (33,028)            -             -
 N
 A




          Amortisation of goodwill                                         (14,707)         (14,707)            -             -
BL




          Profit attributable to shareholders                            1,153,960        1,123,708    1,111,209       951,967
 A
 I




          Dividends                                   27                 (343,721)         (291,288)    (343,721)     (291,288)
 C
 R
 E




          Retained profit for the year                                    810,239          832,420       767,488       660,679
 M
 M




          Earnings per share (Rs)                     28                    19.81             19.29
C
M
TO
 S
 U
 I
 T
 I
 R
 U
 A
 E
 H




          The notes on pages 43 to 63 form part of these accounts.
36        Auditors' report on pages 32 and 33.
                            S TAT E M E N T          OF     CHANGES            IN        EQUITY
                                           FOR THE   YEAR   ENDED   30TH JUNE 2002




                                             Share          Capital Translation Statutory            Retained      Total




                                                                                                                               2 0 0 2
                                             Capital        Reserve Reserve Reserve                   Profit
                                    Note     RS’000         RS’000    RS’000     RS’000               RS’000      RS’000




                                                                                                                                E
                                                                                                                                N
GROUP




                                                                                                                               JU
At 1st July 2000                            582,578         1,550,901        80,720       582,578   3,187,938    5,984,715




                                                                                                                                H
                                                                                                                                T
Share of (decrease)/increase in




                                                                                                                               3 0
 reserves of associates                               -         (1,305)       7,739             -           -        6,434




                                                                                                                                T
Currency translation difference                       -                -    (15,362)            -           -      (15,362)




                                                                                                                                R
                                                                                                                                O
Net loss not recognised in the




                                                                                                                                P
                                                                                                                                E
  profit and loss account                             -         (1,305)      (7,623)            -           -       (8,928)




                                                                                                                               R
Profit attributable to shareholders                   -                -             -          -   1,123,708    1,123,708




                                                                                                                                L
                                                                                                                                A
                                                                                                                                U
Dividends                             27              -                -             -          -    (291,288)    (291,288)




                                                                                                                                N
                                                                                                                                N
At 30th June 2001                           582,578         1,549,596        73,097       582,578   4,020,358    6,808,207




                                                                                                                               A
                                                                                                                               •
Share of (decrease)/increase in
 reserves of associates                               -       (46,517)        1,831             -           -      (44,686)




                                                                                                                                D
                                                                                                                                E
                                                                                                                                T
Increase in interest in associate                     -        86,296                -          -     11,439       97,735




                                                                                                                                I
                                                                                                                                M
Transfer on disposal of associate                     -              (39)            -          -         39               -




                                                                                                                               LI
Currency translation difference                       -                -    214,105             -           -     214,105




                                                                                                                                K
                                                                                                                                N
                                                                                                                                A
Net gain not recognised in the

                                                                                                                               B
 profit and loss account                              -        39,740       215,936             -     11,478      267,154
                                                                                                                                L
                                                                                                                                A

Profit attributable to shareholders                   -                -             -          -   1,153,960    1,153,960
                                                                                                                                I
                                                                                                                                C




Dividends                             27              -                -             -          -    (343,721)    (343,721)
                                                                                                                                R
                                                                                                                                E
                                                                                                                                M




At 30th June 2002                           582,578         1,589,336       289,033       582,578   4,842,075    7,885,600
                                                                                                                               C
                                                                                                                               M
                                                                                                                               TM
                                                                                                                                O
                                                                                                                                S
                                                                                                                                U
                                                                                                                                I
                                                                                                                                T
                                                                                                                                I
                                                                                                                                R
                                                                                                                                U
                                                                                                                                A
                                                                                                                                E
                                                                                                                                H




The notes on pages 43 to 63 form part of these accounts.
Auditors' report on pages 32 and 33
                                                                                                                               37
                                     S TAT E M E N T             OF     CHANGES            IN     EQUITY
                                                       FOR THE   YEAR   ENDED   30TH JUNE 2002
2 0 0 2




                                                             Share               Capital         Statutory       Retained      Total
                                                             Capital             Reserve         Reserve          Profit
                                                Note         RS’000              RS’000           RS’000          RS’000      RS’000
 E
 N




          BANK
JU




          At 1st July 2000                                       582,578         1,345,724         582,578       2,540,210    5,051,090
 H
 T




          Profit attributable to shareholders                              -               -                 -     951,967     951,967
3 0




          Dividends                             27                         -               -                 -    (291,288)    (291,288)
 T
 R




          At 30th June 2001                                      582,578         1,345,724         582,578       3,200,889    5,711,769
 O
 P
 E




          Profit attributable to shareholders                              -               -                 -   1,111,209    1,111,209
R




          Dividends                             27                         -               -                 -    (343,721)    (343,721)
 L
 A
 U




          At 30th June 2002                                      582,578         1,345,724         582,578       3,968,377    6,479,257
A
•
L
B
C
M
TN
 N
 D
 E
 T
 I
 M
 I
 K
 N
 A
 L
 A
 I
 C
 R
 E
 M
 M
 O
 S
 U
 I
 T
 I
 R
 U
 A
 E
 H




          The notes on pages 43 to 63 form part of these accounts.
38        Auditors' report on pages 32 and 33
                                    C A S H F L O W S TAT E M E N T S
                                          FOR THE   YEAR   ENDED   30TH JUNE 2002




                                                                        GROUP                          BANK




                                                                                                                            2 0 0 2
                                                                     2002    2001                  2002    2001
                                              Notes                 RS’000  RS’000                RS’000  RS’000




                                                                                                                             E
                                                                                                                             N
Net cash flows from trading activities          30                 2,036,324        1,982,202    2,196,255     1,433,083




                                                                                                                            JU
Net cash flows from other operating
  activities                                    31                  191,709         1,319,591    (1,370,539)    140,937




                                                                                                                             H
                                                                                                                             T
Net cash flows from operating activities                           2,228,033        3,301,793      825,716     1,574,020




                                                                                                                            3 0
Servicing of finance net of return on
  investments




                                                                                                                             T
Dividends received from associates                                   13,897           21,819              -            -




                                                                                                                             R
                                                                                                                             O
Dividends paid                                                      (314,592)        (256,334)    (314,592)     (256,334)




                                                                                                                             P
Dividends paid to minority shareholders in




                                                                                                                            RE
   subsidiary undertakings                                           (15,544)          (6,442)            -            -
                                                                    (316,239)        (240,957)    (314,592)     (256,334)




                                                                                                                             L
                                                                                                                             A
Taxation




                                                                                                                             U
Income tax paid                                                     (253,917)        (172,446)    (140,766)      (60,630)




                                                                                                                            AN
                                                                                                                             N
Investing activities




                                                                                                                            •
Purchase of investments                                             (108,293)        (312,592)     (72,334)      (22,238)




                                                                                                                             D
Proceeds from sale of investments                                    17,204             5,183       14,384             -




                                                                                                                             E
Investments in subsidiary undertakings                                  (495)               -      (37,762)      (36,506)




                                                                                                                             T
                                                                                                                             I
Proceeds from sale of associate                                        2,855                -        2,855             -




                                                                                                                             M
Refund of subordinated loans                                               -                -             -      29,418




                                                                                                                            LI
Purchase of property, plant and equipment                           (443,217)        (345,586)    (316,613)     (221,728)




                                                                                                                             K
Proceeds from sale of property, plant and



                                                                                                                             N
  equipment                                                          14,157             4,448        5,165         3,220


                                                                                                                            BA
                                                                    (517,789)        (648,547)    (404,305)     (247,834)
Net cash flows before financing                                    1,140,088        2,239,843      (33,947)    1,009,222     L
                                                                                                                             A

Financing
                                                                                                                             I




Issue of share capital                                               14,426           16,569              -            -
                                                                                                                             C
                                                                                                                             R




Subordinated loans received                                                -            5,422             -            -
                                                                                                                             E




Capital element of finance lease rental
                                                                                                                             M
                                                                                                                             M




  payments                                                           (35,761)         (42,336)     (35,761)      (42,336)
                                                                                                                             O




                                                                     (21,335)         (20,345)     (35,761)      (42,336)
                                                                                                                            C




Increase/(Decrease) in cash and cash
                                                                                                                             S




  equivalents                                                      1,118,753        2,219,498      (69,708)     966,886
                                                                                                                             U
                                                                                                                             I




Cash and cash equivalents at 1st July 2001                         4,075,514        1,878,369    2,808,654     1,841,768
                                                                                                                             T




Effect of foreign exchange rate changes                             158,531           (22,353)            -            -
                                                                                                                             I
                                                                                                                             R




Cash and cash equivalents at
                                                                                                                             U




  30th June 2002                                32                 5,352,798        4,075,514    2,738,946     2,808,654
                                                                                                                            M
                                                                                                                            TA
                                                                                                                             E
                                                                                                                             H




The notes on pages 43 to 63 form part of these accounts.
Auditors' report on pages 32 and 33                                                                                         39
                                                G E N E R A L I N F O R M AT I O N




             The Mauritius Commercial Bank Limited (“the Company”) is a public company incorporated by Royal Charter
2 0 0 2




          in 1838 and registered as limited liability company on 18th August 1955. Its registered office is situated at 9-15,
          Sir William Newton Street, Port Louis, Mauritius.
 E
 N




             The Mauritius Commercial Bank Limited was one of the first companies to be listed on The Stock Exchange
JU




          of Mauritius.
 H
 T




             The main activities of the Company and those of its subsidiaries (“the Group”) consist in providing a whole
3 0




          range of financial services in the Indian Ocean region and beyond.
 T
 R




             Contact details of Banking entities within “the Group” are laid out on page 65.
R
A
•
L
B
C
M
TO
 P
 E
 L
 A
 U
 N
 N
 D
 E
 T
 I
 M
 I
 K
 N
 A
 L
 A
 I
 C
 R
 E
 M
 M
 O
 S
 U
 I
 T
 I
 R
 U
 A
 E
 H




40
                               INDEX             TO       NOTES              TO THE               ACCOUNTS




NOTES                                                                                                                                                      PAGES




                                                                                                                                                                   2 0 0 2
 1      ACCOUNTING POLICIES ...................................................................................................                               43

(a)     Basis of presentation .................................................................................................................




                                                                                                                                                                    E
                                                                                                                                                                    N
(b)     Basis of consolidation................................................................................................................




                                                                                                                                                                   JU
(c)     Foreign currency translation ......................................................................................................




                                                                                                                                                                    H
(d)     Interest income and expense ....................................................................................................                      44




                                                                                                                                                                    T
                                                                                                                                                                   3 0
(e)     Fees and commissions..............................................................................................................




                                                                                                                                                                    T
 (f)    Government securities and Treasury bills..................................................................................




                                                                                                                                                                    R
                                                                                                                                                                    O
(g)     Impairment of assets .................................................................................................................




                                                                                                                                                                    P
                                                                                                                                                                    E
(h)     Sale and repurchase agreements .............................................................................................




