SACOS GROUP LIMITED CONSOLIDATED FINANCIAL STATEMENTS FOR

SACOS GROUP LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED

31 DECEMBER 2019

SACOS GROUP LIMITED

TABLE OF CONTENTS - 31 DECEMBER 2019

PAGES

CORPORATE INFORMATION 1

DIRECTORS' REPORT 2 - 3

AUDITOR'S REPORT 4 - 9

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 10 - 11

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 12

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY & STATEMENT OF LIFE ASSURANCE FUND 13

CONSOLIDATED STATEMENT OF CASH FLOWS 14 - 15

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS 16 - 69

SACOS GROUP LIMITED

CORPORATE INFORMATION 1

Board of Directors

Non-executive directors : Mrs. Lekha Nair Chairperson & C.E.O. Appointed April 22, 2015

Seychelles Pension Fund

Mr. Louis Rivalland C.E.O. Appointed July 16, 2007

Swan Group

Mr. Patrice Bastide Senior Manager Appointed March 28, 2013

Swan Group

Mr. Rod Thorrington Consultant Appointed April 2, 2015

Mrs. Ina Barbe Consultant Appointed October 19, 2015

Mr. Bernard Adonis Director Appointed September 25, 2017

Ms. Doreen Bradburn Corporate Manager Appointed September 18, 2018

Executive Directors : Ms. Jennifer Morel Chief Executive Officer Appointed January 12, 2018

Ms. Georgette Capricieuse Deputy Chief Executive Officer Appointed October 23, 2018

Mrs.Tacey Furneau Chief Financial Officer Appointed March 25, 2019

Company Secretary Valsen Fiduciaries (Seychelles) Limited Company Secretary Appointed July 1, 2017

Registered Office : Maison Esplanade, Francis Rachel Street,

Victoria, Mahe,

Seychelles

Legal Advisers : K.B Shah

Attorney-at-Law & Notary Public

S Aglae ( Resigned July 2019)


A Madeleine (Appointed December 2019)


Auditors : Pool and Patel

Chartered Accountants

Actuaries : QED Actuaries and Consultants South Africa

Bankers : Barclays Bank (Seychelles) Limited

Bank of Baroda (Seychelles)

Seychelles International Mercantile Banking Corporation Limited [Nouvobanq]

Al Salam Bank Seychelles

Seychelles Commercial Bank Limited

The Mauritius Commercial Bank (Seychelles) Limited [MCB]

Sponsor Advisor : Constant Capital (Seychelles) Ltd

Eden Island,

Seychelles

SACOS GROUP LIMITED

DIRECTORS' REPORT

2

PRINCIPAL ACTIVITIES & CURRENT YEAR EVENTS

RESULTS

2019 2018 2019 2018

SCR SCR SCR SCR

Profit / (loss) for the year 24,990,800 16,205,023 6,784,875 5,217,839

Other comprehensive income 9,145,621 (732,851) 2,661,821 -

Total comprehensive income 34,136,421 15,472,172 9,446,696 5,217,839

Retained earnings brought forward 39,797,066 37,263,746 53,395,156 51,177,317

Share of Shareholder's Surplus/(Deficit) 13,598,090 315,481 - -

Comprehensive income for the year (excl. fair value change) 6,784,875 5,217,839 6,784,875 5,217,839

Dividends (4,000,000) (3,000,000) (4,000,000) (3,000,000)

Retained earnings at end of period 56,180,031 39,797,066 56,180,031 53,395,156

Fair value reserve 5,057,131 2,395,310 5,057,131 2,395,310

Total reserves 61,237,162 42,192,376 61,237,162 55,790,466

1.

2.

3.

4.

5.

6.

DIVIDENDS

EQUIPMENT AND INVESTMENT PROPERTIES

31 DECEMBER 2019

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

ended 31 December 2019.

SACOS Group Limited (collectively "the Group" and referred as "The Company" for its separate financial statements here-after) is

underwriting of general insurance and life assurance policies. Pursuant to order dated 23rd January 2019 of the Supreme Court of

Seychelles, Sacos Insurance Company Limited and Sun Investment Limited have been amalgamated with the Sacos Group Limited with

effective from 1st January 2017.

Consequently, Sacos Insurance Company Limited and Sun Investment Limited have been amalgamated into Sacos Group Limited with

the principal activity of the Company is that of Short-term Insurance Business. These activities have remained unchanged during the

year under review. Activities of its 100% owned subsidiary SACOS Life Assurance Company Limited (hereafter referred as 'SLACL') is to

underwrite life assurance policies.

The Group The Company

Made judgments and estimates that are reasonable and prudent;

Taken reasonable steps for the prevention and detection of fraud and other irregularities; and

Considered appropriate disclosures for all events after the reporting period.

Prepared the financial statements on a going-concern basis;

Taken appropriate measures to safeguard the assets of the Group through the application of appropriate internal control, risk

management systems and procedures;

Additions to investment property during the year 2019 and 2018 were Nil for both Group and Company except for capitalization of work in

progress amounting to SCR 8,260,248 (2018: Nil) for the Group and SCR 7,428,161 (2018: Nil) for the Company.

The Directors confirm that in preparing these financial statements they have:

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

approximate their fair values.

Dividends of SCR 2.00 per share amounting to SCR 4 million were proposed, approved and paid in 2019 (2018: SCR1.50 per share).

Additions to equipment during the year amounting to SCR 6,730,303 (2018: SCR 29,642,334) for the Group and SCR 6,625,456 (2018:

SCR 28,753,648) for the Company and these comprised mainly motor vehicles, computer equipment, furniture & fittings and Work in

progress.

DIRECTORS’ STATEMENT OF RESPONSIBILITIES

Selected suitable accounting policies that are compliant with International Financial Reporting Standards and applied them

consistently;

SACOS GROUP LIMITED

DIRECTORS' REPORT

3

DIRECTORS AND DIRECTORS' INTERESTS

SGL SLACL

2019 2018

L Nair (Chairperson) 280 280 a a

J Morel 120 120 a a

R Thorrington - 1 a a

I Barbe - - a a

L Rivalland - - a a

P Bastide - - a a

B Adonis - - a a

D Bradburn - - a a

G Capricieuse - - a a

T Furneau 130 130 a a

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors consider they have met the aforesaid responsibilities.

AUDITORS

Pool and Patel

Chartered Accountants

BOARD APPROVAL

L Nair L Rivalland P Bastide R Thorrington

Director Director Director Director

I Barbe B Adonis D Bradburn J Morel


G Capricieuse T Furneau

Director Director

These financial statements have been approved for issue by the Board of Directors on 8th April 2020.

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

31 DECEMBER 2019

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

decisions.

SACOS GROUP LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019 10

Notes

The

Company Life Consolidated

The


SCR SCR SCR SCR SCR SCR

ASSETS

Non-current assets

Equipment 5 24,657,286 1,469,737 26,127,023 29,738,205 2,619,842 32,358,047

Right of use asset 6 21,363,408 - 21,363,408 - - -

Investment properties 7 66,339,314 212,995,101 279,334,415 85,173,940 218,381,147 303,555,087

Intangible assets 8 2,721,546 285,834 3,007,380 4,165,039 441,004 4,606,043

Investment in subsidiaries 9 3,000,000 - - 3,000,000 - -

Investment in preference share 9 45,000,000 - - 45,000,000 - -

Investment in financial assets 10 51,186,593 68,480,771 119,667,364 21,390,457 76,906,329 98,296,786

Loans and receivables 11 - 36,598,699 36,598,699 - 39,442,694 39,442,694

Investment in associates 13 - 21,284,705 21,284,705 - 20,508,967 20,508,967

214,268,147 341,114,847 507,382,996 188,467,642 358,299,983 498,767,625

Current assets

Investment in financial assets 10 10,884,746 93,323,106 104,207,851 615,308 73,317,120 73,932,428

Loans and receivables 11 - 19,006,977 19,006,977 - 21,981,809 21,981,809

Trade and other receivables 14 100,303,965 12,058,713 112,362,678 101,677,535 5,868,861 107,546,396

Intercompany receivables 15 - 35,729,340 - - 17,346,108 -

Cash and cash equivalents 16 16,468,297 17,551,144 34,019,441 32,342,752 24,525,786 56,868,538

Current tax asset 17 4,366,092 - 4,366,092 4,383,682 - 4,383,682

132,023,100 177,669,280 273,963,039 139,019,277 143,039,684 264,712,853

Total assets 346,291,247 518,784,127 781,346,035 327,486,919 501,339,667 763,480,478

EQUITY AND LIABILITIES

Capital and reserves

Share capital 18 70,000,000 3,000,000 70,000,000 70,000,000 3,000,000 70,000,000

Preference share - 45,000,000 - - 45,000,000 -

Solvency/Undistributed reserve 28,651,586 - 28,651,586 - - -

Retained earnings 27,528,445 - 27,528,445 53,395,161 (13,598,090) 39,797,071

Fair value reserve 5,057,131 - 5,057,131 2,395,310 - 2,395,310

Total equity 131,237,162 48,000,000 131,237,162 125,790,471 34,401,910 112,192,381

Technical provisions

Life assurance fund 19 - 455,858,950 455,858,950 - 444,767,315 444,767,315

Gross outstanding claims and IBNR20/25 66,935,232 2,255,147 69,190,379 82,887,872 3,534,123 86,421,995

Gross unearned premiums 20/25 67,031,629 - 67,031,629 64,123,960 - 64,123,960

Total technical provisions 133,966,861 458,114,097 592,080,958 147,011,832 448,301,438 595,313,270

LIABILITIES

Non-current liabilities

Retirement benefit obligations 23 4,470,036 829,495 5,299,531 4,204,115 919,112 5,123,227

Deferred tax liabilities 12 1,543,567 - 1,543,567 1,202,468 - 1,202,468

Funds under Management 21/22 2,349,295 - 2,349,295 2,321,284 - 2,321,284

8,362,898 829,495 9,192,393 7,727,867 919,112 8,646,979

Current liabilities

Trade and other payables 24(a) 14,977,795 11,840,535 26,818,330 29,610,644 17,717,207 47,327,851

Intercompany payables 15 35,729,340 - - 17,346,108 - -

Lease liability 24(b) 22,017,192 - 22,017,192 - - -

72,724,327 11,840,535 48,835,522 46,956,752 17,717,207 47,327,851

Total liabilities 81,087,225 12,670,030 58,027,915 54,684,619 18,636,319 55,974,830

Total equity and liabilities 346,291,247 518,784,127 781,346,035 327,486,919 501,339,667 763,480,478

(0.14) 0.72 0.27 0.11 - 0.34

THE GROUP

20182019

The notes on pages 16 to 69 form an integral part of these consolidated financial statements.

Auditors' report on pages 4 to 9.

SACOS GROUP LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019 11

BOARD APPROVAL

These financial statements have been approved for issue by the Board of Directors on 08th April 2020.

L Nair L Rivalland P Bastide R Thorrington


I Barbe B Adonis D Bradburn J Morel


G Capricieuse T Furneau

Director Director



SACOS GROUP LIMITED

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2019 12

Notes The


The



Turnover 169,676,615 70,926,001 240,602,616 162,552,080 64,503,589 227,055,669

Gross written premiums 25(b) 169,676,615 70,926,001 240,602,616 162,552,080 64,503,589 227,055,669

Premiums ceded to reinsurers 25(b) (66,504,485) (3,029,627) (69,534,112) (56,040,429) (5,540,143) (61,580,572)

Change in gross unearned premium 25(b) (2,907,668) - (2,907,668) 3,607,304 - 3,607,304

Recoverable from reinsurers 25(b) (1,091,218) - (1,091,218) (3,359,741) - (3,359,741)

Net premium earned 99,173,244 67,896,374 167,069,618 106,759,214 58,963,446 165,722,661

Gross claims paid 25(c) (97,423,537) (62,210,481) (159,634,018) (47,855,556) (48,668,083) (96,523,639)

Recoverable from reinsurers 25(c) 46,230,891 - 46,230,891 4,712,297 - 4,712,297

Movement in gross outstanding claims 25(c) 15,952,641 - 15,952,641 (45,319,455) - (45,319,455)

Recoverable from reinsurers 25(c) (2,600,109) - (2,600,109) 34,956,510 - 34,956,510

Net claims incurred (37,840,114) (62,210,481) (100,050,595) (53,506,204) (48,668,083) (102,174,287)

Commission receivable from reinsurers 7,629,909 765,754 8,395,663 5,812,093 1,137,367 6,949,460

Commission paid to agents and brokers (11,068,293) (3,073,971) (14,142,264) (9,216,222) (2,807,788) (12,024,010)

Net commission paid (3,438,384) (2,308,217) (5,746,601) (3,404,129) (1,670,421) (5,074,550)

Underwriting surplus 57,894,746 3,377,676 61,272,422 49,848,881 8,624,942 58,473,824

Rental income 7(d) 7,651,303 14,388,559 22,039,863 8,504,323 15,750,316 24,254,639

Investment income 26 2,982,936 11,670,276 14,653,212 622,145 10,641,866 11,264,011

Sundry income 27 2,531,209 519,742 3,050,951 3,478,538 582,325 4,060,863

Increase / (Decrease) in fair value of investment properties 3,008,928 17,078,055 20,086,983 - - -

Profit / (loss) on disposal of investment properties 6 (5,163,331) 158,229 (5,005,102) - (2,000,000) (2,000,000)

Total Other Income 11,011,045 43,814,861 54,825,906 12,605,006 24,974,507 37,579,513

Staff costs 28 (26,862,902) (2,648,504) (29,511,406) (29,811,084) (3,063,506) (32,874,590)

Sales and marketing expenses 29 (1,999,659) (259,128) (2,258,787) (1,713,077) (325,124) (2,038,201)

Operating and administrative expenses 29 (27,119,364) (16,630,397) (43,749,761) (19,783,542) (9,509,198) (29,292,740)

Depreciation and amortisation charges 30 (12,426,857) (630,130) (13,056,987) (3,637,354) (483,304) (4,120,658)

Intercompany recharge 29 9,594,191 (9,594,191) - 9,386,842 (9,386,842) -

(Impairment) / reversal of impairment on financial assets29 (1,341,248) - (1,341,248) (2,866,274) - (2,866,274)

Total Expenses (60,155,839) (29,762,350) (89,918,189) (48,424,489) (22,767,974) (71,192,463)

Share of Profit in associates 13(a) - 775,738 775,738 - 880,184 880,184

Profit / (loss) before taxation 8,749,952 18,205,925 26,955,877 14,029,398 11,711,659 25,741,058

Taxation 17 (1,965,076) - (1,965,076) (8,811,559) (724,476) (9,536,035)

Profit / (loss) for the year 6,784,875 18,205,925 24,990,800 5,217,839 10,987,183 16,205,023

2,661,821 6,483,800 9,145,621 - (732,851) (732,851)

Total comprehensive income / (loss) for the year 9,446,696 24,689,725 34,136,421 5,217,839 10,254,332 15,472,172

Earnings / (loss) per share (Basic and diluted):

- - 3.39 - - 2.61

Surplus transferred as follows:

Life Assurance Fund 14,659,655 10,254,332

Proprietors’ fund 10,030,069 -

24,689,725 10,254,332

20182019

THE GROUP

Profit / (loss) attributable to equity holders of the parent

Other comprehensive income/(loss) for the year,

Fair value change on available-for-sale assets



SACOS GROUP LIMITEDCONSOLIDATED STATEMENT OF CHANGES IN EQUITY & STATEMENT OF LIFE ASSURANCE FUNDAS AT 31 DECEMBER 2019 13

a) STATEMENT OF CHANGES IN EQUITY

THE GROUP

Share Retained Fair value

capital earnings reserve Total

SCR SCR SCR SCR

At 1 January 2018 70,000,000 37,263,746 2,395,310 109,659,056

Share of Shareholder's Surplus/(Deficit) (i) - 315,481 - 315,481

Total comprehensive income for the year - 5,217,839 - 5,217,839

Dividends (note 35) - (3,000,000) - (3,000,000)

At 31 December 2018 70,000,000 39,797,066 2,395,310 112,192,376

Share of surplus to shareholders - 10,030,069 - 10,030,069

Share of profit attributed to shareholders fund (i) - 3,568,021 - 3,568,021

Total comprehensive income for the year - 6,784,875 2,661,821 9,446,696

Dividends (note 35) - (4,000,000) - (4,000,000)

At 31 December 2019 70,000,000 56,180,026 5,057,131 131,237,162

70,000,000 56,180,031 5,057,131 131,237,162

THE COMPANY

Share Share Retained

capital premium earnings Total

SCR SCR SCR SCR

At 1 January 2018 70,000,000 51,177,317 2,395,310 123,572,627

Total comprehensive income for the year - 5,217,839 - 5,217,839

Dividends (note 35) - (3,000,000) - (3,000,000)

At 31 December 2018 70,000,000 53,395,156 2,395,310 125,790,466

Total comprehensive income for the year - 6,784,875 2,661,821 9,446,696

Dividends (note 35) - (4,000,000) - (4,000,000)

At 31 December 2019 70,000,000 56,180,026 5,057,131 131,237,162

70,000,000 56,180,031 5,057,131 131,237,162

b) STATEMENT OF LIFE ASSURANCE FUND

SCR SCR

At 1 January 444,767,315 434,828,465

Fair value change on available-for-sale assets 6,483,800 (732,851)

Surplus the year 18,205,925 10,987,182

Share of surplus to shareholders (i) (3,568,021) (315,481)

Share of profit attributed to shareholders fund (10,030,069) -

At 31 December 455,858,950 444,767,315

(i) After the actuarial valuation, transfer of surplus was as follows:

2019 2018

SCR SCR

With Profit Fund 648,485 315,481

Without Profit Fund 2,919,536 -

Total 3,568,021 315,481

2019 2018

During the year, the Company split its Life Fund into segregated With Profit and Without Profit Funds and a Shareholders Fund to cater

for all excess assets of the company. All new Decreasing Term Assurance policies issued as from 01 January 2019 have been allocated

to the Without Profit Fund, whilst the existing business was allocated to the With Profit Fund. The majority of the Company’s business is

still held within the With-Profits Fund (98.5% of reserves), where 90% of the surplus generated accrues to policyholders and 10% to

shareholders. As for the Without Profit Fund, surplus accrues 100% to shareholders.

As per the Insurance Act 2008, the surplus of the Life Assurance Fund is to be shared by the policyholders and shareholders in the

maximum ratio of 90:10 respectively and as prescribed by our independent actuaries. The share of surplus due to the shareholders has

been calculated by the Actuary and recorded in their valuation report amounting to SCR 648,485 in 2019 (SCR 315,481 in 2018). This

has been recognised in the statement of changes in equity and Life assurance Fund.

(ii) With the creation of the 3 designated funds i.e. With Profit, Without Profit and Shareholders funds, net revenue generated from the

assets allocated to the With Profit and Without Profit fund are transferred to the Life Fund whereas assets allocated to the shareholders

fund will be transferred directly to the retained earnings.



SACOS GROUP LIMITED

CONSOLIDATED STATEMENT OF CASH FLOW


2019 2018 2019 2018

Notes SCR SCR

S SCR SCR

Cash flows from operating activities:

Profit/(Loss) before taxation 26,955,877 25,741,057 8,749,952 14,029,398

Profit/(Loss) before taxation attributable to shareholders 26,955,877 25,741,057 8,749,952 14,029,398

Adjustments for:

Depreciation and Amortisation 30 13,056,989 4,120,658 12,426,857 3,637,354

(Profit) / loss on disposal of equipment 14,936,026 (343,092) 5,072,882 (2,336,510)

Provision for Doubtful Debt 14 (1,341,248) - (1,341,248) -

Change in fair value of investment in financial assets (46,288) - (116,676) -

Change in fair value of investment Properties (20,086,982) 2,000,000 (3,008,928) 2,000,000

Profit from associate (775,738) (880,184) - -

Release of mortgage protection fund - (64,499) - (64,499)

Release of fisheries and agricultural fund - (1,463) - (1,463)

Release of policy protection fund 21/22 28,011 44,208 28,011 44,208

Movement in retirement benefit obligations 23 984,785 538,717 996,678 516,434

Interest income 26 (957,348) (11,264,011) (957,348) (11,264,011)

Charge of impairment provision 10 - 2,866,273 - 2,866,273

Effect of change in exchange rates 27 - (247,244) - (247,244)

32,754,083 22,510,420 21,850,180 9,179,940

Changes in working capital:

- (Increase) / Decrease in Trade and other receivables 14 (21,858,266) (29,600,121) 2,714,818 (19,699,366)

- Increase / (Decrease) in Trade and other payables 24 (2,126,290) (18,458,745) 3,750,383 (26,635,376)

- Gross claims liabilities 25(a) (14,323,948) 46,985,314 (13,044,971) 41,712,149

- Unearned premium 25(b) - (3,607,305) - -

(5,554,420) 17,829,563 15,270,409 4,557,347

Net tax paid 17 (1,606,388) 3,307,212 (1,606,388) 4,031,688

Interest received 9 & 26 (6,844,575) 4,765,739 - 11,091,051

Retirement benefit obligation paid 23 (808,481) (603,443) (730,757) (573,137)

Net cash inflow / (outflow) from operating activities (14,813,864) 25,299,071 12,933,265 19,106,949

Cash flows from investing activities:

Purchase of equipment 5 (5,655,432) (29,642,333) (6,382,672) (28,753,647)

Proceeds from disposal of equipment 556,850 450,000 556,850 405,000

Purchase of intangible assets 8 (33,165) (488,477) (33,165) -

Proceed from loans and receivables 11 27,157,892 26,223,808 (7,428,161) -

Disbursement loans and receivables 11 (20,462,384) (22,470,023) - -

Additions to investment in financial assets 10 (231,574,863) (144,949,217) (72,566,099) (5,017,468)

Reclassification/additions to investment properties 7 (21,712,528) - - -

Proceeds from sale of investment properties 51,642,390 30,025,000 24,809,160 14,025,000

Redemption of investment in financial assets 10 196,046,006 141,507,120 36,236,370 19,056,953

Net cash inflow from investing activities (4,035,234) 655,878 (24,807,717) (284,162)

THE GROUP THE COMPANY



SACOS GROUP LIMITED

CONSOLIDATED STATEMENT OF CASH FLOW (CONTINUED)


2019 2018 2019 2018

Notes SCR SCR

S SCR SCR

Cash flows from financing activity:

Dividends paid 35 (4,000,000) (3,000,000) (4,000,000) (3,000,000)

Net cash outflow from financing activity (4,000,000) (3,000,000) (4,000,000) (3,000,000)

Net change in cash and cash equivalents (22,849,097) 22,954,951 (15,874,455) 15,822,787

Movement in cash and cash equivalents:

At 1 January 56,868,538 33,913,587 32,342,752 16,519,965

Change (22,849,097) 22,954,951 (15,874,455) 15,822,787

At 31 December 16 34,019,441 56,868,538 16,468,297 32,342,752




SACOS GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR YEAR ENDED 31 DECEMBER 2019 16

1. GENERAL INFORMATION

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

Statement of compliance

Basis of consolidation

The consolidated and separate financial statements are presented in Seychellois rupee (SCR), unless otherwise indicated.

The consolidated and separate financial statements have been prepared in accordance with International Financial Reporting

Standards (“IFRS”) and comply with the Companies Act 1972 and the Insurance Act 2008.

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

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

The consolidated and separate financial statements comprise the financial statements of the Group and its subsidiary as at 31

December 2019. The Group controls an investee if and only if the Group has:

• Power over the investee (i.e.it holds existing rights that give it the current ability to direct the relevant activities of the investee)

• Exposure, or rights, to variable returns from its involvement with the investee, and

• The ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and

circumstances in assessing whether it has power over an investee, including:

SACOS Group Limited (collectively "the Group" and referred to as "The Company" for its separate financial statements here-after)

was incorporated under the Companies Act, 1972 on 22 November 2005. Pursuant to order dated 23rd January 2019 of the

Supreme Court of Seychelles, Sacos Insurance Company Limited and Sun Investment Limited have been amalgamated with the

Company with effective 1st January 2017.

Consequently, Sacos Insurance Company Limited and Sun Investment Limited have been amalgamated into Sacos Group

Limited with the principal activity of the Company is that of Short-term Insurance Business. These activities have remained

unchanged during the year under review. Activities of its 100% owned subsidiary SACOS Life Assurance Company Limited

(hereafter referred as 'SLACL') is to underwrite life assurance policies.

The Group is domiciled in Republic of Seychelles and its registered office is Maison Esplanade, Francis Rachel Street, Victoria,

Mahe, Seychelles.

These consolidated and separate financial statements will be submitted for approval at the forthcoming Annual General Meeting of

the shareholders of the Group.

The consolidated and separate financial statements have been prepared under the historical cost basis except for the revaluation

of land and buildings and financial assets and investment properties which are stated at their fair values.

• The contractual arrangement with the other vote holders of the investee

• Rights arising from other contractual arrangements

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or

more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and

ceases when the Group loses control of the subsidiary.

Assets, liabilities, income and expenses of a subsidiary are included in the consolidated financial statements from the date the

Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the

Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When

necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the

Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions

between members of the Group are eliminated in full upon consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group

loses control over a subsidiary, it:

• Derecognizes the assets (including goodwill) and liabilities of the subsidiary

• Derecognises the carrying amount of any non-controlling interests

• Derecognises the cumulative translation differences recorded in equity

• Recognizes the fair value of the consideration received

• Recognizes the fair value of any investment retained

• Recognizes any surplus or deficit in profit or loss

• Reclassifies the parent’s share of components previously recognized in OCI to profit or loss or retained earnings, as appropriate,

as would be required if the Group had directly disposed of the related assets or liabilities

SACOS GROUP LIMITED



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Changes in accounting policies and disclosures

Amendments

IFRS 16 Leases 01-Jan-19

IFRS 16 Leases – effective 1 January 2019

The Group has assessed the impact of this new standard.

a) Transition accounting and effective date

Modified Retrospective Approach has been followed for the purpose of Transition Impact - IFRS 16 "Leases".

IFRS 16 - Para C5b

For Transition Impact of Sacos Group, initial application date is 1 January 2019.

Leases previously classified as Operating Lease IFRS 16 Para C8

Measurement of Lease Liability

Measurement of Right to Use Asset

b) Incremental Rate of Borrowing

c)

d) Fixed Monthly lease payments are exclusive of Value Added Tax.

The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended

IFRSs and IFRIC interpretations adopted in the year commencing 1 Jan 2019:

Effective for accounting period

The IASB has redrafted this new leasing standard that requires lessees to recognize assets and liabilities for most leases.

Lessees applying IFRS would have a single recognition and measurement model for all leases (with certain exemptions). Lessors

applying IFRS would classify leases using the principle in IAS 17; in essence, lessor accounting would not change.

Under this approach, a lessee does not restate comparative information. Consequently, the date of initial application is the first

day of the annual reporting period in which a lessee first applies the requirements of the new leases standard. At the date of initial

application of the new leases standard, lessees recognize the cumulative effect of initial application as an adjustment to the

opening balance of equity as of 1 Jan 2019.

The lessee shall measure that lease liability at the present value of the remaining lease payments, discounted using the lessee’s

incremental borrowing rate at the date of initial application.

Amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease

recognized in the statement of financial position immediately before the date of initial application.

For the purpose of Discounting of Present Value of Cash Flows, implicit rate is not mentioned in the Agreement, in the absence

we have discounted the Cash Flows considered the Interest Rate of 7.50%.

However, since Initial Application Date of the IFRS -16 Leases is 1 January 2019 & as per Para C8 - IFRS 16 - Leases

"lease liability should be measured at the present value of the remaining lease payments, discounted using the lessee’s

incremental borrowing rate at the date of initial application."

However - IFRS 16 Para C8 requires Cash flows should be discounted using the lessee’s incremental borrowing rate at the date of

initial application. In accordance with the same, Lease Payments should be adjusted/discounted at the Incremental Borrowing

Rate as at 1 January 2019.

As per IFRS 16 Para 27, Variable lease payments that depend on an index or a rate such as payments that vary to reflect

changes in market rental rates are initially measured using the Index or rate at commencement date.

Appendix II of the Agreement states that Basic Monthly Rent shall escalate on every anniversary date of Lease Commencement

Date either in lien with the CPI or 5% whichever is higher.

SACOS GROUP LIMITED




2.3 Accounting standards and interpretations issued but not yet effective

New or revised standards

IFRS 9 Financial instruments 01-Jan-18

IFRS 15 Revenue from contracts with customers 01-Jan-18

IFRS 17 Insurance Contracts 01-Jan-21

Exemption to insurance companies to apply IFRS 9,15,and 17 concurrently in 2023

The amendments clarify that:

These amendments will not have an impact on the Group’s consolidated and separate financial statements.

IFRS 9 Financial instruments

The following standards, amendments to existing standards and interpretations were in issue but not 'yet effective. They are

mandatory for accounting periods beginning on the specified dates, but the Group has not early adopted them:

The amendments should be applied retrospectively and are effective from 1 January 2018, with earlier application permitted. If

an entity applies those amendments for an earlier period, it must disclose that fact.

Financial assets are classified by reference to the business model within which they are held and their contractual cash flow

characteristics. The 2014 version of IFRS 9 introduces a “fair value through other comprehensive income” category for certain

debt instruments. Financial liabilities are classified in a similar manner as under IAS 39; however there are differences in the

requirements applying to the measurement of an entity’s own credit risk.

The 2014 version of IFRS 9 introduces an “expected credit loss” model for the measurement of the impairment of financial assets,

so it is no longer necessary for a credit event to have occurred before a credit loss is recognized. A new hedge model is designed

to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk

exposures.

The requirements for derecognition of financial assets and liabilities are carried forward from IAS 39.

The application of IFRS 9 has been deferred until the effective adoption and application of the new standard on insurance

contracts. Exemption to insurance companies to apply IFRS 9 concurrently in 2023 and the Company plans to adopt the new

standard on that required date. However, the Group is assessing the impact of the full adoption of IFRS 9, which it intends to

adopt, on the financial statements.

Amendments to IFRS 4 - Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts

Where the adoption of the standard or interpretation or improvement is deemed to have an impact on the financial statements or

performance of the Group when applicable, its impact is described below:

IAS 28 Investments in associates and joint ventures – Clarification that measuring investees at fair value through profit

or loss is an investment by investment choice

An entity that is a venture capital organization, or other qualifying entity, may elect, at initial recognition on an investment-by-

investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss. If an entity that is

not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when

applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture

to the investment entity associate’s or joint venture’s interests in subsidiaries. This election is made separately for each

investment entity associate or joint venture, at the later of the date on which:

(a) the investment entity associate or joint venture is initially recognized;

(b) the associate or joint venture becomes an investment entity; and

(c) the investment entity associate or joint venture first becomes a parent.

The amendments address concerns arising from implementing the new financial instruments Standard, IFRS 9, before

implementing the new insurance contracts standard that International Accounting Standard Board (IASB) is developing to replace

IFRS 4. The amendments introduce two options for entities issuing insurance contracts: a temporary exemption from applying

IFRS 9 and an overlay approach.

Temporary exemption from IFRS 9

The optional temporary exemption from IFRS 9 is available to the Companies whose activities are predominantly connected with

insurance. The temporary exemption permits such companies to continue to apply IAS 39 Financial Instruments: Recognition and

Measurement while they defer the application of IFRS 9 until 1 January 2023 at the latest. Predominance must be initially

assessed at the annual reporting date that immediately precedes 1 April 2016 and before IFRS 9 is implemented. Also the

evaluation of predominance can only be reassessed in rare cases. Companies applying the temporary exemption will be required

to make additional disclosures.

SACOS GROUP LIMITED




2.3 Accounting standards and interpretations issued but not yet effective (continued)

IFRS 15 Revenue from contracts with customers

IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.

The five steps in the model are as follows:

• Identify the contract with the customer;

• Identify the performance obligations in the contract;

• Determine the transaction price;

• Allocate the transaction price to the performance obligations in the contracts; and

• Recognize revenue when (or as) the entity satisfies a performance obligation.

The Group is assessing the impact of this new standard.

IFRS 17 Insurance Contracts

The Group is assessing the impact of this new standard.

These amendments will not have an impact on the consolidated and separate financial statements.

The temporary exemption is first applied for reporting periods beginning on or after 1 January 2018. The Company may elect the

overlay approach when it first applies IFRS 9 and apply that approach retrospectively to financial assets designated on transition

to IFRS 9. The Company restates comparative information reflecting the overlay approach if, and only if, the Company restates

comparative information when applying IFRS 9.

The Group plans to defer the application of IFRS 9 until the earlier of the effective date of the new insurance contract standard

(IFRS 17) of 1 January 2023, opting the temporary exemption from applying IFRS 9 by the amendments to IFRS 4.

Guidance is provided on topics such as the point in which revenue is recognized, accounting for variable consideration, costs of

fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.

IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance Contracts. It requires a current measurement model where

estimates are re-measured each reporting period. Contracts are measured using the building blocks of:

• discounted probability-weighted cash flows

• an explicit risk adjustment, and

• profit of the contract which is recognized as revenue over the coverage period.

The standard allows a choice between recognizing changes in discount rates either in profit or loss or directly in other

comprehensive income. The choice is likely to reflect how insurers account for their financial assets under IFRS 9.

An optional, simplified premium allocation approach is permitted for the liability for the remaining coverage for short duration

contracts, which are often written by non-life insurers. There is a modification of the general measurement model called the

policyholders share in the returns from underlying items. When applying, the underlying items are included in the contractual

service margin, The results of insurers using this model are therefore likely to be less volatile than under the general model.

The new rules will affect the financial statements and key performance indicators of all entities that issue insurance contracts or

investment contracts with discretionary participation features.

The overlay approach

The overlay approach is an option for companies that adopt IFRS 9 and issue insurance contracts, to adjust profit or loss for

eligible financial assets; effectively resulting in IAS 39 accounting for those designated financial assets. The adjustment eliminates

accounting volatility that may arise from applying IFRS 9 without the new insurance contracts standard. Under this approach, an

entity is permitted to reclassify amounts between profit or loss and other comprehensive income (OCI) for designated financial

assets.

Company must present a separate line item for the amount of the overlay adjustment in profit or loss, as well as a separate line

item for the corresponding adjustment in OCI.

Transition

The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or

contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of

assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture, is recognized in full.

Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognized only to

the extent of unrelated investors’ interests in the associate or joint venture. The IASB has deferred the effective date of these

amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively.

Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture

SACOS GROUP LIMITED




2.4 Significant accounting policies

2.4.1

Transactions and balances

2.4.2 Insurance contracts

Classification of insurance contracts

Insurance contracts issued by the Group are classified within the following main categories:

(i) Short-term insurance contracts

(ii) Long-term insurance contracts with fixed and guaranteed terms

(iii) Long-Term insurance contracts without fixed terms and with DPF

- 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;

and which are contractually based on the:

- performance of specified pool of contracts or a specified type of contract; and

- realized and unrealized investment returns on a specified pool of assets held by the Group.

Short-term insurance contracts are mainly in respect of motor business but the Group also sells fire and allied perils, health,

marine, engineering and other miscellaneous insurance contracts. These contracts protect the Group’s customers from damage

suffered to property or goods, value of property and equipment lost, losses and expenses incurred, sickness and loss of earnings

resulting from the occurrence of the insured events.

These contracts insure events associated with human life, i.e. death, disability or survival over a long term. Life insurance liabilities

are recognized when contracts are entered into and premiums are charged. These liabilities are measured by using the Gross

Premium method. The liability is determined as the sum of the discounted value of the expected future benefits, claims handling

and policy administration expenses, policyholder options and guarantees and investment income from assets backing such

liabilities, which are directly related to the contract, less the discounted value of the expected premiums that would be required to

meet the future cash outflows based on the valuation assumptions used. The liability is either based on current assumptions or

calculated using the assumptions established at the time the contract was issued, in which case, a margin for risk and adverse

deviation is generally included. A separate reserve for longevity may be established and included in the measurement of the

liability. Furthermore, the liability for life insurance contracts comprises the provision for claims outstanding. Adjustments to the

liabilities at the end of each reporting period are recorded in profit or loss in Transfer to life assurance fund’. The liability is

derecognised when the contract expires, is discharged or is cancelled.

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 translation

Items included in the financial statements of each of the Group’s entities are measured using Seychellois rupee (SCR), the

currency of the primary economic environment in which the Group operates (“functional currency”). The consolidated and separate

financial statements are presented in Seychellois rupee (SCR).

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the

transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at

year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of

the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates

at the date the fair value was determined.

The Group issues contracts which transfer insurance risk. Insurance contracts are those contracts which transfer significant

insurance risk at the inception of the contract. Such contracts remain insurance contracts until all rights and obligations are

extinguished or expired. Investment contracts are those contracts that transfer financial risk with no significant insurance risk.

SACOS GROUP LIMITED




2.4 Significant accounting policies (continued)

2.4.2 Insurance contracts (continued)

(iv) Reinsurance contracts

(v) Receivables and payables related to insurance contracts

(vi) Impairment of reinsurance assets

2.4.3 Claims expenses and outstanding claims provisions

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

recognized 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 Group. The bonus is derived from

the DPF eligible surplus available arising mainly upon revaluation of backing assets, carried out by independent actuaries on a

The Group 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

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 recognizes

that impairment in 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.

Outstanding claims provisions are based on the ultimate costs of all claims incurred but not settled at the end of financial reporting

period, whether reported or Incurred But Not Reported (IBNR). Notified claims are only recognized when the Group considers that

it has a contractual liability to settle the claims. IBNR has been provided for on the South African benchmark. Claims expenses are

charged to profit or loss as incurred based on the estimated liability for compensation owed to contract holders or third parties.

There are often delays between the occurrence of the insured event and the time it is actually reported to the Group, particularly in

respect of liability business, the ultimate cost of which cannot be known with certainty at the end of the financial reporting period.

Following the identification and notification of the insured loss, there may still be uncertainty as to the magnitude and timing of the

settlement of the claim. Outstanding claim provisions are not discounted and exclude any allowances for expected future

recoveries. Recoveries represent claims recoverable from third party insurers. Recoveries are accounted for as and when

received. However, non-insurance assets that have been acquired by exercising rights to sell, salvage or subrogate under the

terms of the insurance contracts are included when providing for outstanding claims. The liability is not discounted due to the fact

that the exact timing and actual amount to be paid cannot be determined.

Equity holders' share of the DPF eligible surplus equally to 10%, is transferred from the Life Assurance Fund to them on a yearly

basis when bonuses are declared.

Contracts entered into by the Group with reinsurers under which the Group is compensated for losses on one or more contracts

issued by the Group are classified as reinsurance contracts held. Insurance contracts entered into by the Group under which the

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

Reinsurance contracts used by the Group are proportional and non-proportional treaties and facultative arrangements.

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 Group can fix its retention limit. Non-proportional reinsurance is mainly ‘excess of

loss’ 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. Facultative insurance contracts generally relate to specific insured risks which are

underwritten separately. Under treaty arrangements, risks underwritten by the Group falling under the terms and limits of the

treaties are reinsured automatically.

Reinsurance assets or liabilities are derecognized when the contractual rights are extinguished or expired or when the contract is

transferred to another party.

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its life time,

even if insurance risk reduces significantly during this period, unless all rights and obligations are extinguished or expired.

Investment can, however, be classified as insurance contracts after inception if insurance risk becomes significant.

Receivables and payables are recognized when due. These include amounts due to and from agents, brokers and insurance

contract holders.

SACOS GROUP LIMITED




2.4.4 Salvage and subrogation reimbursements

2.4.5 Provision for unearned premiums

2.4.6 Liability adequacy test

(a) Short-term insurance

(b) Long-term insurance

2.4.7 Financial instruments

(a) Categories of financial assets

(b) Financial assets at fair value through profit or loss (FVTPL)

(c) Loans and receivables

(d) Held-to-maturity financial assets

(e) Available-for-sale financial assets

Estimates of salvage recoveries are included as an allowance in the measurement of the insurance liabilities for claims, and

salvage property is recognized in other assets when the liability is settled. The allowance is the amount that can reasonably be

recovered from the disposal of the property.

The provision for unearned premiums represents the portion of premiums written on short-term insurance contracts relating to

periods of insurance risks subsequent to the reporting date. It is calculated on the inception basis (daily method). The movement

on the provision is taken to profit or loss in order for revenue to be recognized over the period of the risk. The provision is

derecognized when the contract expires, discharged or cancelled.

At end of financial reporting period, a liability adequacy test is performed to ensure the adequacy of the contract liabilities. In

performing the test, current best estimates of future contractual cash flows (including claims handling and administration

Loans and receivables are non-derivative financial assets with fixed or determinable payments. They are recognized initially at fair

value plus any directly attributable transactions costs. Subsequent to initial recognition, loans and receivables are measured at

amortised cost using the effective interest method, less any impairment. Interest on loans and receivables financial assets are

included in the income statement.

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

statement of profit or loss and other comprehensive income. Held-to-maturity financial assets are treasury bonds which are

recognized initially at fair value and subsequently at amortised cost using the effective interest method.

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other

categories. They are included in non-current assets unless management intends to dispose of the investment within twelve

months of the end of the reporting period.

The Group’s Independent Actuaries review the adequacy of insurance liabilities for long term contracts on an annual basis and

ensure that provisions made by the Group are adequate.

Financial instruments carried on the statement of financial position include financial assets classified into the following categories:

Financial assets within the scope of IAS 39 are classified as loans and receivables and investment in financial assets which

comprise of held-to-maturity and available for sales investments as appropriate. The Group determines the classification of its

financial assets at initial recognition.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in

the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell

the asset.

All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss,

directly attributable transaction costs.

This category has two sub-categories: ‘financial assets held for trading and those designated at fair value through profit or loss at

inception’. A financial asset is classified into the ‘financial assets at fair value through profit or loss category at inception if

acquired principally for the purpose of selling in the short term, if it forms part of a portfolio of financial assets in which there is

evidence of short-term profit-taking, or if so designated by management.

SACOS GROUP LIMITED




2.4 Significant accounting policies

2.4.7 Financial instruments (continued)

(i) Measurement

Financial assets at fair value through profit or loss (FVTPL)

(ii) Derecognition

(f) Financial assets carried at amortised cost

(g) Financial assets classified as available-for-sale

Subsequent to initial recognition, they are re-measured at fair value. Changes in fair value are recorded in profit or loss on

financial assets at fair value through profit or loss.

Loans and receivables and held-to-maturity investments

These are subsequently carried at amortised cost using the effective interest method.

Available-for-sale financial assets

These are subsequently carried at their fair values. Changes in fair value are recorded in statement of life assurance fund for life

business and other comprehensive income for group excluding life business.

A financial asset (or, where applicable a part of a financial asset or part of the Group of similar financial assets) is derecognised

• The rights to receive cash flows from the asset have expired;

• The Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without

material delay to a third party under a ‘pass through’ arrangement; and either

(a) has transferred substantially all the risks and rewards of the asset, or

(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained

substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the

Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset

is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group

could be required to repay.

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of

financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if

there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a

‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of

financial assets that can be reliably estimated.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually

significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset,

whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively

assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or

continues to be recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred on loans and receivables carried at amortised cost, the

amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future

cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through

the use of an allowance account and the amount of the loss is recognized in consolidated statement of profit or loss and other

comprehensive income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of

interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded

as part of investment income in profit and loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event

occurring after the impairment was recognized, the previously recognized impairment loss is reversed by adjusting the allowance

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of

financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in

the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence

exists for available-for-sale financial assets, the cumulative loss, measured as the difference between acquisition cost and the

current fair value, less any impairment loss on that financial asset is recognized in the statement of life assurance fund for life

business and profit or loss for group excluding life business. Impairment losses for life business previously recognized in Life

Assurance Fund for an investment in an equity instrument classified as available-for-sale is also reversed through the statement of

life assurance fund and for group excluding life business reversal of impairment is reversed through profit or loss in statement of

profit or loss and other comprehensive income.

SACOS GROUP LIMITED





2.4.7 Financial instruments (continued)

(g) Financial assets classified as available-for-sale (continued)

2.4.8 Financial liabilities

(a) Categories of financial liabilities

(b) Measurement

(c) Derecognition

(d) Offsetting of financial instruments

2.4.9 Investment in subsidiary companies

Separate financial statements

2.4.10 Equity

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 recognized (such as an improvement in the debtor's credit rating), the previously recognized

impairment loss is reversed through the statement of life assurance fund for life business and profit or loss for group excluding life

business 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 recognized.

The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities within the scope of IAS 39

are classified as either fair value through profit or loss or amortised cost as appropriate. All financial liabilities are recognized

initially at fair value minus directly attributable transaction costs.

The Group's financial liabilities include trade and other financial payables and bank overdrafts.

After initial recognition, financial liabilities of the Group are subsequently measured at amortised cost using the effective interest

rate method. Gains and losses are recognized in profit or loss when the liabilities are derecognised as well as through the effective

interest rate method (EIR) amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral

part of the EIR. The EIR amortisation is included in finance cost in profit or loss.

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. Where an existing

financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability

are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the

recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.

The carrying amount of the asset is reduced and the amount of the loss is recognized in the statement of life assurance fund for

life business and profit or loss for group excluding life business. If an available for sale investment has a variable interest rate,

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

Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of financial position if, and

only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net

basis, or to realize the assets and settle the liabilities simultaneously. Income and expenses will not be offset in the profit or loss

unless required or permitted by any accounting standard or interpretation, as specifically disclosed in the accounting policies of the

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

from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Investments in subsidiaries in the separate financial statements of the Company are carried at cost, net of any impairment. Where

the carrying amount of an investment is greater than its estimated recoverable amount, it is written down immediately to its

recoverable amount and the difference is recognized in profit or loss. Upon disposal of the investment, the difference between the

net disposal proceeds and the carrying amount is recognized in profit or loss.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Shares issued by the Group are recognized at the proceeds received, net of direct issue costs.

SACOS GROUP LIMITED





2.4.11 Dividends

2.4.12 Property and equipment

Rates

Furniture and fittings 10%

Computer and equipment 15% - 20%

Motor vehicles 25%

2.4.13 Investment properties

2.4.14 Intangible assets

Computer software

Website

Subsequent costs are included in the assets' carrying amount or recognized 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 disposal of property and equipment are determined by reference to their carrying amounts and are taken into

profit or loss . On disposal of revalued assets, any amounts in revaluation reserve relating to those assets are transferred to

retained earnings.

Investment properties held to earn rentals/or for capital appreciation or both and not substantially occupied by the Group are

initially stated at cost, including transaction costs and then are subsequently carried at fair value, representing open market value

determined annually by external valuers and or the Directors as appropriate.

Dividends on ordinary shares are recognized as a liability and deducted from equity when they are approved by the Group’s

shareholders.

Property and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost

excludes the cost of day to day servicing. Replacement or major inspection costs are capitalized when incurred and if probable

that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Gains or losses arising from changes in fair values of investment properties are recognized in the consolidated statement of profit

or loss and other comprehensive income.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an

indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset

with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the

expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization

period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible

assets with finite lives are recognized in consolidated statement of profit or loss and other comprehensive income in the expense

category that is consistent with the function of the intangible assets.

Acquired computer software licenses are capitalized 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.

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 recognized as intangible assets. Direct costs include staff costs of the software

development team and an appropriate portion of relevant overheads. Website development costs recognized as assets are

amortised using a straight-line method over their useful lives of 3⅓ years.

SACOS GROUP LIMITED





2.4.15 Impairment of non-financial assets

2.4.16 Cash and cash equivalents

2.4.17 Provisions

2.4.18 Segment reporting

2.4.19 Trade and other receivables

2.4.20 Trade and other payables

2.4.21 Taxes

(a) Current income tax

(b) Deferred tax

Cash and short-term deposits in the consolidated statement of financial position comprise cash at banks, in hand and short-term

deposits with a maturity of less than three months. Cash and cash equivalents are measured at fair value.

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, and 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. Where the Group expects some or all of a provision to be reimbursed, the

reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to

any provision is presented in consolidated statement of profit or loss and other comprehensive income net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where

appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is

recognized as a borrowing cost.

Segments reported are consistent with the historical Group structure.

Trade and other receivables are recognized at fair value less provision for impairment.

Interest on loans and receivables financial assets are recognized in the consolidated statement of profit or loss and other

comprehensive income.

Trade and other payables financial liabilities are recognized at fair value minus directly attributable transaction costs (transaction

costs are only taken into account or the financial liability instruments not classified as fair value through profit and loss). Interest

paid on loans and other payables is recognized in the consolidated statement of profit or loss and other comprehensive income.

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. Where an existing

financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability

are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the

recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated profit or loss.

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication

exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An

asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use.

The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely

independent of those from other assets or groups of assets. In assessing value in use, the estimated future cash flows are

discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of

money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into

account, if available.

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered

from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or

substantively enacted by the reporting date, in the countries where the Group operates and generates taxable income. The

income tax is recognized as a charge in consolidated statement of profit or loss and other comprehensive income.

Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of

assets and liabilities and their carrying amounts for financial reporting purposes.

SACOS GROUP LIMITED





2.4.21 Taxes (continued)

2.4.22 Retirement benefit obligations

Defined benefit plans

2.4.23 Shareholders’ share of the surplus generated by the Life Business

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer

probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

Unrecognized deferred income tax assets are reassessed at each reporting date and are recognized to the extent that it has

become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized

or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognized outside profit or loss are not recognized in profit or loss. Deferred tax items are

recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current

income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the

same taxation authority.

The Group and the Company have disclosed deferred income tax assets and deferred income tax liabilities separately as it does

not meet the above criteria.

The Group provides for a payment of compensation to permanent employees as is required by Regulation 24(2) of S.I. 34 of 1991

read with section 47(2)(b)(i) of the Employment Act as amended by Act 18 of 2010. The amount provisioned every year is based

on the number of months the employee has worked. This type of employee benefits has the characteristics of a defined benefit

plan. The liability recognized in the statement of financial position in respect of the defined benefit plan is the value of the defined

obligation at the reporting date. The value of the defined benefit obligation is determined by use of the formula as required by the

Act, being "the rate of five-sixths of one day's wage for each completed month of service in the case of continuous employment".

Payments, reflecting the obligation are made on termination of employment.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a

business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint

ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary

differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and

unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary

differences, and the carry-forward of unused tax credits and unused tax losses can be utilized except:

• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset

or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting

profit nor taxable profit or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint

ventures, deferred income tax assets are recognized only to the extent that it is probable that the temporary differences will

reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The Group does not carry out an actuarial valuation since the obligation is calculated on the method as prescribed by the

Seychelles Employment Act and frequently adjusted to reflect the present obligation using the current salary and months of

service. Movements in the compensation obligation are recognized as part of staff costs in the consolidated statement of profit or

loss and other comprehensive income.

As 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 Actuary based on assumptions

and judgement. As the life business made a deficit during the year, the deficit amount is recognized in consolidated statement of

changes in equity and no share is transferred to life assurance fund.

SACOS GROUP LIMITED





2.4.24 Life Assurance Fund

2.4.25 Mortgage protection fund

2.4.26 Fisheries and Agricultural fund

2.4.27 Revenue recognition

(a) Gross written premiums

(i) Short-term insurance

(ii) Long-term insurance

At each reporting date, an assessment is made of whether the recognized life insurance liabilities are adequate by using an

existing liability adequacy test. The liability value is adjusted to the extent that it is insufficient to meet expected future benefits and

expenses. In performing the adequacy test, current best estimates of future contractual cash flows such as claims handling and

policy administration expenses, policyholder options and guarantees, as well as investment income from assets backing such

liabilities are used. A number of valuation methods are applied, including discounted cash flows, option pricing models and

stochastic modelling. To the extent that the test involves discounting of cash flows, the interest rate applied may be prescribed or

may be based on managements prudent expectation of current market interest rates. Any inadequacy is recorded in the statement

of profit or loss by establishing an additional insurance liability for the remaining loss.

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 Group.

The Fund is designated for contributions to premiums payable under a Government sponsored / subsidized voluntary scheme.

Under this Agricultural Disaster and Fisheries Voluntary Insurance Scheme, farmers registered with the Seychelles Agriculture

Agency (SAA) and boat owners registered with the Seychelles Fisheries Authorities (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.

Gross written premium comprise the total premium for the whole period of cover provided by contracts entered into and are

recognized as revenue (earned premiums) on the date on which the policy commences, proportionally over the period of

coverage.

Premiums earned on long-term life contracts are recognized 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 consolidated

statement of profit or loss and other comprehensive income.

The Life Assurance Fund represents the net assets of the Company attributable to policy holders of the Fund. At each reporting

date the amount of the liabilities of the life assurance fund is established and the adequacy of the fund is determined by actuarial

valuation. A portion of the surplus or deficit between the value of the assets and the value of the liabilities is transferred to the

statement of profit or loss. When the actuarial valuation of the liability exceeds the value of the fund, the difference is recognized

immediately in income statement. The movement in the fund is recognized in other comprehensive income to the extent of the fair

value gains on available-for-sale financial assets.

Life insurance liabilities are recognized when contracts are entered into and premiums are charged. These liabilities are measured

using the net premium method. The liability is determined as the sum of the discounted value of the expected future benefits,

claims handling and policy administration expenses, policyholder options and guarantees and investment income from assets

backing such liabilities , which are directly related to the contract, less the discounted value of the expected premiums that would

be required to meet future cash outflows based on the valuation assumptions used. The liability is either based on current

assumptions or calculated using the assumptions established at the time the contract was issued, in which case, a margin for risk

and adverse deviation is generally included. Furthermore, the liability for the life insurance contracts includes claims outstanding.

Profits originated from margins for adverse deviations on run-off contracts are recognized in the statement of profit or loss over the

life of the contract, whereas losses are fully recognized in the statement of profit and loss during the first year of runoff. The

liability is derecognised when the contract expires, is discharged or cancelled.

SACOS GROUP LIMITED





2.4.27 Revenue recognition (continued)

(b) Earned premiums

(c) Underwriting surplus

2.4.28 Other income

Other income earned by the Group is recognized on the following bases:

- Interest income

- Investment income

- Commission

- Rental Income

-

2.4.29 Fair value measurement:

The Company measures available for sale financial assets and investment properties in non-financial assets at fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the

asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use.

When pricing the asset or liability, it is assumed that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits

by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest

and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to

measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Interest income is recognized in profit or loss 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 recognized as an adjustment to the effective interest rate

of the instrument.

Investment income comprises dividend and rental income from investment property business. Dividend income is recognized

when the shareholders' right to receive payment is established while rental income is recognized on an accrual basis.

Commission income is recognized as it accrues in accordance with the substance of the relevant agreements.

Rental income comprises of income from the lease of the Group's investment properties. Rental income is recognized on an

accrual basis and where appropriate using the straight line methodology over the lease term.

Management fees

Management fees are charged to subsidiaries and are recognized in the separate financial statements when the services are

rendered.

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

if any.

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

outstanding claims and additional reserves.

SACOS GROUP LIMITED





2.4.29 Fair value measurement (continued)

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the

basis of the lowest level input that is significant to the fair value measurement in its entirety.

For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value

measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a

Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires

judgement, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgement by the Company. Management considers

observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not

proprietary, and provided by independent sources that are actively involved in the relevant market.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether

transfers have occurred between Levels in the hierarchy by re-assessing categorization (based on the lowest level input that is

significant to the fair value measurement as a whole) at the end of each reporting period. If there is a transfer occurred between

the levels, it is deemed to have occurred from the date of assessment.

For fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics

and risks of the asset or liability and the level of the fair value hierarchy as explained above.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair

value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or

indirectly observable

- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

SACOS GROUP LIMITED

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS


3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS

3.1 Insurance risk

3.1.1 Insurance contracts

Concentration, frequency and severity of claims



Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount of risk, accumulation of risk and

type of industry covered.

The Group issues contracts that transfer insurance or financial risk or both. This section summarizes the main risks linked to long-

term and short-term insurance business and the way they are managed.

A description of the significant risk factors are given below together with the risk management policies applicable.

Insurance risk is transferred when the Group agrees to compensate a policyholder if a specified uncertain future event (other than a

change in a financial variable) adversely affects the policyholder. By the very nature of an insurance contract, this risk is random and

therefore unpredictable. The Group is exposed to short-term and long-term insurance risks.

The main risk that the Group faces under its insurance contracts is that actual claims and benefit payments exceed the carrying

amount of the insurance liabilities. This may occur if the frequency or severity of claims and benefits are greater than estimated.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected

outcome. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the

portfolio. The Group has developed its insurance underwriting strategy so as 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.

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.

For contracts with fixed and guaranteed benefits and fixed future premiums, there are no mitigating items and conditions that reduce

the insurance risk accepted.

For contracts with Discretionary Participation Feature (DPF), the participating nature of these contracts results in a significant portion

of the insurance risk being shared with the insured party.

The reinsurance arrangements for proportional and non-proportional treaties are such that the Group is adequately protected and

would only suffer predetermined amounts.

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 natural calamities, fire and allied perils and their consequences and liability claims awarded by the Court. Inflation is another

factor that may affect claims payments.

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

terms and conditions on renewal or not to renew an insurance contract.

SACOS GROUP LIMITED



3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)

3.1.1 Insurance contracts (continued)

3.1.2 Concentration of insurance risk


Number

Class of business of Claims

SCR SCR

Non-life

Fire & Allied Perils 72 2,974,272 1,214,985

Motor 2,025 10,835,285 10,334,785

Accident & Liability 201 29,644,043 2,041,527

Marine 38 15,840,373 2,200,498

Others 67 2,910,578 629,926

2,403 62,204,551 16,421,721

IBNR - 4,730,681 3,156,358

2,403 66,935,232 19,578,079

Number

Class of business of Claims

SCR SCR

Non-life

Fire & Allied Perils 39 32,066,451 3,233,984

Motor 3,197 10,999,611 10,999,611

Accident & Liability 209 7,431,298 1,387,644

Marine 18 90,000 75,000

Others 73 23,626,246 12,013,410 3,536 74,213,606 27,709,649

IBNR - 8,674,267 5,220,962

3,536 82,887,872 32,930,611


With Profit Without Profit Total

SCR SCR SCR

Office Premium 59,977,744 - 59,977,744

Single Premium 30,402,215 7,637,274 38,039,489

Accrued Bonus 133,237,188 - 133,237,188

Sum Assured 1,472,933,346 152,862,408 1,625,795,754

Reserve before Bonuses 421,870,084 6,490,115 428,360,199

Reserve after Bonuses 427,706,499 6,490,115 434,196,614

Number of Policies 9,574 301 9,875

Total outstanding claims at December 31, 2018 (notes 20 & 25(a))

The Group

Gross

2018

2019

Net

Total outstanding claims at December 31, 2019 (notes 20 & 25(a))

The Group 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

Group does not have any reinsurance covers for contracts that insure survival risk.

2019

The following tables disclose the concentration of claims by class of business gross and net of reinsurance for short-term insurance:

The Group

Gross Net

SACOS GROUP LIMITED




3.1.2 Concentration of insurance risk (continued)

(b) Long-term insurance (continued)

With Profit Without Profit Total

SCR SCR SCR

Office Premium 59,577,288 62,580 59,639,868

Single Premium - 21,665,563 21,665,563

Accrued Bonus 142,941,506 - 142,941,506

Sum Assured 871,593,297 672,923,949 1,544,517,246

Reserve before Bonuses 403,541,004 18,800,647 422,341,651

Reserve after Bonuses 406,380,331 18,800,647 425,180,978

Number of Policies 8,325 1,935 10,260

3.1.3 Sources of uncertainty in the estimation of future claim payment


2019

Change

in

assumpti

ons

Impact on

gross

liabilities

Impact on

reinsurance

share of

liabilities

Impact on

profit before

tax Impact on equity

SCR SCR SCR SCR

Average claim cost 5% 3,110,228 821,086 (3,931,314) (3,644,722)

2018

Change in

assumptio

ns

Impact on

gross

liabilities

Impact on

reinsurance

share of

liabilities

Impact on

profit before

tax

Impact on

equity

SCR SCR SCR SCR

Average claim cost 5% 3,710,680 1,385,482 (5,096,163) (4,371,096)


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.

The Group 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.

THE GROUP

THE GROUP

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 of 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.

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 Group 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.

All reasonable steps are taken to ensure that appropriate information is 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 Group has ensured that liabilities on the statement of financial position at reporting date for existing claims

whether reported or not, are adequate.

2018

SACOS GROUP LIMITED




3.1.3 Sources of uncertainty in the estimation of future claim payment (continued)

(b) Long-term insurance (continued)

2019 2018

Actuarial

Liability

Actuarial

Liability

Percentage

change relative

to main basis

SCR SCR %

Main Basis 434,196,564 425,181,000

Renewal expenses plus 10% 444,803,841 436,324,000 2.4%

Withdrawals plus 10% 433,300,403 416,835,000 -0.2%

Inflation plus 1% 439,852,263 431,201,000 1.3%

Investment return less 1% 469,593,809 450,655,000 8.2%

Mortality (and other claims) plus 10% 435,789,355 418,656,000 0.4%

Investment return plus 1% 443,784,311 395,602,000 2.2%

The table below indicated the level of the respective variables that will trigger an adjustment and then indicates the liability

adjustment required as a result of a further deterioration of the variable.

The following table presents the sensitivity of the value of insurance liabilities disclosed to movements in assumptions used in the

estimation of insurance liabilities.

The Group has a predetermined retention limit on any single life insured and the Group reinsures the excess of the insured benefit

above the retention limit.

The Group manages long-term insurance risks through its underwriting strategy and reinsurance arrangements. Management

ensures that risks underwritten are well diversified in terms of type of risk and the level of insured benefits. Medical selection is

included in the Group’s underwriting procedures, with premiums varied to reflect the health condition and family medical history of

the applicant. Insurance risk may also be affected by the contract holder's behaviour who may decide to amend terms or terminate

the contract or exercise a guaranteed annuity option.

SACOS GROUP LIMITED




3.1 Insurance risk (Continued)

3.1.4 Claims development

Net insurance contract liabilities - 2019

Accident year 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total

SCR SCR SCR SCR SCR SCR SCR SCR SCR SCR

At end of accident year 48,912,375 35,267,010 37,912,041 34,774,860 44,258,000 40,999,000 46,438,000 43,334,580 20,499,000

One year later 63,846,696 47,892,219 50,383,622 47,183,000 48,938,000 47,596,000 53,928,609 43,335,796 -

Two years later 62,557,680 51,994,611 51,677,000 52,690,000 49,002,000 47,600,842 53,928,720 - -

Three years later 62,073,827 52,563,000 53,252,000 52,707,000 - - - - -

Four years later 62,322,000 52,566,000 53,252,000 - - - - - -

62,322,000 52,566,000 53,252,000 52,707,000 49,002,000 47,600,842 53,928,720 43,335,796 20,499,000 435,213,358

At end of accident year (48,912,375) (33,331,299) (37,043,163) (27,912,469) (30,248,000) (27,695,000) (36,886,000) (26,415,274) (17,164,000)

One year later (63,846,696) (46,971,029) (47,334,734) (45,381,000) (39,857,000) (42,462,000) (51,268,816) (26,426,212) -

Two years later (62,557,680) (50,706,486) (58,709,000) (46,644,000) (40,872,000) (43,296,450) (51,268,986) - -

Three years later (61,355,452) (51,614,000) (59,073,000) (47,118,000) (41,019,000) (43,302,450) - - -

Four years later (61,606,000) (51,964,000) (62,897,000) (48,532,000) (41,022,684) - - - -

Cumulative claims paid to date (61,606,000) (51,964,000) (62,897,000) (48,532,000) (41,022,684) (43,302,450) (51,268,986) (26,426,212) (17,164,000) (404,183,332)

Net contract liabilities at reporting date 716,000 602,000 (9,645,000) 4,175,000 7,979,316 4,298,392 2,659,734 16,909,584 3,335,000 31,030,026

Incurred but not reported (IBNR) 3,162,000

Net outstanding claims at December 31, 2019 (notes 20 & 25(c)) 34,192,026

The development of insurance liabilities for the short-term insurance business provides a measure of the Group'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

20 and 25) for the net claims outstanding at December 31, 2019 and December 31, 2018.

Current estimate of cumulative claims

incurred

THE GROUP

SACOS GROUP LIMITED




3.1 Insurance risk (Continued)

3.1.4 Claims development (continued)

Net insurance contract liabilities - 2018

Accident year 2011 2012 2013 2014 2015 2016 2017 2018 Total

SCR SCR SCR SCR SCR SCR SCR SCR SCR

At end of accident year 48,912,375 35,267,010 37,912,041 34,774,860 44,258,000 40,999,000 46,438,000 43,334,580

One year later 63,846,696 47,892,219 50,383,622 47,183,000 48,938,000 47,596,000 53,928,609 -

Two years later 62,557,680 51,994,611 51,677,000 52,690,000 49,002,000 - - -

Three years later 62,073,827 52,563,000 53,252,000 52,707,000 - - - -

Four years later 62,322,000 52,566,000 53,252,000 - - - - -

Current estimate of cumulative claims incurred 62,322,000 52,566,000 53,252,000 52,707,000 49,002,000 47,596,000 53,928,609 43,334,580 414,708,189

At end of accident year (48,912,375) (33,331,299) (37,043,163) (27,912,469) (30,248,000) (27,695,000) (36,886,000) (26,415,274)

One year later (63,846,696) (46,971,029) (47,334,734) (45,381,000) (39,857,000) (42,462,000) (51,268,816) -

Two years later (62,557,680) (50,706,486) (58,709,000) (46,644,000) (40,872,000) (43,296,450) - -

Three years later (61,355,452) (51,614,000) (59,073,000) (47,118,000) (41,019,000) - - -

Four years later (61,606,000) (51,964,000) (62,897,000) (48,532,000) - - - -

Cumulative claims paid to date (61,606,000) (51,964,000) (62,897,000) (48,532,000) (41,019,000) (43,296,450) (51,268,816) (26,415,274) (386,998,540)

Net contract liabilities at reporting date 716,000 602,000 (9,645,000) 4,175,000 7,983,000 4,299,550 2,659,793 16,919,306 27,709,649

Incurred but not reported (IBNR) 5,220,962

Net outstanding claims at December 31, 2018 (notes 20 & 25(c)) 32,930,611

The Group has in place a series of proportional and non-proportional or surplus and excess of loss covers in each of the last four years to cover for losses on these contracts.

THE GROUP

SACOS GROUP LIMITED




3.2 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.

3.2.1 Market risk

Currency risk

THE GROUP

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

At December 31, 2019 SCR USD Euro GBP Total

SCR SCR SCR SCR SCR

Assets

Investment in financial assets 137,298,320 86,576,896 - - 223,875,216

Trade and other receivables 99,320,131 9,472,846 3,569,700 - 112,362,678

Cash & cash equivalents 30,596,551 3,422,890 - - 34,019,441

Total assets 267,215,002 99,472,632 3,569,700 - 370,257,335

At December 31, 2019 Rupee USD Euro GBP Total

SCR SCR SCR SCR SCR

Liabilities

Trade and other payables 27,386,641 - - - 27,386,641

Total liabilities 27,386,641 - - - 27,386,641

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

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

best practice. The Board recognizes the critical importance of having efficient and effective risk management policies and

systems in place. To this end, there is a clear organizational 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.

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 the market risk policy through the Group’s

Investment Committee which is also responsible for managing market risk at Group level.

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 and the approach to be taken when liabilities cannot be matched and the monitoring processes

required.

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 British pound.

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

risk is not hedged.

The Group also has a investments in foreign currencies, namely US Dollar, which are exposed to currency risk.

SACOS GROUP LIMITED




3.2 Financial risk (Continued)

3.2.1 Market risk (Continued)

Currency risk (Continued)

At December 31, 2018

SCR USD Euro GBP Total

SCR SCR SCR SCR SCR

Assets



Cash & cash equivalents 40,542,553 16,321,540 1,631 2,814 56,868,538

Total assets 209,266,515 111,510,810 15,864,008 2,814 336,644,148

Liabilities

Trade and other payables 34,638,033 9,161,991 3,527,828 - 47,327,851

Total liabilities 34,638,033 9,161,991 3,527,828 - 47,327,851

THE COMPANY

The Company's financial assets and financial liabilities in foreign currencies are detailed below:


SCR SCR SCR SCR SCR

Assets



Cash & cash equivalents 13,045,407 3,422,890 - - 16,468,297

Total assets 115,996,596 59,277,304 3,569,700 - 178,843,601


SCR SCR SCR SCR SCR

Liabilities

Trade and other payables 15,546,104 - - - 15,546,104

Total liabilities 15,546,104 - - - 15,546,104


Rupee USD Euro GBP Total

SCR SCR SCR SCR SCRAssetsInvestment in financial assets 5,662,506 16,343,259 - - 22,005,765 Trade and other receivables 22,156,529 63,658,629 15,862,377 - 101,677,535

Cash & cash equivalents 16,016,767 16,321,540 1,631 2,814 32,342,752

Total assets 209,266,515 111,510,810 15,864,008 2,814 336,644,148

Liabilities

Trade and other payables 16,920,826 9,161,991 3,527,828 - 29,610,645

Total liabilities 16,920,826 9,161,991 3,527,828 - 29,610,645

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

Sensitivity analysis

Impact of a 5% change in exchange rate on consolidated

statement of profit or loss and OCI GBP Euro USD

SCR SCR SCRAt December 31, 2019

Increase of 5% in the exchange rate - 178,485 4,973,632

Decrease of 5% in the exchange rate - (178,485) (4,973,632)


Increase of 5% in the exchange rate (141) (616,809) (5,117,441)

Decrease of 5% in the exchange rate (141) (616,809) (5,117,441)

If the Seychelles 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 as a result of foreign exchange gains / losses.

THE GROUP

SACOS GROUP LIMITED






Interest rate risk

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

2019 2018 2019 2018

% % % %

Held-to-maturity investments 5.00%-6.34% 2.00%-6.34% 5.75% -

Short term deposits - 3.10% - 4.50% - -

Loans and receivables 4.5%-12% 4.5%-12% - -

Management regularly monitors the sensitivity of reported interest rate movements.

2019 2018

Impact on Life Assurance Fund SCR million SCR million

+1% 16.2 15.4

-1% (16.2) (15.4)

Equity price risk

The Group

Market indices

Change in

variables

Impact on

profit before

tax

Impact on

equity

Impact on

profit before

tax Impact on equity

% SCR SCR SCR SCR

Foreign markets + 15% 10,648,552 10,648,552 12,515,467 12,515,467

Foreign markets - 15% (10,648,552) (10,648,552) (12,515,467) (12,515,467)

- 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.

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.

Interest rate risk arises from the Group’s investments in fixed income securities: loans & receivables, held-to-maturity

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

monitored by the Investment Committee through a close matching of assets and liabilities. The impact of exposure to sustained

As at 31 December 2019, the Group only has fixed interest rate financial instruments and thus is not exposed to risk of

movement in interest rates.

THE COMPANY

For liabilities under long term insurance contracts with fixed and guaranteed terms, changes in interest rate will not cause a

change to the amount of liability because their carrying amounts are not affected by the level of market interest rates.

2019

Credit risks is a risk that a counterparty will be unable to pay an amount in full when due. 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:

However for insurance contracts with Discretionary Participation Feature (DPF), the DPF element liabilities are directly affected

by changes in the level of interest rates to the extent that they affect the carrying amount of underlying assets. An increase in

the value of the assets would require all other assumptions being equal, an increase in the DPF liability and vice versa.

The Group’s equity price risk exposure relates to quoted equity instrument financial assets whose values will fluctuate as a

result of changes in market prices. The sensitivity analysis of the risk is disclosed below:

2018

Equity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in

equity prices (other than those arising from interest rate or foreign exchange rate risk), whether those changes are caused by

factors specific to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in

the market.

THE GROUP

The impact of changes of 100 basis points in the interest rates used for discounting the liabilities within the Life Assurance Fund

are as follows:

SACOS GROUP LIMITED






Equity price risk (Continued)

Reinsurance credit exposures

The

CompanyLife

40% -

- 95%

30% 5%

2018 2018 2019 2018

SCR SCR SCR SCR

Neither past due nor impaired 111,021,430 104,680,122 98,962,717 98,811,261

Impaired 1,341,248 2,866,274 1,341,248 2,866,274

Carrying amount at year-end 112,362,678 107,546,396 100,303,965 101,677,535

2019 2018 2019 2018

SCR SCR SCR SCR

Neither past due nor impaired 55,605,676 61,424,503 - 2,866,274

Impaired - - - -

Carrying amount at year-end 55,605,676 64,054,603 - 2,866,274

The Group is however is 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.

THE COMPANY

The Group manages its reinsurance counterparty exposures and the reinsurance department has a monitoring role over this

risk. The Group's largest reinsurance counterparties are:

Swan Life Ltd

2019

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.

Loans and receivables

Africa Re

Swiss Re

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.


THE GROUP

The following table provides information regarding the carrying value of trade and other receivables that have been impaired.

Trade & other receivables

The amounts presented in the consolidated 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.

SACOS GROUP LIMITED





3.2.3 Liquidity risk

Financial instruments

2019 2018 2019 2018

SCR SCR SCR SCR

55,605,676 61,424,503 - -

223,875,214 172,229,214 62,071,339 22,005,765

112,362,678 107,546,396 100,303,965 101,677,535

Bank balances and cash 34,019,441 56,868,538 16,468,297 32,342,752

2019 2018

SCR SCR

Collateral is from the counterparty and is repayable if the contract terminates. 42,329,022 43,964,020

Loan amount against the above collateral 38,096,120 39,567,618

Maturities of financial liabilities

THE GROUP

2019 Less than

1 year 1 to 5 years

More than

5 years Total

SCR SCR SCR SCR

Trade and other payables 26,818,330 - - 26,818,330

Gross outstanding claims and IBNR 69,190,379 - - 69,190,379

Gross unearned premiums 67,031,629 - - 67,031,629

Bank overdraft - - - -

Total liabilities 163,040,339 - - 163,040,339

2018 Less than

1 year 1 to 5 years

More than

5 years Total

SCR SCR SCR SCR






The following table provides information regarding the carrying value of loans and receivables that have been impaired.

THE GROUP

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

the Company to credit risk.

Loans and receivables at amortised cost

Trade and other receivables

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.

Investments in financial assets*

The loan to the associate and the Group staff loans are also collateralized as appropriate to minimize the risk of credit losses.

Collateral on policy loans

The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are

implemented regarding the acceptability of types of collateral and the valuation parameters. Collateral is mainly obtained for

loans and receivables which are secured by corresponding life assurance policies and amount granted is limited to 90% of the

surrender value. Management monitors the value of the collateral, requests additional collateral when needed.

The amounts for collateral as at the year-end are:

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 COMPANYTHE GROUP

SACOS GROUP LIMITED





3.2.3 Liquidity risk (Continued)

THE COMPANY2019 Less than

1 year 1 to 5 years

More than

5 years Total

SCR SCR SCR SCR






2018 Less than

1 year 1 to 5 years

More than

5 years Total

SCR SCR SCR SCR

Trade and other payables 29,610,644 - - 29,610,644 Gross outstanding claims and IBNR 82,887,872 - - 82,887,872 Gross unearned premiums 64,123,960 - - 64,123,960 Bank overdraft - - - -


3.2.4 Capital management

THE GROUP

•

•

•

•

•

•

The Group manages its capital structure and makes adjustment to it, in light of changes in economic conditions. In order to

maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares

or sell assets to reduce debts. The Actuarial valuation report as at 31 December 2019 shows a valuation surplus of SCR 11.2

million and the Assets in the Life Fund meets the Insurance Act Minimum Solvency Requirement in the Life Fund . The Life

Fund is therefore solvent as at 31 December 2019 with a Solvency ratio of 5.14.

The Group has established the following capital management objectives, policies and approach to managing the risks that

affect its capital position:

To allocate capital efficiently and support the development of business by ensuring that returns on capital employed

meet the requirements of its capital providers and of its shareholders

To maintain financial strength to support new business growth and to satisfy the requirements of the policyholders,

regulators and stakeholders

To retain financial flexibility by maintaining strong liquidity and access to a range of capital markets

To align the profile of assets and liabilities taking account of risks inherent in the business

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

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

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 minimize the risk of default

and insolvency on the part of the Group to meet unforeseen liabilities as these arise.

To maintain the required level of stability of the Group thereby providing a degree of security to policyholders

As per Section 15 of the Insurance Regulations 2009 and Insurance Act, 2008, the stated capital of a licensed insurer carrying

short (general) insurance and long term (life) insurance businesses shall be SCR 3 million which the Group is currently

compliant with.

To maintain strong credit ratings and healthy capital ratios in order to support its business objectives and maximize

shareholders value

SACOS GROUP LIMITED





3.2.4 Capital management (Continued)

Short-term insurance

- Not less than SCR 2 million;

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

- 20% of loss reserves of the fund at the end of the preceding accounting period, whichever is the highest.

Solvency margin

based on preceding accounting period

Highest of: SCR

(a) SR 2 million fund 2,000,000

(b) 20% of net premium income of the Fund in the preceding accounting period; or 21,302,330

(c) 20% of loss reserves of the fund at the end of the preceding accounting period. 16,577,574

Long-term insurance

-

-

2019 2018

SCR SCR

3% of without profit liabilities 663,493 564,019

plus 2% of with profit liabilities 8,241,603 8,127,607

plus 1% of the sum assured for initial terms of 2 years or less 15,896 27,204

plus 0.2% of the sum assured for initial terms of more than 2 years 2,156,154 1,976,495

11,077,146 10,695,325

Approach to capital management

THE COMPANY

The Company has no long term debt.

3.3 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.

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.

The Group’s approach in managing capital involves managing assets, liabilities and risks in a coordinated way, assessing

shortfalls between reported and required capital levels on a regular basis and taking appropriate actions to influence the capital

position of the Group in the light of changes in economic conditions and risk characteristics. An important aspect of the Group's

overall capital management process is the setting of target risk adjusted rates of return, which are aligned to performance

objectives and ensure that the Group is focused on the creation of value for shareholders.

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

These valuation techniques maximize 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.

3% of the insurer's liabilities as determined under regulation 19 in respect of non-participating policies, and 2% of such

liabilities in respect of participating policies, as at the end of the preceding accounting period; and

1% of the sum insured at risk for policies the original term of which is 2 years or less, and 0.2% of the sum insured at

risk for policies the original term of which is more than 2 years, as at the end of the preceding accounting period.

The Group seeks to optimize the structure and sources of capital to ensure that it consistently maximizes returns to the

shareholders and policyholders.

Solvency margin based on

preceding accounting period

SACOS GROUP LIMITED





3.3 Fair Value estimation - (continued)

(a)

Fair Value

Hierarchy

Fair value at

31 December

2019

Carrying

value at 31

December

2019

Fair Value

Hierarchy

Fair value at

31 December

2018

Carrying value

at 31 December

2018


Assets

Land (note 3.3 (i) (iii)) Level 3 13,056,727 13,056,727 Level 3 46,338,550 46,338,550

Buildings (note 3.3 (i) (ii)) Level 2 266,277,688 266,277,688 Level 2 257,216,537 257,216,537

279,334,415 279,334,415 303,555,087 303,555,087

Level 1 99,925,728 99,925,728 Level 1 81,953,527 81,953,527

Level 2 19,741,636 19,741,636 Level 2 16,343,259 16,343,259

119,667,364 119,667,364 98,296,786 98,296,786

Fair Value

Hierarchy

Fair value at

31 December

2019

Carrying

value at 31

December

Fair Value

Hierarchy

Fair value at

31 December

2018

Carrying value

at 31 December

2018


Assets

Land (note 3.3 (i) (iii)) Level 3 2,330,314 2,330,314 Level 3 46,338,550 46,338,550

Buildings (note 3.3 (i) (ii)) Level 2 64,009,000 64,009,000 Level 2 38,835,390 38,835,390

66,339,314 66,339,314 85,173,940 85,173,940

Level 1 31,444,957 31,444,957 Level 1 5,047,198 5,047,198

Level 2 19,741,636 19,741,636 Level 2 16,343,259 16,343,259

51,186,593 51,186,593 21,390,457 21,390,457

The carrying values of loans and receivables approximate its fair value.

(b)

Available-for-sale investment

(note 3.3 (ii):

This note provides information on how the Group and Company determine fair value of various assets and liabilities.

Available-for-sale investments comprise of equity instruments that are listed on stock exchange. Active market prices on stock

exchange are used to revalue these investments.

Investment properties (note

3.3 (i):

Some of the Group and Company's assets and liabilities are measured at fair value at the end of each reporting period. The

following table gives the information about how the fair value of these assets and liabilities are determined:

The Group

The Company

Investment properties (note

Available-for-sale investment

Given the prevailing stable political and economic environment in the Seychelles, the Directors assess that it is currently

appropriate to have each of the investment properties valued by an independent valuer in 3 - 5 year cycles as a rule and more

frequently if the Board assesses that it is appropriate for any particular property. The valuation for the year ended December 31,

2019 was based on a mix of Directors' best estimates and independent professional valuation reports which were requested as

appropriate to the individual circumstances. Management and the Board considered that the carrying amounts of the

investment properties approximate their fair values.

Available-for-sale investments comprise of equity instruments that are listed on stock exchange. Active market prices on stock

exchange are used to revalue these investments.

SACOS GROUP LIMITED




4. RISK MANAGEMENT FRAMEWORK

Governance Framework

Regulatory Framework

4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

Critical accounting estimates and assumptions

(a) Insurance Contracts

Estimates of future claims payments

Short-term insurance

▪ 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.

The board of directors approves the Group risk management policies and meets regularly to approve any commercial,

regulatory and organizational requirements of such policies. These policies define the Group’s identification of risk and its

interpretation and limit structure to ensure the appropriate quality and diversification of assets aligning underwriting and

reinsurance strategy to the corporate goals, and specify reporting requirements.

The primary objective of the Group’s risk and financial management framework is to protect the Group’s shareholders from

events that hinder the sustainable achievement of financial performance objectives, including failing to exploit opportunities. Key

management recognized the critical importance of having efficient and effective risk management systems in place.

Specifically, long-tail lines of business, which often have low frequency, high severity claims settlements, are generally more

difficult to project and subject to greater uncertainties than short-tail, high frequency claims. Further, not all catastrophic events

can be modelled using actuarial methodologies, which increases the degree of judgment needed in estimating general

insurance loss reserves. At each reporting date, prior year claims estimates are reassessed for adequacy and changes are

made to the provision.

The Group adopts multiple techniques to estimate the required level of provisions, thereby setting a range of possible

outcomes. The most appropriate estimation technique is selected taking into account the characteristics of the business class

and risks involved. The techniques Group use involves review of following:

The estimation of ultimate liability arising from the claims made under insurance contracts is one of the Group's most critical

accounting estimates. There are sources of uncertainty that need to be considered in the estimate of the liability that the Group

will eventually pay for such claims. Estimates have to be made both for the expected ultimate cost of claims reported at the

reporting date and for the expected ultimate cost of claims incurred but not reported (“IBNR”) at the reporting date. The Group

uses a range of actuarial methodologies to estimate these provisions. Liabilities for unpaid reported claims are estimated using

the input of assessments for individual cases reported to the Group and management estimates based on past claims

settlement trends for the claims IBNR. Technical provisions for general insurance contracts require significant judgment relating

to factors and assumptions such as inflation, claims development patterns and regulatory changes.

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.

Regulators are primarily interested in protecting the rights of policyholders and monitor them closely to ensure that the Group is

satisfactorily managing affairs for their benefit. At the same time, regulators are also interested in ensuring that the Group

maintains an appropriate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters.

The operations of the Group are subject to regulatory requirements within the jurisdictions in which it operates. Such regulations

not only prescribe approval and monitoring of activities, but also impose certain restrictive provisions (e.g. capital adequacy) to

minimize the risk of default and insolvency on the part of insurance companies to meet unforeseen liabilities as these arise.

The preparation of these consolidated financial statements requires management to make judgements, estimates and

assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent

liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that

could require a material adjustment to the carrying amount of the asset or liability affected in the future.

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

provisions. The technical provisions of the Group include provision for unearned premiums, Life Assurance Fund, Fisheries

and Agricultural Fund, Mortgage Protection Fund and outstanding claims (including IBNR).

SACOS GROUP LIMITED




4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)

Long-term insurance

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

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.

For short-term business, the Group is regulated by local authority to maintain a solvency margin under Insurance Act 2008

(note 3.2.4). Management assessed the appropriateness of the liability for short-term insurance contracts at the year-end.

The liability for life insurance contracts with DPF is either based on current assumptions or on assumptions established at the

inception of the contract, reflecting the best estimate at the time increased with a margin for risk and adverse deviation.

The liability for life insurance contracts with DPF is either based on current assumptions or on assumptions established at the

inception of the contract, reflecting the best estimate at the time increased with a margin for risk and adverse deviation. All

contracts are subject to a liability adequacy test, which reflect actuarial’ s best current estimate of future cash flows.

The determination of the liabilities under long-term insurance contracts is dependent on estimates made by the Group.

Estimates are made as to the expected number of deaths for each of the years in which the Group is exposed to risk. The

Group bases these estimates on standard industry mortality tables that reflect recent historical mortality experience, adjusted

where appropriate to reflect the Group'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 Group is exposed to longevity risk.

SACOS GROUP LIMITED




Critical accounting estimates and assumptions (Continued)

(a) Insurance Contracts (Continued)

Estimates of future claims payments (Continued)

Short-term insurance (Continued)

Long-term insurance (Continued)

Sensitivity

Uncertainties and judgements

▪

▪

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

(b) Reinsurance

(c) Pension benefits

The uncertainty arising under insurance contracts may be characterized 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;

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 contracts without fixed terms, it is assumed that the Group will be able to increase mortality risk charges in future years in line

with emerging mortality experience.

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.

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.

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

best estimate is used.

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

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 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.

The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to

determine 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.

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 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.

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.

SACOS GROUP LIMITED




Critical accounting estimates and assumptions (Continued)

(d) Revaluation of investment property

For commercial and residential rent earning investment properties where the determined fair value is arrived at using the income

approach, the calculated fair value amount is most sensitive to the assumptions of estimated yield and the long-term occupancy

rate.

The Directors and Valuer used the valuation techniques as deemed appropriate to each of the individual investment properties.

They considered that the carrying amounts of the assets to approximate their fair values.

As allowed by IFRS 13, more than one valuation technique is used to arrive at the Fair Value based primarily on availability of

market information for transactions on similar properties/ indicative purchase offers on the property and or the income approach.

Given the prevailing stable political and economic environment in the Seychelles, the Directors assess that it is currently

appropriate to have each of the investment properties valued by an independent valuer in 3 - 5 year cycles as a rule and more

frequently if the Board assesses that it is appropriate for any particular property.

Investment properties are re-measured at fair value, which is the amount for which the property could be exchanged between

knowledgeable, willing parties in an arm's length transaction. Fair value reflects the actual market state and circumstances as at

the balance sheet date for a given investment property. Changes in fair value are recognized in the statement of profit or loss and

other comprehensive income.

Management and the Board (particularly the Investment Committee) frequently evaluate property values. Where deemed

appropriate, the Company also engages an Independent Professional Valuer to determine the market fair value revalued

SACOS GROUP LIMITED



5. EQUIPMENT

(a) THE GROUP Furniture Motor Computer Total Work in

and fittings vehicles equipment PPE Progress Total


COST

At January 1, 2018 9,474,941 4,981,910 9,629,996 24,086,847 - 24,086,847

Additions 22,244,559 278,500 611,634 23,134,693 6,507,640 29,642,333

Disposals (158,244) (859,936) (153,491) (1,171,671) - (1,171,671)

At December 31, 2018 31,561,256 4,400,474 10,088,139 46,049,869 6,507,640 52,557,509

Additions 94,230 475,246 768,787 1,338,263 5,392,040 6,730,303

Disposals - (1,337,877) - (1,337,877) - (1,337,877)

W/offs (4,325,203) (768,354) (7,706,097) (12,799,654) - (12,799,654)

Transfer to Investment Property (832,087) - - (832,087) (7,428,161) (8,260,248)

At December 31, 2019 26,498,197 2,769,489 3,150,829 32,418,514 4,471,519 36,890,033

ACCUMULATED DEPRECIATION

At January 1, 2018 6,762,626 2,972,473 8,972,749 18,707,847 - 18,707,847

Charge for the year (note 30) 1,238,873 939,155 378,347 2,556,376 - 2,556,376

Disposals (115,915) (948,847) - (1,064,762) - (1,064,762)

At December 31, 2018 7,885,584 2,962,780 9,351,096 20,199,461 - 20,199,461


Disposals - (1,028,471) - (1,028,471) - (1,028,471)

W/offs (4,309,026) (768,354) (7,594,128) (12,671,508) - (12,671,508)

At December 31, 2019 6,852,782 1,729,376 2,180,851 10,763,010 - 10,763,010

NET BOOK VALUE

At December 31, 2019 19,645,415 1,040,112 969,978 21,655,504 4,471,519 26,127,023

At December 31, 2018 23,675,673 1,437,693 737,043 25,850,408 6,507,640 32,358,048

(b) THE COMPANY Furniture Motor Computer Total Work in

and fittings vehicles equipment PPE Progress Total


COST

At January 1, 2018 3,021,261 4,828,419 8,548,541 16,398,221 - 16,398,221

Additions 21,355,872 278,500 611,634 22,246,007 6,507,640 28,753,647

Disposals (6,094) (859,936) - (866,030) - (866,030)

At December 31, 2018 24,371,040 4,246,983 9,160,175 37,778,198 6,507,640 44,285,838

Additions 36,739 475,246 721,431 1,233,416 5,392,040 6,625,456

Disposals - (1,337,877) - (1,337,877) - (1,337,877)

W/offs (1,943,553) (768,354) (6,726,993) (9,438,900) - (9,438,900)

Transfer to Investment Property - - - - (7,428,161) (7,428,161)

At December 31, 2019 22,464,226 2,615,998 3,154,613 28,234,837 4,471,519 32,706,356

ACCUMULATED DEPRECIATION

At January 1, 2018 2,331,455 3,650,469 7,732,387 13,714,311 - 13,714,311

Charge for the year (note 30) 971,996 826,061 570,637 2,368,694 - 2,368,694

Disposals (3,961) (1,513,751) (17,661) (1,535,373) - (1,535,373)

At December 31, 2018 3,299,490 2,962,780 8,285,363 14,547,633 - 14,547,633


Disposals - (1,028,471) - (1,028,471) - (1,028,471)

W/offs (1,893,331) (768,354) (6,620,220) (9,281,905) - (9,281,905)

At December 31, 2019 4,240,277 1,729,376 2,079,417 8,049,070 - 8,049,071

NET BOOK VALUE

At December 31, 2019 18,223,949 886,622 1,075,196 20,185,767 4,471,519 24,657,286

At December 31, 2018 21,071,550 1,284,203 874,812 23,230,565 6,507,640 29,738,205

(c) Depreciation has been charged to other operating expenses (note 30).

(d) There is no restriction (pledge/security) on realisability of equipment or the remittance of income and proceeds of disposal.

SACOS GROUP LIMITED



6. RIGHT OF USE ASSET (Relating to Office Rental-Maison Esplanade)

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 28,484,544 - 28,484,544 -

Additions - - - -

Disposals - - - -

Depreciation (note 30) (7,121,136) - (7,121,136) -

Increase / (decrease) in fair value - - - -

21,363,408 - 21,363,408 -

This Right of use asset is relevant for rental of Head Office Building - Maison Esplanade

7 INVESTMENT PROPERTIES

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 303,555,087 335,580,088 85,173,940 88,451,730

Right Of Use Assets (IFRS 16) 7 (a) 9,051,727 - 1,731,314 -

Transfer from PPE 8,260,248 - 7,428,161 -

WIP - Life 11,523,334 - - -

Disposals (56,647,491) (32,025,001) (29,972,491) (3,277,790)

Write-off (10,000,000) - - -

Increase / (decrease) in fair value 13,591,510 - 1,978,390 -

At December 31, 279,334,415 303,555,087 66,339,314 85,173,940

(a) Right Of Use Assets

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 2,646,972 - 718,025 -

Additions - - - -

Disposals - - - -

Depreciation (90,716) - (17,248) -

Increase / (decrease) in fair value 6,495,501 - 1,030,537 -

9,051,727 - 1,731,314 -

(b)

(c)

(d) The following amounts have been recognized:

2019 2018 2019 2018

SCR SCR SCR SCR

Rental income 22,039,863 24,254,639 7,651,303 8,504,323

Related expenses:

4,418,355 3,582,078 1,824,552 1,075,645

337,002 461,777 207,000 243,151

4,755,357 4,043,855 2,031,552 1,318,796

There is no restriction on realisability of investment property or the remittance of income and proceeds of disposal. The Group has no contractual

obligation to purchase, construct or develop investment property or for repairs, maintenance or enhancement.



THE COMPANY

Direct operating expenses arising from investment property that

generated income

Direct operating expenses arising from investment property that

did not generate income

The fair market value of each of the investment properties was determined on an open-market basis by reference to market evidence of expected

fair value and the income approach as deemed appropriate to each investment property. The valuation for the year ended December 31, 2019

was based on a mix of Directors' best estimates and independent professional valuation reports which were requested as appropriate to the

individual circumstances. Management and the Board considered that the carrying amounts of the investment properties approximate their fair

values.

THE GROUP


The fair value arrived at falls primarily within category level 2 of the hierarchy. Where deemed necessary and appropriate, Level 3 inputs also

were used to assess and or corroborate the fair value amount. Investment properties have not been increased in value based on inflation.

SACOS GROUP LIMITED



8. INTANGIBLE ASSETS

(a) THE GROUP Computer Website Total

software

SCR SCR SCR

COST

At January 1, 2018 9,342,076 124,468 9,466,544

Additions 488,477 - 488,477

At December 31, 2018 9,830,553 124,468 9,955,021

Additions - 33,165 33,165

At December 31, 2019 9,830,553 157,633 9,988,186

AMORTISATION

At January 1, 2018 3,685,990 98,703 3,784,693

Charge for the year (note 30) 1,539,391 24,894 1,564,285

At December 31, 2018 5,225,381 123,597 5,348,978


At December 31, 2019 6,850,257 130,549 6,980,806

NET BOOK VALUE

At December 31, 2019 2,980,296 27,084 3,007,380

At December 31, 2018 4,605,172 871 4,606,043

(b) THE COMPANY Computer Website Total

software

SCR SCR SCR

COST

At January 1, 2018 6,860,054 124,468 6,984,522

Additions 488,477 488,477

At December 31, 2018 7,348,531 124,468 7,472,999

Additions - 33,165 33,165

Write-off (note 30) - - -

At December 31, 2019 7,348,531 157,633 7,506,164

AMORTISATION

At January 1, 2018 1,714,657 98,703 1,813,360


At December 31, 2018 3,184,363 123,597 3,307,960


At December 31, 2019 4,654,069 130,549 4,784,618

NET BOOK VALUE

At December 31, 2019 2,694,462 27,084 2,721,546

At December 31, 2018 4,164,168 871 4,165,039

9 INVESTMENT IN SUBSIDIARIES THE COMPANY

2019 2018

SCR SCR

Investment at cost 3,000,000 3,000,000

Investment at cost - preference shares 45,000,000 45,000,000

48,000,000 48,000,000

(a) Details of the subsidiary company is as follows:

2019

Name of subsidiaries Shareholding Amount

% SCR'000

SACOS Life Assurance Company Limited 100 48,000

48,000

Activities

Long-term insurance business

SACOS GROUP LIMITED



9 INVESTMENT IN SUBSIDIARIES (CONTINUED)

(b)

10. INVESTMENT IN FINANCIAL ASSETS

2019 2018 2019 2018

SCR SCR SCR SCR

Available-for-sale financial assets (note a & d) 91,381,830 43,484,074 51,186,593 21,390,457

Held-to-maturity financial assets (note b) 132,493,385 128,745,139 10,884,746 615,308

223,875,215 172,229,213 62,071,339 22,005,765

The Group

2018 2019 2018 2019 2018

SCR SCR SCR SCR SCR

Current asset - 104,207,851 73,932,428 104,207,851 73,932,428

Non-current asset 43,484,074 28,285,534 54,812,711 119,667,364 98,296,785

43,484,074 132,493,385 128,745,139 223,875,215 172,229,213

The Company

Current asset - - 10,884,746 615,308 10,884,746 615,308

Non-current asset 51,186,593 21,390,457 - - 51,186,593 21,390,457

51,186,593 21,390,457 10,884,746 615,308 62,071,339 22,005,765

(a) The movement in investments in available-for-sale financial assets is summarized as follows:

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 43,484,075 26,236,202 21,390,457 16,096,019

Reclassification of Investment 9,812,711 - - -

Investments purchased during the year 28,716,570 17,703,753 26,911,944 5,047,198

Interest Accrued 392,172 29,730 - -

Interest Paid (321,299) - - -

Fair value changes 9,191,906 (732,851) 2,778,497 -

Foreign exchange gain / (loss) 105,695 247,240 105,695 247,240

At December 31, 91,381,830 43,484,074 51,186,593 21,390,457

(b) The movement in investments in held-to-maturity financial assets is summarized as follows:

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 128,745,139 137,661,938 615,308 548,780

Investments purchased during the year 202,752,601 127,245,464 45,548,463 -

Reclassification of Investment (9,812,711) - - -

Investments matured during the year (196,046,006) (141,507,120) (36,236,370) -

Accrued interest 6,854,362 5,344,857 957,348 66,528

At December 31, 132,493,385 128,745,139 10,884,749 615,308

SCR

-

91,381,830

91,381,830

2019


AVAILABLE-FOR-SALE HELD-TO-MATURITY Total

THE COMPANY

Sacos Group Limited fully subscribed to 45,000 shares of SCR1,000 each which were issued by Sacos Life Assurance Company Limited

(SLACL) and this has been treated as an investment in subsidiary in the Company financial statements and equity in the financial statements of

SLACL. The main terms of the preference shares are that the shares be redeemable at the option of Sacos Life Assurance Company Limited and

attract a target 5% annual dividend rate, payable at the discretion of the management of the Sacos Life Assurance Company Limited. At the end

of the transaction both Sacos Life Assurance Company Limited and Sacos Group Limited are solvent.

THE GROUP


SACOS GROUP LIMITED



10. INVESTMENT IN FINANCIAL ASSETS - (CONTINUED)

(c) Investments in financial assets include the following:

(i) THE GROUP

Interest rate 2019 2018

% SCR SCR

Available-for-sale:

Equity investment 91,381,830 43,484,074

Held-to-maturity:

Term deposit 5.00%-6.34% 132,493,385 82,556,309

Treasury bills N/A - 46,188,830

132,493,385 128,745,139

(ii) THE COMPANY

Held-to-maturity:

Term deposit 5.75% 10,884,749 615,308

10,884,749 615,308

(d) Available-for-sale investments are quoted in active market.

11. LOANS AND RECEIVABLES

(a)

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 39,567,618 37,364,685 - -

Loans granted 20,462,384 22,470,023 - -

Loans repaid (21,933,882) (20,267,090) - -

At December 31, 38,096,120 39,567,618 - -

(b)

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 11,136,092 13,669,999 - -

Movement during the year (1,446,454) (2,533,908) - -

At December 31, 9,689,638 11,136,092 - -

(c)

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 10,720,792 13,019,919 - -

Loans granted - - - -

Loans repaid (3,777,557) (3,422,811) - -

Accrued Interest 876,684 1,123,684 - -

At December 31, 7,819,919 10,720,792 - -

(d)

2019 2018 2019 2018

SCR SCR SCR SCR

Current asset 19,006,977 21,981,809 - -

Non-current asset 36,598,699 39,442,694 - -

55,605,677 61,424,503 - -

Loans and receivables of the Group consist of staff loan movement is shown below:

Loans and receivables of the Group consist of loans on life assurance policies and the movement is shown below:





Classification between current and non-current assets:

Loans and receivables of the Group consist of loan to associate company and movement is shown below:

Maturity date

No fixed date of maturity

March 2020 to September 2021

N/A

Jun-20

SACOS GROUP LIMITED



11. LOANS AND RECEIVABLES (CONTINUED)

(e)

(f)

(i) Policy Loan from 12% (2018: 10% to 12%).

(ii) Staff Loan 4.5% (2018: 4.5 %).

(iii) Loan to Associate Company 9.5% (2018: 9.5%)

12. DEFERRED TAX ASSETS / (LIABILITIES)

(a) Deferred income tax is calculated on all temporary differences under the liability method:

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, (1,202,468) 602,488 (1,202,468) 602,488

(Charge) / credit for the year

(note 12(i & ii)) (341,099) (1,804,956) (341,099) (1,804,956)

At December 31, (1,543,567) (1,202,468) (1,543,567) (1,202,468)

(b)

2019 2018 2019 2018

SCR SCR SCR SCR

Deferred tax assets 1,475,112 154,213 1,475,112 154,213

Deferred tax liability (3,018,679) (1,356,681) (3,018,679) (1,356,681)

(1,543,567) (1,202,468) (1,543,567) (1,202,468)

(c) Deferred tax assets and liabilities during the year are attributable to the following items:

(i) Deferred tax assets:


Retirement Retirement

benefit benefit

obligations obligations

SCR SCR

At January 1, 2018 1,446,727 1,446,727

Charge to consolidated statement of profit or loss and other comprehensive income (1,292,514) (1,292,514)

At December 31, 2018 154,213 154,213

At January 1, 2019 154,213 154,213

Charge to consolidated statement of profit or loss and other comprehensive income 1,320,899 1,320,899

At December 31, 2019 1,475,112 1,475,112

(ii) Deferred tax liability:

THE GROUP THE COMPANYTHE GROUP Accelerated Accelerated

tax tax

depreciation depreciation

SCR SCR

At January 1, 2018 (844,239) (844,239)

(512,442) (512,442)

At December 31, 2018 (1,356,681) (1,356,681)

At January 1, 2019 (1,356,681) (1,356,681)

(1,661,998) (1,661,998)

At December 31, 2019 (3,018,679) (3,018,679)


Loans and receivables are secured as appropriate to minimize credit risk.

The rate of interest on loans are as follows;

Deferred tax assets and liabilities are offset for the income taxes related to the same fiscal authority of the same entity. The

following amounts are shown in the consolidated statements of financial position:

Charge to consolidated statement of profit or loss and other

comprehensive income

Charge to consolidated statement of profit or loss and other

comprehensive income


SACOS GROUP LIMITED



13. INVESTMENT IN ASSOCIATES2019 2018

SCR SCR

(a) Company's share of net assets in associated Company

As previously reported 20,508,967 19,628,783

Share of results of associated Company 775,738 880,184

At 31 December, 21,284,705 20,508,967

(b) Details of the associate at the end of the reporting period as follows:

Year endPrincipal Place of

Business

Proportion of

ownership

interest

St Claire Development Co Ltd Dec-31 Seychelles 49%

(i) The above associate is accounted for using the equity method.

(ii)

14. TRADE AND OTHER RECEIVABLES

2019 2018 2019 2018

SCR SCR SCR SCR

Premium receivables 43,152,867 31,608,390 35,714,722 29,685,655

Provision for credit impairment

(note 14(a)) (4,869,474) (3,695,636) (4,869,474) (3,695,636)

38,283,393 27,912,754 30,845,248 25,990,019

Recoverable from reinsurers

- share of notified claims (notes 20 & 25(a)) 47,357,153 49,957,262 47,357,153 49,957,262

- share of unearned premiums (notes 20 & 25(b)) 17,961,927 19,053,146 17,961,927 19,053,146

Other receivables and prepayments (note 14(c)) 8,760,205 10,623,234 4,139,637 6,677,108

112,362,678 107,546,396 100,303,965 101,677,535

(a) The movement in the provision for impairment is as follows:

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 3,695,636 829,362 3,695,636 829,362

1,173,838 2,866,274 1,173,838 2,866,274

At December 31, 4,869,474 3,695,636 4,869,474 3,695,636

(b) The carrying amount of trade and other receivables are denominated in the following currencies:

2019 2018 2019 2018

SCR SCR SCR SCR

Seychelles rupee 100,255,534 94,716,350 88,196,822 88,847,491

US dollar 8,537,442 8,450,304 8,537,442 8,450,304

Euro 3,569,700 4,379,741 3,569,700 4,379,741

UK pound sterling - - - -

112,362,676 107,546,395 100,303,964 101,677,536

(c) Other receivables and prepayments comprise of advances to staff, commission receivable, rent receivables and other prepaid.

(d) The carrying amounts of 'trade and other receivables' approximate their fair values.

(e) The Group and the Company do not hold any collateral as security against any of trade and other receivables.

(f) The other classes within trade and other receivables do not contain any impaired assets.

Charged / (reverse) to the statement of profit or loss

2019

The St Claire Development Company Ltd owns the Maison St Claire building in Victoria, Mahe. The Company holds 49% of

the shares of the St Claire Development Company which means that there is no effective control in that the remaining 51% is

held by one non-related party giving them the effective control.

Nature of Business

Own, manage & renting of shopping

center.

Name




SACOS GROUP LIMITED



15. INTERCOMPANY RECEIVABLES AND PAYABLES

Amount (payable)/

receivable by Consolidated

Amount (payable)/

receivable by Consolidated

SCR SCR SCR SCR

The Company (35,729,340) (35,729,340) (17,346,108) (17,346,108)

35,729,340 35,729,340 17,346,108 17,346,108

- - - -

(a)

(b)

16. CASH AND CASH EQUIVALENTS

2019 2018 2019 2018

SCR SCR SCR SCR

Cash in hand 120,012 194,344 117,718 192,050

Call account balances 444,762 898,083 444,762 372,824

Bank balances 33,454,667 55,776,111 15,905,817 31,777,877

Cash and bank balances 34,019,441 56,868,538 16,468,297 32,342,752

17. CURRENT TAX ASSETS / (LIABILITIES)

(a) Current Tax Assets

(i) Statement of financial position

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 4,383,682 15,421,972 4,383,682 15,421,972

Paid/(Refund) during the year 1,606,387 (4,031,688) 1,606,387 (4,031,688)

Charge for the year (1,649,319) (7,006,603) (1,649,319) (7,006,603)

(Under)/Over provision for prior year 25,342 - 25,342 -

At December 31, 4,366,092 4,383,682 4,366,092 4,383,682

Current tax assets 4,366,092 4,383,682 4,366,092 4,383,682

Current tax liability - - - -

4,366,092 4,383,682 4,366,092 4,383,682

(ii) Statement of profit or loss

2019 2018 2019 2018

SCR SCR SCR SCR

Tax charge on the adjusted profit for the year (note 17(b)) (1,649,319) (7,006,603) (1,649,319) (7,006,603)

(Under)/Over provision for prior year 25,342 - 25,342 -

Tax charge for prior years - (724,476) - (724,476)

Deferred tax (charge) / credit (note 12) (341,099) (1,804,956) (341,099) (1,804,956)

(1,965,076) (9,536,035) (1,965,076) (9,536,035)

(b) Applicable tax rates for 2019 and 2018 tax years are as follows:

THE THE

Taxable income threshold GROUP COMPANY

% %

Less than or equal to SCR. 1,000,000 25% 25%

More than SCR. 1,000,000 33% 33%

2019

Life

Intercompany receivables and payables represent the net balance receivable or payable by The Company to Life as disclosed

above.


2018



Intercompany receivables and payables are interest free unsecured balances with not fixed repayment terms or maturity.

SACOS GROUP LIMITED



18. SHARE CAPITAL

2019 2018

SCR SCR

Authorized and fully paid up

Ordinary shares of SR 35 each 70,000,000 70,000,000

The authorized share capital of the group and the company is 2 million shares (2018: 2 million shares).

19. LIFE ASSURANCE FUND

(a)

(b)

20. INSURANCE LIABILITIES AND REINSURANCE ASSETS

2019 2018

SCR SCR

Claims reported and loss adjustment expenses (note 25(c)) 62,204,551 74,213,606

4,730,681 8,674,267

Unearned premiums (note 25(a)) 67,031,629 64,123,960

Total gross insurance liabilities (note 25) 133,966,861 147,011,832

Recoverable from reinsurers


Claims Incurred But Not Reported (IBNR) (note 25(c)) 1,574,323 3,453,305

Unearned premiums (note 25(a)) 17,961,927 19,053,145

Total reinsurer's share of insurance liabilities (note 25) 65,319,080 69,010,406

Net


Claims Incurred But Not Reported (IBNR) (note 25(c)) 3,156,358 5,220,962 Unearned premiums (note 25(a)) 49,069,702 45,070,815

Total net insurance liabilities (note 25) 68,647,781 78,001,426

Gross outstanding claims and IBNR (The Company) 66,935,232 82,887,872

Gross outstanding claims (life business) 2,255,147 3,534,123

69,190,379 86,421,995

21. MORTGAGE PROTECTION FUND

2019 2018

SCR SCR

At January 1, 164,412 228,911

- (64,499)

At December 31, 164,412 164,412

(a)

Released during the year to statement of profit or loss and other comprehensive income

THE GROUP

Claims Incurred But Not Reported (IBNR) (note 25(c))

The liability component of the Discretionary Participating Feature (DCF) is included in the Life Assurance Fund.

THE GROUP

AND THE COMPANY

The actuary of Sacos Life Assurance Company Limited is QED Actuaries & Consultants (Pty) Ltd. The latest actuarial valuation of the Life

assurance fund was done at 31 December 2019. At the end of every year, the amount of the liabilities of the Life assurance fund is established.

As the Company made a surplus during the year, the total surplus of SCR 14.6 million was transferred to statement of Life Fund (2018: Share of

Deficit SCR 10.2 million). This share of deficit and / or surplus is calculated and approved by the actuaries on the basis that sufficient reserves

are held to maintain the solvency of the life assurance fund over the long term.

THE GROUP

The fund is designated for mortgage protection insurance under a Home Ownership Scheme. Under this scheme, upon approval of their

mortgage loans, 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% consist of 4% risk premium and 2% management fee for the Company

which arises at the inception of the loan.

SACOS GROUP LIMITED



22. FISHERIES AND AGRICULTURAL FUND

2019 2018

SCR SCR

At January 1, 478,763 480,226

- (1,463)

At December 31, 478,763 478,763

23. RETIREMENT BENEFIT OBLIGATIONS

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 5,123,227 5,187,954 4,204,115 4,260,819

Transfer to Trade and Other Payables (111,397) - (111,397) -

Charge for the year 1,096,182 538,717 1,108,075 1,663,040

Benefits paid during the year (808,481) (603,444) (730,757) (1,719,744)

At December 31, 5,299,531 5,123,227 4,470,036 4,204,115

24. TRADE AND OTHER PAYABLES

2018 2018 2019 2018

(a) Trade and Other Payables SCR SCR SCR SCR

Trade payables (10,879,574) 9,966,082 (11,050,540) 8,350,652

Commission payable 4,233,759 4,615,367 3,967,981 1,139,498

Lease Liability 2,636,516 - 716,836 -

Other accruals and payables 19,318,147 28,872,293 10,113,290 15,465,118

Other tax payables 11,509,482 3,874,108 11,230,228 4,655,376

.26,818,330 47,327,850 14,977,795 29,610,644

The carrying amount of trade and other payables approximate its amortised costs.

(b) (i) Lease Liability ( ME Lease)

2019 2018 2019 2018

SCR SCR SCR SCR

At January 1, 28,484,544 - 28,484,544 -

Finance Cost 1,921,227 - 1,921,227 -

Lease Repayment (8,388,579) - (8,388,579) -

At December 31, 22,017,192 - 22,017,192 -

(ii) Amounts recognized in the P&L THE GROUP THE COMPANY

2019 2018 2019 2018

SCR SCR SCR SCR

Amortisation of Right of use asset 7,121,136 7,121,136 -

Finance Cost 1,921,227 - 1,921,227 -

9,042,363 - 9,042,363 -

Released during the year to statement of profit or loss and other comprehensive income

THE GROUP

The fund is designated for contributions to premiums payable under a Government sponsored/subsidized voluntary scheme. Under this

Agricultural Disaster and Fisheries Voluntary Insurance Scheme, farmers registered with the Seychelles Agriculture Agency (SAA) and boat

owners registered with the Seychelles Fisheries Authorities (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.



Retirement benefit obligations is in respect of length-of-service compensation as per the Seychelles Employment Act, 1995. Movement during

the year is shown below:


SACOS GROUP LIMITED



25.MOVEMENTS IN INSURANCE LIABILITIES AND REINSURANCE ASSETS

(a) Provision for unearned premiums

Gross Reinsurance Net Gross Reinsurance NetSCR SCR SCR SCR SCR SCR

At January 1, 64,123,960 (19,053,145) 45,070,815 67,731,265 (22,412,886) 45,318,379

169,676,615 (66,504,485) 103,172,130 162,552,080 (56,040,429) 106,511,651

(166,768,947) 67,595,703 (99,173,244) (166,159,384) 59,400,170 (106,759,214)

At December 31,(note 20) 67,031,629 (17,961,927) 49,069,701 64,123,960 (19,053,145) 45,070,815

(b) Net earned premium 2019 2018

SCR SCR

(i) Gross premium earned:

The Company 169,676,615 162,552,080

Life business 70,926,001 64,503,589

240,602,616 227,055,669

Change in unearned premiums (2,907,668) 3,607,304

237,694,948 230,662,973

(ii) Premium ceded to reinsurers:

The Company (66,504,485) (56,040,429)

Life business (3,029,627) (5,540,143)

(69,534,113) (61,580,572)

Change in unearned premiums (1,091,218) (3,359,741)

(70,625,331) (64,940,313)

Net earned premiums 167,069,618 165,722,660

(c) Outstanding claims

Gross Reinsurance Net Gross Reinsurance Net


At January 1, 74,213,606 (46,503,956) 27,709,649 34,432,711 (14,354,985) 20,077,726

Claims incurred 85,414,482 (45,509,765) 39,904,718 87,636,451 (36,861,268) 50,775,183

(97,423,537) 46,230,891 (51,192,646) (47,855,556) 4,712,297 (43,143,260)

Recognized notified claims 62,204,551 (45,782,830) 16,421,721 74,213,606 (46,503,956) 27,709,649

4,730,681 (1,574,323) 3,156,358 8,674,267 (3,453,305) 5,220,962

At December 31, (note 20) 66,935,233 (47,357,153) 19,578,079 82,887,872 (49,957,261) 32,930,611

(15,952,639) 2,600,108 (13,352,532) 45,319,455 (34,956,510) 10,362,944

(15,952,639) 2,600,108 (13,352,532) 45,319,455 (34,956,510) 10,362,944

- - - -

(15,952,639) 2,600,108 (13,352,532) 45,319,455 (34,956,510) 10,362,944

Gross Reinsurance Net Gross Reinsurance NetSCR SCR SCR SCR SCR SCR

Total claims and benefits paid

Claims (The Company) (97,423,537) 46,230,891 (51,192,646) (47,855,556) 4,712,297 (43,143,259)

Claims and benefits (life) (62,210,481) - (62,210,481) (48,668,083) - (48,668,083)

(159,634,018) 46,230,891 (113,403,127) (96,523,639) 4,712,297 (91,811,342)

2019 2018

The Group

The Group

THE COMPANY2019 2018

Premium written during the year

Premium earned during the year

The Company

2019 2018

Cash paid for claims settled in the year

Movement in outstanding claims (The

Company)

Movement in outstanding claims (life

Movement during the year recognized in

profit or loss

Incurred But Not Reported (IBNR)

Movement during the year recognized in

profit or loss

SACOS GROUP LIMITED



26. INVESTMENT INCOME

2019 2018 2019 2018

SCR SCR SCR SCR

Interest income was in respect of:

- Financial assets 8,869,255 5,994,342 2,982,936 622,145

- Loans and receivables 5,783,957 5,269,669 - -

14,653,212 11,264,011 2,982,936 622,145

0 27. OTHER INCOME

2019 2018 2019 2018

SCR SCR SCR SCR

Gain on foreign exchange 8,744 362,624 8,744 362,624

(Loss) / profit on sale of equipment 247,444 340,318 247,444 340,318

Other income 2,794,763 3,357,922 2,275,021 2,775,596

3,050,951 4,060,864 2,531,209 3,478,538

28. STAFF COSTS

2019 2018 2019 2018

SCR SCR SCR SCR

Salaries and wages 20,618,414 24,481,871 18,702,782 21,559,969

Retirement benefit obligations (note 23(a)) 1,096,182 538,717 1,108,075 1,663,040

Other staff costs 7,796,810 7,854,003 7,052,044 6,588,075

29,511,406 32,874,591 26,862,901 29,811,084

(a)

THE COMPANY



THE GROUP

Other staff costs includes welfare, compensation, termination, leave pay accruals, overtime, pension, uniforms, training and

health insurance.

