SACOS GROUP LIMITED FINANCIAL STATEMENTS FOR THE …€¦ · Company and these comprised mainly motor vehicles, computer equipment and furniture & fittings. The Directors have estimated

SACOS GROUP LIMITED

FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED

31 DECEMBER 2017

SACOS GROUP GROUP VISION, MISSION AND VALUES

Vision:

Mission:

To be the insurer of choice in Seychelles;

Increase market presence;

Develop, retain, attract and inspire top talent;

To attain optimal return on investments ;

Increase shareholder value;

To be visible and relevant in the community;

Provide memorable customer experience;

Establish and develop strong and lasting; collaborative partnerships.

Provide market lead ing insurance solutions by leveraging our financial strength and world class reinsurers, optimising investments to strengthen our financial position, by remaining committed to innovation and service excellence, in partnership with our valued employees and partners.

Values:

Service excellence

Trust

Accountability

Innovation

Respect

Stewardship

SACOS GROUP LIMITED TABLE OF CONTENTS- 31 DECEMBER 2017

PAGES

CORPORATE INFORMATION

DIRECTORS' REPORT 2-3

AUDITOR'S REPORT 4-5

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6-8

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 9

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 10

STATEMENT OF LIFE ASSURANCE FUND 11

CONSOLIDATED STATEMENT OF CASH FLOWS 12 - 13

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS 14-66

SACOS GROUP LIMITED CORPORATE INFORMATION

Board of Directors

Non-executive Directors

Executive Directors

Company Secretary

Auditors

Actuaries

Bankers

Legal Advisers

Sponsor Advisor

Mrs. Lekha Nair (Chairperson)

Mr. Louis Rival land

Mr. Jean Claude D'Offay

Mr. Patrice Bastide

Mr. Mark Inch

Mr. Rod Tharrington

Mrs. Ina Barbe

Mr. Bernard Adonis

Ms. Jennifer Morel

Mr. John Esther

Mr. Marko Sinovich

Mr. Jean Raguin

Valsen Fiduciaries (Seychelles) Limited

Pool and Patel

Chartered Accountants

QED Actuaries and Consultants South Africa

South Africa

Barclays Bank (Seychelles) Limited

Bank of Baroda (Seychelles)

Chief Executive Officer

Seychelles Pension Fund


Swan Group

Retiree

Senior Manager

Swan Group

Managing Partner

Bluebird lnvestissements Ltd

Consultant

Consultant

Director



Chief Financial Officer

GM HR and Administration

Company Secretary

Seychelles International Mercantile Banking Corporation Limited [Nouvobanq]

Habib Bank (Seychelles)

AI Salam Bank Seychelles

Seychelles Commercial Bank Limited

The Mauritius Commercial Bank (Seychelles) Limited [MCB]

K.B Shah

Attorney-at-Law & Notary Public

S Aglae

Attorney-at-Law & Notary Public

Constant Capital (Seychelles) Ltd

Eden Island

Seychelles

Relevant dates:

Appointed April 22, 2015

Appointed July 16, 2007

Appointed December 11, 2009

Appointed March 28, 2013

Appointed September 30, 2014

Resigned 28 December 2017

Appointed April 2, 2015

Appointed October 19, 2015

Appointed September 25, 2017

Appointed January 12, 2018

Appointed June 13, 2016

Resigned December 7, 2017

Appointed March 29,2017

Resigned June 30, 2017

Appointed July 1, 2017

SACOS GROUP LIMITED DIRECTORS' REPORT 31 DECEMBER 2017 2

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 2017.

PRINCIPAL ACTIVITIES & CURRENT YEAR EVENTS

The principal activity of SAGOS Group Limited (collectively "the Group" and referred as "the Company" for its separate financial statements here-after) is underwriting of general and life assurance policies and the Company is that of an investment holding. These activities have remained unchanged during the year under review. The Companies under SAGOS Group Limited include:

(i) SAGOS Insurance Company Limited (hereafter referred as 'SICL'); (ii) SAGOS Life Assurance Company Limited (hereafter referred as 'SLACL'); and (iii) Sun Investment (Seychelles) Limited (hereafter referred as 'SISL')

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

RESULTS The Group 2017 2016

SCR SCR

Profit I (loss) for the year 9,341,773 (8,455,484) Other comprehensive income 4,479,355 (555,005)

Total comprehensive income 13,821,128 (9,01 0,488)

Retained earnings brought forward 56,256,547 82,267,029

Comprehensive income for the year (excl fair value reserve) (4,992,796) (9,01 0,482)

Dividends (14,000,000) (17,000,000)

Retained earnings at end of period 37,263,751 56,256,547

Fair value reserve 2,395,310

Total reserves 39,659,061 56,256,547

DIRECTORS' STATEMENT OF

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

The Company

2017 2016

SCR SCR

12,471,910 17,890,028

12,471,910 17,890,028

28,588,739 27,698,711

12,471,910 17,890,028

(14,000,000) (17,000,000)

27,060,649 28,588,739

27,060,649 28,588,739

1. Selected suitable accounting policies that are compliant with International Financial Reporting Standards and applied them consistently;

2. Made judgments and estimates that are reasonable and prudent; 3. Prepared the financial statements on a going-concern basis; 4. Taken appropriate measures to safeguard the assets of the Group through the application of appropriate internal control, risk

management systems and procedures; 5. Taken reasonable steps for the prevention and detection of fraud and other irregularities; and

6. Considered appropriate disclosures for all events after the reporting period.

DIVIDENDS

Dividends of SCR 7 per share amounting to SCR 14 million were proposed and approved in 2017 and paid in 2018 (2016: SCR 7 per share amounting to SCR 14 million).

EQUIPMENT AND INVESTMENT PROPERTIES

Additions to equipment during the year amounting to SCR 1,410,602 (2016: SCR 814,512) for the Group and Nil (2016: Nil) for the Company and these comprised mainly motor vehicles, computer equipment and furniture & fittings.

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.

SACOS GROUP LIMITED DIRECTORS' REPORT 31 DECEMBER 2017

DIRECTORS AND DIRECTORS' INTERESTS

J C D'Offay L Nair {Chairperson)

J Morel R Tharrington I Barbe

M Sinovich L Rivalland

P Bastide B Adonis

Number of shares

held at year-end

2017 2016

517 517

280 280 120 nla

423

STATEMENT OF DIRECTORS' RESPONSIBILITIES

3

SGL SICL SLACL SISL

" " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " "

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

The Board is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards (IFRS) and in compliance with the Seychelles Companies Act, 1972 and the Insurance Act 2008. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The Directors have the general responsibility of safeguarding the assets, both owned by the Group and those that are held in trust and used by the Group.

The Directors consider they have met the aforesaid responsibilities.

AUDITORS

Pool and Patel Chartered Accountants

BOARD APPROVAL

These financial statements have been approved for issue by the Board of Directors on

L Nair

~ J C D'Offay

~ RT~h . · ton Dire r

__....-t '

Dated: ~ 4-tACtt.t (7 'W\ i Victoria, Seychelles

L Rivalland

Director

J Morel

Director

~ i/

AS 'PR()VtD£0 'B3 c.ofi\PANI~S 4-C..II s. rscr, LOtllS

ro St&N B& eE-ASoN o'F- PH(JSto4L tAJc~PAC.t~ .

I Barbe

~-P Bastlde

M Sinovich Director

Pool & Patel Maison La Rosiere, PO Box 117, Victoria, Mahe, Seychelles.