                                                                                                                                                                   R
 (i)    Loans and advances and doubtful debts .................................................................................                               45




                                                                                                                                                                    L
                                                                                                                                                                    A
 (j)    Goodwill .....................................................................................................................................




                                                                                                                                                                    U
                                                                                                                                                                    N
(k)     Property, plant and equipment ..................................................................................................                      46




                                                                                                                                                                   AN
 (l)    Computer software development costs ....................................................................................




                                                                                                                                                                   •
(m)     Finance leases ...........................................................................................................................




                                                                                                                                                                    D
                                                                                                                                                                    E
(n)     Cash and cash equivalents .......................................................................................................




                                                                                                                                                                    T
                                                                                                                                                                    I
(o)     Employee benefits .....................................................................................................................               47




                                                                                                                                                                   LM
                                                                                                                                                                    I
(p)     Deferred taxation........................................................................................................................




                                                                                                                                                                    K
(q)     Acceptances ..............................................................................................................................



                                                                                                                                                                    N
                                                                                                                                                                    A
 (r)    Segmental reporting ..................................................................................................................

 2      CASH         AND BALANCES WITH                           CENTRAL BANKS ....................................................                           48   BL
                                                                                                                                                                    A


 3      DUE       FROM OTHER BANKS..............................................................................................
                                                                                                                                                                    I
                                                                                                                                                                    C
                                                                                                                                                                    R




 4      INVESTMENTS                  IN    GOVERNMENT                   SECURITIES AND                     TREASURY               BILLS .........
                                                                                                                                                                    E
                                                                                                                                                                    M




 5      LOANS          AND ADVANCES TO CUSTOMERS .................................................................
                                                                                                                                                                    M
                                                                                                                                                                    O




(a)     Loans and advances to customers comprise the following .....................................................
                                                                                                                                                                   C




(b)     Maturity of loans and advances to customers ..........................................................................                                49
                                                                                                                                                                    S
                                                                                                                                                                    U




(c)     Movements on provisions for bad and doubtful debts.............................................................
                                                                                                                                                                    I
                                                                                                                                                                    T




 6      OTHER          INVESTMENTS .......................................................................................................
                                                                                                                                                                    I
                                                                                                                                                                    R
                                                                                                                                                                    U




 7      INVESTMENTS                  IN ASSOCIATES ......................................................................................                     50
                                                                                                                                                                   MA




 8      INVESTMENTS                  IN SUBSIDIARY UNDERTAKINGS                                    .....................................................
                                                                                                                                                                    E




 9      GOODWILL               ARISING ON CONSOLIDATION                                 ................................................................
                                                                                                                                                                   TH




10      PROPERTY,               PLANT AND EQUIPMENT..........................................................................                                 51
                                                                                                                                                                   41
                                        INDEX             TO       NOTES               TO THE                ACCOUNTS
                                                                                 CONTINUED




          NOTES                                                                                                                                                       PAGES
2 0 0 2




          11      DEFERRED              TAX ASSETS...................................................................................................                     52

          12      OTHER          ASSETS         ...................................................................................................................
 E
 N




          13      DUE       TO OTHER BANKS ....................................................................................................
JU




          14      DEPOSITS ..............................................................................................................................
 H




          15      OTHER          LIABILITIES .............................................................................................................
 T
3 0




          16      EMPLOYEE              BENEFITS OBLIGATIONS                            ...........................................................................       53
 T




          17      OUTSTANDING                  LEASE OBLIGATIONS ...........................................................................                              54
 R
 O




          18      MINORITY            INTEREST ..........................................................................................................
 P
 E




          19      SHARE          CAPITAL ...................................................................................................................
R




          20      LETTERS           OF CREDIT, GUARANTEES, ACCEPTANCES,
 L
 A




                       ENDORSEMENTS AND OTHER OBLIGATIONS ......................................................                                                          55
 U
 N




          21      INTEREST            INCOME ..............................................................................................................
AN




          22      INTEREST            EXPENSE           ...........................................................................................................
•




          23      OTHER          INCOME ...................................................................................................................
 D




          24      OPERATING              EXPENSES .....................................................................................................                   56
 E
 T




          25      CHARGE            FOR BAD AND DOUBTFUL DEBTS .............................................................
 I
 M
 I




          26      TAXATION ................................................................................................................................
L




          27      DIVIDENDS .............................................................................................................................                 57
 K
 N




          28      EARNINGS             PER SHARE .....................................................................................................
BA




          29      CAPITAL          COMMITMENTS ..................................................................................................
 L
 A




          30      NET      CASH FLOWS FROM TRADING ACTIVITIES ......................................................                                                      58
 I
 C




          31      NET      CASH FLOWS FROM OTHER OPERATING ACTIVITIES .................................
 R
 E




          32      ANALYSIS            OF THE BALANCES OF CASH AND CASH
 M
 M




                         EQUIVALENTS AS SHOWN IN THE                                        BALANCE SHEETS ................................
CO




          33      SEGMENT             INFORMATION ..................................................................................................                      59
 S




                  - Geographical segments .........................................................................................................                     59-60
 U
 I




                  - Business segments ................................................................................................................                  61-62
 T
 I




          34      RELATED                                                         .................................................................................       63
 R




                                     PARTY TRANSACTIONS
 U
 A




          35      DIRECTORS               SERVICE CONTRACTS ..............................................................................
M




          36      SHARE          INTERESTS .............................................................................................................
 E
 H




          37      SUBSTANTIAL                SHAREHOLDERS .....................................................................................
T




42
                                    NOTES           TO THE           ACCOUNTS
                                          FOR THE   YEAR   ENDED   30TH JUNE 2002




1. ACCOUNTING POLICIES




                                                                                                                       2 0 0 2
  The principal accounting policies adopted in the preparation of these consolidated financial statements are
  set out below:




                                                                                                                        E
                                                                                                                        N
                                                                                                                        U
 (a) Basis of presentation




                                                                                                                       JH
       These consolidated financial statements are prepared under the historical cost convention, as modified




                                                                                                                        T
       by the revaluation of certain fixed assets, and in accordance with applicable Accounting Standards.




                                                                                                                       3 0
 (b) Basis of consolidation




                                                                                                                        T
                                                                                                                        R
                                                                                                                        O
       (1) Subsidiary undertakings




                                                                                                                        P
       The consolidated financial statements include the Balance Sheet of the Bank and that of its subsidiaries




                                                                                                                       RE
       as at 30th June. Subsidiary undertakings are those companies and other entities in which the Group,
       directly or indirectly, has power to exercise control over financial and operating policies.




                                                                                                                        L
                                                                                                                        A
                                                                                                                        U
       The results of subsidiaries acquired or disposed of during the year are included in the consolidated Profit




                                                                                                                        N
       and Loss Account from the date on which effective control is transferred to the Group up to the date of




                                                                                                                       AN
       their disposal which is the date on which the parent ceases to have control. Intragroup balances,
       transactions and unrealised profits and losses are eliminated on consolidation.




                                                                                                                       •D
       (2) Associates




                                                                                                                        E
                                                                                                                        T
       Investments in associates are accounted for by the equity method of accounting.                Associates are




                                                                                                                        I
       undertakings over which the Group generally has between 20% and 50% of the voting rights, and over




                                                                                                                        M
                                                                                                                        I
       which the Group has significant influence, but which it does not control. Unrealised gains on transactions




                                                                                                                       L
       between the Group and its associated undertakings are eliminated to the extent of the Group’s interests




                                                                                                                        K
       in the associated undertakings. Unrealised losses are also eliminated unless the transaction provides



                                                                                                                        N
       evidence of an impairment of the asset transferred. The Group’s investment in associated undertakings


                                                                                                                       BA
       includes goodwill (net of accumulated amortisation). Equity accounting is discontinued when the carrying
       amount of the investment in an associated undertaking reaches zero, unless the Group has incurred                L
                                                                                                                        A

       obligations or guaranteed obligations in respect of the associated undertaking. The Group Profit and
                                                                                                                        I




       Loss Account reflects the Group’s share of post-tax profits of associates.
                                                                                                                        C
                                                                                                                        R
                                                                                                                        E




       Where applicable, the accounting policies used by subsidiaries and associates have been changed to
                                                                                                                        M




       ensure consistency with the policies adopted by the Group.
                                                                                                                       CM
                                                                                                                        O




 (c)   Foreign currency translation
                                                                                                                        S
                                                                                                                        U




       The foreign subsidiaries’ Balance Sheets are translated to Mauritian Rupees using the closing rate method.
                                                                                                                        I
                                                                                                                        T




       Their financial results and cash flows are translated at the average rate for the year. Any resulting
                                                                                                                        I




       exchange differences are taken to the Translation Reserve. On disposal of a foreign entity, such
                                                                                                                        R
                                                                                                                        U




       exchange differences are recognised in the Profit and Loss Account as part of the gain or loss on sale.
                                                                                                                        A




       Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
                                                                                                                       M




       liabilities of the foreign entity and translated at the closing rate.
                                                                                                                       TE
                                                                                                                        H




                                                                                                                       43
                                            NOTES            TO THE          ACCOUNTS
                                            FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          1. ACCOUNTING POLICIES (CONTINUED)
2 0 0 2




           (c)   Foreign currency translation (continued)
 E




                 Trading transactions denominated in foreign currencies are accounted for at the rate of exchange ruling
 N
 U




                 at the date of the transaction.
J




                 Monetary assets and liabilities expressed in foreign currencies are reported at the rate of exchange ruling
 H




                 at the Balance Sheet date. Differences arising from reporting monetary items are dealt with through the
 T




                 Profit and Loss Account.
3 0




           (d) Interest income and expense
 T
 R
 O




                 Interest income and expense are recognised in the Profit and Loss Account for all interest bearing
 P




                 instruments on an accrual basis. Interest income includes coupons earned on fixed income investment
RE




                 and trading securities and accrued discount and premium on treasury bills and other discounted
                 instruments.
 L
 A




                 Interest income is suspended when loans become non-performing according to guidelines set by the
 U




                 regulatory authorities. In general terms, loans become non-performing when overdue by more than
 N




                 90 days, or when the borrower or debt issuer defaults, if earlier than 90 days. Interest thus suspended is
AN




                 excluded from interest income until received.
•




           (e) Fees and commissions
 D
 E
 T




                 Fees and commissions are generally recognised on an accrual basis. Loan processing fees which are
 I




                 charged as a front end fee are taken directly to income.
LM
 I




           (f)   Government securities and Treasury bills
 K
 N




                 Government securities and Treasury bills with fixed maturity are recognised at cost or amortised cost less
BA




                 any provision for impairment where management has both the intent and the ability to hold to maturity.
 L
 A




           (g) Impairment of assets
 I
 C
 R




                 An asset is impaired if its carrying amount is greater than its estimated recoverable amount. The amount
 E




                 of the impairment loss for assets carried at amortised cost is calculated as the difference between the
 M




                 asset’s carrying amount and the present value of expected future cash flows discounted at the original
 M
 O




                 effective interest rate.
CS




           (h) Sale and repurchase agreements
 U
 I
 T




                 Securities sold subject to linked repurchase agreements (“repos”) are retained in the Balance Sheet as
 I




                 Government securities and Treasury bills and the counterparty liability is included in amount due to other
 R
 U




                 banks or deposits, as appropriate.
 A




                 Securities purchased under agreements to resell (“reverse repos”) are recorded as amount due from
M




                 other banks or loans and advances, as appropriate.The difference between sale and repurchase price is
 E




                 treated as interest and accrued over the life of repo agreements using the effective yield method.
TH




44
                                  NOTES             TO THE          ACCOUNTS
                                   FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




1. ACCOUNTING POLICIES (CONTINUED)




                                                                                                                        2 0 0 2
 (i)   Loans and advances and doubtful debts




                                                                                                                         E
       Loans and advances are recognised upon disbursement to customers.




                                                                                                                         N
                                                                                                                         U
       A specific provision for loan impairment is established if there is objective evidence that the Group will not




                                                                                                                        J
       be able to collect all amounts due in the light of periodical loan reviews. The amount of the provision is




                                                                                                                         H
       the shortfall between the carrying amount and the recoverable amount.




                                                                                                                         T
       In the case of loans to borrowers in countries where there is an increased risk of difficulties in servicing




                                                                                                                        3 0
       external debt, an assessment of the political and economic situation is made and additional country risk
       provisions are established.




                                                                                                                         T
       The loan loss provision also covers losses where there is objective evidence that probable losses are




                                                                                                                         R
                                                                                                                         O
       present in components of the loan portfolio at the balance sheet date. These have been estimated based




                                                                                                                         P
       upon historical patterns of losses in each component, the credit ratings allocated to the borrowers and




                                                                                                                        RE
       reflecting the current economic climate in which the borrowers operate.
       In addition to the above a provision of 1% is made in respect of the remainder of the loan portfolio.




                                                                                                                         L
                                                                                                                         A
       Where a loan is uncollectable, it is written off against the related provision for impairments; subsequent




                                                                                                                         U
       recoveries are credited to charge for bad and doubtful debts in the Profit and Loss Account. If the amount




                                                                                                                         N
       of the impairment subsequently decreases due to an event occurring after the write-down, the release of




                                                                                                                        AN
       the provision is credited to charge for bad and doubtful debts.
       Specific and general provisions are deducted from loans and advances to customers in the Balance




                                                                                                                        •
       Sheets.




                                                                                                                         D
                                                                                                                         E
                                                                                                                         T
 (j)   Goodwill




                                                                                                                         I
                                                                                                                         M
                                                                                                                         I
       Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of net




                                                                                                                        L
       assets of the acquired subsidiary or associated undertaking at the date of acquisition.




                                                                                                                         K
       Negative goodwill represents the excess of the fair value of the Groups’ share of net asset acquired over



                                                                                                                         N
       the cost of acquisition. Negative goodwill is presented in the same Balance Sheet classifications as


                                                                                                                        BA
       goodwill.
       Goodwill and negative goodwill arising on consolidation are amortised on a straight-line basis through the        L
                                                                                                                         A

       Profit and Loss Account over a period of twenty years.
                                                                                                                         I




       The carrying amount of goodwill and negative goodwill is reviewed when circumstances or events indicate
                                                                                                                         C
                                                                                                                         R




       that there may be uncertainty over the carrying amount, in which case a charge is recognised in the Profit
                                                                                                                         E




       and Loss Account to reflect the impairment.
                                                                                                                        C
                                                                                                                        M
                                                                                                                        TM
                                                                                                                         M
                                                                                                                         O
                                                                                                                         S
                                                                                                                         U
                                                                                                                         I
                                                                                                                         T
                                                                                                                         I
                                                                                                                         R
                                                                                                                         U
                                                                                                                         A
                                                                                                                         E
                                                                                                                         H




                                                                                                                        45
                                            NOTES            TO THE          ACCOUNTS
                                            FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          1. ACCOUNTING POLICIES (CONTINUED)
2 0 0 2




           (k)   Property, plant and equipment
 E




                 Property, plant and equipment are carried at historical cost or at revalued amounts less accumulated
 N
 U




                 depreciation.
J




                 Revaluation surpluses are credited to reserves. Any subsequent decrease is first charged to reserves.
 H




                 Thereafter, decreases are charged to the Profit and Loss Account to the extent that the decrease exceeds
 T




                 any amount formerly held in reserves in respect of the same asset.
3 0




                 Land and buildings are revalued on a regular basis by qualified independent valuers.
                 Depreciation is calculated to write down the cost or amount of the valuation of such assets to their residual
 T




                 values on a straight-line basis over their estimated useful lives as follows:
 R
 O
 P




                       Buildings                                        50 years
RE




                       Computer and other equipment                   5-10 years
                       Furniture and fittings                        10-15 years
 L
 A




                       Motor vehicles                                    5 years
 U
 N




                 Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
AN




                 immediately to its recoverable amount.
                 Gains or losses on disposal of property, plant and equipment are determined by reference to their carrying
•




                 amount and are recognised in the Profit and Loss Account.
 D




                 Repairs and renewals are charged to the Profit and Loss Account when the expenditure is incurred.
 E
 T
 I




           (l)   Computer software development costs
LM
 I




                 Costs associated with maintaining computer software programmes are recognised as an expense as
 K




                 incurred. However, expenditure that enhances or extends the benefits of computer software programmes
 N




                 beyond their original specifications and lives is recognised as a capital improvement and added to the
BA




                 original cost of the software. Computer software development costs recognised as assets are amortised
                 using the straight-line method over their useful lives but not exceeding a period of five years.
 L
 A
 I




           (m) Finance leases
 C
 R
 E




                 Assets acquired under finance leases are accounted for at the present value of the minimum lease
 M




                 payments and depreciated over their estimated useful lives. A corresponding liability is recorded as
 M
 O




                 outstanding lease obligations.
C




                 Lease payments are apportioned between the liability and the finance charge so as to achieve a constant
 S




                 periodic rate of interest on the outstanding lease obligations.
 U
 I
 T




           (n) Cash and cash equivalents
 I
 R
 U




                 For the purposes of the Cash Flow Statements, cash and cash equivalents comprise cash and balances
 A




                 with Central Banks and amounts due to and from other banks. A further breakdown of cash and cash
M




                 equivalents is given in notes 2, 3 and 13 to the accounts.
TE
 H




46
                                   NOTES            TO THE          ACCOUNTS
                                   FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




1. ACCOUNTING POLICIES (CONTINUED)




                                                                                                                           2 0 0 2
 (o) Employee benefits




                                                                                                                            E
       The Group operates a number of defined benefit and defined contribution plans throughout the region.




                                                                                                                            N
                                                                                                                            U
       The defined benefit plan is fully funded. The assets of the funded plan are held independently and




                                                                                                                           J
       administered by the MCB Superannuation Fund. The pension costs are assessed in accordance with




                                                                                                                            H
       the advice of qualified actuaries using the projected unit credit method. The Group’s contributions are




                                                                                                                            T
       charged to the Profit and Loss Account in the year to which they relate. The main assumptions made in




                                                                                                                           3 0
       the actuarial valuation of the pension fund are listed in note 16 to the accounts.




                                                                                                                            T
 (p) Deferred taxation




                                                                                                                            R
                                                                                                                            O
                                                                                                                            P
       Deferred taxation is provided for, using the liability method, on all taxable temporary differences arising




                                                                                                                           RE
       between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
       The principal temporary differences arise from depreciation of property, plant and equipment and




                                                                                                                            L
                                                                                                                            A
       provisions for employee benefits.




                                                                                                                            U
       Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available




                                                                                                                            N
       against which the temporary differences can be utilised.




                                                                                                                           AN
 (q) Acceptances




                                                                                                                           •D
       Acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The




                                                                                                                            E
                                                                                                                            T
       Group expects most acceptances to be settled simultaneously with the reimbursement from the




                                                                                                                            I
       customers.




                                                                                                                            M
                                                                                                                            I
       Acceptances are disclosed as liabilities with corresponding contra-assets.




                                                                                                                           LK
 (r)   Segmental reporting



                                                                                                                           BN
                                                                                                                            A
       A segment is a distinguishable component of the Group that is engaged either in providing products or
       services within a particular economic environment (geographical segment) or in providing products or                 L
                                                                                                                            A

       services (business segment) which is subject to risks and rewards that are different from those of other
                                                                                                                            I




       segments. Segments with a majority of revenue earned from sales to external customers and whose
                                                                                                                            C
                                                                                                                            R




       gross income, operating profit or assets are 10 per cent or more of all the segments are reported
                                                                                                                            E




       separately.
                                                                                                                            M




       Inter segment services are charged at prime commercial rates.
                                                                                                                            M
                                                                                                                            O




       The Group’s results and assets relate predominantly to financial services within a particular economic
                                                                                                                           C




       environment and is mainly organised on a geographical basis.
                                                                                                                            S




       Detailed analyses of segmental reporting are shown in note 33 to the accounts.
                                                                                                                           M
                                                                                                                           TU
                                                                                                                            I
                                                                                                                            T
                                                                                                                            I
                                                                                                                            R
                                                                                                                            U
                                                                                                                            A
                                                                                                                            E
                                                                                                                            H




                                                                                                                           47
                                           NOTES            TO THE          ACCOUNTS
                                           FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          2.   CASH             BALANCES              CENTRAL BANKS
2 0 0 2




                        AND                  WITH



                                                                             GROUP                         BANK
                                                                           2002   2001                  2002    2001
 E




                                                                          RS’000 RS’000                RS’000  RS’000
JN
 U




               Cash and balances with Central Banks                      3,614,446      3,250,177     2,808,396     2,271,159
               Foreign currency notes and coin                              40,507         37,355       40,507        37,355
 H
 T




                                                                         3,654,953      3,287,532     2,848,903     2,308,514
3 0




          3.   DUE     FROM     OTHER BANKS
 T
 R
 O




               Balances with offshore banks in Mauritius,
 P
 E




                banks and financial institutions overseas                6,745,411      3,139,817     3,006,889     1,867,213
RL




          4.   INVESTMENTS        IN   GOVERNMENT SECURITIES                   AND    TREASURY BILLS
 A
 U
 N




               Government stocks maturing:
 N




                 Within 1 year                                             349,727        835,415       51,152       518,880
A




                 Over 1 year and up to 3 years                           1,816,980        448,073      662,090       126,435
•




                 Over 3 years                                              883,447      3,387,033      663,724      1,263,186
 D




                                                                         3,050,154      4,670,521     1,376,966     1,908,501
 E
 T




               Treasury bills                                            6,904,792      1,432,752     4,039,074     1,193,325
 I




                                                                         9,954,946      6,103,273     5,416,040     3,101,826
LM
 I




          5.   LOANS     AND     ADVANCES     TO     CUSTOMERS
 K
 N
 A




               (a) Loans and advances to customers comprise the following:
B




               Local bills purchased and discounted
 L




                 Current                                                 1,162,365      1,232,815      450,926       567,501
 A




                 Overdue                                                   119,835         91,432       70,400        91,432
 I
 C




