SACOS GROUP LIMITED 1 CORPORATE INFORMATION ......SACOS GROUP LIMITED 6(a) STATEMENTS OF FINANCIAL POSITION (CONT'D) - DECEMBER 31, 2015 Notes 2015 2014 2015 2014 SR SR SR SR Technical

SACOS GROUP LIMITED

1

CORPORATE INFORMATION

Vision Statement :

: To be a major real estate developer.

Mission Statement :

:

Core Values : Integrity – Honesty – Customer Satisfaction – Loyalty to stakeholders

Board of Directors

Chairman : Mr B. Hoareau Attorney Appointed June 9, 2015

Directors : Mr L. Rivalland C.E.O. Appointed July 16, 2007

Swan Group

Mr J.C. D’Offay Retiree Appointed December 11, 2009

Mr P. Bastide Senior Manager Appointed March 28, 2013

Swan Group

Mr. M. Inch Managing Partner Appointed September 30, 2014

Bluebird Investissements

Mr. R. Thorrington Consultant Appointed April 2, 2015

Mrs. L. Nair C.E.O. Appointed April 22, 2015

Seychelles Pension Fund

Mrs. I. Barbe Consultant Appointed October 19, 2015

Company Secretary : Mr J. Raguin Executive Manager Appointed September 3, 2015

SACOS Group

To be the leading insurer in terms of premium volume and profitability in

Seychelles.

To provide quality insurance solutions, strong security and excellent service to

our customers.

To look after the interests of our stakeholders including customers,

shareholders, employees and the community at large

SACOS GROUP LIMITED

1(a)

CORPORATE INFORMATION (CONT'D)

Legal Advisers : K.B Shah

Attorney-at-Law & Notary Public

D. Lucas

Attorney-at-Law & Notary Public

Auditors : BDO Associates

Chartered Accountants

Actuaries : State Insurance Company of Mauritius Limited

Port Louis, Mauritius

Bankers : Bank of Baroda (Seychelles)

Barclays Bank (Seychelles) Limited

Habib Bank (Seychelles)

Seychelles International Mercantile Banking Corporation Limited (Nouvobanq)

Seychelles Commercial Bank Limited

The Mauritius Commercial Bank (Seychelles) Limited

SACOS GROUP LIMITED

4

DIRECTORS' REPORT - DECEMBER 31, 2015

PRINCIPAL ACTIVITIES & CURRENT YEAR EVENTS

(i) SACOS Insurance Company Limited (hereafter referred as 'SICL');

(ii) SACOS Life Assurance Company Limited (hereafter referred as 'SLACL'); and

(iii) Sun Investment (Seychelles) Limited (hereafter referred as 'SISL')

The activities of the subsidiaries are detailed in note 8 to the financial statements.

RESULTS

THE THE

GROUP COMPANY

SR'000 SR'000

Profit before taxation 33,296 20,153

Taxation (charge)/credit (10,340) (1,661)

Profit after taxation 22,956 18,492

Retained earnings brought forward 86,704 36,762

Profits available for distribution 109,660 55,254

Dividends (17,000) (17,000)

Retained earnings carried forward 92,660 38,254

DIVIDENDS

EQUIPMENT AND INVESTMENT PROPERTIES

Dividends of SR 8.50 per share amounting to SR 17m were proposed for the year under review (2013: SR 6

per share amounting to SR 12m).

The Directors are pleased to submit their report together with the audited financial statements of the Group

and the Company for the year ended December 31, 2015.

The principal activity of the Company (hereafter referred as 'SGL') is that of an investment holding and sale

of spare parts and related services. These activities have remained unchanged during the year under review.

The subsidiaries are listed below:

Additions to equipment during the year amounting to SR 3.6m (2014: SR 734k) for the Group and Nil (2014:

SR 25k) for the Company and these comprised mainly motor vehicles, computer equipment and furniture &

fittings.

Additions to investment properties during the year amounted to SR 529k (2014: SR 9.4m) comprised mainly

assets under construction.

The Directors have estimated that the carrying amount of equipment and investment properties as at the

date of the reporting period approximate their fair value.

SACOS GROUP LIMITED

4(a)

DIRECTORS' REPORT (CONT'D) - DECEMBER 31, 2015

DIRECTORS AND DIRECTORS' INTERESTS

SGL SICL SLACL SISL

2015 2014

B Hoareau (Chairman) - - P P P P

L Rivalland - - P P P P

J C D'Offay 670 670 P P P P

P Bastide - - P P P P

M Inch* 250,000 250,000 P P P P

R Thorrington 73 - P P P P

L Nair 280 280 P P P P

I Barbe - - P P P P

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors consider they have met the aforesaid responsibilities.

AUDITORS

The auditors, Messrs. BDO Associates, retire and being eligible offer themselves for re-appointment.

The Directors of the Company and its subsidiaries since the date of the last report and the date of this

report are:

* Mr. Inch also holds shares in SACOS Group Limited through Bluebird Investissement SARL (96,596 shares).

The Directors are responsible for the overall management of the affairs of the Group including its operations

and making investment decisions.

The Board is responsible for the preparation and fair presentation of these financial statements in

accordance with International Financial Reporting Standards (IFRS) and in compliance with the Seychelles

Companies Act, 1972 and the Insurance Act 2008. This responsibility includes: designing, implementing and

maintaining internal control relevant to the preparation and fair presentation of financial statements that

are free from material misstatement, whether due to fraud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that are reasonable in the circumstances. The

Directors have the general responsibility of safeguarding the assets, both owned by the Group and those that

are held in trust and used by the Group.

Number of shares

held at year-end

SACOS GROUP LIMITED 4(b)

DIRECTORS' REPORT (CONTD) - DECEMBER 31,2015

BOARD APPROVAL

. :",'

Jl'thc" ~ B Hoareau Director

~ I Barbe Director

:t1-:~liP ,~

L Rivalland Director

, .t-. ' ___ ~\. ->: ,//

Minch Director

~. L Nair Director.

~-J C D'Offay

Director

~ P Bastide Director

~L R Thorrington

Director

Dated: March 21, 2016 Victoria, Seychelles

SACOS GROUP LIMITED

5

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS

Report on the Financial Statements

Board's Responsibility for the Financial Statements

Auditors' Responsibility

This report is made solely to the members of SACOS Group Limited and its subsidiaries, (the

"Group") , as a body, in terms of our engagement to conduct the audit on their behalf. Our audit

work has been undertaken so that we might state to the members those matters which we are

required to state to them in an auditors' report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the members as a

body, for our audit work, for this report, or for the opinions we have formed.

We have audited the attached financial statements of SACOS Group Limited set out on pages 6 to

61 which comprise the Statements of Financial Position as at December 301, 2015, the Statements

of Profit or Loss and Other Comprehensive Income, the Statements of Changes in Equity and the

Statements of Cash Flows for the year then ended and a summary of significant accounting policies

and explanatory notes.

As stated on page 4(a) of the Directors' Report, the Board of Directors are responsible for

preparation of the financial statements.

Our responsibility is to express an opinion on those financial statements based on our audit. We

conducted our audit in accordance with International Standards on Auditing. Those standards

require that we plan and perform the audit to obtain reasonable assurance that the financial

statements are free of material misstatement. An audit involves performing procedures to obtain

audit evidence about the amounts and disclosures in the financial statements. The procedures

selected depend on the auditors' judgement, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error. In making these risk

assessments, the auditors consider internal control relevant to the Group's preparation and fair

presentation of the financial statements in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

Group's internal control. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by the Board of Directors as

well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

SACOS GROUP LIMITED

6

STATEMENTS OF FINANCIAL POSITION - DECEMBER 31, 2015

Notes

2015 2014 2015 2014

SR SR SR SR

ASSETS

Non-current assets

Equipment 5 4,838,564 2,392,650 73,907 92,695

Investment properties 6 47,190,346 47,433,527 - -

Intangible assets 7 442,093 878,160 24,708 49,913

Investment in subsidiaries 8 - - 64,271,362 64,271,362

Deferred tax assets 9 46,025 435,415 - 2,590

52,517,028 51,139,752 64,369,977 64,416,560

Current assets

Inventories 10 6,933,851 7,253,647 6,933,851 7,253,647

Investment in financial assets 11 84,042,613 101,484,109 34,648,935 32,786,083

Trade and other receivables 12 74,755,569 54,120,052 3,366,267 3,057,314

Cash and cash equivalents 13 64,062,740 61,549,318 2,546,989 1,617,479

229,794,773 224,407,126 47,496,042 44,714,523

Life Business Assets 14 414,996,965 395,022,911 - -

Total assets 697,308,766 670,569,789 111,866,019 109,131,083

EQUITY AND LIABILITIES

Capital and reserves

Share capital 15 70,000,000 70,000,000 70,000,000 70,000,000

Retained earnings 92,660,794 86,704,559 38,254,496 36,762,369

Total equity 162,660,794 156,704,559 108,254,496 106,762,369

The notes on pages 10 to 61 form an integral part of these financial statements.

Auditors' report on pages 5 and 5(b).

THE GROUP THE COMPANY

SACOS GROUP LIMITED

6(a)

STATEMENTS OF FINANCIAL POSITION (CONT'D) - DECEMBER 31, 2015

Notes

2015 2014 2015 2014

SR SR SR SR

Technical provisions

Life Assurance Fund 14 414,996,965 395,022,911 - -

Gross outstanding claims and IBNR 17/23 25,705,962 18,345,286 - -

Gross unearned premiums 17/23 61,133,773 67,646,244 - -

Mortgage protection fund 18 370,503 506,453 - -

Fisheries and Agricultural fund 19 1,282,687 2,000,000 - -

503,489,890 483,520,894 - -

LIABILITIES

Non-current liabilities

Retirement benefit obligations 20 2,799,883 2,827,665 - -

Deferred tax liabilities 9 - - 24,654 -

2,799,883 2,827,665 24,654 -

Current liabilities

Trade and other payables 21 24,554,604 26,634,097 2,833,404 2,301,362

Current tax liabilities 22 3,803,595 882,574 753,465 67,352

28,358,199 27,516,671 3,586,869 2,368,714

Total liabilities 31,158,082 30,344,336 3,611,523 2,368,714

Total equity and liabilities 697,308,766 670,569,789 111,866,019 109,131,083



THE COMPANYTHE GROUP

SACOS GROUP LIMITED 6(b)

STATEMENTS OF FINANCIAL POSITION (CONTD) - DECEMBER 31, 2015

These financial statements have been approved for issue by the Board of Directors on March 21,2016.

J!!/ro(h ~ B Hoareau Director

~ P Bastide Director

~ ~ L Nair Director

~ I Barbe Director

I ~ \~/>/ ~/

Minch Director

R Thorrington Director

/;/)~j0 !~ L Rivalland Director

~..

J C D'Offay Director

The notes on pages 10 to 61 form an integral part of these financial statements. Auditors' report on pages 5 and 5(b).

SACOS GROUP LIMITED

7

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME - YEAR ENDED DECEMBER 31, 2015

Notes

2015 2014 2015 2014

SR SR SR SR

Turnover 2(v) 148,687,905 144,604,512 - -

Gross written premiums 23(b) 148,687,905 144,604,512 - -

Premiums ceded to reinsurers 23(b) (57,031,591) (51,734,504) - -

Change in gross unearned premium 23(b) 6,512,471 (14,493,047) - -

Movement in recoverable from reinsurers 23(b) 1,750,459 8,929,638 - -

Net premium earned 99,919,244 87,306,599 - -

Gross claims paid 23(a) (52,096,514) (45,605,522) - -

Recoverable from reinsurers 23(a) 5,027,810 8,022,927 - -

Movement in gross outstanding claims 23(a) (7,360,676) (6,638,050) - -

Movement in recoverable from reinsurers 23(a) 8,856,548 1,811,042 - -

Net claims incurred (45,572,832) (42,409,603) - -

Commission receivable from reinsurers 8,405,169 6,185,062 - -

Commission paid to agents and brokers (12,753,911) (7,935,061) - -

Net commission paid (4,348,742) (1,749,999) - -

Underwriting surplus 49,997,670 43,146,997 - -

Rental income 2,667,963 2,218,550 - -

Investment income 24 8,114,835 6,693,521 15,793,894 14,128,130

Sundry income 25 8,018,103 8,483,845 3,478,620 3,426,391

Increase in fair value of investment

properties 6 1,815,013 1,153,549 - -

20,615,914 18,549,465 19,272,514 17,554,521

Staff costs 26 (16,660,068) (15,339,172) (74,896) (180,464)

Marketing and administrative expenses 27 (21,167,381) (16,095,643) (451,196) (519,379)

Other operating expenses 28 (935,753) (1,116,268) (39,250) (45,919)

(38,763,202) (32,551,083) (565,342) (745,762)

Share of surplus of Life Assurance Fund 14(a) 1,446,075 1,986,028 1,446,075 1,986,028

Profit before taxation 33,296,457 31,131,407 20,153,247 18,794,787

Taxation (charge)/credit 22(b) (10,340,222) (5,119,612) (1,661,120) 783,021

Total comprehensive income for the year 22,956,235 26,011,795 18,492,127 19,577,808




SACOS GROUP LIMITED

8

STATEMENTS OF CHANGES IN EQUITY - YEAR ENDED DECEMBER 31, 2015

THE GROUP

Share Retained

capital earnings Total

SR SR SR

At January 1, 2015 70,000,000 86,704,559 156,704,559

Total comprehensive income for the year - 22,956,235 22,956,235

Dividends (note 31) - (17,000,000) (17,000,000)

At December 31, 2015 70,000,000 92,660,794 162,660,794

At January 1, 2014 70,000,000 74,692,764 144,692,764


Dividends (note 31) - (14,000,000) (14,000,000)

At December 31, 2014 70,000,000 86,704,559 156,704,559

THE COMPANY

Share Retained

capital earnings Total

SR SR SR

At January 1, 2015 70,000,000 36,762,369 106,762,369


Dividends (note 31) - (17,000,000) (17,000,000)

At December 31, 2015 70,000,000 38,254,496 108,254,496

At January 1, 2014 70,000,000 31,184,561 101,184,561


Dividends (note 31) - (14,000,000) (14,000,000)

4At December 31, 2014 70,000,000 36,762,369 106,762,369



SACOS GROUP LIMITED

9

STATEMENTS OF CASH FLOWS - YEAR ENDED DECEMBER 31, 2015

Notes

2015 2014 2015 2014

SR SR SR SR

Cash flows from operating activities


Adjustments for:

Depreciation of equipment 5 910,548 1,099,108 14,045 45,919

Profit on disposal of equipment (297,809) - (6,758) -

Profit on sale of investment properties (164,738) - - -

Change in fair value of investment properties 6 (1,815,013) (1,153,549) - -

Amortisation of intangible asset 7 25,205 9,584 25,205 -

Impairment of intangible asset 7 417,384 411,367 - -

Release of Mortgage Protection Fund 18 (135,950) (174,343) - -

Release of Fisheries and Agricultural Fund 19 (717,313) - - -

Movement in retirement benefit obligations 20 1,328,674 765,420 - -

Accrued interests 11 (2,032,238) (3,917,503) (1,047,215) (2,628,130)

(Reversal)/Charge of provision for credit impairment 12 (637,658) 453,269 - -

Effect of change in exchange rates (1,036,473) (1,874,560) - -

29,141,076 26,750,200 19,138,524 16,212,576

Changes in working capital:

- Inventories 319,796 424,893 319,796 424,893

- Trade and other receivables (9,390,852) 2,191,132 (308,953) (2,153,548)

- Trade and other payables (2,079,493) 11,347,899 532,042 (8,080,139)

- Gross claims liabilities 23(a) 7,360,676 6,638,050 - -

- Recoverable from reinsurers

- outstanding claims 23(a) (8,856,548) (1,811,042) - -

- unearned premium 23(b) (1,750,459) (8,929,638) - -

- Unearned premium 23(b) (6,512,471) 14,493,047 - -

8,231,725 51,104,541 19,681,409 6,403,782

Net tax paid 22 (7,029,812) (7,357,956) (947,763) (1,977,657)

Retirement benefit obligation paid 20 (1,356,456) (62,935) - -

Net cash inflow/(outflow) from operating activities (154,543) 43,683,650 18,733,646 4,426,125

Cash flows from investing activities

Purchase of equipment 5 (3,631,154) (734,103) - (24,957)

Proceeds from disposal of equipment 572,501 - 11,501 -

Purchase of investment properties 6 (528,806) (9,368,510) - -

Proceeds from sale of investment properties 2,751,739 - - -

Purchase of intangible assets 7 (6,522) (49,913) - (49,913)

Additions to investment in financial assets 11 (115,012,580) (72,002,567) (50,439,076) (36,614,351)

Redemption of investment in financial assets 11 134,486,314 95,639,695 49,623,439 50,958,974

Net cash inflow from investing activities 18,631,492 13,484,602 (804,136) 14,269,753

Cash flows from financing activity

Dividends paid and net cash outflow from

financing activity 31 (17,000,000) (14,000,000) (17,000,000) (14,000,000)

Net change in cash and cash equivalents 1,476,949 43,168,252 929,510 4,695,878

Movement in cash and cash equivalents

At January 1, 61,549,318 16,506,506 1,617,479 (3,078,399)

Change 1,476,949 43,168,252 929,510 4,695,878

Effect of change in exchange rates 1,036,473 1,874,560 - -

At December 31, 13 64,062,740 61,549,318 2,546,989 1,617,479




SACOS GROUP LIMITED

10

NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED DECEMBER 31, 2015

1. GENERAL INFORMATION

2. PRINCIPAL ACCOUNTING POLICIES

(a) Basis of preparation

(i) investment properties are stated at their revalued amounts;

(ii) held-to-maturity investments and relevant financial assets are carried at amortised cost; and

(iii) relevant financial assets are stated at their fair value.

Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) applies to contributions from

employees or third parties to defined benefit plans and clarifies the treatment of such contributions.

The amendment distinguishes between contributions that are linked to service only in the period in

which they arise and those linked to service in more than one period. The objective of the amendment

is to simplify the accounting for contributions that are independent of the number of years of employee

service, for example employee contributions that are calculated according to a fixed percentage of

salary.

Entities with plans that require contributions that vary with service will be required to recognise the

benefit of those contributions over employee’s working lives. The amendment has no impact on the

Group’s financial statements.

Annual Improvements 2010-2012 Cycle

IFRS 2, ‘Share based payments’ amendment is amended to clarify the definition of a ‘vesting condition’

and separately defines ‘performance condition’ and ‘service condition’. The amendment has no impact

on the Group’s financial statements.

Standards, Amendments to published Standards and Interpretations effective in the reporting

period

SACOS Group Limited was incorporated under the Companies Act, 1972 on November 22, 2005. The

activities of the Company and the subsidiaries are detailed under the Directors' report on page 4 and

note 8 respectively.

The Company is domiciled in Seychelles and its registered office is SACOS Tower, Palm Street, Victoria,

Mahé, Seychelles.

These financial statements will be submitted for consideration and approval at the forthcoming Annual

General Meeting of the shareholders of the Company.

The principal accounting policies adopted in the preparation of these financial statements are set out

below. These policies have been consistently applied to all the years presented, unless otherwise

stated.

The financial statements of SACOS Group Limited have been prepared in accordance with International

Financial Reporting Standards (IFRS), the Seychelles Companies Act, 1972 and the Insurance Act, 2008.

These financial statements have been prepared under the historical cost convention, except that:

SACOS GROUP LIMITED

11


2. PRINCIPAL ACCOUNTING POLICIES (CONT'D)

(a) Basis of preparation (Cont'd)

Annual Improvements 2011-2013 Cycle

IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’ is amended to clarify in the

Basis for Conclusions that an entity may choose to apply either a current standard or a new standard

that is not yet mandatory, but permits early application, provided either standard is applied

consistently throughout the periods presented in the entity’s first IFRS financial statements. The

amendment has no impact on the Group’s financial statements, since the Group is an existing IFRS

preparer.

IFRS 8, ‘Operating segments’ is amended to require disclosure of the judgements made by management

in aggregating operating segments. It is also amended to require a reconciliation of segment assets to

the entity’s assets when segment assets are reported. The amendment has no impact on the Group’s

financial statements.

IFRS 13 (Amendment), ‘Fair Value Measurement’ clarifies in the Basis for Conclusions that short-term

receivables and payables with no stated interest rates can be measured at invoice amounts when the

effect of discounting is immaterial. The amendment has no impact on the Group’s financial

statements.

IFRS 3,’Business combinations’ is amended to clarify that IFRS 3 does not apply to the accounting for

the formation of any joint venture under IFRS 11. The amendment has no impact on the Group’s

financial statements.

IAS 16, ’Property, plant and equipment’ and IAS 38,’Intangible are amended to clarify how the gross

carrying amount and the accumulated depreciation are treated where an entity uses the revaluation

model. The amendment has no impact on the Group’s financial statements.

IAS 24,’Related party disclosures’ is amended to include, as a related party, an entity that provides key

management personnel services to the reporting entity or to the parent of the reporting entity (the

‘management entity’). Disclosure of the amounts charged to the reporting entity is required. The

amendment has no impact on the Group’s financial statements.

IAS 38, ‘ Intangible Assets’ is amended to require an entity to take into account accumulated

impairment losses when adjusting the amortisation on revaluation. The amendment has no impact on

the Group’s financial statements


period (Cont'd)

IFRS 3, ‘Business combinations’ is amended to clarify that an obligation to pay contingent consideration

which meets the definition of a financial instrument is classified as a financial liability or equity, on the

basis of the definitions in IAS 32, ‘Financial instruments: Presentation’. It also clarifies that all non-

equity contingent consideration is measured at fair value at each reporting date, with changes in value

recognised in profit and loss. The amendment has no impact on the Group’s financial statements.

SACOS GROUP LIMITED

12




IFRS 9 Financial Instruments

Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)

IFRS 14 Regulatory Deferral Accounts

Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)

IFRS 15 Revenue from Contract with Customers

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)

Equity Method in Separate Financial Statements (Amendments to IAS 27)

Annual Improvements to IFRSs 2012-2014 Cycle

Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)

Disclosure Initiative (Amendments to IAS 1)

Standards, Amendments to published Standards and Interpretations issued but not yet effective.

Certain standards, amendments to published standards and interpretations have been issued that are

mandatory for accounting periods beginning on or after 1 January 2016 or later periods, but which the

Group has not early adopted.

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10

and IAS 28)

Where relevant, the Group is still evaluating the effect of these Standards, amendments to published

Standards and Interpretations issued but not yet effective, on the presentation of its financial

statements.


period (Cont'd)

IFRS 13,’Fair value measurement’ is amended to clarify that the portfolio exception in IFRS 13 applies

to all contracts (including non-financial contracts) within the scope of IAS 39 or IFRS 9. The amendment

has no impact on the Group’s financial statements.

IAS 40,’Investment property’ is amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive. IAS

40 assists users to distinguish between investment property and owner-occupied property. Preparers

also need to consider the guidance in IFRS 3 to determine whether the acquisition of an investment

property is a business combination. The amendment has no impact on the Group’s financial

statements.

At the reporting date of these financial statements, the following were in issue but not yet effective:

SACOS GROUP LIMITED

13




(b) Equipment

Rates

Furniture and fittings 10%

Computer and equipment 15% - 20%

Motor vehicles 25%

(c) Investment properties

(d) Intangible assets

Computer software

The preparation of financial statements in conformity with IFRS requires the use of certain critical

accounting estimates. It also requires management to exercise its judgement in the process of applying

the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or

areas where assumptions and estimates are significant to the financial statements, are disclosed in Note

4.

Subsequent costs are included in the assets' carrying amount or recognised as a separate asset as

appropriate, only when it is probable that future economic benefits associated with the item will flow

to the Group and the cost of the item can be measured reliably.

Depreciation on property and equipment is calculated on the straight line method to write off the cost

of each asset to their residual values over their estimated useful life as follows:

The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each balance

sheet date.

Where the carrying amount is greater than its recoverable amount, it is written down to its recoverable

amount.

Gains and losses on disposals of equipment including revalued assets are determined by comparing

proceeds with their carrying amount and are included in the statement of profit or loss.

Investment properties, held to earn rentals/or for capital appreciation or both and not occupied by

the Group are initially stated at cost, including transaction costs are carried at fair value, representing

open value determined annually by external valuers.

Gains and losses arising from changes in fair values of investment properties are recognised in the

statement of profit or loss.

Acquired computer software licenses are capitalised on the basis of costs incurred to acquire and bring

to use the specific software and are amortised using the straight line method over the estimated useful

life of 3⅓ years.

All equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is

directly attributable to the acquisition of the items.

Where relevant, the Group is still evaluating the effect of these Standards, amendments to published

Standards and Interpretations issued but not yet effective, on the presentation of its financial

statements.

SACOS GROUP LIMITED

14



(d) Intangible assets (Cont'd)

Website

(e) Impairment of non-financial assets

(f) Investments in subsidiaries

Separate financial statements of the investor

Consolidated financial statements

Costs that are directly associated with the development of the Group's website and which will probably

generate economic benefits exceeding costs beyond one year, are recognised as intangible assets.

Direct costs include staff costs of the software development team and an appropriate portion of

relevant overheads. Website development costs recognised as assets are amortised using a straight-line

method over their useful lives of 3⅓ years.

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for

impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its

recoverable amount. The recoverable amount is the higher of an assets' fair value less costs to sell and

value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for

which there are separately identifiable cash flows (cash-generating units).

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group

controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement

with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are

de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group. The

consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred,

the liabilities incurred and the equity interests issued by the Group.

The consideration transferred includes the fair value of any asset or liability resulting from a contingent

consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets

acquired and liabilities and contingent liabilities assumed in a business combination are measured

initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group

recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling

interest’s proportionate share of the acquiree’s net assets.

In the separate financial statements of the investor, investment in subsidiary company is carried at

cost. The carrying amount is reduced to recognise any impairment in the value of investment.

SACOS GROUP LIMITED

15



(f) Investments in subsidiaries (Cont'd)

Consolidated financial statements (Cont'd)

Transactions and non-controlling interests

Disposal of subsidiaries

(g) Financial instruments

Categories of financial assets

Held-to-maturity financial assets

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree

and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of

the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the

fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference

is recognised directly in the statement of profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group companies

are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been

changed where necessary to ensure consistency with the policies adopted by the Group.

The Group treats transactions with non-controlling interests as transactions with equity owners of the

Group. For purchases from non-controlling interests, the difference between any consideration paid and

the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.

Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair

value, with the change in carrying amount recognised in statement of profit or loss. The fair value is

the initial carrying amount for the purposes of subsequently accounting for the retained interest as an

associate, joint venture or financial asset. In addition, any amounts previously recognised other

comprehensive income in respect of that entity are accounted for as if the Group had directly disposed

of the related assets or liabilities. This may mean that amounts previously recognised in other

comprehensive income are reclassified to statement of profit or loss.

The Group classifies its financial assets as held-to-maturity investments. The classification depends on

the purpose for which the financial assets were acquired. Management determines the classification of

the investments at initial recognition and re-evaluates this at every reporting date.

Held-to-maturity financial assets are non-derivative instruments with fixed or determinable payments

and fixed maturities that the Group has the positive intention and ability to hold to maturity. Interest

on held-to-maturity financial assets are included in the income statement. Held-to-maturity financial

assets are treasury bonds which are recognised initially at fair value and subsequently at amortised cost

using the effective interest method.

SACOS GROUP LIMITED

16



(g) Financial instruments (Cont'd)

Recognition and measurement

Impairment of financial assets

Financial assets carried at amortised cost

(h) Trade and other receivables

(i) Trade and other payables

(j) Cash and cash equivalents

A provision for impairment is established when there is objective evidence that the Group will not be

able to collect all amounts due according to the original terms of receivables. The amount of provision

is recognised in the statement of profit or loss.

Trade and other payables are stated at fair value and subsequently measured at amortised cost using

the effective interest method.

Cash and cash equivalents include cash in hand, cash at Group and deposits held at call with Groups and

other short-term highly liquid investments with original maturities of 3 months or less and Group

overdrafts. Group overdrafts are shown within borrowings in current liabilities.

Purchases and sales of financial assets are recognised on trade-date, the date on which the Group

commits to purchase or sell the asset. Investments are initially recorded at fair value plus transaction

costs.

Financial assets are derecognised when the rights to receive cash flows from the investments have

expired or they have been transferred and the Group has also transferred substantially all risks and

rewards of ownership.

If there is objective evidence that an impairment loss on assets carried at amortised cost has been

incurred, the amount of the impairment loss is measured as the difference between the asset's carrying

amount and the present value of estimated future cash flows (excluding future credit losses that have

not been incurred) discounted at the financial asset's original effective interest rate.

The carrying amount of the asset is reduced and, the amount of the loss is recognised in the statement

of profit or loss. If a held-to-maturity investment has a variable interest rate, the discount rate for

measuring any impairment loss is the current effective interest rate determined under the contract.

If, in a subsequent period, the amount of the impairment loss decreases and the decreases can be

related objectively to an event occurring after the impairment was recognised, the previously

recognised impairment loss is reversed through the statement of profit or loss to the extent that the

carrying amount of the investment at the date the impairment is reversed does not exceed what the

amortised cost would have been had the impairment not been recognised.

Trade and other receivables are recognised initially at fair value and subsequently measured at

amortised cost using the effective interest method, less provision for impairment.

SACOS GROUP LIMITED

17



(k) Share capital

Ordinary shares are classified as equity.

(l) Deferred tax

(m) Retirement benefit obligations

Defined benefit plans

(n) Foreign currencies

Functional and presentation currency

Items included in the financial statements are measured in the currency of the primary economic

environment in which the Group operates. The Group's functional currency is the Seychelles Rupee, the

currency in which the financial statements are also presented.

The Group provides for a payment of gratuity to permanent employees. Gratuities are paid every five

years (except in the case of early retirement) as from January 2007, for continuous service. The amount

provisioned every year is based on the number of years the employee has worked after the last payment

date. This type of employee benefits has the characteristics of a defined benefit plan. The liability

recognised in the statement of financial position in respect of the defined benefit plan is the present

value of the defined obligation at the reporting date less fair value of plan assets together with

adjustments for unrecognised actuarial gains and losses and past service costs. The defined benefit

obligation is calculated annually by independent actuaries using the projected unit credit method. The

present value of the defined benefit obligation is determined by discounting the estimated future cash

outflows using interest rates of high-quality corporate bonds that are denominated in the currency in

which the benefits will be paid and that have terms to maturity approximating the terms of the related

pension liability.

The Group does not carry out any actuarial valuation since the Directors have based themselves on the

method as prescribed by the Seychelles Employment Act and they have estimated that the amount of

liability provided will not be materially different had it been computed by an external Actuary.

Deferred tax is provided in full, using the liability method, on temporary differences arising between

the tax bases of assets and liabilities and their carrying amounts in the financial statements. However,

if the deferred income tax arises from initial recognition of an asset or liability in a transaction, other

than a business combination, that at the time of the transaction affects neither accounting nor taxable

profit or loss, it is not accounted for.

Deferred tax is determined using tax rates that have been enacted or substantively enacted at the

reporting date and are expected to apply in the period when the related deferred income tax asset is

realised or the deferred income tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be

available against which deductible temporary differences can be utilised.

SACOS GROUP LIMITED

18



(n) Foreign currencies (Cont'd)

Transactions and balances

(o) Insurance Contracts


Types of insurance contracts

Short-term insurance

Long-term insurance

- which are likely to be significant portion of the total contractual benefits; and

- whose amount or timing is contractually at the discretion of the issuer;

Contracts that do not transfer significant insurance risk are investment contracts. The Group considers

that all its short term and long term products are insurance contracts. Insurance risk is transferred

when the Group agrees to compensate a policyholder if a specified uncertain event (the insured event)

adversely affects the policyholder.

Insurance contracts issued by the Subsidiary, SACOS Insurance Company Limited, are short-term

insurance contracts. These contracts are in respect of the following classes of business: motor, fire,

marine, engineering, personal accident, household and miscellaneous and they provide compensation

following damage to or loss of property, goods, equipment, losses and expenses incurred, and loss of

earnings resulting from the occurrence of the events insured against.

The Subsidiary, SACOS Life Assurance Company Limited, transacts in long term insurance contracts and

insures events associated with human life.

Insurance contracts are further classified as being either with or without Discretionary Participation

Features (DPF). DPF is a contractual right to receive, as a supplement to guaranteed benefits,

additional benefits:

Foreign currency transactions are translated in the functional currency using the exchange rates

prevailing on the transaction dates. Foreign exchange gains and losses resulting from the settlement of

such transactions and from translation of monetary assets and liabilities denominated in a currency

other than the presentation currency, are recognised in the statement of profit or loss. Non-monetary

items that are measured at historical cost and at fair value in a foreign currency are translated using

the exchange rates at the date of the transaction and at the date of the fair value was determined

respectively.

Translation differences on non-monetary assets classified as available-for-sale financial assets, are

included in the statement of profit or loss.

Insurance contracts are those contracts that transfer significant insurance risk at the inception of the

contract. Insurance contracts are derecognised when all rights and obligations are extinguished or

expire.

SACOS GROUP LIMITED

19



(o) Insurance Contracts (Cont'd)

Types of insurance contracts (Cont'd)

Long-term insurance (Cont'd)

and which are contractually based on the:

-

Categories of insurance contracts issued by the Subsidiary

Long-term insurance contracts with fixed and guaranteed terms

Long-term insurance contracts without fixed terms and with DPF

These contracts also insure events associated with human life (i.e. death or survival) over a long

duration. Premiums are recognised directly as liabilities which are increased by credited interest and

decreased by administration fees, mortality, surrender charges and any withdrawals. These types of

contracts entitles the contract holders to a minimum guaranteed amount per annum. They contain a

DPF which entitles the contract holders, in supplement to the minimum guaranteed amount, a

contractual right to receive additional bonuses. A bonus is declared when the actual return on backing

assets is higher than the expected return at inception of the contract.

The amount and timing of the settlement of the DPF element is however at the discretion of the

Subsidiary. The bonus is derived from the DPF eligible surplus available arising mainly upon revaluation

of backing assets, carried out by independent Actuaries on a yearly basis.

The Subsidiary has legal obligation to eventually pay to contract holders at least 90% of the DPF eligible

surplus. Any portion of the DPF eligible surplus that is not declared as a bonus and not credited to

individual contract holders accounts is retained as a liability in the Life Assurance Fund for the benefit

of all contract holders until declared and credited to them individually in future periods.

Equity holders' share of the DPF eligible surplus, equal to 10%, is transferred from the Life Assurance

Fund to them on a yearly basis when bonuses are declared.

performance of specified pool of contracts or a specified pool of contracts or a specified type and

realised and unrealised investment returns on a specified pool of assets held by the Group.

These contracts insure events associated with human life (i.e. death or survival) over a long duration.

Premiums are recognised as revenue when they become payable by the contract holder. Benefits are

recorded as an expense when they are incurred. A liability for contractual benefits that are expected

to be incurred in the future is recorded when the premiums under such a contract have been

recognised. The liability is based on assumptions such as mortality, persistency, maintenance expenses

and investment income that are established at the time the contract is issued. The best estimate

assumptions are adjusted to include a margin for prudence and adverse deviations.

SACOS GROUP LIMITED

20



(p) Reinsurance Contracts


Ceded reinsurance arrangements do not relieve the Subsidiary from its obligations to policyholders.

Types of reinsurance contracts

Short-term reinsurance contracts

Long-term reinsurance contracts

The Subsidiary's reinsurance assets arise from an Individual Life Treaty and a Group Life Treaty.

Reinsurance liabilities are primarily premium payable for reinsurance contracts and are recognised as an

expense when due.

The Subsidiary, SACOS Insurance Company Limited, reinsures either on a proportional or non-

proportional treaty basis, with all risk falling within the treaty terms, conditions and limits being

reinsured automatically, or on a facultative basis. Proportional reinsurance can be either 'quota share'

where the proportion of each risk reinsured is stated or 'surplus' which is a more flexible form of

reinsurance and where the Subsidiary fixes its retention limit. Non-proportional reinsurance is mainly

'excess-of-loss' type of reinsurance where, in consideration for a premium, the reinsurer agrees to pay

all claims in excess of a specified amount i.e. the retention and up to a maximum amount. Under

facultative reinsurance, risk are offered to the reinsurer on an individual basis and can be accepted or

rejected by the reinsurer. Under the treaty method, all risks written by the Subsidiary that fall within

the terms and limits of the treaty will be reinsured by the reinsurer automatically.

The benefits to which the Subsidiary, SACOS Life Assurance Company Limited, is entitled under its

reinsurance contracts held are recognised as reinsurance assets. Reinsurance liabilities are primarily

premium payable for reinsurance contracts and are recognised as an expense when due.

Contracts entered into by the Group with Reinsurers under which they are indemnified for losses are

classified as reinsurance contracts held. Insurance contracts entered into and under which the contract

holder is another insurer (inwards facultative reinsurance) are included with insurance contracts.

The indemnity to which the Group is entitled under its reinsurance contracts held are recognised as

reinsurance assets. Short term balances due from both Insurers and Reinsurers are classified within

Trade and other receivables and non current ones are classified as long term receivables. Amounts

recoverable from reinsurers are estimated on a manner consistent with the outstanding claims

provisions or settle claims associated with the reinsured policies and in accordance with the relevant

insurance contract.

SACOS GROUP LIMITED

21



(p) Reinsurance Contracts

Types of reinsurance contracts (Cont'd)

Impairment of reinsurance assets

Derecognition

(q) Life Assurance Fund

(r) Unearned Premiums

(s) Claims expenses and Outstanding claims provisions


Outstanding claims provisions made up of:

(a) provisions for claims incurred but not reported (IBNR) and

(b)

The provision for unearned premiums represents the proportion of written premiums relating to periods

of insurance risks subsequent to the end of the reporting period calculated on a daily pro-rata basis.

The change in this provision is taken to the statement of profit or loss. The unearned premium is

derecognised when the contract is discharged, expires or cancelled.

Claims expenses are charged to profit or loss as incurred based on the estimated liability for

compensation owed to contract holders or third parties.

the net estimated costs of claims admitted or intimated but not yet settled at the end of the

reporting period.

Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an

indication of impairment arises during the reporting year. If a reinsurance asset is impaired, the Group

reduces the carrying amount accordingly and recognises that impairment in the statement of profit or

loss. A reinsurance asset is impaired if there is objective evidence, as a result of an event that

occurred after initial recognition of that asset, that the Group may not recover all amounts due under

the terms of the contract and that the event has a measurable impact on the amounts that the Group

will receive from the reinsurer.

Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or

expired or when the contract is transferred to another party.

The surplus on the Life Assurance Fund Account for the year is retained in the Life Assurance Fund. The

adequacy of the fund to meet insurance obligations is determined by actuarial valuation on a triennial

basis with yearly re-assessment.

SACOS GROUP LIMITED

22



(s) Claims expenses and Outstanding claims provisions (Cont'd)

Short-term insurance (Cont'd)

(t) Liability adequacy test

(u) Tax

(v) Revenue recognition

Gross written premiums


Long-term insurance

Some delays may occasionally be experienced in the notification and settlement of certain types of

claims, particularly in respect of liability business, the ultimate cost of which cannot be known with

certainty at the end of the reporting period. The Subsidiary, SACOS Insurance Company Limited, does

not discount its liabilities for unpaid claims. Any estimate represents a determination within a range of

possible outcomes. Outstanding claims provisions are valued excluding allowances for expected future

recoveries. Recoveries are accounted for, on a cash basis based on experts' estimate, and include non-

insurance assets that have been acquired by exercising rights to sell (usually damaged) motor vehicles,

to settle a claim (salvage)/obtain refund from third parties for some or all costs (subrogation) under the

terms of the insurance contracts. Salvage of motor vehicles are accounted for on a cash basis.

For the Subsidiary SACOS Life Assurance Company Limited, an independent Actuary reviews contract

liabilities and carry out a liability adequacy test using current estimates of future contractual cash

flows after taking into account the investment return expected on assets relating to the relevant long

term business. For SACOS Insurance Company Limited, management carries out reviews and any

deficiency is immediately recognised in the Life Assurance Fund or the Statement of Profit or Loss by

establishing a provision for the losses arising from liability adequacy test (the unexpired risk provision).

Current tax is the expected amount of taxes payable in respect of the taxable profit for the year and is

measured using the tax rates that have been enacted at the balance sheet date.

Gross written premium comprise the total premium receivable for the whole period of cover provided

by contracts entered into during the accounting period and are recognised as revenue (earned

premiums) on the date on which the policy incepts, proportionally over the period of coverage.

Premiums earned on long-term life contracts are recognised as revenue when they become payable by

the policyholder, i.e. the date when payments are due.

Premiums on long term insurance contracts which have been in force for less than three years and for

which not all premium have been received are accrued for three months. When these policies lapse due

to non receipt of premium after three months, then all related premium income accrued but not

received from the date they are deemed to have lapsed is released to the Life Assurance Fund.

SACOS GROUP LIMITED

23



(v) Revenue recognition (Cont'd)

Earned premiums

Underwriting surplus

Other income

Other income earned by the Group are recognised on the following bases:

- Interest income

- Investment income

- Commission receivable

(w) Commission and agency expenses

(x) Management fees

(y) Provisions

(z) Dividend distribution

Dividend distribution to the shareholders of SACOS Group Limited is recognised as a liability in the

Group's financial statements in the period in which the dividends are declared.

Interest income is recognised in the statement of profit or loss as it accrues and is calculated by

using the effective interest rate method. Fees and commissions that are an integral part of the

effective yield of the financial asset or liability are recognised as an adjustment to the effective

interest rate of the instrument.

Commission receivable is recognised as it accrues in accordance with the substance of the relevant

agreements.

Commission and agency expenses represent costs directly incurred in securing premium on insurance

policies. Income derived from reinsurers in the course of ceding of premium to reinsurers is netted off

against the commission and agency expenses and the balances are charged to the statement of profit or

loss in the period in which they are incurred.

The Company, SACOS Group Limited, charges 1% of the Gross written Premium to its subsidiary, SACOS

Insurance Company Limited at the end of each financial year as management fee. It also charges 0.5%

of the balance of the Life Fund at the end of each reporting period as management fee for managing

the Life Fund.

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a

past event, it is probable that an outflow of resources embodying economic benefits will be required to

settle the obligation and a reliable estimate can be made of the amount of the obligation.

Earned premiums represent gross written premiums net of reinsurance ceded to reinsurers and adjusted

for unearned premiums.

Underwriting surplus is determined for each class of business after taking into account inter alia,

unearned premium reserves, outstanding claims and additional reserves.

Investment income comprises dividend and rental income. Dividend income is recognised when the

shareholders' right to receive payment is established while rental income is recognised on an

accrual basis.

SACOS GROUP LIMITED

24


3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS

(a) Insurance risk

(i) Insurance Contracts

Concentration, frequency and severity of claims


Long-term insurance

Underwriting measures are in place to enforce appropriate risk selection criteria. For example, the

Subsidiary has the right to review terms and conditions on renewal or not to renew an insurance

contract.

The reinsurance arrangements for proportional and non-proportional treaties are such that the

Subsidiary is adequately protected and would only suffer predetermined amounts.

For contracts where death is the insured risk, the most significant factors that could increase the overall

frequency of claims are epidemics or wide spread changes in lifestyle, such as eating, smoking and

exercise habits, resulting in earlier or more claims than expected. For contracts where survival is the

insured risk, the most significant factor is continued improvement in medical science and social

conditions that would increase longevity. Insurance risk is therefore subject to contract holders'

behaviours and the impact of contract holders' behaviours have been factored into the assumptions used

to measure insurance liabilities.

The Group issues contracts that transfer insurance or financial risk or both. This section summarises the

main risks linked to long-term insurance business and the way they are managed.

A description of the significant risk factors is given below together with the risk management policies

applicable.

The risk under any one insurance contract is the possibility that the insured event occurs and the

uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk

is random and therefore unpredictable.

For a portfolio of insurance contracts where the theory of probability is applied to pricing and

provisioning, the principal risk that the Group faces under its insurance contracts is that the actual

claims and benefit payments exceed the carrying amount of the insurance liabilities.

The Group has developed its insurance underwriting strategy to diversify the type of insurance risks

accepted and within each of these categories to achieve a sufficiently large population of risks to

reduce the variability of the expected outcome.

The frequency and severity of claims can be affected by several factors, the most significant resulting

from severe weather events like cyclones, fire and allied perils and their consequences and liability

claims awarded by the Court. Inflation is another factor that may affect claims payments.

For contracts with fixed and guaranteed benefits and fixed future premiums, there are no mitigating

items and conditions that reduce the insurance risk accepted.

SACOS GROUP LIMITED

25


3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONT'D)

(a) Insurance risk (Cont'd)

(i) Insurance Contracts (Cont'd)

Long-term insurance (Cont'd)

Concentration of insurance risk

No. of

Class of business Claims Gross Net

SR'000 SR'000

Fire & Allied Perils 349 15,090 5,201

Motor 2,917 7,535 5,139

Marine 25 80 105

3,291 22,705 10,445

IBNR 3,000 3,000

Total outstanding claims at December 31, 2015 (notes 17 & 23(a)) 25,705 13,445

No. of

Class of business Claims Gross Net

SR'000 SR'000

Fire & Allied Perils 295 5,926 4,346

Motor 2,294 6,619 6,840

Marine 35 2,800 755

2,624 15,345 11,941

IBNR 3,000 3,000

Total outstanding claims at December 31, 2014 (notes 17 & 23(a)) 18,345 14,941

2015

For contracts with DPF, the participating nature of these contracts results in a significant portion of the

insurance risk being shared with the insured party.

The Subsidiary manages these risks through its underwriting strategy and reinsurance arrangements.

The underwriting strategy is intended to ensure that the risks underwritten are well diversified in terms

of type of risk and the level of insured benefits. For example, death risk and survival risk are balanced

across its portfolio. Medical selection is also included in the underwriting procedures with premiums

varied to reflect the health condition and family medical history of the applicants. There are defined

retention limit on any single life or group life insured and reinsures the excess of the insured benefit

over its retention limit. The Subsidiary does not have any reinsurance covers for contracts that insure

survival risk.

The following tables disclose the concentration of claims by class of business gross and net of

reinsurance for short-term insurance:

2014

SACOS GROUP LIMITED

26





Sources of uncertainty in the estimation of future claim payments


Long-term insurance

The Subsidiary uses appropriate base tables of standard mortality according to the type of contract

being written and statistical data are used to adjust the crude mortality rates to produce a best

estimate of expected mortality for the future. When data is not sufficient to be statistically credible,

the best estimate of future mortality is based on standard industry tables adjusted for experience.

Uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance

contracts arises from the unpredictability of long-term changes in overall levels of mortality and the

variability in contract holders' behaviour.

Claims are payable on a mix of claims-occurrence and claims-made basis. On a claims-occurrence basis,

mostly for the liabilities classes of business, the Subsidiary is liable for all insured events that occurred

during the term of the contract, even if the loss is discovered after the end of the contract term. On a

claims-made basis, which is mostly with respect to the property classes of business, the claim is only

entertained if the policy was in force at the time the claim is asserted for coverage to apply. As a

result, liability claims are settled over a long period of time. There are several variables that affect the

amount and timing of cash flows from these contracts. These mainly relate to the inherent risks of the

business activities carried out by individual contract holders and the risk management procedures

adopted. The compensation paid on these contracts is the monetary awards granted for bodily injury by

employees (for employer's liability covers) or members of the public (for public liability covers). Such

awards are lump-sum payments that are calculated as the present value of the lost earnings and

rehabilitation expenses that the injured party will incur as a result of the accident.

Claims can be either long tail or short tail. Short tail claims are settled within a short time and the

estimation processes reflect with a higher degree of certainty all the factors that influence the amount

and timing of cash flows about the estimated costs of claims. However, for long tail claims (e.g. bodily

injury), the estimation process is more uncertain and depends largely on external factors such as Court

awards for example.

All reasonable steps are taken to ensure that appropriate information are available regarding claims

exposures. However, given the uncertainty in establishing claims provisions, it is likely that the final

outcome will prove to be different from the original liability established. The liability for these

contracts comprise a provision for IBNR and a provision for reported claims not yet paid at the reporting

date. The Subsidiary has ensured that liabilities on the statement of financial position at reporting date

for existing claims whether reported or not, are adequate.

SACOS GROUP LIMITED

27


3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS



Claims development

Net insurance contract liabilities

Accident year 2010 2011 2012 2013 2014 2015 Total

SR'000 SR'000 SR'000 SR'000 SR'000 SR'000 SR'000

At end of accident year 29,741 48,912 35,267 37,912 34,775 44,258

One year later 36,927 63,847 47,892 50,384 47,183

Two years later 37,426 62,558 51,995 51,677 -

Three years later 36,729 62,074 52,563 - -

Four years later 35,470 62,298 - - -

Current estimate of cumulative claims incurred 35,470 62,298 52,563 51,677 47,183 44,258 293,449

At end of accident year (23,684) (48,912) (33,331) (37,043) (27,912) (30,248)

One year later (32,374) (63,847) (46,971) (47,335) (45,381)

Two years later (35,085) (62,558) (50,706) (58,709) -

Three years later (35,400) (61,355) (51,614) - -

Four years later (35,446) (61,606) - - -

Cumulative claims paid to date (35,446) (61,606) (51,614) (58,709) (45,381) (30,248) (283,004)

Net contract liabilities at reporting date 24 692 949 (7,032) 1,802 14,010 10,445

Incurred but not reported (IBNR) 3,000

Net outstanding claims at December 31, 2015 (notes 17 & /23(a)) 13,445

The development of insurance liabilities for the short-term insurance business provides a measure of the Subsidiary's ability to estimate the ultimate value of

claims. The table below illustrates how the estimates of net claims outstanding for each year have changed at successive year ends and the table reconciles

the cumulative claims to the net amount appearing in the statements of financial position (see notes 17 and 23) for the net claims outstanding at December

31, 2015.

SACOS GROUP LIMITED

28





Claims development (Cont'd)

(b) Financial risk

The most important components of this financial risk are:

▪ Market risk (which includes currency risk, interest rate risk and equity price risk);

▪ Credit risk;

▪ Liquidity risk;

▪ Capital management; and

▪ Fair value estimation.

(i) Market risk

The Group's activities are exposed to financial risks through its financial assets, financial liabilities,

insurance and reinsurance assets and liabilities. In particular, the key financial risk is that investment

proceeds are not sufficient to fund the obligations arising from insurance contracts.

The Group's risk management policies are designed to identify and analyse these risks, to set

appropriate risk limits and control, and to monitor the risks and adherence to limits by means of

reliable and up-to-date administrative and information systems.

The Group regularly reviews its risk management policies and systems to reflect changes in markets,

products and emerging best practice. The Board recognises the critical importance of having efficient

and effective risk management policies and systems in place. To this end, there is a clear

organisational structure with delegated authorities and responsibilities from the Board to Board

Committees, executives and senior management. Individual responsibility and accountability are

designed to deliver a disciplined, conservative and constructive culture of risk management and control.

The Subsidiary has taken advantage of the disclosure requirement of Para 44 of IFRS 4 which allows

disclosure of information about claims development limited to five years prior to first time adoption of

this IFRS.

Due to lack of available information, the claims development tables have been disclosed for net claims

only.

The Subsidiary has in place a series of quota-share and excess of loss covers in each of the last four

years to cover for losses on these contracts.

Market risk is the risk of adverse financial impact due to changes in fair values or future cash flows of

financial instruments from fluctuation in interest rates, equity prices, property prices and foreign

currency exchange rates.

The Group has established policies which set out the principles that they expect to adopt in respect of

management of the key market risks to which they are exposed. The Group monitors adherence to this

market risk policy through the Group’s Investment Committee which is also responsible for managing

market risk at Group level.