Tel: +248 4323201 Fax: +248 4323518 Chartered Accountants Email: pnp@seychel les.net

Bernard L. Pool FCA Suketu Patel FCA Gemma Roberts FCCA

INDEPENDENT AUDITOR'S REPORT

SACOS GROUP COMPANY LIMITED

To the Shareholders of SA COS Group Company Limited

Opinion

Website: www.moorestephens.com www.poolandpatel .com

We have audited the financial statements of SACOS Group Company Limited, which comprise the statement of financial position as at 31 December, 2017, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at 31 December, 2017, and its financial performance and its cash flows for the year then ended in accordance with the requirements of the Seychelles Companies Act, 1972.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Seychelles, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with requirements of the Seychelles Companies Act, 1972, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

MOORE STEPHENS INTERNATIONAL LIMITED

An Independent member firm of Moore Stephens International Limited - members in principal cities throughout the world.

INDEPENDENT AUDITOR'S REPORT (CONTINUED)

SACOS GROUP COMPANY LIMITED

Report on Other Legal and Regulatory Requirements

The Seychelles Companies Act 1972 requires that in carrying out our audit we consider and report to you on the following matters. We confirm that:

a. we have obtained all the information and explanations necessary for the performance of our audit, and

b. in our opinion

(i) proper books of accounting have been kept by the Company as far as appears from our examination of those records; and

(ii) the Company's statement of financial position and statement of comprehensive income are in agreement with the books of account and returns.

n , . D ·r<:qa\. .......... ~ ~ POOL &PATEL CHARTERED ACCOUNTANTS 27 July 2018

-4-

SACOS GROUP LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017

2017

Group excluding

Notes Life Life SCR SCR

ASSETS

Non-current assets Equipment 5 3,195,803 2,183,195 Investment properties 6 99,198,941 236,381,147 Intangible assets 7 5,659,639 22,212 Investment in subsidiaries 8 - -Investment in preference share 8 45,000,000 -Investment in financial assets 9 16,096,019 65,357,248 Loans and receivables 10 - 39,821,962 Deferred lease rentals 11 - -Deferred tax assets 12 602,488 -Investment in associates 13 - 19!628!783

169! 752!890 363!394!547 Current assets Investment in financial assets 9 19,529,031 62,915,842 Loans and receivables 10 - 24,232,641 Trade and other receivables 14 73,213,749 7,598,798 Intercompany receivables 15 - 5,264,066 Cash and cash equivalents 16 16,519,962 18,120,990 Current tax asset 17 15!421!973 -

124!684!715 118! 132!337

Total assets 294,437,605 481,526,884

The notes on pages 14 to 66 form an integral part of these consolidated financial statements. Auditors· report on pages 4 to 5.

6

THE GROUP THE COMPANY 2016 2017 2016

SCR SCR Group

Consolidated excluding Life Life Consolidated SCR SCR SCR SCR

5,378,998 3,731,243 2,605,848 6,337,091 335,580,088 99,098,986 225,733,891 324,832,877

5,681,851 7,103,580 126,787 7,230,367 - - - - 64,271,362 64,271,362 - - - - 45,000,000

81,453,267 - 8,056,139 8,056,139 39,821,962 - 14,226,978 14,226,978

- - 10,647,256 10,647,256 602,488 240,514 - 240,514

19!628!783

488! 147!437 110,174,323 261,396,899 371 ,571 ,222 109!271!362 64,271,362

82,444,873 80,831,848 96,717,836 177,549,684 548,781 24,010,386 24,232,641 - 22,257,022 22,257,022 80,812,548 53,722,780 28,571,697 82,294,478 2,451,348 9,770,796

- 1,333,658 34,640,952 21,712,900 13,279,591 34,992,491 5,966,482 7,151,239 151421 1973 7,277,648 - 7,277,648 3!019!318 1,672,682

237!552!987 164,878,834 160,826,146 324,371 ,323 11!985,929 42,605,103

725,700,424 275,053,157 422,223,045 695,942,545 121.257,291 106,876,465


2017

Group excluding

Notes Life Life EQUITY AND LIABILITIES SCR SCR

Capital and reserves Share capital 18 67,000,000 3,000,000 Preference share - 45,000,000 Capital contribution Shareholder's loan Retained earnings 51,177,321 (13,913,571) Fair value reserve 2!395!310 -Total equity 120!572!631 34!086!429

Technical provisions Life Assurance Fund 19 - 434,828,465 Gross outstanding claims and IBNR 20/25 37,568,418 1,868,263 Gross unearned premiums 20/25 67,731,265 -Mortgage protection fund 21 228,911 -Fisheries and agricu ltural fund 22 480,226 -Policy holders protection fund 1!633!901 -Total technical provisions 107,642,721 436,696,728

LIABILITIES

Non-current liabi lities Retirement benefit obligations 23 4!260!819 927! 135

4!260!819 927!135 Current liabilities Trade and other payables 24 56,697,369 9,089,227 Intercompany payables 15 5,264,066 -Bank overdraft 16 - 727,365

61,961,435 9!816,592

Total liabilities 66,222,254 10,743,727

Total equity and liabilities 294,437,605 481 ,526,884

The notes on pages 14 to 66 form an integral part of these consolidated financial statements. Auditors' report on pages 4 to 5.

7

THE GROUP THE COMPANY 2016 2017 2016

SCR SCR Group

Consolidated excluding Life Life Consolidated SCR SCR SCR SCR

70,000,000 67,000,000 3,000,000 70,000,000 70,000,000 70,000,000

37,263,750 70,343,087 (14,086,548) 56,256,541 27,060,649 28,588,739 2!395!310

1 09!659!060 137,343,087 (11 ,086,548} 126,256,541 9710601649 98,588,739

434,828,465 - 418,409,852 418,409,852 39,436,681 42,307,296 2,327,595 44,634,891 67,731,265 61,769,706 - 61,769,706

228,911 259,080 - 259,080 480,226 873,207 - 873,207

1!633!901

544,339,449 105,209,289 420,737,447 525,946,736

5!187!954 4,275,573 3,112,443 7,388,016

511871954 4,275,573 3,112,443 7,388,016

65,786,596 28,225,208 7,919,332 36,144,540 24,196,642 8,287,726 - - 1,333,659

727,365 - 206,712 206,712

6615131961 28,225,208 9,459,703 36,351,252 24,196!642 8,287,726

71,701!915 32,500,781 12,572,146 43,739,268 24!196!642 8,287,726

725,700,424 275,053, 157 422,223,045 695,942,545 121 ,257,291 106.876.465


BOARD APPROVAL

These financial statements have been approved for issue by the Board of Directors on q 4AU~A'S'i Ut~

L Nair L Rivalland I Barbe Director Director Director

~ ~-~

J C D'Otfay J Morel

1J~ Director

~ R Thorrington B Adonis M Sinovich

~' Director Director

v ~

AS p((ov 10

€o 'B!:) coM PAN 1£5 A-C.T, S. tS"9, LOUI.S t:?.l VALl-AND IS UNA-BLE To S t&N B~ i(EA-Sot\1 ~F PH.YSttAL rNcJlPAc..tr~.

The notes on pages 14 to 66 form an integral part of t hese consolidated financia l statements. Auditors' report on pages 4 to 5.

8

SACOS GROUP LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2017

THE GROUP

2017

Group Notes excluding

Life Life Consolidated SCR SCR SCR

Turnover 161,109,429 60,930,796 221,094,411

Gross written premiums 25(c) 161 '1 09,429 60,930,796 221 ,094,411 Premiums ceded to reinsurers 25(c) (59,923,946) (4,012,835) (63,936, 781 ) Change in gross unearned 25(c) (5,961 ,551 ) (5,961 ,551 ) Recoverable from reinsurers 25(c) 3,029,768 3,029,768

Net premium earned 98,253,700 56,917,961 154,225,848 -

Gross claims paid 25(a) (71 ,322,000) (41 ,542,826) (112,864,826) Recoverab le from reinsurers 25(a) 14,355,977 14,355,977 Movement in gross outstanding