               Foreign bills purchased and discounted
 R
 E




                 Current                                                 1,291,550      1,189,411     1,209,117     1,090,306
 M




                 Overdue                                                   148,952         99,528      148,952        99,528
 M
 O




               Overdrafts and other advances repayable
C




                on demand                                              23,980,615      20,838,155    19,968,678    18,070,698
 S




               Term loans and debentures                               36,784,629      32,052,831    22,627,257    20,223,760
 U




                                                                       63,487,946      55,504,172    44,475,330    40,143,225
 I
 T




               Less:
 I
 R




               Specific and general provisions for bad and
 U




                doubtful debts and interest suspense                    (3,464,509)    (2,974,212)   (1,875,783)   (1,895,046)
MA




                                                                       60,023,437      52,529,960    42,599,547    38,248,179
TE
 H




48
                                   NOTES            TO THE          ACCOUNTS
                                   FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




5.   LOANS             ADVANCES              CUSTOMERS (CONTINUED)




                                                                                                                          2 0 0 2
                 AND                 TO



                                                                     GROUP                          BANK
                                                                   2002   2001                   2002    2001




                                                                                                                           E
                                                                  RS’000 RS’000                 RS’000  RS’000




                                                                                                                          JN
                                                                                                                           U
     (b) Maturity of loans and advances




                                                                                                                           H
        to customers




                                                                                                                           T
     Remaining maturity:




                                                                                                                          3 0
        Up to 6 months                                         34,281,037      30,104,420     24,678,335    22,727,945
        Over 6 months and up to 1 year                           1,909,093      1,714,733       831,059       932,161




                                                                                                                           T
                                                                                                                           R
        Over 1 year and up to 3 years                            7,076,201      6,753,826      3,753,194     4,098,374




                                                                                                                           O
        Over 3 years                                           20,221,615      16,931,193     15,212,742    12,384,745




                                                                                                                           P
                                                                                                                           E
                                                               63,487,946      55,504,172     44,475,330    40,143,225




                                                                                                                          R
     (c) Movements on provisions for bad




                                                                                                                           L
      and doubtful debts




                                                                                                                           A
     Provisions at 1st July 2001                                 2,139,145      1,906,035      1,263,331      946,024




                                                                                                                           U
                                                                                                                           N
     Translation differences in respect of




                                                                                                                           N
      subsidiary undertakings                                      182,299          (2,339)            -             -




                                                                                                                          A
     Provisions made during the year                               807,727        610,775       406,784       398,673




                                                                                                                          •
     Provisions released during the year                          (147,527)      (138,947)       (12,542)       (8,762)




                                                                                                                           D
     Amounts written off                                          (277,960)      (236,379)      (256,978)      (72,604)




                                                                                                                           E
                                                                                                                           T
     Provisions at 30th June 2002                                2,703,684      2,139,145      1,400,595     1,263,331




                                                                                                                           I
                                                                                                                           M
     Interest suspense                                             760,825        835,067       475,188       631,715




                                                                                                                           I
     Provisions and interest suspense at




                                                                                                                          L
      30th June 2002                                             3,464,509      2,974,212      1,875,783     1,895,046




                                                                                                                           K
                                                                                                                           N
                                                                                                                           A
6.   OTHER       INVESTMENTS


                                                                                                                          BL
     Quoted
                                                                                                                           A



     Official list
                                                                                                                           I
                                                                                                                           C




        Shares                                                     302,344        314,333        13,723        16,466
                                                                                                                           R
                                                                                                                           E




     Over the counter
                                                                                                                           M




        Shares                                                      20,134         19,741        20,000        19,607
                                                                                                                           M
                                                                                                                           O




     Unquoted
                                                                                                                          C




        Shares                                                     235,481        132,587       164,400        99,876
                                                                                                                           S




                                                                   557,959        466,661       198,123       135,949
                                                                                                                           U
                                                                                                                           I
                                                                                                                           T




     Market value of quoted investments                            268,553        350,340        47,343        59,871
                                                                                                                           I
                                                                                                                           R




     Cost of unquoted investments                                  235,481        132,587       164,400        99,876
                                                                                                                           U




                                                                   504,034        482,927       211,743       159,747
                                                                                                                          MA




     Net assets value of investments                               607,918        536,459       248,081       214,993
                                                                                                                          TE
                                                                                                                           H




                                                                                                                          49
                                               NOTES            TO THE          ACCOUNTS
                                               FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          7.   INVESTMENTS            ASSOCIATES
2 0 0 2




                                 IN


                                                       Country                   Effective holding             BANK
                                                          of                   2002         2001          2002      2001
 E




                                                    incorporation               %             %          RS’000    RS’000
 N
 U




               Banque Internationale
J




                  des Mascareignes Ltée                  Mauritius               35.00          35.00      32,737      32,737
 H




               Fincorp Investment Ltd.                   Mauritius               47.53          47.53      12,073      12,073
 T




               Mauritius Fund
3 0




                   Management Co. Ltd.                   Mauritius                   -          33.56           -       2,515
               Venture Capital Partners Ltd.             Mauritius               40.00          40.00         368         368
 T




                                                                                                           45,178      47,693
 R
 O
 P




               Except for Fincorp Investment Ltd., which is quoted on the official list, the other associated companies are
 E




               unquoted.
R




               Market value of quoted investment                                                      228,458     217,035
 L




               Cost of unquoted investments                                                            33,105      35,620
 A




                                                                                                      261,563     252,655
 U




                                                                        GROUP
 N
 N




                                                                    2002              2001
A




                                                                   RS’000            RS’000
•




               Group share of net assets                                       668,535        586,206
 D
 E
 T




          8.   INVESTMENTS       IN   SUBSIDIARY UNDERTAKINGS
 I
 M




                                                       Country                   Effective holding             BANK
LI




                                                          of                   2002         2001          2002        2001
                                                    incorporation               %             %          RS’000      RS’000
 K
 N
 A




               Banque Française
B




                  Commerciale O.I.                France                         88.88          88.88     804,454     804,454
               Uniâo Comercial de Bancos
 L
 A




                (Moçambique) S.A.R.L.           Mozambique                       75.55          75.55     136,569      99,302
 I




               Union Commercial Bank            Madagascar                       78.88          78.88       7,131       7,131
 C
 R




               MCB Investment
 E




                 Management Co. Ltd.             Mauritius                       60.00          60.00        3,000       2,505
 M




               MCB Stockbrokers Ltd.             Mauritius                       99.90          99.90          500         500
 M




               MCB Registry and Securities Ltd.  Mauritius                       99.90          99.90           50          50
 O




                                                                                                           951,704     913,942
C




               Subordinated loans to subsidiary company                                                    521,470     433,777
 S




                                                                                                         1,473,174   1,347,719
 U




               The above companies are unquoted.
 I
 T
 I




          9.   GOODWILL
 R




                              ARISING ON CONSOLIDATION
 U
 A




                                                                                 GROUP
M




                                                                              2002    2001
                                                                             RS’000  RS’000
TE
 H




               At 1st July 2001                                                159,972        174,679
50             Amortisation during the year                                    (14,707)       (14,707)
               At 30th June 2002                                               145,265        159,972
                              NOTES            TO THE          ACCOUNTS
                              FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




10. PROPERTY, PLANT              EQUIPMENT




                                                                                                                     2 0 0 2
                         AND


                              Assets             Land         Computer       Furniture       Motor        Total
                                under             and             and           and         vehicles
                              finance          buildings         other        fittings




                                                                                                                      E
                               leases                         equipment




                                                                                                                      N
                              RS’000            RS’000          RS’000        RS’000        RS’000       RS’000




                                                                                                                     JU
   GROUP
   Cost & valuation




                                                                                                                      H
                                                                                                                      T
   At 1st July 2001           135,587          1,797,946      1,479,599       485,326        88,743     3,987,201




                                                                                                                     3 0
   Exchange adjustment                  -        58,098          39,734         53,406        2,550      153,788
   As restated                135,587          1,856,044      1,519,333       538,732        91,293     4,140,989




                                                                                                                      T
   Additions                   17,674           119,900         203,146         93,117       26,059      459,896




                                                                                                                      R
   Disposals                     (168)             (785)         (29,666)      (12,528)       (9,463)     (52,610)




                                                                                                                      O
                                                                                                                      P
   Exchange adjustment                  -         3,095              988            5,219        84         9,386




                                                                                                                      E
   At 30th June 2002          153,093       1,978,254         1,693,801       624,540       107,973     4,557,661




                                                                                                                     RL
   Accumulated depreciation




                                                                                                                      A
   At 1st July 2001            64,347           164,704         997,611       267,952        56,390     1,551,004




                                                                                                                      U
                                                                                                                      N
   Exchange adjustment                  -        17,556          33,561         19,834        1,582       72,533




                                                                                                                      N
   As restated                 64,347           182,260       1,031,172       287,786        57,972     1,623,537




                                                                                                                     A
   Charge for the year         30,419            24,363         208,832         61,176       18,081      342,871




                                                                                                                     •
   Disposal adjustment            (79)                   -       (27,671)       (4,524)       (8,600)     (40,874)




                                                                                                                      D
   Exchange adjustment                  -              402         3,556            3,811        17         7,786




                                                                                                                      E
   At 30th June 2002           94,687           207,025       1,215,889       348,249        67,470     1,933,320




                                                                                                                      T
                                                                                                                      I
                                                                                                                      M
   Net book values




                                                                                                                     LI
   At 30th June 2002           58,406       1,771,229           477,912       276,291        40,503     2,624,341
   At 30th June 2001           71,240          1,633,242        481,988       217,374        32,353     2,436,197




                                                                                                                      K
                                                                                                                      N
                                                                                                                      A
   BANK

                                                                                                                     B
   Cost & valuation
                                                                                                                      L
   At 1st July 2001           135,587          1,487,093      1,241,774       162,073        69,306     3,095,833
                                                                                                                      A



   Additions                   17,674            87,051         184,331         26,521       17,715      333,292
                                                                                                                      I
                                                                                                                      C




   Disposals                     (168)                   -       (25,520)       (1,728)       (6,621)     (34,037)
                                                                                                                      R




   At 30th June 2002          153,093       1,574,144         1,400,585       186,866        80,400     3,395,088
                                                                                                                      E
                                                                                                                      M
                                                                                                                      M




   Accumulated depreciation
                                                                                                                      O




   At 1st July 2001            64,347           118,687         843,430         65,854       44,860     1,137,178
                                                                                                                     C




   Charge for the year         30,419            19,543         163,772         12,512       13,655      239,901
                                                                                                                      S




   Disposal adjustment            (79)                   -       (23,693)       (1,221)       (5,758)     (30,751)
                                                                                                                      U
                                                                                                                      I




   At 30th June 2002           94,687           138,230         983,509        77,145        52,757     1,346,328
                                                                                                                      T
                                                                                                                      I
                                                                                                                      R




   Net book values
                                                                                                                      U




   At 30th June 2002           58,406       1,435,914           417,076       109,721        27,643     2,048,760
                                                                                                                     MA




   At 30th June 2001           71,240          1,368,406        398,344         96,219       24,446     1,958,655
                                                                                                                     TE
                                                                                                                      H