SACOS GROUP LIMITED

29



(b) Financial risk (Cont'd)

(i) Market risk (Cont'd)

Currency risk

THE GROUP

The Group's financial assets and financial liabilities are detailed below:

At December 31, 2015 Rupee USD Euro GBP Total

SR'000 SR'000 SR'000 SR'000 SR'000

Assets

Investment in financial assets 51,287 32,756 - - 84,043

Trade and other receivables 63,067 10,253 900 536 74,756

Cash & cash equivalents 48,751 15,312 - - 64,063

Total assets 163,105 58,321 900 536 222,862

Liabilities

Gross outstanding claims and IBNR 25,706 - - - 25,706

Gross unearned premiums 61,134 - - - 61,134

Trade and other payables 11,725 11,490 455 885 24,555

Total liabilities 98,565 11,490 455 885 111,395

The Group purchases reinsurance contracts internationally, thereby exposing it to foreign currency

fluctuations. The Group's primary exposures are with respect to the Euro, US Dollar and UK pound

sterling.

The Group also has a number of investments in foreign currencies, namely US Dollar, which are exposed

to currency risk.

Management closely monitors currency risk exposures against pre-determined limits. Exposure to

foreign currency exchange risk is not hedged.

The financial impact from market risk is monitored at board level through investment reports which

examine impact of changes in market risk on investment returns and asset values. The Group’s market

risk policy sets out the principles for matching liabilities with appropriate assets, the approaches to be

taken when liabilities cannot be matched and the monitoring processes that are required.

SACOS GROUP LIMITED

30





Currency risk (Cont'd)

At December 31, 2014 Rupee USD Euro GBP Total

SR'000 SR'000 SR'000 SR'000 SR'000

Assets

Investment in financial assets 87,455 14,029 - - 101,484

Trade and other receivables 19,866 33,659 113 482 54,120

Cash & cash equivalents 48,610 12,939 - - 61,549

Total assets 155,931 60,627 113 482 217,153

Liabilities

Gross outstanding claims and IBNR 18,345 - - - 18,345

Gross unearned premiums 67,646 - - - 67,646

Trade and other payables 13,804 11,490 455 885 26,634

Total liabilities 99,795 11,490 455 885 112,625

THE COMPANY

The Company's financial assets and financial liabilities are denominated in Seychelles Rupees.

Sensitivity analysis

Impact of a +/-5% change on results THE GROUP

USD

SR'000

At December 31, 2015

Investment in financial assets 1,638

Cash & cash equivalents 766


Investment in financial assets 701

Cash & cash equivalents 647

Interest rate risk

If the rupee had weakened/strengthened against the following currencies with all variables remaining

constant, the impact on the results for the year would have been as shown below mainly as a result of

foreign exchange gains/losses.

Interest rate risk arises from the Group’s investments in fixed income securities (held-to-maturity

Investments), bank balances and deposits which are exposed to fluctuations in interest rates. Exposure

to interest rate risk on short term business is monitored by the Investment Committee through a close

matching of assets and liabilities. The impact of exposure to sustained low interest rates is also

regularly monitored.

SACOS GROUP LIMITED

31





Interest rate risk (Cont'd)

The interest rate profiles of the financial assets of the Group as at December 31, were as follows:

Held-to-maturity investments

Short term deposits

Bank balances

The Company does not have any interest-rate bearing assets and liabilities.

(ii) Credit risk

- reinsurer's share of insurance liabilities;

- amounts due from reinsurers in respect of claims already paid;

- amounts due from insurance contract holders, and

- amounts due from insurance intermediaries.

Reinsurance credit exposures

The amounts presented in the statements of financial position are net of allowances for estimated

irrecoverable amount receivables, based on management's prior experience and the current economic

environment.

The Group has no significant concentration of credit risk in respect of its insurance business with

exposure spread over a large number of clients, agents and brokers. The Group has policies in place to

ensure that sales of services are made to clients and brokers with sound credit history.

The Group is however exposed to concentrations of risks with respect to its reinsurers due to the nature

of the reinsurance market and the restricted range of reinsurers that have acceptable credit ratings.

The Group is exposed to the possibility of default by its reinsurers in respect of share of insurance

liabilities and refunds in respect of claims already paid.

1%

1.90% - 14%

3.10% - 3.40%

1%

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the

Group's surplus for the year ended December 31, 2015 would increase/decrease by SR 41k (2014: SR

33k).

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial

instruments fails to meet all or part of their obligations. The Group's credit risk is primarily attributable

to:

Short term insurance liabilities are not directly sensitive to the level of market interest rates as they

are undiscounted and contractually non-interest bearing. However, due to the time value of money and

the impact of interest rates on the level of bodily injury related claims incurred by certain insurance

contract holders, a reduction for interest rates would normally produce a higher insurance liability.

2014

Rates

2015

Rates

1.15% - 14%

3.10% - 4.50%

SACOS GROUP LIMITED

32




(ii) Credit risk

Reinsurance credit exposures (Cont'd)

2015 2014 2015 2014

SR'000 SR'000 SR'000 SR'000

Neither past due nor impaired 74,490 53,216 3,366 3,057

Impaired 266 904 -

Carrying amount at year-end 74,756 54,120 3,020 3,057

(iii) Liquidity risk

The Group has strong liquidity positions and liquidity risk is considered to be low. Through the

application of the liquidity management policy, the Group seeks to maintain sufficient financial

resources to meet its obligations as they fall due.

The tables below analyses the Group and the Company’s financial assets and liabilities to the relevant

maturity groupings based on the remaining years of repayment.

Trade & other receivables


This exposure is monitored on a regular basis for any shortfall in the claims history to verify that the

contract is progressing as expected and that no further exposure for the Group will arise.

Management also monitors the financial strength of reinsurers and there are policies in place to ensure

that risks are ceded to top-rated and credit worthy reinsurers only.

The following table provides information regarding the carrying value of trade and other receivables

that have been impaired.

The Group manages its reinsurance counterparty exposures and the reinsurance department has a

monitoring role over this risk. The Group's largest reinsurance counterparty are Swiss Re (30%) and

Africa Re (27%). At December 31, 2015, the reinsurance assets recoverable was SR Nil (2014 : IGI and

Munich Re, SR 1.7K).

SACOS GROUP LIMITED

33




(iii) Liquidity risk

Maturities of financial assets and liabilities

THE GROUP

< 1 year 1 to 5 years Total

SR'000 SR'000 SR'000


Assets

Investment in financial assets 84,043 - 84,043

Trade and other receivables 71,756 3,000 74,756

Cash and cash equivalents 64,063 - 64,063

Total assets 219,862 3,000 222,862

Liabilities

Outstanding claims 25,706 - 25,706

Gross unearned premiums 61,134 - 61,134

Trade and other payables 21,650 - 21,650

Total liabilities 108,490 - 108,490


Assets

Investment in financial assets 101,484 - 101,484

Trade and other receivables 51,120 3,000 54,120

Cash and cash equivalents 61,549 - 61,549

Total assets 214,153 3,000 217,153

Liabilities

Outstanding claims 18,345 - 18,345

Gross unearned premiums 67,646 - 67,646

Trade and other payables 26,634 - 26,634

Total liabilities 112,625 - 112,625

THE COMPANY

The maturities of financial assets and liabilities are all less than one year.

(iv) Capital Management

THE GROUP

The operations of the Group are subject to regulatory requirements within the jurisdiction where it

operates, Such regulations not only prescribe approval and monitoring of activities but also impose

certain restrictive provisions to minimise the risk of default and insolvency on the part of the Group to

meet unforeseen liabilities as these arise.

SACOS GROUP LIMITED

34




(iv) Capital Management (Cont'd)

THE GROUP (CONT'D)


- Not less than SR 2m;

- 20% of net premium income of the Fund in the preceeding accounting period; or

- 20% of loss reserves of the fund at the end of the preceeding accounting period.

whichever is the highest.

Long-term insurance

-

-

THE COMPANY

The Company has no long term debt.

(v) Fair Value estimation

If one or more of the significant inputs is not based on observable market data, the instrument is

included in level 3.If one or more of the significant inputs is not based on observable market data, the

instrument is included in level 3.

As per Section 15 of the Insurance Regulations 2009, the stated capital of a licensed insurer carrying

short (general) insurance and long term (life) insurance businesses shall be SR 3m respectively.

The solvency margin of an insurance fund established in respect of short (general) insurance business to

be maintained by a licensed insurer at all times during any accounting period shall be:-

3 per cent of the insurer's liabilities as determined under regulation 19 in respect of non-

participating policies, and 2 per cent of such liabilities in respect of participating policies, as at the

end of the preceding accounting period; and

1 per cent of the sum insured at risk for policies the original term of which is two years or less, and

0.2 per cent of the sum insured at risk for policies the original term of which is more than two

years, as at the end of the preceding accounting period.

The fair value of financial instruments traded in active markets is based on quoted market prices at the

end of the reporting period. A market is regarded as active if quoted prices are readily and regularly

available from for example, a stock exchange and those prices represent actual and regularly occurring

market transactions on an arm’s length basis. The quoted market price used for financial assets held by

the Group is the current bid price. These instruments are included in level 1. Instruments included in

level 1 comprise primarily quoted equity investments classified as trading securities or available-for-sale

classified as trading securities or available-for-sale.

The fair value of financial instruments that are not traded in an active market is determined by using

valuation techniques. These valuation techniques maximise the use of observable market data where it

is available and rely as little as possible on specific estimates. If all significant inputs required to fair

value an instrument are observable, the instrument is included in level 2.

SACOS GROUP LIMITED

35


4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Critical accounting estimates and assumptions

(a) Insurance Contracts

Estimates of future claims payments


▪ terms and conditions of the insurance contracts;

▪ knowledge of events;

▪ court judgement;

▪ economic conditions;

▪ previously settled claims;

▪ estimates based upon a projection of claims numbers and average cost; and

▪ expected loss ratios.

Estimates and judgements are continuously evaluated and are based on historical experience and other

factors, including expectations of future events that are believed to be reasonable under the

circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates

will, by definition, seldom equal the related actual results. The estimates and assumptions that have a

significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within

the next financial year are discussed below.

The uncertainty inherent in the financial statements of the Group arises principally in respect of the

technical provisions. The technical provisions of the Group include provision for unearned premiums

and outstanding claims (including IBNR).

Outstanding claims provision is determined based upon knowledge of events, terms and conditions of

relevant policies, on interpretation of circumstances as well as previous claims experience. Similar

cases and historical claims payment trends are also relevant.

The Group employs a variety of techniques and a number of different bases to determine appropriate

provisions. These include:

Large claims impacting each relevant business class are generally assessed separately, being measured

either at the face value of the loss adjuster's recommendations or based on management's experience.

Provisions are calculated gross of any reinsurance recoveries. A separate estimate is made of the

amounts that will be recoverable from reinsurers based upon the gross provision and having due regard

to collectability.

SACOS GROUP LIMITED

36


4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT'D)

Critical accounting estimates and assumptions (Cont'd)

(a) Insurance Contracts (Cont'd)

Estimates of future claims payments (Cont'd)

Long-term insurance

Long-term business technical provisions are computed using statistical or mathematical methods.

Sensitivity

Estimates are also made as to the future investment income arising from the assets backing long-term

insurance contracts. These estimates are based on current market returns as well as expectations

about future economic and financial developments.

A margin for risk and uncertainty is added to these assumptions. These assumptions are ‘locked in‘ for

the duration of the contract. New estimates are made each subsequent year in order to determine

whether the previous liabilities are adequate in the light of these latest estimates. If the liabilities are

considered adequate, the assumptions are not altered. If they are not adequate, the assumptions are

altered (‘unlocked’) to reflect the best estimate assumptions.

For long-term insurance contracts with fixed and guaranteed terms and with DPF, estimates are made in

two stages. Estimates of future deaths, voluntary terminations, investment returns and administration

expenses are made at the inception of the contract and form the assumptions used for calculating the

liabilities during the life of the contract.

For contracts without fixed terms, it is assumed that the Subsidiary will be able to increase mortality

risk charges in future years in line with emerging mortality experience.

The computations are made by the Subsidiary's Actuaries on the basis of recognised actuarial methods,

with due regard to the actuarial principles laid down by the law and by actuarial best practices. The

methodology takes into account the risks and uncertainties of the particular classes of long-term

business written and the results are certified by the professionals undertaking the valuations.

The determination of the liabilities under long-term insurance contracts is dependent on estimates

made by the Subsidiary. Estimates are made as to the expected number of deaths for each of the years

in which the Subsidiary is exposed to risk. The Subsidiary bases these estimates on standard industry

mortality tables that reflect recent historical mortality experience, adjusted where appropriate to

reflect the Subsidiary's own experience. For contracts that insure the risk of longevity, appropriate but

not excessively prudent allowance is made for expected mortality improvements. However, continuing

improvements in medical care and social conditions could result in improvements in longevity in excess

of those allowed for in the estimates used to determine the liability for contracts where the Subsidiary

is exposed to longevity risk.

The reasonableness of the estimation process is tested by an analysis of sensitivity around several

different scenarios and the best estimate is used.

SACOS GROUP LIMITED

37




(a) Insurance Contracts (Cont'd)

Uncertainties and judgements

▪

▪

▪ uncertainty over the timing of a settlement to a policyholder for a loss suffered.

(b) Reinsurance

(c) Held-to-maturity investments

(d) Impairment of other assets

(e) Pension benefits

uncertainty as to the amount of insured loss suffered by a policyholder as a result of the event

occurring; and

The degree of uncertainty will vary by policy class according to the characteristics of the insured risks.