25(a) 4,738,878 4,738,878 claims Recoverab le from reinsurers 25(a) 1,634,749 1,634,749

Net claims incurred (50,592,396} {41,542,826} {92,135,222}

Commission receivable from 6,006,553 846,349 6,852,902 re insurers Commission pa id to agents and brokers {12,369,702} {2,367,834} {14,737,536}

Net commission paid {6,363,149} {1,521,485} {7,884,634}

Underwriting surplus 41,298,155 13,853,650 54,205,992

Rental income 6 7,172,022 16,317,713 23,489,735 Investment income 26 1,748,473 8,643,431 10,391 ,904 Sundry income 27 2,124,418 1,707,372 3,831,790 Intercompany income 2,624,662 Increase I (decrease) in fair value

6 of investment properties

Total Other Income 13,669,575 26,668,516 37,713,429

Staff costs 28 (31 ,321 ,394) (3,447,413) (34,768,807) Marketing and administrative 29 (31 ,446, 178) (12,353,720) (42 ,854,084) Other operating expenses 30 (3,387,261 ) (587,328) (3,974,589) Intercompany expenses/Recharge 6,845,365 (9,470,028) (Impairment) I reversal of 10(e) impairment on fi nancial assets {439,555} {439,555)

Total Expenses (59,309,468} (26,298,044} {82,037 ,035}

Transfer to life assurance fund Share of Profit in associates 283,423 283,423

Profit I (loss) before taxation (4,341 ,737) 14,507,544 10,165,808

Taxation 17 (824,036} (824,036}

Profit I (loss) for the year {5,165,773} 14,507,544 9,341,773

Other comprehensive income/(loss)

Other comprehensive income I (loss) not to be reclassified to profit or loss in subsequent periods:

Re-measurement of retirement benefit ob ligation Deferred tax on re-measurement of retirement benefit obligation

Fair va lue change on available-for-sale 2,395,310 2,084,045 4,479,355

Fair value-changes in availab le-for-sale investments

Total comprehensive income I (loss) for the year {2,770,463} 16,591,589 13,821,128

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

Profit I (loss) attributable to equity holders of the parent 1.33

The notes on pages 14 to 66 form an integral part of these consolidated financial statements.

Auditors" report on pages 4 to 5.

Group excluding Life

SCR

159,994,367

159,994,367 (64, 180,227)

(635,941) 275,325

95,453,524

(39,501 ,598) 3,983,154

(16,601 ,335)

1,104,745

{51 ,015,034}

5,373,419

(8,693,923}

(3,320,504)

41,117,986

6,544,075 5,215,799 3,394,964 6,722,128

1 567 130

23,444,096

(19,390,773) (27,802,871 )

(2,008,673) (2, 101 ,215)

(51 ,303,532)

13,258,550

(2,231 ,255)

11,027,296

(690,526)

172,632

10,509,401

9

THE COMPANY

2016 2017 2016

Life Consolidated SCR SCR SCR SCR

63,205,995 223,200,362

63,205,995 223,200,362 (2,300,091) (66,480,318)

(635,941) 275,325

60,905,904 156,359,428

(39,488,438) (78,990,036) 3,983,154

(16,601 ,335)

1,104,745

(39,488,438) (90,503,472)

373,271 5,746,690

(2,473,211) (11,167,134)

(2,099,940) (5,420,444}

19,317,526 60,435,512

14,207,721 20,751,796 10,308,268 15,524,067 12,906,282 15,252,720

663,077 4,058 ,041 194,195 3,889,381

(29,235,241) (27,668, 111 )

(4,056, 175) 12,665,793 13,100,477 19,142,101

(8,435, 166) (27 ,825,939) (13,439,056) (41,241,927) (446,743) (478,935)

(1,138,357) (3,147,030) (4,620,913)

(3,870,521) (3,870,521)