                                                                                                                     51
                                            NOTES            TO THE          ACCOUNTS
                                            FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          11. DEFERRED TAX ASSETS
2 0 0 2




                                                                              GROUP                         BANK
                                                                            2002   2001                  2002    2001
 E




                                                                           RS’000 RS’000                RS’000  RS’000
JN
 U




              At 1st July 2001                                               23,416         16,503       23,416        16,503
              Movement for the year                                             109          6,913          171          6,913
 H
 T




              At 30th June 2002                                              23,525         23,416       23,587        23,416
3 0




          12. OTHER ASSETS
 T
 R
 O




              Balances due in clearing                                      418,343        429,889      376,694       243,953
 P




              Accrued interest receivable                                   532,352        527,273      388,057       404,529
 E




              Others                                                      1,144,696        754,156      434,944       402,935
R




                                                                          2,095,391      1,711,318     1,199,695     1,051,417
 L
 A
 U




          13. DUE      TO   OTHER BANKS
AN
 N




              Borrowings from the Bank of Mauritius                         990,539               -     990,539              -
              Balances with offshore banks in Mauritius
•




               and banks overseas                                         4,057,027      2,351,835     2,126,307     1,367,073
 D




                                                                          5,047,566      2,351,835     3,116,846     1,367,073
 E
 T
 I




          14. DEPOSITS
LM
 I




              Demand deposits                                           19,023,262      14,007,885     8,074,129     6,383,549
              Savings deposits                                          27,605,420      23,418,767    22,183,212    19,340,587
 K
 N




              Time deposits with remaining maturity:
 A




                Up to 6 months                                          11,307,429       9,928,008     7,065,815     6,716,569
B




                Over 6 months and up to 1 year                            3,012,340      2,407,457     2,192,780     1,539,727
 L




                Over 1 year and up to 3 years                             4,103,855      4,317,245     3,888,505     4,004,890
 A
 I




                Over 3 years                                              4,546,476      3,577,977     3,495,246     3,092,339
 C




                                                                        22,970,100      20,230,687    16,642,346    15,353,525
 R
 E




                                                                        69,598,782      57,657,339    46,899,687    41,077,661
 M
 M




          15. OTHER LIABILITIES
CO




              Accrued interest payable                                      904,877      1,038,802      723,127       740,674
 S
 U




              Employee benefits obligations (note 16)                       304,148        297,577      304,148       297,577
 I




              MCB Superannuation Fund                                        78,022         89,468       78,022        89,468
 T
 I




              MCB Foundation                                                 12,750         12,750       12,750        12,750
 R




              Interest suspense, impersonal & other
 U




                accounts                                                  2,088,176      1,913,419     1,259,620     1,021,678
MA




                                                                          3,387,973      3,352,016     2,377,667     2,162,147
              Interest suspense shown in note 5(c)                         (760,825)      (835,067)     (475,188)     (631,715)
 E




                                                                          2,627,148      2,516,949     1,902,479     1,530,432
TH




52
                                     NOTES            TO THE          ACCOUNTS
                                     FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




16. EMPLOYEE BENEFITS OBLIGATIONS




                                                                                                                       2 0 0 2
                                                                       GROUP                       BANK
                                                                     2002   2001                2002    2001




                                                                                                                        E
                                                                    RS’000 RS’000              RS’000  RS’000




                                                                                                                       JN
                                                                                                                        U
    Present value of funded obligations                              862,724        766,936    862,724     766,936
    Fair value of plan assets                                       (901,839)      (836,000)   (901,839)   (836,000)




                                                                                                                        H
                                                                                                                        T
    Surplus of plan assets                                           (39,115)       (69,064)    (39,115)    (69,064)




                                                                                                                       3 0
    Present value of unfunded obligations                            465,443        413,812    465,443     413,812
    Unrecognised actuarial loss                                     (122,180)       (47,171)   (122,180)    (47,171)




                                                                                                                        T
    Liability in the balance sheet                                   304,148        297,577    304,148     297,577




                                                                                                                        R
                                                                                                                        O
                                                                                                                        P
    The amounts recognised in the Profit and Loss Accounts are as follows:




                                                                                                                       RE
    Current service cost                                              54,526         49,959     54,526      49,959




                                                                                                                        L
    Interest cost                                                    133,517        118,249    133,517     118,249




                                                                                                                        A
                                                                                                                        U
    Expected return on plan assets                                  (102,654)       (92,139)   (102,654)    (92,139)




                                                                                                                        N
    Total included in operating expenses (note 24)                    85,389         76,069     85,389      76,069




                                                                                                                       AN
    Movements in employee benefits obligations:




                                                                                                                       •D
    At 1st July 2001                                                 297,577        295,118    297,577     295,118




                                                                                                                        E
    Total expense as above                                            85,389         76,069     85,389      76,069




                                                                                                                        T
                                                                                                                        I
    Contributions paid                                               (78,818)       (73,610)    (78,818)    (73,610)




                                                                                                                        M
                                                                                                                        I
    At 30th June 2002                                                304,148        297,577    304,148     297,577




                                                                                                                       LK
    The principal actuarial assumptions used for accounting purposes were:



                                                                                                                        N
                                                                                                   BANK


                                                                                                                       BA
                                                                                               2002        2001
                                                                                                                        L

    Discount rate                                                                              11.50%      11.50%
                                                                                                                        A
                                                                                                                        I




    Expected return on plan assets                                                             12.00%      12.00%
                                                                                                                        C
                                                                                                                        R




    Future salary increases                                                                     9.50%       9.50%
                                                                                                                        E




    Future pension increases *                                                                  3.00%       3.00%
                                                                                                                        M
                                                                                                                        M
                                                                                                                        O




   * 3% for Superannuation fund and 6.5% for Supplementary Pensions
                                                                                                                       C




   Note: Employee benefits obligations have been provided for based on the report from Bacon Woodrow
                                                                                                                        S
                                                                                                                        U




   and Legris Ltd., Actuaries and Consultants.
                                                                                                                       M
                                                                                                                       TI
                                                                                                                        T
                                                                                                                        I
                                                                                                                        R
                                                                                                                        U
                                                                                                                        A
                                                                                                                        E
                                                                                                                        H




                                                                                                                       53
                                               NOTES            TO THE          ACCOUNTS
                                               FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          17. OUTSTANDING LEASE OBLIGATIONS
2 0 0 2




                                                                                 GROUP                         BANK
                                                                               2002   2001                  2002    2001
 E




                                                                              RS’000 RS’000                RS’000  RS’000
JN
 U




              Minimum lease payments:
                Up to 1 year                                                    42,025         42,736       42,025       42,736
 H
 T




                Over 1 year and up to 5 years                                   38,496         62,095       38,496       62,095
3 0




                                                                                80,521        104,831       80,521      104,831
              Less:
 T




                Future finance charges                                           (9,803)      (15,031)       (9,803)     (15,031)
 R
 O




                                                                                70,718         89,800       70,718       89,800
 P
 E




              The present value of finance lease liabilities may be analysed as follows:
RL




                Up to 1 year                                                    35,806         33,821       35,806       33,821
 A
 U




                Over 1 year and up to 5 years                                   34,912         55,979       34,912       55,979
 N




                                                                                70,718         89,800       70,718       89,800
AN




          18. MINORITY INTEREST
•D




                                                                                 GROUP
 E




                                                                               2002   2001
 T
 I




                                                                              RS’000 RS’000
LM
 I




              At 1st July 2001                                                 199,033        166,718
              Share of profit after taxation                                    40,726         33,028
 K
 N




              Dividends paid                                                   (15,544)         (6,442)
 A




              Share of currency translation difference                          28,677          (5,799)
B




              Issue of share capital                                            20,880         11,528
 L




              At 30th June 2002                                                273,772        199,033
 A
 I
 C




          19. SHARE CAPITAL
 R
 E




                                                                                                               BANK
 M




                                                                                                            2002    2001
 M




                                                                                                           RS’000  RS’000
CO




              Authorised:
 S




              (100,000,000 shares of Rs 10 each)                                                          1,000,000    1,000,000
 U
 I




              Issued and fully paid:
 T
 I




              (58,257,756 shares of Rs 10 each)                                                            582,578      582,578
M
TR
 U
 A
 E
 H




54
                                 NOTES            TO THE          ACCOUNTS
                                 FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




20. LETTERS            CREDIT, GUARANTEES, ACCEPTANCES,




                                                                                                                       2 0 0 2
                OF

   ENDORSEMENTS            AND   OTHER OBLIGATIONS


                                                                   GROUP                          BANK




                                                                                                                        E
                                                                 2002   2001                   2002    2001




                                                                                                                        N
                                                                RS’000 RS’000                 RS’000  RS’000




                                                                                                                       JU
   Letters of credit                                           3,127,649      3,343,659      2,089,651    2,146,190




                                                                                                                        H
                                                                                                                        T
   Guarantees                                                  7,405,746      6,505,994      5,150,090    4,912,641




                                                                                                                       3 0
   Acceptances and endorsements                                  129,452        116,596              -            -
   Forward contracts                                           3,649,525      3,749,543      3,517,655    3,610,797




                                                                                                                        T
   Other obligations                                             285,252        513,714        84,774      289,012




                                                                                                                        R
                                                                                                                        O
                                                             14,597,624      14,229,506     10,842,170   10,958,640




                                                                                                                        P
                                                                                                                        E
21. INTEREST INCOME




                                                                                                                       RL
   Interest on loans and advances to customers                 5,480,392      5,106,942      4,240,657    3,952,098




                                                                                                                        A
                                                                                                                        U
   Interest on investments in Government




                                                                                                                        N
     securities and Treasury bills                               735,521        570,596       478,114      410,916




                                                                                                                        N
   Interest on placements with other banks                       201,526        168,490       121,839      142,184




                                                                                                                       A
   Other interest income                                                -         3,030              -            -




                                                                                                                       •
                                                               6,417,439      5,849,058      4,840,610    4,505,198




                                                                                                                        D
                                                                                                                        E
22. INTEREST EXPENSE




                                                                                                                        T
                                                                                                                        I
                                                                                                                        M
   Interest on deposits                                        3,100,902      3,124,231      2,678,040    2,743,096




                                                                                                                       LI
   Interest on borrowings from banks and
     financial institutions                                      170,102        176,110       100,832      107,135




                                                                                                                        K
                                                                                                                        N
   Interest on subordinated loans                                 25,459         27,383              -            -


                                                                                                                        A
   Other interest expense                                         21,753         26,114        21,613       18,232

                                                                                                                       B
                                                               3,318,216      3,353,838      2,800,485    2,868,463
                                                                                                                        L
                                                                                                                        A



23. OTHER INCOME
                                                                                                                        I
                                                                                                                        C
                                                                                                                        R
                                                                                                                        E




   Profit arising from dealing in foreign currencies             483,406        534,506       400,582      466,285
                                                                                                                        M




   Fees and commissions receivable                               992,547        828,182       521,613      446,530
                                                                                                                        M