For certain classes of policy, the maximum value of the settlement of a claim may be specified under

the policy terms while for other classes, the cost of a claim will be determined by an actual loss

suffered by the policyholder.

There may be some reporting lags between the occurrence of the insured event and the time it is

actually reported. Following the identification and notification of an insured loss, there may still be

uncertainty as to the magnitude and timing of the settlement of the claim. There are many factors that

will determine the level of uncertainty such as judicial trends, unreported information etc.

The Group is exposed to disputes on, and defects in, contract wordings and the possibility of default by

their Reinsurers. The Group monitors the financial strength of their Reinsurers. Allowance is made in

the financial statements for non-recoverability due to Reinsurer's default as required.

The uncertainty arising under insurance contracts may be characterised under a number of specific

headings, such as:

uncertainty as to whether an event has occurred which would give rise to a policy holder suffering

an insured loss;

If the Group fails to keep these investments to maturity other than for specific circumstances explained

in IAS 39, it will be required to reclassify the whole class as available-for-sale. The investments would

therefore be measured at fair value and not amortised cost.

The Group follows the guidance of International Accounting Standard (IAS) 39 - Recognition and

Measurement" on classifying non-derivative financial assets with fixed or determinable payments and

fixed maturity as held-to-maturity. In making their judgement for classification, the Group evaluates its

intention and ability to hold such investments to maturity.

At the end of each reporting period, management reviews and assesses the carrying amounts of other

assets and where relevant write them down to their recoverable amounts based on best estimates.

The present value of the pension obligations depends on a number of factors that are determined on an

actuarial basis using a number of assumptions. The assumptions used in determining the net cost for

pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of

pension obligations.

SACOS GROUP LIMITED

38




(e) Pension benefits (Cont'd)

(f) Revaluation of investment property

(g) Shareholder's share of surplus of the Life Assurance Fund

(h) Claims incurred but not reported (IBNR)

(i)

Useful lives and residual values

(j)

(k)

The sensitivity analyses do not take into consideration that the Group's assets and liabilities are actively

managed. Other limitations include the use of hypothetical market movements to demonstrate

potential risk that only represent the Group's views of possible near-term market changes that cannot

be predicted with any certainty.

The Group is yet to carry out an actuarial valuation of its general insurance business. In the meantime,

the Directors have estimated an amount of SR 3m as IBNR based on previous years trends of incurred

but not yet reported claims.

Determining the carrying amounts of property and equipment requires the estimation of the useful lives

and residual values of these assets which carry a degree of uncertainty. The Directors have used

historical information relating to the Bank and the relevant industry in which it operates in order to

best determine the useful lives and residual values of property and equipment.

Per the Insurance Act 2008, the surplus of the Life Assurance Fund is to be shared irrespectively by the

policyholders and shareholders in the ratio 90:10. The determination of the share of surplus is usually

done by the Group's Actuary based on assumptions and judgement. In the absence of the Actuarial

report, the Directors usually base themselves on their best estimates and judgements to transfer the

share of the surplus to shareholders.

The Group carries its investment properties at revalued amounts, with changes in fair value being

recognised in the statement of profit or loss. The Group engaged an Independent Professional Valuer to

determine the revalued amounts at December 31, 2014. The Valuer used a mix of valuation techniques

consisting of discounted cash flow model and comparable market data. The valuation for the year

ended December 31, 2013 was based on Directors' best estimates. They considered that the carrying

amounts of the assets approximate their fair values.

The Group has not carried out any actuarial valuation since the Directors have based themselves on the

method as prescribed by the Seychelles Employment Act and they have estimated that the amount of

liability provided will not be materially different had it been computed by an external Actuary.

The Group determines the appropriate discount rate at the end of each year. This is the interest rate

that should be used to determined the present value of estimated future cash outflows expected to be

required to settle the pension obligations. In determining the appropriate discount rate, the Group

considers the interest rates of high-quality corporate bonds that are denominated in the currency in

which the benefits will be paid, and that have terms to maturity approximating the terms of the related

pension liability.

The Board of Directors have determined the Seychelles Rupees to be the functional currency of the

Company.

Limitation of sentivity analysis

Property and equipment

Functional currency

The determined fair value of the investment properties is most sensitive to the estimated yield as well

as the long term occupancy rate.

SACOS GROUP LIMITED

39


5. EQUIPMENT

(a) THE GROUP Furniture Motor Computer

and fittings vehicles equipment Total

SR SR SR SR

COST

At January 1, 2014 2,499,354 4,872,387 7,080,371 14,452,112

Additions 120,648 249,953 363,502 734,103

At December 31, 2014 2,620,002 5,122,340 7,443,873 15,186,215

Additions 397,504 2,372,109 861,541 3,631,154

Disposals (17,531) (1,861,211) (8,641) (1,887,383)

At December 31, 2015 2,999,975 5,633,238 8,296,773 16,929,986

DEPRECIATION

At January 1, 2014 1,438,291 3,944,235 6,311,931 11,694,457

Charge for the year 243,183 540,911 315,014 1,099,108

At December 31, 2014 1,681,474 4,485,146 6,626,945 12,793,565

Charge for the year 192,419 353,562 364,567 910,548

Disposal adjustment (12,788) (1,599,903) - (1,612,691)

At December 31, 2015 1,861,105 3,238,805 6,991,512 12,091,422

NET BOOK VALUE

At December 31, 2015 1,138,870 2,394,433 1,305,261 4,838,564

At December 31, 2014 938,528 637,194 816,928 2,392,650

(b) THE COMPANY Furniture Computer

and fittings equipment Total

SR SR SR

COST

At January 1, 2014 195,694 60,254 255,948

Additions - 24,957 24,957

At December 31, 2014 195,694 85,211 280,905

Additions - - -

Disposal (17,531) - (17,531)

At December 31, 2015 178,163 85,211 263,374

DEPRECIATION

At January 1, 2014 97,101 45,190 142,291

Charge for the year 35,877 10,042 45,919

At December 31, 2014 132,978 55,232 188,210

Charge for the year 9,785 4,260 14,045

Disposal adjustment (12,788) - (12,788)

At December 31, 2015 129,975 59,492 189,467

NET BOOK VALUE

At December 31, 2015 48,188 25,719 73,907

At December 31, 2014 62,716 29,979 92,695

(c) Depreciation has been wholly charged to other operating expenses (note 28).

SACOS GROUP LIMITED

40


6. INVESTMENT PROPERTIES

2015 2014

SR SR

At January 1, 47,433,527 36,911,468

Additions 528,806 9,368,510

Disposals (2,587,000) -

Increase in fair value 1,815,013 1,153,549

At December 31, 47,190,346 47,433,527

(a)

(b)

(c) The following amounts have been recognised:

2015 2014

SR SR

Rental income 2,667,963 2,218,550

Direct operating expenses generating rental income 754,336 693,702

7. INTANGIBLE ASSETS

(a) THE GROUP Computer

software Website Total

SR SR SR

COST

At January 1, 2014 1,265,325 95,840 1,361,165

Additions 49,913 - 49,913

Impairment loss (note 27) (411,367) - (411,367)

At December 31, 2014 903,871 95,840 999,711

Additions 6,522 - 6,522

Impairment loss (note 27) (417,384) - (417,384)

At December 31, 2015 493,009 95,840 588,849

AMORTISATION

At January 1, 2014 25,711 86,256 111,967

Charge for the year - 9,584 9,584

At December 31, 2014 25,711 95,840 121,551

Charge for the year 25,205 - 25,205

At December 31, 2015 50,916 95,840 146,756

NET BOOK VALUE

At December 31, 2015 442,093 - 442,093

At December 31, 2014 878,160 - 878,160

THE GROUP

The investment property was valued in December 2014 at present market value by Messrs Hubert Alton &

Co., an independent professionally qualified valuer, and they have appropriate qualifications and recent

experience in the valuation of properties in the relevant locations. The present market value was

determined on an open-market basis by reference to market evidence of transaction prices for similar

properties. The valuation for year ended December 31, 2015 has been based on Directors' estimates.

The fair value of the property has been valued based on valuation techniques used by external valuers and

falls within category level 2 of the fair value hierarchy. No change was noted during the year as compared

to the prior year.

THE GROUP

SACOS GROUP LIMITED

41


7. INTANGIBLE ASSETS (CONT'D)

(b) THE COMPANY Computer

software

COST SR

At January 1, 2014 25,711

Additions 49,913

At December 31, 2014 75,624

Additions -

At December 31, 2015 75,624

AMORTISATION

At January 1, 2014 25,711

Charge for the year -

At December 31, 2014 25,711

Charge for the year 25,205

At December 31, 2015 50,916

NET BOOK VALUE

At December 31, 2015 24,708

At December 31, 2014 49,913

(c) Amortisation has been wholly charged to other operating expenses (note 28).

8. INVESTMENT IN SUBSIDIARIES THE COMPANY

2015 & 2014

SR

Investment at cost 13,100,000

Investment recognised upon split (note 8(a)) 28,651,590

Long-term receivables (note 8(b)) 22,519,772

64,271,362

(a) Investment recognised upon split

(b)

(c) Details of the subsidiary companies are as follows:

Name of subsidiaries Shareholding Amount

% SR'000

SACOS Insurance Company Limited

(SICL) 100 10,000

SACOS Life Assurance Company Limited

(SLACL) 100 3,000

Sun Investment (Seychelles) Limited

(SISL) 100 100

13,100

An amount of SR 35.7m resulted upon the split of the SACOS Group Limited on January 1, 2009 when the

retained earnings generated by the General Insurance business up to the split date was transferred to a

Capital Contribution account. Subsequently in 2011, SR 7m was used to issue bonus shares to the Company's

shareholders, thus resulting in remaining balance above. No movement has been noted since then as well as

during the year ended December 31, 2015.

The long term receivables are unsecured, interest free and with no fixed repayment terms. The Directors

are of the opinion that these should be classified as non-current assets.

2015 & 2014

Investment property

Activities

Short-term insurance business

Long-term insurance business

SACOS GROUP LIMITED

42


8. INVESTMENT IN SUBSIDIARIES (CONT'D)

(d) All the above subsidiaries are incorporated in Seychelles and have December 31st year ends.

(e)

(f) Summarised financial information in respect of the Group's subsidiaries

December 31, 2015

SICL SISL Total

SR'000 SR'000 SR'000

Non-current assets 8,448 44,082 52,530

Current assets 176,578 3,269 179,847

Non-current liabilities 2,138 749 2,887

Current liabilities 24,700 618 25,318

Revenue 148,688 3,751 152,439

Profit and total comprehensive income for the year 13,892 3,552 17,444

December 31, 2014

SICL SISL Total

SR'000 SR'000 SR'000

Non-current assets 7,395 43,599 50,994

Current assets 175,118 3,127 178,245

Non-current liabilities 2,360 468 2,828

Current liabilities 24,852 1,849 26,701

Revenue 144,605 - 144,605

Profit and total comprehensive income for the year 14,994 2,940 17,934

(g)

9. DEFERRED TAX ASSETS/(LIABILITIES)

(a) The movement on the deferred tax account is as follows:

2015 2014 2015 2014

SR SR SR SR

At January 1, 435,415 265,905 2,590 (3,156)

(Charge)/Credit for the year

(notes 9(c) & 22(b)) 276,569 169,510 (27,244) 5,746

At December 31, 711,984 435,415 (24,654) 2,590

Summarised statements of financial position and statements of profit or loss and other comprehensive

income

THE GROUP

For SACOS Life Assurance Company Limited, there is no line-by-line consolidation since only the Life

Business Assets and the Life Fund are consolidated.

The carrying amount of the long term receivables approximate their costs which are considered to be their

fair values.

THE COMPANY

SACOS GROUP LIMITED

43


9. DEFERRED TAX ASSETS (CONT'D)

(b)

2015 2014 2015 2014

SR SR SR SR

Deferred tax assets 878,108 1,054,020 - 2,590

Deferred tax liability (832,083) (618,605) (24,654) -

Net deferred tax assets 46,025 435,415 (24,654) 2,590

(c) Deferred tax assets and liabilities during the year are attributable to the following items:

(i) Deferred tax assets

THE GROUP

Retirement

benefit

obligations

SR

At January 1, 2015 895,715

(Charge)/Credit to statement of profit or loss (17,607)

At December 31, 2015 878,108

At January 1, 2014 672,006

(Charge)/Credit to statement of profit or loss 223,709

At December 31, 2014 895,715

(ii) Deferred tax liability

THE GROUP Accelerated Unrealised

tax exchange

depreciation differences Total

SR SR

At January 1, 2015 158,305 (618,605) (460,300)

(Charge)/Credit to statement of profit or loss (648,352) 276,569 (371,783)

At December 31, 2015 (490,047) (342,036) (832,083)

At January 1, 2014 531,770 (937,871) (406,101)

(Charge)/Credit to statement of profit or loss (373,465) 319,266 (54,199)

At December 31, 2014 158,305 (618,605) (460,300)

Deferred tax assets and liabilities are offset when the income taxes relate to the same fiscal authority on

the same entity. The following amounts are shown in the statements of financial position:


SACOS GROUP LIMITED

44


9. DEFERRED TAX ASSETS (CONT'D)

THE COMPANY

Accelerated

tax

depreciation

SR

At January 1, 2015 2,590

(Charge)/Credit to statement of profit or loss (27,244)

At December 31, 2015 (24,654)

At January 1, 2014 (3,156)

(Charge)/Credit to statement of profit or loss 5,746

At December 31, 2014 2,590

10. INVENTORIES

2015 2014

SR SR

Spare parts 6,933,851 7,253,647

11. INVESTMENTS IN FINANCIAL ASSETS

(a) Investment in financial assets comprises held-to-maturity financial assets.

(b) The movement in investments in held-to-maturity financial assets may be summarised as follows:

2015 2014 2015 2014

SR SR SR SR

At January 1, 101,484,109 121,203,734 32,786,083 44,502,576

Additions 115,012,580 72,002,567 50,439,076 36,614,351

Matured (134,486,314) (95,639,695) (49,623,439) (50,958,974)

Accrued interest 2,032,238 3,917,503 1,047,215 2,628,130

At December 31, 84,042,613 101,484,109 34,648,935 32,786,083


AND THE COMPANY

THE GROUP

SACOS GROUP LIMITED

45


(c) Held-to-maturity financial assets include the following:

(i) THE GROUP

Interest rate 2015 2014

% SR SR

At amortised cost

Treasury bonds N/A - 49,010,074

Term deposits with banks 1.15% - 3.75% 45,215,483 47,204,563

Treasury bills 10% - 13% 38,827,130 5,269,472

84,042,613 101,484,109

(ii) THE COMPANY

Interest rate 2015 2014

% SR SR

At amortised cost

Treasury bonds N/A - 5,562,911

Term deposits with banks 3.75% - 10.30% 11,956,092 26,074,106

Treasury bills 10% - 13% 22,692,843 1,149,066

34,648,935 32,786,083

(d) Held-to maturity investments are all denominated in Seychelles rupees.

12. TRADE AND OTHER RECEIVABLES

2015 2014 2015 2014

SR SR SR SR

Premium receivables 23,240,481 22,584,130 - -

Provision for credit impairment

(note 12(a)) (265,847) (903,505) - -

22,974,634 21,680,625 - -

Recoverable from reinsurers

- share of notified claims

(notes 17 & 23(a)) 12,261,257 3,404,709 - -

- share of unearned premiums

(notes 17 & 23(b)) 19,107,793 17,357,334 - -

Amount receivable from related company

(note 12(d)) 5,897,139 2,354,575 3,365,162 3,056,209

Other receivables and prepayments 14,514,746 9,322,809 1,105 1,105

74,755,569 54,120,052 3,366,267 3,057,314

N/A

Maturity date

THE COMPANY

Jan 2016 to Jun 2016

Jan 2016 to Sep 2016

Maturity date

N/A

Jan 2016 to Sep 2016

Jan 2016 to Jun 2016

THE GROUP

SACOS GROUP LIMITED

46


12. TRADE AND OTHER RECEIVABLES (CONT'D)

(a) The movement in the provision for credit impairment is as follows:

2015 2014

SR SR

At January 1, 903,505 450,236

Charged to the statement of profit or loss (637,658) 453,269

At December 31, 265,847 903,505

(b)

(c) The carrying amount of trade and other receivables are denominated in the following currencies:

2015 2014 2015 2014

SR SR SR SR

Seychelles rupee 63,066,785 19,866,395 3,366,267 3,057,314

US dollar 10,252,607 33,658,791 - -

Euro 900,176 113,046 - -

UK pound sterling 536,001 481,820 - -

74,755,569 54,120,052 3,366,267 3,057,314

(d) The breakdown of amount payable from related companies is as follows:

2015 2014 2015 2014

SR SR SR SR

SACOS Life Assurance Company Ltd 5,897,139 2,354,575 3,062,775 3,056,209

SACOS Insurance Company Ltd - - 302,387 -

5,897,139 2,354,575 3,365,162 3,056,209

(i)

(e) The carrying amounts of 'trade and other receivables' approximate their fair values.

(f)

(g) The Company does not hold any collateral as security.

(h) The other classes within trade and other receivables do not contain any impaired assets.

13. CASH AND CASH EQUIVALENTS

2015 2014 '2015 2014

SR SR SR SR

Cash in hand 16,115 10,072 - 1,000

Bank balances 21,046,625 51,701,960 2,546,989 63,153

Short term deposits 43,000,000 9,837,286 - 1,553,326

64,062,740 61,549,318 2,546,989 1,617,479

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables

mentioned above.



THE GROUP

THE COMPANY

The amounts payable to related companies are unsecured, interest free and with no fixed repayment

terms. These have been classified as current liabilities based on Directors' opinion.

As at December 31, 2014, SR 265,847 (2014: SR 903,505) aged over 6 months were past due and impaired.

These relate to a number of independent customers who are in unexpectedly difficult economic situations.

THE GROUP

SACOS GROUP LIMITED

47


14. LIFE BUSINESS ASSETS/LIFE ASSURANCE FUND

2015 2014

SR SR

Non-current Assets

Property and Equipment 2,626,870 2,872,735

Investment properties 220,872,212 215,224,538

Intangible assets 344,137 561,487

Investment in financial assets 7,435,372 8,188,912

Loans and receivables 16,228,478 19,283,061

Deferred lease rental 10,797,217 10,947,178

258,304,286 257,077,911

Current Assets

Trade and other receivables 20,634,112 13,714,173

Loans and receivables 121,486,334 12,398,726

Investment in financial assets 18,445,193 116,567,398

Cash and cash equivalents 17,848,060 10,997,749

178,413,699 153,678,046

Technical Provisions

Gross outstanding claims 1,340,727 627,280

Gross unearned premiums 2,784,607 4,717,413

4,125,334 5,344,693

Non-Current liabilities

Retirement benefit obligation 1,747,835 1,279,959

Current Liabilities

Trade and other payables 12,423,002 6,068,832

Bank overdraft 653,308 39,562

13,076,310 6,108,394

Less:

Share capital (3,000,000) (3,000,000)

Total life business assets/ Life Assurance Fund 414,996,965 395,022,911

(a) Movement in the Life Assurance Fund is as follows:

2015 2014

SR SR

At January 1, 395,022,911 381,428,035

Surplus on life assurance fund for the year 21,420,129 15,427,148

Fair value change of available-for-sale assets - 153,756

Share of surplus to shareholder for the year (1,446,075) (1,523,828)

Prior year underprovision of share of surplus to shareholder - (462,200)

At December 31, 414,996,965 395,022,911

THE GROUP

THE GROUP

SACOS GROUP LIMITED

48


14. LIFE BUSINESS ASSETS/LIFE ASSURANCE FUND (CONT'D)

(b)

(c)

15. SHARE CAPITAL

2015 2014

SR SR

Authorised and fully paid up

At January 1 and December 31, 70,000,000 70,000,000

17. INSURANCE LIABILITIES AND REINSURANCE ASSETS

2015 2014

SR SR

Gross

Claims notified (note 23(a)) 22,705,962 15,345,286

Unearned premiums (note 23(b)) 61,133,773 67,646,244

Claims incurred but not reported (IBNR) (notes 17(a) & 23(a)) 3,000,000 3,000,000

Total gross insurance liabilities (note 23) 86,839,735 85,991,530

Recoverable from reinsurers

Claims notified 12,261,257 3,404,709

Unearned premiums 19,107,793 17,357,334

Total reinsurer's share of insurance liabilities (note 23) 31,369,050 20,762,043

Net

Notified claims (note 12) 10,444,705 11,940,577

Unearned premiums (note 12) 42,025,980 50,288,910

Claims incurred but not reported (IBNR) 3,000,000 3,000,000

Total net insurance liabilities (note 23) 55,470,685 65,229,487

(a)

The transfer of share of surplus to shareholders for 2015 was based on Directors' best estimate and on the

actuarial report from State Insurance Company of Mauritius Ltd for 2014.

The Company has not carried out any actuarial valuation with respect to its insurance liabilities. In this

respect, the amount provided as IBNR has been based on Directors' best estimates and disclosed as a gross

and a net amount of SR 3m.

THE GROUP

AND THE COMPANY

THE GROUP

The liability component of the Discretionary Participating Feature (DCF) is included in the Life Assurance

Fund.

SACOS GROUP LIMITED

49


18. MORTGAGE PROTECTION FUND

2015 2014

SR SR

At January 1, 506,453 680,796

Release during the year (135,950) (174,343)

At December 31, 370,503 506,453

(a)

(b)

19. FISHERIES AND AGRICULTURAL FUND

2015 2014

SR SR

At January 1, 2,000,000 2,000,000

Release during the year (717,313) -

At December 31, 1,282,687 2,000,000

(a)

20. RETIREMENT BENEFIT OBLIGATIONS

2015 2014

SR SR

At January 1, 2,827,665 2,125,180

Charge for the year (note 26) 1,126,823 765,420

Paid during the year (1,356,456) (62,935)

Transfer from SACOS Life Assurance Company 201,851 -

At December 31, 2,799,883 2,827,665

The full premium is amortised based on the duration of the loan with a corresponding amount being

recognised each year, and the remainder carried forward as unearned premium.

THE GROUP

The Fund is designated for Mortgage Protection Insurance under a Home Ownership Scheme. Under this

scheme, upon approval of their mortgage loan, borrowers are automatically charged 6% of the nominal

value of the loan towards mortgage protection which is expected to cover the loan repayments in case of

death or permanent disability. The 6% consists of 4% risk premium and 2% management fee for the

Company which arises at inception of the loan.

Retirement benefit obligations is in respect of length-of-service compensation as per the Seychelles

Employment Act, 1995 (as amended). Movement during the year is shown below:

THE GROUP

THE GROUP

The Fund is designated for contributions to premiums payable under a Government sponsored/subsidised

voluntary scheme. Under this scheme, the Agricultural Disaster and Fisheries Voluntary Insurance Scheme,

farmers registered with the SAA and boat owners registered with the SFA are charged 4% of the insured

values, to which the fund contributes 50%. The contributions would cover the insured items (crop,

livestock, boats and employees/crew) in case of loss or damage, death following natural disasters and

accidents, depending on the scheme applicable.

SACOS GROUP LIMITED

50


21. TRADE AND OTHER PAYABLES

2015 2014 2015 2014

SR SR SR SR

Reinsurance liabilities 11,841,975 14,395,667 -

Other payables and accruals 12,712,629 12,238,430 2,833,404 2,301,362

24,554,604 26,634,097 2,833,404 2,301,362

(a) Currency analysis of trade and other payables is disclosed in note 3(b)(i).

(b) The carrying amount of trade and other payables approximate its amortised costs.

22. CURRENT TAX LIABILITIES

(a) Statement of financial position

2015 2014 2015 2014

SR SR SR SR

At January 1, (882,574) (2,951,408) (67,352) (2,822,284)

Paid during the year 7,714,258 7,357,956 1,632,209 1,977,657

Refund received during the year (684,446) - (684,446) -

Charge for the year (9,950,833) (7,391,494) (1,633,876) (1,325,097)

Overprovision in the prior years - 2,102,372 - 2,102,372

At December 31, (3,803,595) (882,574) (753,465) (67,352)

(b) Statement of profit or loss

2015 2014 2015 2014

SR SR SR SR

Tax charge on the adjusted profit for

the year (note 22(c)) 9,950,833 7,391,494 1,633,876 1,325,097

Overprovision in the prior years - (2,102,372) - (2,102,372)

Deferred tax charge/(credit) (note 9) (276,569) (169,510) 27,244 (5,746)

9,674,264 5,119,612 1,661,120 (783,021)

THE COMPANY



THE GROUP

SACOS GROUP LIMITED

51


22. CURRENT TAX LIABILITIES (CONT'D)

(c )

2015 2014 2015 2014

SR SR SR SR


Tax calculated at rates as shown below

(note 22(d)) 13,430,121 11,849,683 5,038,312 4,698,697

Income not subject to tax (5,415,466) (4,669,740) (3,407,947) (3,366,362)

(Excess of capital allowance over

depreciation)/Excess of depreciation

over capital allowance 13,504 (276,737) 3,511 (7,238)

Expenses not deductible for

tax purposes 1,810,498 606,591 - -

Unused/(Utilised) tax losses 112,176 (118,303) - -

Tax charge for the year 9,950,833 7,391,494 1,633,876 1,325,097

(d) Applicable tax rates for 2014 and 2015 are as follows:

THE THE

Taxable income threshold SUBSIDIARIES COMPANY

% %

≤ SR. 1,000,000 25% 25%

> SR. 1,000,000 30% 25%

THE COMPANY

The tax on the Company's profit before tax differs from the theoretical amount that would arise using the

basic rate of the Group as follows:

THE GROUP

SACOS GROUP LIMITED

52


23. MOVEMENTS IN INSURANCE LIABILITIES AND REINSURANCE ASSETS

(a) Outstanding claims

Gross Reinsurance Net Gross Reinsurance Net

SR SR SR SR SR SR

At January 1, 15,345,286 (3,404,709) 11,940,577 8,707,236 (1,593,667) 7,113,569

Notified claims

Claims incurred during the year 59,457,190 (13,884,358) 45,572,832 52,243,572 (9,833,969) 42,409,603

Cash paid for claims settled in the year (52,096,514) 5,027,810 (47,068,704) (45,605,522) 8,022,927 (37,582,595)