(31 ,504,013) (76,085,417) {446,743} (478,935)

(3,240, 117) (3,240,117)

(19,482,779) (6,224,229) 12,653,734 18,663,166

(2,231 ,255) (181,824) (773,138)

(19,482,779) (8,455,484) 12,471,910 17,890,028

(37,110) (727,636)

172,632

(763,357) (763,357)

763,357 763,357

{19,519,889) (9,01 0,488) 12,471,910 17,890,028

(1.21) 1.78 2.56

SACOS GROUP LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2017

THE GROUP Share caEital

SCR

At 1 January 2016 70,000,000

Share of Shareholder's Surplus/(Deficit) (i)

Total comprehensive income for the year

Dividends (note 35)

At 31 December 2016 70,000,000

Issue of preference shares

Share of Shareholder's Surplus/(Deficit) (i)


Dividends (note 35)

At 31 December 2017 70,000,000

THE COMPANY SCR

At 1 January 2016 70,000,000


Dividends (note 35)

At 31 December 2016 70,000,000


Dividends (note 35)

At 31 December 2017 70,000,000

The notes on pages 14 to 66 form an integral part of these consolidated financial statements.

Auditors· report on pages 4 to 5.

10

Retained Fair value earnings reserve Total

SCR SCR

82,267,029 152,267,029

(9,01 0,488) (9,01 0,488)

(17,000,000) (17,000,000)

56,256,547 126,256,547

172,977 172,977

(5,165,773) 2,395,310 (2, 770,463)

(14,000,000) (14,000,000)

37,263,751 2,395,310 109,659,061

SCR SCR SCR

27,698,711 97,698,711

17,890,028 17,890,028

(17,000,000) (17,000,000)

28,588,739 98,588,739

12,471 ,910 12,471,910

(14,000,000) (14,000,000)

27,060,649 97,060,649

SACOS GROUP LIMITED STATEMENT OF LIFE ASSURANCE FUND AS AT 31 DECEMBER 2017

THE GROUP

LIFE ASSURANCE FUND

At 1 January

Fair value change on available-for-sale assets (Note 9(a)) Surplus the year Share of surplus I (deficit) to shareholder for the year

At 31 December


2017

SCR

418,409,852

2,084,045 14,507,544

(1 72,977)

434,828,464

11

2016

SCR

414,406,378

763,357 3,240,117

418,409,852

SACOS GROUP LIMITED CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2017

THE GROUP 2017

Notes SCR

Cash flows from operating activities:

ProfiU(Loss) before taxation 10,165,808 Less: Life amounts not attributable to shareholders {14,334,567}

ProfiU(Loss) before taxation attributable to shareholders (4,168,759)

Adjustments for: Depreciation of equipment 30 2,368,696 (Profit) I loss on disposal of equipment 27 (530,350) Change in fair value of investment properties 6 Change in fair value of investment in financial assets (2,372,867) Amortisation of intangible asset 30 1,605,894 Impairment of intangible asset 30 Release of Mortgage Protection Fund 21 (30, 169) Release of Fisheries and Agricultural Fund 22 (392,981) Release of Policy Protection Fund 1,633,901 Movement in retirement benefit obligations 23 1,685,323 Interest income 26 (5,235,748) Dividend income 26 Charge of impairment provision 10 Impairment on trade and other receivables 29 Net movement in Life Assurance Fund 16,418,613 Effect of change in exchange rates 27 {288,820}

10,692,733 Changes in working capital: - Trade and other receivables 14 (3, 182,587) - Trade and other payables 24 15,642,056 - Gross claims liabilities 25(a) ( 5,198,21 0) - Recoverable from reinsurers

- share of notified claims 14 1,634,749 - unearned premium 14 3,029,768

- Unearned premium 25(b) 5,961,559

28,580,068

Net tax paid 17 (9,330,334)

Interest received 9 &26 19,919

Retirement benefit obligation paid 23 (3,885,385)

Net cash inflow I (outflow) from operating activities 15,384,269

The notes on pages 14 to 66 form an integra l part of these consolidated financial statements. Auditors' report on pages 4 to 5.