   Income from quoted investments :
                                                                                                                       CO




     Associate                                                          -              -       19,990         7,425
     Others                                                       29,318         27,573         3,161       14,206
                                                                                                                        S




   Income from unquoted investments :
                                                                                                                        U
                                                                                                                        I




     Subsidiaries                                                       -              -       88,121       42,967
                                                                                                                        T
                                                                                                                        I




     Associates                                                         -              -        8,698         3,543
                                                                                                                        R




     Others                                                        3,272         14,991         2,844       17,510
                                                                                                                        U
                                                                                                                        A




   Profit/(Loss) on disposal of property, plant
                                                                                                                       M




    and equipment                                                  2,421        (12,349)        1,879       (11,971)
   Profit/(Loss) on disposal of investments
                                                                                                                        E
                                                                                                                        H




    and associate                                                  4,043          (3,285)       4,564             -
                                                                                                                       T




   Other operating income                                         45,402         50,492        19,687             -
                                                               1,560,409      1,440,110      1,071,139     986,495     55
                                          NOTES            TO THE          ACCOUNTS
                                          FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          24. OPERATING EXPENSES
2 0 0 2




                                                                            GROUP                         BANK
                                                                          2002   2001                  2002    2001
                                                                         RS’000 RS’000                RS’000  RS’000
 E
 N




             Staff costs                                                1,188,980      1,034,916      602,397      550,813
JU




             Employee benefits                                             85,389         76,069       85,389       76,069
             Depreciation charge                                          342,871        335,295      239,901      246,903
 H
 T




             Auditors’ remuneration - De Chazal Du Mée & Co                 4,109          3,604        4,000        3,500
3 0




             Auditors’ remuneration - Others                                5,190          3,507             -            -
             Other fees and services provided by audit firm                 2,897          2,247        2,530        1,786
 T




             Directors’ emoluments                                                                      1,530        1,460
 R
 O




             Consultancy fees in respect of B.P.R. project                145,400               -     145,400             -
 P




             Other operating expenses                                     753,845        651,207      336,819      265,547
 E




                                                                        2,528,681      2,106,845     1,417,966    1,146,078
R




             Number of employees at the end of the
 L




               year was                                                     2,108          2,086        1,523        1,533
 A
 U
 N




             Staff costs include an amount of RS 18,965,000 in respect of remuneration of key management.
AN




             Fees earned by DCDM Consulting, a related company to DCDM & Co, amounted to RS 42.5 M during the
             year (2001-RS 27.5 M), of which RS 26.5 M are included in operating expenses above and the balance
•




             which represents I.T. development costs has been capitalised.
 D




             Other operating expenses include RS 558,000 of donations.
 E
 T
 I




          25. CHARGE       FOR   BAD   AND   DOUBTFUL DEBTS
LM
 I




             Provisions for bad and doubtful debts                        807,727        610,775      406,784      398,673
 K




             Bad debts written off for which no
 N




               provisions were made                                        11,655          9,658             -            -
BA




             Provisions released during the year                         (147,527)      (138,947)      (12,542)      (8,762)
             Recoveries of advances written off                             (5,101)        (1,593)       (682)        (485)
 L




                                                                          666,754        479,893      393,560      389,426
 A
 I
 C




          26. TAXATION
 R
 E
 M




             Income tax based on the adjusted profits                     285,309        218,489      174,546      141,986
 M




             Deferred tax                                                    (109)        (6,913)        (171)      (6,913)
 O




             Share of income tax of associated companies                    5,042          4,758            -            -
C




             Under provision in previous years                             11,018         31,163       14,154          686
             Charge for the year                                          301,260        247,497      188,529      135,759
 S
 U
 I




             The tax on the company’s profit differs from the theoretical amount that would arise using the basic tax rate
 T




               as follows:
 I
 R




             Profit before tax                                    1,510,653     1,418,940      1,299,738      1,087,726
 U




             Tax calculated at a rate of 25%                        377,663        354,735       324,935        271,932
 A




             Effect of different tax rates in other countries        71,656         11,948               -              -
M




             Impact of:
                Income not subject to tax                          (186,789)      (191,899)     (171,801)      (171,862)
 E
 H




                Expenses not deductible for tax purposes             82,416         80,170         44,863         50,928
T




             Tax credits                                            (54,704)       (38,620)       (23,622)       (15,925)
             Under provision in previous years                       11,018         31,163         14,154            686
56
             Tax charge                                             301,260        247,497       188,529        135,759
                                NOTES            TO THE          ACCOUNTS
                                FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




27. DIVIDENDS




                                                                                                                 2 0 0 2
                                                                                             BANK
                                                                                          2002    2001
                                                                                         RS’000  RS’000




                                                                                                                  E
                                                                                                                  N
                                                                                                                  U
   Interim paid on 18th December 2001 RS 2.45 per share                                  142,732    119,428




                                                                                                                 J
   Final paid on 18th July 2002 RS 3.45 per share                                        200,989    171,860




                                                                                                                  H
                                                                                         343,721    291,288




                                                                                                                  T
                                                                                                                 3 0
28. EARNINGS     PER    SHARE




                                                                                                                  T
                                                                                                                  R
   The earnings per share figure is computed on the basis of Group post tax profit of RS.1,153,960,000 for the




                                                                                                                  O
   year (2001: RS.1,123,708,000) and 58,257,756 shares in issue during the year.




                                                                                                                 RP
                                                                                                                  E
29. CAPITAL COMMITMENTS




                                                                                                                  L
                                                                                                                  A
   Capital Commitments at 30th June 2002 are as follows:




                                                                                                                  U
                                                                                                                  N
                                                                                                                  N
                                                                  GROUP                      BANK




                                                                                                                 A
                                                                2002   2001               2002    2001




                                                                                                                 •
                                                               RS’000 RS’000             RS’000  RS’000




                                                                                                                  D
                                                                                                                  E
   Expenditure contracted for




                                                                                                                  T
     but not incurred                                            77,984         69,489    77,984      69,489




                                                                                                                  I
                                                                                                                  M
   Expenditure approved by the




                                                                                                                  I
     Board but not contracted for                                60,350         76,489    60,350      76,489




                                                                                                                 L
   Uncalled portion on shares                                          -        44,125         -      36,500




                                                                                                                 B
                                                                                                                 C
                                                                                                                 M
                                                                                                                 TK
                                                                                                                  N
                                                                                                                  A
                                                                                                                  L
                                                                                                                  A
                                                                                                                  I
                                                                                                                  C
                                                                                                                  R
                                                                                                                  E
                                                                                                                  M
                                                                                                                  M
                                                                                                                  O
                                                                                                                  S
                                                                                                                  U
                                                                                                                  I
                                                                                                                  T
                                                                                                                  I
                                                                                                                  R
                                                                                                                  U
                                                                                                                  A
                                                                                                                  E
                                                                                                                  H




                                                                                                                 57
                                           NOTES            TO THE          ACCOUNTS
                                           FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          30. NET CASH FLOWS                    TRADING ACTIVITIES
2 0 0 2




                                        FROM



                                                                             GROUP                         BANK
                                                                           2002   2001                  2002    2001
 E




                                                                          RS’000 RS’000                RS’000  RS’000
JN
 U




             Operating profit                                            1,464,197      1,348,592     1,299,738     1,087,726
             Increase in interest receivable and other assets             (303,928)      (233,186)      (15,537)     (164,126)
 H
 T




             (Decrease)/Increase in other liabilities                      (61,873)        45,207       365,476      (145,235)
3 0




             Provision for employee benefits                                 6,571          2,459         6,571         2,459
             Provisions for bad and doubtful debts                         807,727        610,775       406,784       398,673
 T




             Release of provisions                                        (147,527)      (138,947)      (12,542)        (8,762)
 R
 O




             Exchange adjustment                                           (65,250)         (3,627)     (87,693)        3,474
 P




             Depreciation                                                  342,871        335,295       239,901       246,903
 E




             (Profit)/Loss on disposal of property, plant
R




               and equipment                                                 (2,421)       12,349         (1,879)      11,971
 L




             (Profit)/Loss on disposal of investments
 A
 U




               and associate                                                 (4,043)        3,285         (4,564)            -
 N




                                                                         2,036,324      1,982,202     2,196,255     1,433,083
AN




          31. NET CASH FLOWS            FROM    OTHER
•




             OPERATING ACTIVITIES
 D
 E




             Net increase in deposits                                    9,156,658      4,553,320     5,822,026     2,964,093
 T
 I




             Net increase in loans and advances                         (5,470,190)    (4,680,085)    (4,745,610)   (4,269,604)
 M
 I




             (Increase)/Decrease in Government
L




               securities and Treasury bills                            (3,537,589)     1,470,683     (2,314,214)   1,530,178
 K




             Decrease/(Increase) in balances due in
 N




               clearing                                                     42,830        (24,327)     (132,741)      (83,730)
BA




                                                                           191,709      1,319,591     (1,370,539)     140,937
 L




          32. ANALYSIS                BALANCES
 A




                            OF THE                      OF
 I




             CASH     AND    CASH EQUIVALENTS                AS
 C
 R




             SHOWN        IN THE   BALANCE SHEETS
 E
 M




             ASSETS
 M
 O




             Cash and balances with Central Banks                        3,654,953      3,287,532     2,848,903     2,308,514
C




             Due from other banks                                        6,745,411      3,139,817     3,006,889     1,867,213
 S
 U




             LIABILITIES
 I




             Due to other banks                                         (5,047,566)    (2,351,835)    (3,116,846)   (1,367,073)
 T
 I




             CASH AND CASH EQUIVALENTS                                   5,352,798      4,075,514     2,738,946     2,808,654
 R
 U




             CHANGE IN YEAR                                              1,277,284                      (69,708)
M
TA
 E
 H




58
                                    NOTES             TO THE         ACCOUNTS
                                    FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




33. SEGMENT INFORMATION




                                                                                                                                2 0 0 2
   Primary reporting format - geographical segments


   Year ended 30th June 2002




                                                                                                                                 E
                                                                                                                                 N
                                                     GROUP        MAURITIUS    REUNION* MADAGASCAR MOZAMBIQUE ELIMINATIONS




                                                                                                                                 U
                                                     RS'000        RS'000       RS'000        RS'000      RS'000      RS'000




                                                                                                                                JH
                                                                                                                                 T
   Income:




                                                                                                                                3 0
   External gross income                        7,977,848         5,751,654     1,887,879     221,437     116,878
   Gross income from other segments                          -      64,564                -      3,777         27    (68,368)




                                                                                                                                 T
                                                                                                                                 R
   Total gross income                           7,977,848         5,816,218     1,887,879     225,214     116,905    (68,368)




                                                                                                                                 O
   Interest expense and operating expenses     (5,846,897)       (4,238,862) (1,530,731)      (103,722)   (41,950)    68,368




                                                                                                                                 P
                                                                                                                                 E
   Operating profit before provisions           2,130,951         1,577,356      357,148      121,492      74,955          -




                                                                                                                                R
   Charge for bad and doubtful debts             (666,754)         (393,560)     (111,041)    (154,666)    (7,487)




                                                                                                                                 L
   Operating profit                             1,464,197         1,183,796      246,107       (33,174)    67,468




                                                                                                                                 A
                                                                                                                                 U
   Share of profits in associates                    46,456




                                                                                                                                 N
                                                                                                                                 N
   Profit before taxation                       1,510,653




                                                                                                                                A
   Taxation                                      (301,260)




                                                                                                                                •
   Profit after taxation                        1,209,393




                                                                                                                                 D
   Minority interest                                 (40,726)




                                                                                                                                 E
                                                                                                                                 T
   Amortisation of goodwill                          (14,707)




                                                                                                                                 I
   Profit attributable to shareholders          1,153,960




                                                                                                                                LM
                                                                                                                                 I
   Other segment items:




                                                                                                                                 K
                                                                                                                                 N
                                                                                                                                 A
   Segment assets                              85,656,438        57,762,951    26,404,784 2,373,711       558,957 (1,443,965)
   Investments in associates                     668,535                                                                        BL
                                                                                                                                 A

   Goodwill arising on consolidation             145,265
                                                                                                                                 I
                                                                                                                                 C




   Deferred tax assets                               23,525
                                                                                                                                 R




   Total assets                                86,493,763
                                                                                                                                 E
                                                                                                                                 M
                                                                                                                                 M




   Segment liabilities                         77,273,496        52,261,909    24,699,751 2,055,922       468,957 (2,213,043)
                                                                                                                                CO




   Unallocated liabilities                       522,420
                                                                                                                                 S




   Total liabilities                           77,795,916
                                                                                                                                 U
                                                                                                                                 I
                                                                                                                                 T




   Capital expenditure                           443,217           317,671       113,480         4,350      7,716
                                                                                                                                 I
                                                                                                                                 R
                                                                                                                                 U
                                                                                                                                 A




   Depreciation charge                           342,871           240,323        87,899         6,475      8,174
                                                                                                                                ME




   Amortisation                                      14,707
                                                                                                                                TH




   * Note: Figures for BFCOI have been aggregated under this heading, Reunion being this bank’s main place of
                                                                                                                                59
   business.
                                              NOTES             TO THE         ACCOUNTS
                                              FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          33. SEGMENT INFORMATION (CONTINUED)
2 0 0 2




             Primary reporting format - geographical segments


             Year ended 30th June 2001
 E
 N




                                                               GROUP        MAURITIUS    REUNION* MADAGASCAR MOZAMBIQUE ELIMINATIONS
 U




                                                               RS'000        RS'000       RS'000        RS'000      RS'000       RS'000
JH
 T




             Income:
3 0




             External gross income                        7,289,168         5,354,919     1,648,519     192,208      93,522
             Gross income from other segments                          -      73,351                -      2,723         82     (76,156)
 T
 R




             Total gross income                           7,289,168         5,428,270     1,648,519     194,931      93,604     (76,156)
 O




             Interest expense and operating expenses     (5,460,683)       (4,031,816) (1,359,288)      (106,153)   (39,582)    76,156
 P
 E




             Operating profit before provisions           1,828,485         1,396,454      289,231       88,778      54,022           -
R




             Charge for bad and doubtful debts             (479,893)         (389,426)      (76,580)      (6,168)    (7,719)
 L
 A




             Operating profit                             1,348,592         1,007,028      212,651       82,610      46,303
 U




             Share of profits in associates                    70,348
 N
 N




             Profit before taxation                       1,418,940
A




             Taxation                                      (247,497)
•




             Profit after taxation                        1,171,443
 D




             Minority interest                                 (33,028)
 E
 T




             Amortisation of goodwill                          (14,707)
 I
 M




             Profit attributable to shareholders          1,123,708
LI




             Other segment items:
 K
 N
 A




             Segment assets                              69,674,758        49,104,896    19,225,833 1,635,996       442,438    (734,405)
B




             Investments in associates                     586,206
 L
 A




             Goodwill arising on consolidation             159,972
 I
 C




             Deferred tax assets                               23,416
 R




             Total assets                                70,444,352
 E
 M
 M




             Segment liabilities                         62,526,123        44,327,257    18,056,481 1,371,218       388,267 (1,617,100)
CO




             Unallocated liabilities                       463,064
 S




             Total liabilities                           62,989,187
 U
 I
 T




             Capital expenditure                           345,586           222,024       112,750         7,951      2,861
 I
 R
 U
 A




             Depreciation charge                           335,295           247,246        72,302         6,742      9,005
ME




             Amortisation                                      14,707
TH




             * Note: Figures for BFCOI have been aggregated under this heading, Reunion being this bank’s main place of
60
             business.
                               NOTES            TO THE          ACCOUNTS
                               FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




33. SEGMENT INFORMATION (CONTINUED)




                                                                                                                    2 0 0 2
   Secondary reporting format - business segments


   Year ended 30th June 2002




                                                                                                                     E
                                                Group




                                                                                                                     N
                                                                                                                     U
                                                RS’000




                                                                                                                    J
   External gross income:




                                                                                                                     H
   The Mauritius Commercial Bank Ltd.       5,911,749




                                                                                                                     T
   Banque Française Commerciale O.I.        1,887,879




                                                                                                                    3 0
   Union Commercial Bank                         221,437
   Uniâo Comercial de Bancos




                                                                                                                     T
     (Moçambique) S.A.R.L.                       116,905




                                                                                                                     R
                                                                                                                     O
   Others                                         57,347




                                                                                                                     P
   Eliminations                                 (217,469)




                                                                                                                    RE
                                            7,977,848




                                                                                                                     L
                                                                                                                     A
                                                                                                                     U
                                                Group        Net interest Fees & Investment Forex profit




                                                                                                                     N
                                                              income commissions income      & others




                                                                                                                    AN
                                                RS’000         RS’000     RS’000   RS’000     RS’000




                                                                                                                    •
   Operating income:




                                                                                                                     D
   The Mauritius Commercial Bank Ltd.       3,111,264          2,040,125       521,613       122,814     426,712




                                                                                                                     E
   Banque Française Commerciale O.I.        1,380,149            886,459       442,404          4,709     46,577




                                                                                                                     T
                                                                                                                     I
   Union Commercial Bank                         162,164         110,924         34,623             -     16,617




                                                                                                                     M
                                                                                                                     I
   Uniâo Comercial de Bancos




                                                                                                                    L
     (Moçambique) S.A.R.L.                       105,657          61,503         13,774             -     30,380




                                                                                                                     K
   Others                                         57,347              212            9,892    26,158      21,085



                                                                                                                     N
   Eliminations                                 (156,949)                -      (29,759)     (121,091)    (6,099)


                                                                                                                    BA
                                            4,659,632          3,099,223       992,547        32,590     535,272
                                                                                                                     L
                                                                                                                     A
                                                                                                                     I




   Segment assets                          80,936,706         80,378,747                     557,959
                                                                                                                     C
                                                                                                                     R




   Investments in associates                     668,535
                                                                                                                     E




   Goodwill arising on consolidation             145,265
                                                                                                                     M




   Deferred tax assets                            23,525
                                                                                                                     M
                                                                                                                     O




   Unallocated assets                       4,719,732
                                                                                                                    C




   Total assets                            86,493,763
                                                                                                                    M
                                                                                                                    TS
                                                                                                                     U
                                                                                                                     I
                                                                                                                     T
                                                                                                                     I
                                                                                                                     R
                                                                                                                     U
                                                                                                                     A
                                                                                                                     E
                                                                                                                     H




                                                                                                                    61
                                         NOTES            TO THE          ACCOUNTS
                                         FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




          33. SEGMENT INFORMATION (CONTINUED)
2 0 0 2




             Secondary reporting format - business segments


             Year ended 30th June 2001
 E




                                                          Group
 N
 U




                                                          RS’000
JH




             External gross income:
 T




             The Mauritius Commercial Bank Ltd.       5,491,693
3 0




             Banque Française Commerciale O.I.        1,648,519
             Union Commercial Bank                         194,931
 T




             Uniâo Comercial de Bancos
 R




               (Moçambique) S.A.R.L.                        93,604
 O
 P




             Others                                         48,958
 E




             Eliminations                                 (188,537)
R




                                                      7,289,168
 L
 A
 U
 N




                                                          Group        Net interest Fees & Investment Forex profit
 N




                                                                        income commissions income      & others
A




                                                          RS’000         RS’000     RS’000   RS’000     RS’000
•D




             Operating income:
 E




             The Mauritius Commercial Bank Ltd.       2,623,230          1,636,735       446,530      85,651    454,314
 T
 I




             Banque Française Commerciale O.I.        1,147,197            734,616       353,982      13,858     44,741
 M




             Union Commercial Bank                         147,298          94,073         44,044          -      9,181
LI




             Uniâo Comercial de Bancos
              (Moçambique) S.A.R.L.                         81,983          29,532         11,371          -     41,080
 K




             Others                                         48,958              264             -     25,258     23,436
 N
 A




             Eliminations                                 (113,336)                -      (27,745)   (82,203)    (3,388)
B




                                                      3,935,330          2,495,220       828,182      42,564    569,364
 L
 A
 I
 C




             Segment assets                          65,527,243         65,060,582                   466,661
 R




             Investments in associates                     586,206
 E
 M




             Goodwill arising on consolidation             159,972
 M




             Deferred tax assets                            23,416
 O




             Unallocated assets                       4,147,515
C




             Total assets                            70,444,352
M
TS
 U
 I
 T
 I
 R
 U
 A
 E
 H




62
                                  NOTES            TO THE          ACCOUNTS
                                  FOR THE   YEAR   ENDED   30TH JUNE 2002 (CONTINUED)




34. RELATED PARTY TRANSACTIONS




                                                                                                                      2 0 0 2
                             Associated                                Directors and        Enterprises in which
                             companies                                Key Management         Key Directors and
                                                                         Personnel           Key Management
                                                                                         Personnel have significant




                                                                                                                       E
                                                                                             interest/influence




                                                                                                                       N
                                                                                                                       U
                                                   RS’000                   RS’000                 RS’000




                                                                                                                      J
     Balances at 30th June 2002
     Loans & Advances                              804,843                  63,982                137,510




                                                                                                                       H
     Deposits                                      207,966                  99,799                442,185




                                                                                                                       T
     Off Balance Sheet items                       250,848                   1,000                379,635




                                                                                                                      3 0
     Income/Expenditure for the year ended 30th June 2002




                                                                                                                       T
     Interest income                        70,625                           5,694                 12,753




                                                                                                                       R
     Interest expense                       17,249                           6,161                 24,567




                                                                                                                       O
     Other income                            7,120                             152                  5,232




                                                                                                                      RP
                                                                                                                       E
35. DIRECTORS SERVICE CONTRACTS
    There are no service contracts between the bank and its directors.




                                                                                                                       L
                                                                                                                       A
36. SHARE INTERESTS




                                                                                                                       U
                                                                                                                       N
    The interests of the directors and the Chief Executive in the share capital of the bank were as follows:




                                                                                                                       N
                                                                                 No. of shares




                                                                                                                      A
                                                                         Direct                 Indirect
    Directors




                                                                                                                      •
    Jean Paul ADAM, G.O.S.K., K.C.S.G., C.B.E.                          157,207                 106,750




                                                                                                                       D
    F. Jacques HAREL                                                     25,000                   35,000




                                                                                                                       E
    Raymond AH-CHUEN                                                         500                        -




                                                                                                                       T
    Peter BRUNSDEN                                                        1,500                         -




                                                                                                                       I
    Arnaud DALAIS                                                         1,320                   22,191




                                                                                                                       M
                                                                                                                       I
    Sir Marc DAVID, C.B.E., Q.C.                                          3,380                      253




                                                                                                                      L
    Pierre DOGER DE SPEVILLE                                             32,000                    4,895
    Hector ESPITALIER NOEL                                                4,946                      442




                                                                                                                       K
    Patrick M. J. GIBLOT DUCRAY                                           2,200                         -



                                                                                                                       N
                                                                                                                       A
    Sanjiv GOBURDHUN                                                         500                594,115

                                                                                                                      B
    Patrick GUIMBEAU, Jr.                                                    500                        -
    Cyril LAGESSE                                                        44,807                   17,544               L
    Sir Maurice LATOUR-ADRIEN                                            73,839                         -
                                                                                                                       A



    Jean Pierre MONTOCCHIO                                                1,214                         -
                                                                                                                       I
                                                                                                                       C




    Sir M. B. Kailash RAMDANEE                                           33,602                         -
                                                                                                                       R




    Simon Pierre REY                                                         500                        -
                                                                                                                       E




    Adolphe VALLET                                                       26,292                   18,949
                                                                                                                       M




    Chief Executive
                                                                                                                       M




    Pierre-Guy NOEL                                                     146,104                    4,624
                                                                                                                      CO




     The General Manager, Pierre-Guy Noël, also owns 500 “Certificats d’investissement” in Banque Française
                                                                                                                       S




     Commerciale O.I.
                                                                                                                       U




     None of the directors have a direct or indirect interest in the equity of the bank’s subsidiaries.
                                                                                                                       I
                                                                                                                       T
                                                                                                                       I




37. SUBSTANTIAL SHAREHOLDERS
                                                                                                                       R
                                                                                                                       U




    At 30th June 2002, the following shareholders held more than 5% of the share capital of the Bank.
                                                                                                                       A




                                                                      No. of                     %
                                                                                                                      M




                                                                      shares                  holding
                                                                                                                       E




     Lloyds TSB Bank PLC                                                     5,807,034                 9.97
                                                                                                                       H




     Fincorp Investment Ltd.                                                 3,861,789                 6.63
                                                                                                                      T




     Lloyds TSB Bank PLC also had at that date an indirect shareholding in the bank’s equity through its 14%          63
     stake in Fincorp Investment Ltd.
                                             GROUP FINANCIAL SUMMARY




                                                                     2002             2001     2000     1999      1998
2 0 0 2




          SUMMARY OF RESULTS
 E
 N




          Profit attributable to shareholders      RS M                1,154.0      1,123.7    956.0    820.1    671.4
JU




          Dividends paid                           RS M                     343.7    291.3     238.9    206.8    171.9
 H




          Earnings per share                        RS                      19.81    19.29     16.41    14.08    11.52
 T
3 0




          Dividends per share                       RS                       5.90     5.00      4.10     3.55      2.95
 T




          Dividend cover                        No of Times                  3.36     3.86      4.00     3.97      3.91
 R
 O
 P
 E




          PERFORMANCE RATIOS                                     *
R




          Return on average total assets            %           1.74         1.47     1.65      1.53     1.48      1.43
 L
 A




          Return on average equity                  %          18.39        15.71    17.57     16.64    16.82    17.08
 U
 N




          Return on average Tier I capital          %          22.16        18.99    22.05     21.65    21.32    20.73
AN




          Cost/Income                               %          51.10        54.27    53.54     57.80    58.06    57.50
•D
 E




          CAPITAL ADEQUACY RATIOS
 T
 I




          Shareholders’ funds / total assets        %                        9.12     9.66      9.12     9.23      8.30
LM
 I




          B.I.S risk adjusted ratio                 %                       13.99    13.37     12.60    13.13    12.10
 K




            of which Tier I                         %                        9.84     9.36      8.57     9.01      9.05
BN
 A




          ASSETS AND LIABILITIES (RS. MILLION)
 L
 A




          Capital & Reserves                                                7,886    6,808     5,984    5,498    4,244
 I
 C
 R




          Deposits                                                      69,599      57,657    52,910   48,706   42,221
 E
 M




          Advances                                                      60,023      52,530    48,353   41,185   34,961
 M
 O




          Investments                                                   11,181       7,156     8,044    6,665    7,840
C




          Balance sheet total                                           86,494      70,444    65,620   59,580   51,113
 S
 U




          Acceptances, guarantees, etc.                                 14,598      14,230    14,541   11,706   10,431
MI
 T
 I
 R
 U
 A




          * Restated to eliminate the impact of B.P.R. consultancy fees and write down of the Group’s share of net assets
 E




          of U.C.B. Madagascar.
TH




64
                              A D M I N I S T R AT I V E I N F O R M AT I O N




                    THE MAURITIUS COMMERCIAL BANK LTD




                                                                                                                     2 0 0 2
HEAD OFFICE                                            REPRESENTATIVE OFFICE - PARIS
9-15 Sir William Newton Street                         3rd Floor - 8 Rue Auber - 75009 Paris




                                                                                                                      E
Port Louis - Republic of Mauritius                     Telephone: (33) (1) 44 94 84 30




                                                                                                                      N
Postal Address: P Box 52 - Port Louis
                  .O.                                  Telefax: (33) (1) 44 94 84 37




                                                                                                                      U
Telephone: (230) 202 5000 - Telefax: (230) 208 7054    Telex: 281 995




                                                                                                                     J
Telex: 4218 EGO IW - Swift Code: MCBL MUMU             Email address: paris@bfcoi.com




                                                                                                                      H
Email address: mcb@mcb.co.mu




                                                                                                                      T
                                                                                                                     3 0
Website: www.mcb.mu




                                                                                                                      T
                            FOREIGN BANKING - SUBSIDIARIES




                                                                                                                      R
                                                                                                                      O
                                                                                                                      P
                     • BANQUE FRANÇAISE COMMERCIALE (OCÉAN INDIEN)




                                                                                                                     RE
REGISTERED OFFICE - PARIS                              HEAD OFFICE - RÉUNION




                                                                                                                      L
8 Rue Auber, 75009 Paris                               60 Rue Alexis de Villeneuve,




                                                                                                                      A
                                                          .
                                                       B.P 323 - 97466 Saint Denis Cedex




                                                                                                                      U
Telephone: (33) (1) 44 94 84 30 and 47 42 19 31




                                                                                                                      N
Telefax: (33) (1) 44 94 84 37                          Telephone: (262) 262 40 55 55 - Telefax: (262) 262 21 21 47




                                                                                                                      N
Telex:281 995 - Swift Code: BFCO FRPP                  Telex: 916162 RE and 916177 RE




                                                                                                                     A
Email address: paris@bfcoi.com                         Swift Code: BFCO RERX




                                                                                                                     •
                                                       Email address: reunion@bfcoi.com




                                                                                                                      D
MAYOTTE                                                SEYCHELLES




                                                                                                                      E
                                                                                                                      T
Route de l’Agriculture, B.P 222 - 97600 Mamoudzou
                           .                           Albert Street - Victoria - Mahé




                                                                                                                      I
Telephone: (269) 611 091 - Telefax: (269) 611 740      Telephone: (248) 284 555 - Telefax: (248) 322 676




                                                                                                                      M
                                                       Telex: 2261 - Swift Code: BFCO SCSC




                                                                                                                      I
Telex: 915814 - Swift Code: BFCO YTYT




                                                                                                                     L
Email address: mayotte@bfcoi.com                       Email address: bfcoi@seychelles.net




                                                                                                                      K
                                                                                                                      N
                                                                                                                      A
                           • UNION COMMERCIAL           BANK   - MADAGASCAR
                                                                                                                     BL
TANANARIVE                                             TAMATAVE
                                                                                                                      A



Rue Solombavambahoaka Frantsay 77                                               .
                                                       16 Boulevard Joffre - B.P 64 - Toamasina 501
                                                                                                                      I
                                                                                                                      C




Antsahavola - B.P 197 - Antananarivo 101
                  .                                    Telephone:(261 20 53) 316 93 and (261 20 53) 317 17
                                                                                                                      R




Telephone:(261 20 22) 272 62                           Telefax: (261 20 53) 316 89
                                                                                                                      E




                                                       Telex: 55 678 UCB MG
                                                                                                                      M




Telefax: (261 20 22) 287 40
                                                                                                                      M




Telex: 225 28 UCB MG - Swift Code: UNCO MGMG           Email address: ucbtam@dts.mg
                                                                                                                      O




Email address: ucb.int@dts.mg
                                                                                                                     CS
                                                                                                                      U




                 • UNIÂO COMERCIAL           DE   BANCOS (MOÇAMBIQUE) S.A.R.L.
                                                                                                                      I
                                                                                                                      T
                                                                                                                      I




MOZAMBIQUE
                                                                                                                      R




Ave Friedrich Engels - 400 Maputo, Mozambique
                                                                                                                      U
                                                                                                                      A




Telephone: (258 1) 49 99 00 and (258 1) 49 52 21-5
                                                                                                                     M




Telefax: (258 1) 49 86 75 - Swift Code: UCBM MZMA
Email address: banque_fc@teledata.mz
                                                                                                                     TE
                                                                                                                      H




                                                                                                                     65
HEAD OFFICE, BRANCHES                   AND   BUREAUX   DE   CHANGE




HEAD OFFICE
Port Louis, Sir William Newton Street


BRANCHES
Curepipe                                        MAURITIUS
Rose Hill
Mahébourg
Quatre Bornes
Centre de Flacq
Triolet
Port Louis, Sir S. Ramgoolam Street
Vacoas
Goodlands
Beau Bassin
Port Louis, Edith Cavell Street
Réduit
Le Morne Brabant
Bell Village
Grand Baie
Chemin Grenier
Rose Belle
Rivière du Rempart
Port Louis, Jules Koenig Street
St. Pierre
Plaine des Papayes
Rivière des Anguilles
Phoenix
Lallmatie
Bel Air, Rivière Sèche
Plaine Magnien
Rose Hill, Stanley
Quatre Bornes, Candos
Montagne Blanche
Curepipe Road
Pamplemousses
Port Louis, Plaine Verte
Vacoas, La Caverne
Port Mathurin, Rodrigues
Flic en Flac
Tamarin
Floréal
Mont Choisy
Pont Fer
                                                RODRIGUES
BUREAUX DE CHANGE
Belle Mare
Curepipe
Grand Baie
Mont Choisy
Pereybere
S.S.R. International Airport
Port Louis (Head Office)
Rose Hill
Flic en Flac
Quatre Bornes

								
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