22,705,962 (12,261,257) 10,444,705 15,345,286 (3,404,709) 11,940,577

Incurred but not reported (IBNR) 3,000,000 - 3,000,000 3,000,000 - 3,000,000

At December 31, (notes 12 & 17) 25,705,962 (12,261,257) 13,444,705 18,345,286 (3,404,709) 14,940,577

(b) Provision for unearned premiums

Gross Reinsurance Net Gross Reinsurance Net

SR SR SR SR SR SR

At January 1, 67,646,244 (17,357,334) 50,288,910 53,153,197 (8,427,696) 44,725,501

Written premiums in the year 148,687,905 (57,031,591) 91,656,314 144,604,512 (51,734,504) 92,870,008

Premiums earned during the year (155,200,377) 55,281,132 (99,919,244) (130,111,465) 42,804,866 (87,306,599)

At December 31, (notes 12 & 17) 61,133,773 (19,107,793) 42,025,980 67,646,244 (17,357,334) 50,288,910

THE GROUP

2015 2014

2015 2014

THE GROUP

SACOS GROUP LIMITED

53


24. INVESTMENT INCOME

2015 2014 2015 2014

SR SR SR SR

Interest income was in respect of:

- Financial assets 8,114,835 6,693,521 2,793,894 2,628,130

Dividend income and share of profit - - 13,000,000 11,500,000

8,114,835 6,693,521 15,793,894 14,128,130

25. SUNDRY INCOME

2015 2014 2015 2014

SR SR SR SR

Gain on foreign exchange differences 1,036,473 1,874,560 - -

Write-back of surplus provision for VAT - 2,043,969 - -

Write-back of unutilised provision - 585,939 - -

Management fees 3,252,870 3,091,750 3,471,862 3,410,156

Profit on sale of investment properties 164,738 - 6,758 -

Mortgage Protection Fund release 135,950 174,343 - -

Adjustment of policy holders protection fund 706,685 - - -

Sundry income 2,721,387 713,284 - 16,235

8,018,103 8,483,845 3,478,620 3,426,391

26. STAFF COSTS

2015 2014 2015 2014

SR SR SR SR

Salaries and wages 13,069,298 12,767,562 74,110 172,202

Retirement benefit obligations (note 20) 1,126,823 765,420 - -

Other staff costs 2,463,947 1,806,190 786 8,262

16,660,068 15,339,172 74,896 180,464

27. MARKETING AND ADMINISTRATIVE EXPENSES

2015 2014 2015 2014

SR SR SR SR

Repairs and maintenance 650,087 532,501 - 825

Directors' emoluments (note 27(a)) 2,160,560 1,465,214 - -

Lease rentals 4,370,176 3,328,735 - 250,000

Legal and professional fees 495,749 708,514 - -

Marketing fees 1,058,665 1,204,141 5,681 29,096

Sponsorships 396,918 330,348 - -

Corporate social responsibility 377,728 325,482 12,778 23,926

Tourism marketing tax 729,901 603,111 - -

Auditors' remuneration 409,398 210,066 136,349 36,972

Electricity and water charges 1,346,046 1,336,567 7,898 62,077

Telecommunication 1,098,282 879,872 - -

Intangible asset impaired (note 7) 417,384 411,367 - -

Travelling expenses 373,308 764,369 - 8,983

Printing, postage and stationery 1,693,507 1,058,957 - -

Loss on foreign exchange differences 3,427,427 - - -

Other administrative expenses 2,162,245 2,936,399 288,490 107,500

21,167,381 16,095,643 451,196 519,379



THE GROUP

THE COMPANY

THE COMPANY

THE GROUP

SACOS GROUP LIMITED

54


27. MARKETING AND ADMINISTRATIVE EXPENSES (CONT'D)

(a) Directors' emoluments

2014

Fees Emoluments Total Total

SR SR SR

E Agathine - - - 28,766

P Bastide 156,469 - 156,469 82,805

W Confait 21,764 - 21,764 84,574

J C D'Offay 76,467 - 76,467 80,291

M Felix 48,825 - 48,825 170,883

M Inch 76,467 - 76,467 32,794

L Nair 59,679 - 59,679

B Hoareau 102,629 - 102,629

R Thorrington 63,544 - 63,544 -

A Hassan - - - 28,766

A Lucas - 1,356,456 1,356,456 953,251

J Raguin 37,382 - 37,382 356,494

L Rivalland 136,469 - 136,469 84,511

Y Suleman 24,410 - 24,410 88,856

804,104 1,356,456 2,160,560 1,991,991

Directors fees & emoluments for SLACL (526,777)

804,104 1,356,456 2,160,560 1,465,214

(b)

28. OTHER OPERATING EXPENSES

2015 2014 2015 2014

SR SR SR SR

Depreciation of equipment 910,548 1,099,108 14,045 45,919

Amortisation of intangible asset 25,205 9,584 25,205 -

Other expenses - 7,576 - -

935,753 1,116,268 39,250 45,919

29. EARNINGS PER SHARE

Earnings attributable to shareholders is based on:

2015 2014 '2015 2014

SR SR SR SR

Total comprehensive income SR 22,956,235 26,011,795 18,492,127 19,577,808

Number of shares in issue 2,000,000 2,000,000 2,000,000 2,000,000

Earnings per share SR 11.48 13.01 9.25 9.79

30. CAPITAL COMMITMENTS

There were no capital commitments as at December 31, 2015 (2014: SR 450k).



THE GROUP

For SACOS Life Assurance Company Limited (SLACL), there is no line-by-line consolidation and

consequently Directors' fees and emoluments are not included in the consolidated marketing and

2015

SACOS GROUP LIMITED

55


31. DIVIDENDS

32. CONTINGENT LIABILITIES

There were no contingent liabilities as at December 31, 2015 (2014: Nil).

33. RELATED PARTY TRANSACTIONS

(a) Transactions and balances with the following related parties

2,015 2014 2015 2014

SR SR SR SR

Fellow subsidiaries

Sales of services 347,975 517,380 - -

Loans and receivables - - 22,519,772 22,519,772

Management fees 3,252,870 3,047,845 3,471,862 3,410,156

Dividends - - 13,000,000 11,500,000

Investment - - 41,751,590 41,751,590

Amount receivable 5,897,139 2,354,575 3,365,162 3,056,209

Amount payable - - - -

Key management personnel

Sales of services 31,009 111,432 - -

Loans and receivables 16,386 26,303 - -

Shareholders

Dividends 17,000,000 14,000,000 17,000,000 14,000,000

Directors

Remuneration 2,160,560 1,991,991 - -

(b) Key management personnel compensation

2015 2014

SR SR

Salaries and short-term employee benefits 1,039,973 2,772,907

(c) The related party transactions are within the normal course of the business.

(d)

(e)

(f) There has been no guarantees provided or received for any related party receivables or payables.

For the year ended December 31, 2015, the Group and the Company has not recorded any impairment of

receivables relating to amounts owed by related parties (2014: Nil) and this assessment is undertaken at

the end of each financial year through examining the financial position of the related party and the market

in which the latter operate.

THE COMPANY

Dividends of SR 8.50 per share amounting to SR 17m were declared and paid during the year under review

(2014: SR 7 per share amounting to SR 14m).

THE GROUP

The terms and conditions in respect of related party receivables and payables have been disclosed under

respective notes.

THE GROUP

SACOS GROUP LIMITED

56


34. SEGMENT INFORMATION

(a) Basis of segmentation

Casualty

Property

(b) Measurement of operating segment profit or loss, assets and liabilities

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

There were no inter-segment sales during the year under review.

The Group generates revenue from provision of insurance services, sales motor vehicle spare parts and letting out residential apartments. The basis of

segmentation is however Casualty and Property and both segments provide insurance services.

The segment provides insurance services on liability claims of individuals/organisations for negligent acts/omissions. The segment accounts for 16% (2014: 65%)

of the revenue of the Group.

The segment provides protection against risks to property such as fire, theft and some weather damage. The segment accounts for 84% (2014: 35%) of the

revenue of the Group.

Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer, who is responsible for allocating resources to

the reportable segments and assesses their performance. The chief operating decision-maker assesses the performance of the operating segments based on a

measure of profit or loss.

SACOS GROUP LIMITED

57


34. SEGMENT INFORMATION (CONT'D)

(c) Operating segment for the Group

December 31, 2015

Casualty Property Unallocated Total

SR'000 SR'000 SR'000 SR'000

Income

Gross written premiums 24,387 124,301 - 148,688

Net earned premiums 11,973 87,946 - 99,919

Underwriting surplus 31,896 18,102 - 49,998

Rental income - - 2,668 2,668

Investment income - - 8,115 8,115

Other income - - 8,018 8,018

Increase in fair value of investment properties - - 1,815 1,815

70,614

Expenses

Staff costs (16,661)

Marketing and administrative expenses (21,167)

Other operating expenses (936)

Share of surplus of Life Assurance Fund 1,446

Profit before taxation 33,296

Taxation charge (10,340)

Profit for the year 22,956


SACOS GROUP LIMITED

58



(a) Operating segment for the Group (Cont'd)

December 31, 2015 (Cont'd)


Life Casualty Property Unallocated Total

SR'000 SR'000 SR'000 SR'000 SR'000

Segment assets 414,997 24,194 99,580 158,538 697,309

Segment liabilities 414,997 6,640 64,562 48,449 534,648

Equity holders' interest 162,661

Capital expenditure 4,166

Depreciation 911

Amortisation 25

SACOS GROUP LIMITED

59




December 31, 2014

Casualty Property Unallocated Total

SR'000 SR'000 SR'000 SR'000

Income

Gross written premiums 93,488 51,117 - 144,605

Net earned premiums 74,793 12,514 - 87,307

Underwriting surplus 31,896 11,250 - 43,146

Rental income - - 2,219 2,219

Investment income - - 6,694 6,694

Other income - - 8,484 8,484

Increase in fair value of investment properties - - 1,154 1,154

61,697

Expenses

Staff costs (15,339)

Marketing and administrative expenses (16,096)

Other operating expenses (1,116)

Share of surplus of Life Assurance Fund 1,986

Profit before taxation 31,132

Taxation charge (5,120)

Profit for the year 26,012


SACOS GROUP LIMITED

60




December 31, 2014 (Cont'd)

Life Casualty Property Unallocated Total

SR'000 SR'000 SR'000 SR'000 SR'000

Segment assets 395,023 138,135 24,899 112,513 670,570

Segment liabilities 395,023 45,928 16,301 56,613 513,865

Equity holders' interest 156,705

Capital expenditure 10,153

Depreciation 1,099

Amortisation 10


SACOS GROUP LIMITED

61


35. EVENT AFTER THE REPORTING PERIOD

36. FIVE YEAR FINANCIAL SUMMARY

(a) THE GROUP

2015 2014 2013 2012* 2011*

SR'000 SR'000 SR'000 SR'000 SR'000

Profit before tax 33,296 31,131 25,806 23,866 33,622

Tax charge (10,340) (5,119) (7,264) (6,955) (7,479)

Profit for the year 22,956 26,012 18,542 16,911 26,143

Retained earnings brought forward 86,705 74,693 79,912 71,405 55,262

Effect of adopting IFRS - - - 3,596 -

Transfer to share capital - - (11,761) - -

Dividends (17,000) (14,000) (12,000) (12,000) (10,000)

Retained earnings carried forward 92,661 86,705 74,693 79,912 71,405

EQUITY

Share capital 70,000 70,000 70,000 35,000 35,000

Capital contribution - - - 23,239 23,239

Retained earnings 92,661 86,705 74,693 79,912 71,405

Total equity 162,661 156,705 144,693 138,151 129,644

(b) THE COMPANY

2015 2014 2013 2012 2011

SR'000 SR'000 SR'000 SR'000 SR'000

Profit before tax 20,153 18,794 14,721 16,790 14,787

Tax charge (1,661) 783 (1,148) (2,162) (1,535)

Profit for the year 18,492 19,577 13,573 14,628 13,252

Retained earnings brought forward 36,762 31,185 41,373 38,770 35,518

Effect of adopting IFRS - - - (25) -

Transfer to share capital - - (11,761) - -

Dividends (17,000) (14,000) (12,000) (12,000) (10,000)

Retained earnings carried forward 38,254 36,762 31,185 41,373 38,770

EQUITY

Share capital 70,000 70,000 70,000 35,000 35,000

Capital contribution - - - 23,239 23,239

Retained earnings 38,254 36,762 31,185 41,373 38,770

Total equity 108,254 106,762 101,185 99,612 97,009

*

During the Board of Directors' Meeting held on April 14, 2016, a dividend of SR 8.50 per share amounting

to SR 17m was proposed for the year ended December 31, 2015. This dividend will be subject to

ratification at the next Annual General Meeting of the Company.

Figures for periods ended 2012 and 2011 have not been restated to comply with the requirements of

adoption of IFRS due to impracticability and costs out of proportion to the benefit of stakeholders.

Documents

SACOS GROUP LIMITED 1 CORPORATE INFORMATION ......SACOS GROUP LIMITED 6(a) STATEMENTS OF FINANCIAL POSITION (CONT'D) - DECEMBER 31, 2015 Notes 2015 2014 2015 2014 SR SR SR SR Technical