Interest on unsecured subordinated bonds denominated in MUR ranges between 5.85% to 7.00% (2018: between 6.35% to 8.50% and 2017: between 6.75% to 8.90%) while USD-denominated bonds bear interest that ranges between 4.19% to 6.67% (2018: between 4.19% to 6.02% and 2017: between 4.20% to 5.23%).

The table below details changes in the Group's and the Bank's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which flows were, or future cash flows will be, classified in the statement of cash flows from financing activities.

Customer custody payable relates to fund received from deposit clients at reporting date which has not yet been allocated to the respective client accounts.

Advance commission relates mainly to upfront fees received on credit advances. 

Special levy was previously classified under income tax expense.

Financial liabilities measured at FVTPL are portfolio of funds that are managed on a fair value basis by the subsidiary.

Each of the above share confer to its holder the following rights:

1. the right to vote at meetings of shareholders and on a poll to cast one vote for each share held;
2. subject to the rights of any other class of shares, the right to an equal share in dividends and other distributions made by the Bank;
3. subject to the rights of any other class of shares, the right to an equal share in the distribution of the surplus assets of the Bank on its liquidation.

On 8 June 2018, the Board of Directors has approved the allotment and issue of 5,981,143 ordinary shares, all fully paid.

On 22 November 2017, the shareholders approved the allotment of 206,233 shares to National Bank of Canada.

As part of the share based payment, 44,034 shares were alloted to one of the founders.

The Class A shares do not carry any general voting right at any shareholders meeting of the Bank other than an irrevocable right to vote on any proposal to amend the Class A shares Terms and Conditions.

The shares are callable, at the option of the issuer, six years after the issue date (30 June 2014), with the prior approval of the Bank of Mauritius.

Dividends are payable at the discretion of the Board of Directors of AfrAsia Bank Limited and subject to the prior approval of Bank of Mauritius.

The Bank has a defined contribution (DC) scheme which is a funded obligation administered by Swan Life Ltd.

The liability relates to retirement gratuities payable under the Employment Rights Act (ERA) 2018 which is unfunded.

The actuarial valuation was carried out at 30 June 2019 by Swan Life Ltd.

The plan expose the Group and the Bank to normal risks associated with defined benefit pension plans such as interest risk and salary risk.

Interest risk: If the bond/bill yields decrease, the liabilities would be calculated using a lower discount rate, and would therefore increase.

Salary risk: If salary increases are higher than assumed in our basis, the liabilities would increase giving rise to actuarial losses.

The rate per annum of withdrawal from service before retirement for the Bank is between 10% and 15% for age upto 30, reducing to 0% after 50 years. The rate per annum of withdrawal from service for the subsidiary is 1% up to age 45, reducing to 0% after 45.
The discount rate is determined by reference to the yield on government bonds of duration equivalent to the duration of liabilities.

EQUITY-SETTLED SHARE-BASED PAYMENT RESERVE

Movement in equity-settled share-based payment reserve relates to expense recognised for employee services received. The remaining balance on the scheme was settled during the year ended 30 June 2018 and the Bank no longer has a share option scheme as from 01 July 2018

STATUTORY RESERVE

This reserve represents transfers from retained earnings in accordance with the Banking Act 2004. A sum equal to not less than 15% of the Bank's profit for the year is transferred each year until the balance is equal to the amount paid as stated capital.

GENERAL BANKING RESERVE

This reserve comprises amounts set aside for general banking risks, including future losses and other unforeseen risks. It also includes provision made to meet other regulatory provision including country risk.

FOREIGN CURRENCY TRANSLATION RESERVE

This reserve arises on retranslation of foreign operations on consolidation.

(a) Financial instruments recorded at fair value

Determination of fair value and fair value hierarchy

The Group and the Bank use the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

The following tables show an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:

The Group

Valuation techniques

Debt instruments mandatorily measured at fair value through profit or loss

(i) Unquoted equity investments

Unquoted equity investments relate to investments in equity funds. The fair value of these investments has been based on their published share price used for trading.

(ii) Government of Mauritius debts securities and Bank of Mauritius bonds and notes

Those investments are valued based on the market yield of similar instruments as made publicly available by the local regulator.

(iii) Corporate debt securities

Those investments are valued based on the market yield of similar instruments which is publicly available.

Equity Investments designated at fair value through other comprehensive income

The investment in equity shares has been fair valued at year end based either on the net assets value of the investee or are based on the market yield of similar instruments as made publicly available by the local regulator.

Derivative Financial Instruments

Derivative products valued using a valuation technique with market observable inputs include forward foreign exchange contracts and foreign exchange option contracts. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.

Index linked notes

Index linked notes are investment products that combine a fixed income investment with additional potential returns that are tied to the performance of equities. Equity linked notes are usually structured to return the initial investment with a variable interest portion that depends on the performance of the linked equity.

Transfers between hierarchy

There was no transfer between fair value hierarchy during the year under review.

(b) Financial assets and liabilities not carried at fair value

The following describes the methodologies and assumptions used to determine fair values for those financial instruments which are not recorded at fair value in the financial statements:

Assets and liabilities for which fair value approximates carrying value

For financial assets and financial liabilities that have a short term maturity (less than three months), it is assumed that the carrying amount approximates their fair value. This assumption is also applied to demand deposits and savings accounts without a specific maturity.

Fixed and floating rate financial instruments

The fair value of fixed and floating rate financial assets and liabilities carried at amortised cost is estimated by comparing market interest rates when they are first recognised with current market rates for similar financial instruments. The estimated fair value of fixed and floating interest bearing deposits is based on discounted cash flows using prevailing money market interest rates for debts with similar credit risk and maturity. For those notes issued where quoted market prices are not available, a discounted cash flow model is used based on a current interest rate yield curve appropriate for the remaining terms to maturity and credit spreads.

Set out below is a comparison, by class, of the carrying amounts and fair values of the Group's and the Bank's financial instruments that are not carried at fair value in the financial statements. The table does not include the fair values of nonfinancial assets and non-financial liabilities.

The GROUP

Financial assets and liabilities to be classified in level 3 if carried at fair value.

Financial assets and liabilities to be classified in level 3 if carried at fair value.

The Group and the Bank classify an asset or liability as current when:

• they expect to realise the asset/settle the liability within 12 months after the reporting period;
• they expect to settle the liability in its normal operating cycle;
• they hold the asset or liability primarily for the purpose of trading;
• they expect to realise the asset, or intend to sell or consume it, in its normal operating cycle;
• the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period; or
• they do not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

The Group and the Bank classify all other assets and liabilities as current.

The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled.