That is why we stand together and act as one with our partners, suppliers and customers. We help set a new future.
A strong “we” is the sum of all of us
Together, we are building a better future for all.
We are building on a strong foundation to make our production more sustainable.
The future is something we create. By concrete actions, we give weight to our words and bring them to reality. We have proved that we can set a new direction and make great changes.
This journey is not ours only, but we promise to be the leaders of change in a positive way for everyone.
Despite the impact of the second lockdown in March this year, our performance for FY2021 has been positive in many respect, thanks to the completion of major public infrastructure and property development projects which were underway when the first lockdown was imposed but also to the government initiatives to boost our industry in such exceptional times.
KEY COMPETITIVE STRENGTHS
A robust foundation: UBP’s long history in Mauritius and financial stability means that we have a robust foundation to lean on when difficult times arise. Although we do not expect the construction sector to be affected too severely, it is important to be aware of this strength and continue to reinforce it.
An engaged workforce: We have always been proud of our work culture and how united we are as a team. The results of our engagement survey last year have demonstrated this to be true still today. Together, we can go far and accomplish much.
Strong reputation across companies and brands: Our history, good governance and customer service have provided us with a strong and stable reputation in our markets. This continues to enable us to have a wide market reach, in both B2C and B2B segments, and ensures loyalty from our customers.
A flexible strategy: Our strategy is designed in a way that allows a certain flexibility and agility in attaining our business goals. This adaptive approach to strategy is particularly effective when the business environment is hard to predict and to shape. By capturing change signals and responding to the evolving environment, we have the ability to promptly adjust our needs and goals.
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“The Group has proven its resilience and achieved a strong set of results. We recorded revenues of Rs 3.3bn, a 17% increase over last year, and a net profit of Rs 215.6m (compared to Rs 21.9m in 2020) on the back of a good performance from UBP’s local core business entities and Espace Maison. This brings us back to pre-COVID-19 profitability levels (2019: Rs 207.3m), indicating the strength of our strategy and business model.”
Dear Shareholders,
2020 will most certainly be remembered for bringing unexpected trials to billions around the world—many of which will continue to be felt for years to come. First and foremost a health crisis, COVID-19 has also disrupted entire economies, industries, businesses and communities worldwide.
This Integrated Report, which covers The United Basalt Products Limited’s performance for the year ended June 30, 2021, provides an overview of the Group’s performance, how it adapted to new circumstances and what the future holds.
OUR OPERATING CONTEXT AND BUSINESS ENVIRONMENT
At the time of writing, Mauritius is set to reopen its borders to international tourists and businesses have resumed operating with strict safety restrictions in place. That is not to say that the pandemic is in the rearview mirror. The island went into a three-week lockdown in March 2021, exacerbating certain national indicators: GDP shrank by an estimated 14.7% in 2020, mainly driven by international travel restrictions; the Mauritian Rupee experienced a steep depreciation, sinking by 14.2% against the USD and 23.4% against the Euro between March 2020 and June 2021. All of this impacted our clients dearly, as they are confronted with not just increasing prices and costs, but also a loss of income and purchasing power.
Despite contracting by 25.8% in 2020, the construction sector is showing an impressive level of resilience, particularly as it is notorious for being slow to change. The industry is projected to rebound by 25.2% in 2021, driven by a large backlog in existing projects, coupled with sizable investments in the pipeline for 2021- 22, namely a budget of Rs 65bn to be invested in infrastructure projects to cater for flood management, social housing, sports and recreational facilities, and the ongoing Metro Express rail network—all of which aim to improve the overall quality of life. This amount includes Rs 8bn from the private sector to develop the urban terminals around the metro, fuelling demand for our construction materials.
NAVIGATING THE COVID-19 LANDSCAPE
The Group’s response to COVID-19 was guided by good sanitary practices, and the determination to protect our employees and their families. Our Back- To-Work Guidelines, which have been in place since last year, have framed new standards and behaviours across our subsidiaries. Today, mask-wearing, temperature checks, virtual meetings and flexible work arrangements have become routine and integral to our work culture—a mindset that was critical in maintaining business as usual, with no interruptions, during the March 2021 lockdown.
Effective and regular communication around the vaccine also played a key role in ensuring a safe return to work. Through surveys, our Facebook group and educational videos, our team members were provided with transparent and accurate information on the benefits, efficacy and potential side effects of the vaccines. As of June 30, 2021, over 84% of the Group’s employees have successfully received one dose and 81% have completed both vaccine doses.
ACHIEVING STRONG BUSINESS PERFORMANCE
UBP and Espace Maison felt the full force of rising import costs, particularly as 60% of Espace Maison’s products are imported. UBP, for its part, was impacted by the cost of imported cement, spare parts, additives and fuel. However, we are fortunate that our core business— construction and building materials—has been designated to play a vital role in the recovery of our economy. Because of this, the impacts of the pandemic were largely offset and somewhat limited. The Group has proven its resilience and achieved a strong set of results. We recorded revenues of Rs 3.3bn, a 17% increase over last year, and a net profit of Rs 215.6m (compared to Rs 21.9m in 2020) on the back of a good performance from UBP’s local core business entities and Espace Maison. This brings us back to pre-COVID-19 profitability levels (2019: Rs 207.3m), indicating the strength of our strategy and business model.
“Nearly one third of Group turnover is attributed to Espace Maison, which, despite rising foreign exchange costs, managed to generate record revenues close to Rs 1bn.”
Nearly one third of Group turnover is attributed to Espace Maison, which, despite rising foreign exchange costs, managed to generate record revenues close to Rs 1bn and an operating profit of Rs 34.5m. Having spent the past year developing efficient digital processes, as well as e-commerce and logistics capabilities, Espace Maison was able to continue serving customers in their time of need, with no discontinuity in its activities.
Gros Cailloux, for its part, saw an improvement over last year, thanks to our greenhouse and vegetable-growing activities. Though it is still performing below expectations, we are confident in our long- term vision and our ability to deliver on our objectives.
Although our core business performed well locally, UBP’s overall turnover was dampened by another unprofitable year in our subsidiary in Madagascar: operating losses amounted to Rs 39.6m for the year under review, compared to Rs 6.2m in 2020. COVID-19 has sent Madagascar into a spiralling recession, worsening its economic and social situation. Not only were we unable to exploit our quarry, but we also experienced a breakdown in our factory in Tamatave and are uncertain about renewing our contract with our client of blasting services. We are currently collaborating with a reputed consulting firm to assess the long-term viability of our business in Madagascar.
Following years of challenges and setbacks in Sri Lanka, we decided to discontinue our operations there and dispose of our subsidiary. Discussions with a potential buyer are at an advanced stage and will be finalised during the coming months. I believe that our decisions concerning our overseas subsidiaries will enable us to sharpen our focus on the local market and dedicate more resources to developing innovative products through increased Research and Development.
In light of all of the above, I am pleased to announce that the Board voted for a dividend per share of Rs 3 (compared to Rs 1.90 last year), representing a total dividend payout of Rs 79.5m. Earnings per share also increased from Rs 0.68 last year to Rs 7.40 this year. This reflects the Board’s confidence in our financial strength and future prospects.
Since our listing on the Stock Exchange of Mauritius in 1989, the Group has delivered positive and steady returns to its shareholders, averaging an annualised return of 16%. This track record has consistently earned us a place on the SEM’s top ten value-creators based on Annualised Total Shareholder Returns, and is a compelling case that UBP is likely to be a high-return investment over the long term.
MOVING TOWARDS AN INTEGRATED AND UNITED GROUP
2021 was the continued pursuit of our strategy: an integrated and agile Group, capable of capitalising on the synergy levers between its different businesses. During the year, we made major strides in our strategic focus areas:
- A Group-level digitisation plan
After deploying Office365 at UBP in 2020, we spent the last year ensuring its adoption by our employees. Through training programmes, we aim to drive the integration of collaborative tools into our team members’ daily work routines and habits, and also strengthen our cybersecurity processes. Our efforts were corroborated during the two lockdown periods, where our teams communicated effectively through Teams and worked productively without disruption. We also deployed a CRM at Drymix, which is currently in the testing stage, and we aim to launch UBP’s and EML’s in the months to come. Once synced, these will help us achieve our strategy of placing our customers at the centre of our activities. Other pilot projects are also being carried out across different businesses.
- Increased collaboration between our teams
We are in the process of developing a Social Workplace, the Group’s new intranet, which aims to be more inclusive. Once completed, the platform will centralise communication and engage our entire workforce around polls, event invitations, blog posts, photos, and more. Learning and development are also integral for the sharing and transfer of knowledge across teams, a goal that is being driven by the UBP Knowledge Hub. (More information on page 76.) We are also moving towards a projects- based work model, rather than a roles- based one, whereby cross-functional teams from different departments and functions collaborate on a common set of objectives.
- Innovative products centred on sustainability
We adopted Sustainability commitments at Group-level, which will cascade down to our entities and rally the Group around common environmental and social objectives. Our approach is based on monitoring our use of resources, reducing energy consumption in our operations, and developing circular solutions. UBP’s Megablock is one of our most recent introductions in pursuance of this goal: its modular interlocking system allows for greater flexibility and reuse, eliminating the need for shuttering. We also voluntarily conducted a Life Cycle Assessment of our blocks in order to earn an Environmental Product Declaration. This attests to our genuine efforts in setting measurable goals to improve our environmental impact. The alarming results of the Intergovernmental Panel on Climate Change’s (IPCC) 2021 report have only reinforced our environmental commitments, which are laid out on page 66.
Climate Change’s (IPCC) 2021 report
- A step closer to realising our C’Nergy ambitions
Another strategic milestone is our decision to move from being 49% shareholders in Pre-Mixed Concrete Ltd to being 100% shareholders. At the time of writing, we have only announced our decision to exercise our rights of first refusal and are hoping to complete the transaction this coming year. As massive users of cement, this move will be key in transitioning to a vertically-integrated business and positioning the Group as a one-stop-shop for all our customers’ construction and home furnishing needs. It’s what we call C’Nergy.
“The pandemic has reinforced our long-held belief that value creation is about delivering more than just financial returns; it has highlighted heightened stakeholder expectations when it comes to an organisation’s environmental and social performance.”
IMPROVING UBP’S RESILIENCE THROUGH GOOD GOVERNANCE AND RISK MANAGEMENT
The Board spends significant time each year constructively rethinking our policies and practices. This year was no different. Recognising that the right mix of skills and experiences is crucial for strong leadership, we conducted a Board skills assessment to determine those most needed to help UBP achieve its goals. Following this exercise, we welcomed a new independent Director, Stéphane Brossard, who brings his extensive experience in the construction sector in Réunion Island. We have a well-rounded and high- performing Board that is equipped to take UBP’s vision forward. In parallel, we reviewed our Risk Framework to evaluate our adaptability and readiness in the face of new uncertainties and changing circumstances. This includes recruiting a full-time Risk & Compliance Officer, whose role is to develop risk metrics and integrate them in our performance appraisal systems. In addition, we enhanced succession planning within the Group to ensure we have the right skills to fill business-critical positions in the future.
The pandemic has reinforced our long-held belief that value creation is about delivering more than just financial returns; it has highlighted heightened stakeholder expectations when it comes to an organisation’s environmental and social performance. This year, we stepped back to reflect on what UBP stands for, our raison d’être, and what meaningful value we bring to Mauritians. More than ever before, we became conscious of our global responsibility. During the year, we sought to gain a deeper understanding into how our stakeholders view us and what they expect from us. Focus groups and workshops were conducted within each subsidiary, and the results brought to light important issues and areas in which we could improve. This constructive feedback is invaluable to us and will guide our decisions moving forward.
We are also in the process of redesigning our CSR programme across our sponsorships, partnerships and social commitments, while strongly encouraging employees to participate and volunteer in purposeful projects.
Though there is much uncertainty ahead, the coming year brings a host of opportunities for the Group. The measures announced in the National Budget 2021-22 are conducive to our industry’s growth and will continue to fuel our motivation to meet new stakeholder expectations. In this context, we are continuing to pursue a comprehensive review of our strategy, the outcome of which I look forward to sharing with you in next year’s report.
I am confident that UBP has a promising future, both in the short and long term. We are led by executives and a management team who demonstrated great responsiveness in the face of challenges. Their ability to coordinate cohesive actions across departments and subsidiaries was nothing short of remarkable. This was only made possible by the support of a hard-working, engaged and purpose-driven workforce. It is this nimble spirit that has brought us where we are, and that will help us thrive into the future.
I would like to thank all our employees for your courage and for continuing to embody UBP’s values in all that you do. I am proud of the way you have emerged from 2020 as a stronger and more united team, making UBP, in turn, a more resilient organisation.
I would also like to sincerely thank I would also like to sincerely thank our Group CEO, Stéphane Ulcoq and his team, for leading the Group through one of the most testing times in recent memory.
I extend my appreciation to my fellow Board members for their guidance, especially in a time when a Board’s role has taken on heightened significance. This applies not just to matters of corporate governance, but also their pivotal role in providing stewardship and strategic guidance.
On behalf of the Board, I would like to express our gratitude to our customers and business partners for their continued support and loyalty.
Last but not least, thank you to our shareholders for the trust you continue to place in us, year after year.