SACOS GROUP LIMITED



29. Marketing and administrative expenses

2019 2018 2019 2018

SCR SCR SCR SCR

(a) Sales and Marketing 2,258,787 2,038,201 1,999,659 1,713,077

Investment Property Expenses 4,755,357 4,043,855 2,031,552 1,318,796

Utilities 1,924,642 1,833,827 1,924,642 1,741,878

Legal and professional fees 11,957,901 11,070,406 10,261,544 7,888,404

Travelling expenses 955,526 1,039,106 840,320 855,840

Printing, postage and stationery 3,838,159 3,257,203 3,380,178 3,422,024

Telecommunication 1,458,397 1,293,786 1,456,447 1,282,820

Other Taxes 2,508,954 2,284,696 1,558,763 1,382,401

Finance Charges 4,052,535 (4,827,206) 3,433,788 5,174,332

Write-Offs (i) 10,177,723 - 156,349 -

Other expenses 3,461,816 12,163,338 (6,177,161) (9,803,519)

47,349,796 34,197,215 20,866,080 14,976,051

(i) The write-off relates to St. Claire Land amounting to SCR10m and the remaining relating to fixed asset write-off.

Marketing and Administrative expenses is presented by:

2019 2018 2019 2018

SCR SCR SCR SCR

Sales and marketing expenses 2,258,787 2,038,201 1,999,659 1,713,077

Operating and administrative expenses 43,749,761 29,292,740 27,119,364 19,783,542

Intercompany recharge - - (9,594,191) (9,386,842)

(Impairment) / reversal of impairment on financial assets 1,341,248 2,866,274 1,341,248 2,866,274

47,349,796 34,197,215 20,866,080 14,976,051

(b) Directors' emoluments

2018

Fees Emoluments Total Total

SCR SCR SCR SCR

P Bastide 201,250 - 201,250 150,000

J C D'Offay - - - 100,000

L Nair 402,500 - 402,500 300,000

R Thorrington 201,250 - 201,250 150,000

I Barbe 201,250 - 201,250 150,000

L Rivalland 201,250 - 201,250 150,000

B Adonis 201,250 - 201,250 150,000

D Bradburn 201,250 - 201,250 50,000

J Morel - 1,448,057 1,448,057 1,566,534

M Sinovich - - - 2,377,056

G Capricieuse - 876,000 876,000 267,770 Tacey Furneau 696,000 696,000

1,610,000 3,020,057 4,630,057 5,411,360

30. Depreciation and amortisation charges

2019 2018 2019 2018

SCR SCR SCR SCR

Depreciation on equipment (note 5(a)) 4,213,309 2,556,373 3,656,645 2,142,754

Amortisation on intangible asset (note 7) 1,631,828 1,564,285 1,631,828 1,494,600

Amortisation of right of use asset (note 6) 7,211,852 - 7,138,384 -

13,056,989 4,120,658 12,426,857 3,637,354


2019

THE GROUP



SACOS GROUP LIMITED



31. RELATED PARTY TRANSACTIONS

(a) Following are transactions and balances with the related parties:

2019 2018 2019 2018

SCR SCR SCR SCR

Transactions with: fellow

subsidiaries (Note 31(a)(e)

Recharges - - 9,594,191 9,386,842

Amount payable - - 35,729,340 17,346,108

Key management personnel

Sales of services 566,184 673,190 100,795 135,248

Loans and receivables 1,381,867 1,407,978 - -

Shareholders

Dividends 4,000,000 3,000,000 4,000,000 3,000,000

Directors

Remuneration 4,630,057 5,411,360 3,241,040 3,787,952

(b) Key management personnel compensation:

2019 2018

SCR SCR

Salaries and short-term employee benefits 5,707,419 7,909,562

Key management personnel consist of the chief executive officer, directors and other key personnel.

(c)

(d)

(e)

(f) There has been no guarantees provided or received for any related party receivable or payable.

32. SEGMENT INFORMATION

(a) Basis of segmentation

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 profit or loss.

The Group's reportable segments under IFRS 8 Operating Segment are based on insurance classes. The Group generates

revenue from provision of life and general insurance services, sales motor vehicle spare parts and letting out residential

apartments. The basis of segmentation is disclosed below:


THE GROUP

The sales, purchases, receivables and payables related to related parties are made on arms length basis and outstanding balances

for related party receivables and payables are unsecured and interest free.

For the year ended December 31, 2019, the Group and the Company has not recorded any impairment on receivables owed by

related parties (2018: nil) and this assessment is undertaken at the end of each financial year by examining the financial position of

the related party and the market in which the latter operates.

The Group include the parent entity i.e. SACOS Group Limited ("the Company") and its subsidiary for which it has 100% ownership

/ control in SACOS Life Assurance Company Limited;

Related party transactions of the Company relate to fellow subsidiaries as explained above.

SACOS GROUP LIMITED



32. SEGMENT INFORMATION (CONTINUED)

(a) Basis of segmentation (Continued)

Insurance services:

General

Life

Investment property business

Revenue from this segment comprise income and gains from rental of investment properties business of the Group.

The Company customer portfolio base is widely spread and no customer accounts for more than 10% of the total revenue.

Inter-segment sales and expenses are eliminated in the below disclosure for operating segment.

(b) Operating segment for the Group

December 31, 2019

Life Casualty Property Total

SCR SCR SCR SCR

Income

Gross written premiums 70,926,001 33,285,658 136,390,957 240,602,616

Net earned premiums 67,896,374 11,777,675 87,395,569 167,069,618

Underwriting surplus 3,377,676 10,252,516 47,642,230 61,272,422

Rental income 22,039,863

Investment income 14,653,212

Operating Profit 97,965,496

Other income 3,050,951 Increase in fair value of investment properties 20,086,983 Gain/(loss) on disposal of investment property (5,005,102)

116,098,328

Expenses

Staff costs (29,511,406)

Marketing and administrative expenses (2,258,787)

Operating and administrative expenses (43,749,761)

Depreciation and amortization charges (13,056,987)

(Impairment) / reversal of impairment on financial assets (1,341,248)

Total Expenses (89,918,190)

Share of Profit in Associates 775,738

Profit before taxation 26,955,875

Taxation charge (1,965,076)

Profit for the year 24,990,799

This segment provides protection against liability claims of individuals / organizations for negligent acts / omissions property, risks such as fire, theft and some weather damage.

Revenue in the above segment is derived primarily from insurance premiums, investment income and realized gain on financial assets.

The Company

SACOS GROUP LIMITED




(b) Operating segment for the Group (Continued)

December 31, 2019 (Continued)


SCR SCR SCR SCR

Segment assets 518,784,127 33,564,154 312,727,093 865,075,373

Effect of Consolidation (83,729,340)

Segment liabilities 470,784,127 42,721,318 172,332,768 685,838,213


Equity holders' interest 131,237,160

Capital expenditure: 6,763,468

Depreciation and Amortisation 13,056,987

December 31, 2018Life Casualty Property Total

SCR SCR SCR SCR

Income

Gross written premiums 64,503,589 27,330,408 135,221,672 227,055,669

Net earned premiums 58,963,446 3,634,729 103,124,485 165,722,660

Underwriting surplus 8,624,942 (574,220) 50,423,101 58,473,823

Rental income 24,254,639

Investment income 11,264,011

Operating Profit 93,992,473

Other income 4,060,863

Gain/(loss) on disposal of investment property (2,000,000)

96,053,336 ExpensesStaff costs (32,874,590)

Marketing and administrative expenses (2,038,201)

Operating and administrative expenses (29,292,740)

Depreciation and amortization charges (4,120,658)

(Impairment) / reversal of impairment on financial assets (2,866,274)

Total Expenses (71,192,463)

Share of Profit in Associates 880,184

Profit before taxation 25,741,058

Taxation charge -

Profit for the year 25,741,058

The Company

The Company

SACOS GROUP LIMITED




(b) Operating segment for the Group (Continued)

December 31, 2018 (Continued)


SCR SCR SCR SCR

Segment assets 501,339,667 10,853,950 316,632,969 828,826,586


Segment liabilities 466,937,757 17,165,196 184,531,255 668,634,208


Equity holders' interest 112,192,381

Capital expenditure: 30,130,810

Depreciation and Amortisation 4,120,658

33. SHAREHOLDERS SHARE OF LIFE SURPLUS

In accordance with the accounting policy in Note 2, the independent actuaries have assessed the amount of the Discretionary Participating Feature (DPF) eligible surplus/deficit to be transferred to Life

Assurance Fund from statement of profit or loss and other comprehensive income. As the life business made a surplus during the year, the surplus amount has been recognized in statement of Life

Assurance Fund. Assets in the Life Fund meets the Insurance Acts Minimum Solvency Requirement and this covers the Solvency Margin as well as 1/9th of the Cost of Bonus that can be transferred to

shareholders under the With Profit Fund and 100% of surplus under the Without profit fund. In addition to the Solvency margin, the bonus stabilization reserve in 2019 stood at SCR 8.9m providing

additional retained surplus in the Life Fund.

The Company

SACOS GROUP LIMITED

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENT


34. EARNINGS / (LOSS) PER SHARE

The following reflects the income and share data used in the computations:

2019 2018 2019 2018

SCR SCR SCR SCR

(Loss) / profit attributable to equity holders of the parent 6,784,875 5,217,839 6,784,875 5,217,839

Weighted average number of ordinary shares ranking for dividend 2,000,000 2,000,000 2,000,000 2,000,000

3.39 2.61 3.39 2.61

35. DIVIDEND PAID

2019 2018

SCR SCR

4,000,000 3,000,000

Dividend Guideline

36. CAPITAL COMMITMENTS

There are no capital commitments as at 31 December 2019 (31 December 2018: nil).

37. CONTINGENT LIABILITIES AND ASSETS

There are no contingent liabilities and assets as at 31 December 2019 (31 December 2018: nil).

38. EVENT AFTER THE REPORTING PERIOD

COVID 19

39. COMPARATIVE FIGURES

The Coronavirus outbreak in early 2020 which originated from China, is now classified by the WHO as a pandemic, as it has migrated all over

the World within few weeks and now Europe is being called the epicenter of the deadly virus. Due to restriction of movement of people and

lock down in several countries worldwide, many businesses have reduced or suspended operations.

The lockdowns instituted in several countries bring potentially significant disruption to business operations around the globe. A wide range of

businesses are being affected including travel and tourism, manufacturing, construction and the retail sector. Looking more widely. There is an

increase in economic uncertainty which may lead to volatility in international markets including exchange rates.

The requirement, in accordance with IAS 10 "Events after the Reporting Period ", is to account for the significant changes in business and

economic conditions as non-adjusting events because the significant development and spread of the Coronavirus did not take place until

January 2020.

Seychelles being a highly demanded tourist destination, the impact on the economy is yet to be assessed. With the current situation we are

foreseeing discontinuation of many businesses which might affect Premium Income for the Financial Year 2020 and moreover if there is a high

death rate our Life Segment might see an increase in Death Claim. Furthermore due to the volatility in international markets, this will create a

negative impact on Investments.

Except for what was disclosed & adjusted to the Financial Statements, there were no other events after the reporting date.

THE GROUP AND THE COMPANY

Authorized dividend in 2019 and paid in 2019 @ SCR 2.00 per share;

(2018: SCR 1.50 per share).

The Company intends to maintain attractive dividend payments to shareholders through dividend cover times ratio targeting by considering the

performance (profit after taxation) for the year.

Group performance is significantly enhanced by good insurance premium income and low claims.

Our numerous and diverse shareholders have an important role to play in this space.

At the same time there is a need to balance the desire for distributions with prudential capital management, business development including

strategic investment and operational liquidity requirements.

To ensure compliance with the law of the Seychelles, when first assessing the potential dividend declaration, the requirements of the

Companies Act and Insurance Act need to take precedence.

The Company thus follows an adaptable, shareholder and business holistic dividend strategy as is appropriate to a given year, the position of

the Company now and in the foreseeable future.

After considering the position and performance of the Company, the Board of Directors is responsible for making a dividend recommendation

for approval of the dividend at the annual shareholders’ meeting.


(Loss) / earnings per share - Basic and diluted

Certain reclassifications are made between accounting elements of the prior period consolidated financial statements for the purpose of better

presentation to confirm with current years' presentation.

SACOS GROUP LIMITED



40. FIVE YEAR FINANCIAL SUMMARY

(a) THE GROUP 2019 2018 2017 2016 2015

(Restated*)

SCR SCR SCR SCR SCR

Profit before tax 26,955,877 25,741,057 10,165,808 (62,224,229) 31,131,000

Tax charge (1,965,076) (9,536,035) (824,036) (2,231,555) (5,099,305)

Profit for the year 24,990,800 16,205,022 9,341,772 (8,455,784) 26,031,695

Other comprehensive income / (loss) - - - (555,005) -

Total comprehensive income / (loss) for the year 24,990,800 16,205,022 9,341,772 (9,010,789) 14,971,461

Retained earnings brought forward 39,797,071 37,263,750 56,256,546 82,267,335 74,693,000

Prior period adjustment -

Life Surplus Consolidated to Life Surplus (18,205,925) (10,987,182) (14,507,544) - -

Share of surplus to shareholders 10,030,069 315,481 172,977 - -

Share of profit attributed to shareholders fund 3,568,021 - - - -

Dividends (4,000,000) (3,000,000) (14,000,000) (17,000,000) (14,000,000)

Retained earnings carried forward 56,180,031 39,797,071 37,263,750 56,256,546 82,267,335

EQUITY

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

Capital contribution 5,057,131 2,395,310 2,395,310 - -

Retained earnings 56,180,031 39,797,071 37,263,750 56,256,541 82,267,029

Total equity 131,237,162 112,192,381 109,659,060 126,256,541 152,267,029

SACOS GROUP LIMITED

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENT


40. FIVE YEAR FINANCIAL SUMMARY (CONTINUED)

(b) THE COMPANY

2019 2018 2017 2016 2015

(Restated*)

SCR SCR SCR SCR SCR

Profit before tax 8,749,952 14,029,398 (4,341,737) 13,258,550 20,851,985

Tax charge (1,965,076) (8,811,559) (824,036) (2,231,255) (7,326,599)

Profit for the year 6,784,875 5,217,839 (5,165,773) 11,027,295 13,525,386

Retained earnings brought forward 53,395,159 51,177,321 70,170,117 76,315,792 80,308,301

Share of profit attributed to shareholders fund - - 172,977 - -

Dividends (4,000,000) (3,000,000) (14,000,000) (17,000,000) (17,000,000)

Retained earnings carried forward 56,180,031 53,395,159 51,177,321 70,343,087 76,833,687

EQUITY

Share capital 70,000,000 70,000,000 67,000,000 67,000,000 67,000,000

Revaluation Reserve 5,057,131 2,395,310 2,395,310 - -

Retained earnings 56,180,031 53,395,159 51,177,321 70,343,087 76,833,687

Total equity 131,237,162 125,790,469 120,572,631 137,343,087 143,833,687

Documents

SACOS GROUP LIMITED CONSOLIDATED FINANCIAL STATEMENTS FOR