12

THE COMPANY 2016 2017 2016

SCR SCR SCR

(6,224,229) 12,653,734 18,663,166

1,740,869

1,691 '125 27,668,111

462,301 417,384

(111 ,423) (409,480)

3,403,069 (11,708,247) (906,282) (2,252,720)

(12,000,000) (13,000,000) 3,870,521

563,515 3,240,117

{2. 160,449)

22,443,184 (252,548) 3,410,446

(3,327, 145) 7,319,448 (6,404,528) 743,387 1,908,916 20,980

16,601,335

(1,104,745) (275,325) 635,934

35,716,625 8,975,81 6 (2,973, 1 02)

(1 0,300,591) (1 ,528,460) (1 ,590,063)

2,902,578 49,581 1,007,436

(562,771)

27,755,841 7,496,936 (3 ,555,729)

SACOS GROUP LIMITED CONSOLIDATED STATEMENT OF; CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2017

THE GROUP 2017

Notes SCR

Cash flows from investing activities:

Purchase of equipment 5 (1,410,602) Proceeds from disposal of equipment 530,355 Disposal of non-current asset held for sale Decrease in deferred lease rental 11 10,647,256 Purchase of intangible assets 7 (57,378) Proceed from loans and receivables 10 23,413,171 Disbursement loans and receivables 10 (50,963,855) Additions to investment in Subsid iary Additions to investment in Associates (19,628, 783) Additions to investment in financial assets 9 (173,942,478) Reclassification/additions to investment properties 6 (10,747,211) Proceeds from sale of investment properties Redemption of investment in financia l assets 9 205,614,244

Net cash inflow from investing activities (16,545,281}

Cash flows from financing activity:

Dividend received 26 Dividends paid 35

Net cash outflow from financing activity

Net change in cash and cash equivalents (1,161,012)

Movement in cash and cash equivalents:

At 1 January 34,785,779 Change (1,161,012) Effect of change in exchange rates 27 288,820 Bank overdraft liability (727,365)

At 31 December 16 33,913,587


2016

SCR

(818,305) 1,509,301

276,147 149,961

(7,348,531) 16,112,000

(22,374,592)

(355,147,180) (94,480,927)

6,111,439 392,312,511

(63,698, 176)

(17,000,000)

(17 ,000,000)

(52,942,335)

85,981,089 (52,942,335)

2,160,449 (206,712)

34 785 779

13

THE COMPANY 2017 2016

SCR SCR

276,147

(45,000,000)

(21 ,344, 732) (68,520,683)

45,663,039 80,404,516

(20,681 ,693} 12,159,980

12,000,000 13,000,000 (17,000,000)

12,000,000 (4,000,000)

(1,184,757) 4 604 251

7,151,239 2,546,988 (1,184,757) 4,604,251

5,966,482 7 151 239

SACOS GROUP LIMITED NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2017

1. GENERAL INFORMATION

14

SACOS Group Limited (collectively "the Group" and referred as "the Company" for its separate financial statements here-after) was incorporated under the Companies Act, 1972 on 22 November 2005. The principal activity of the Company is that of investment holding. Acivities of its 100% owned subsidiaries are listed below:

(i) SACOS Insurance Company Limited (hereafter referred as 'SICL'); (ii) SACOS Life Assurance Company Limited (hereafter referred as 'SLACL'); and (iii) Sun Investment (Seychelles) Limited (hereafter referred as 'SISL')

Principal Activity Short-term insurance business Long-term insurance business

Investment property management

The Group is domiciled in Republic of Seychelles and its registered office is SACOS Tower, Palm 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

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

Statement of compliance

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.

Basis of consolidation

The consolidated and separate financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2017. 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: • 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: • De recognises 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 • Recognises the fair value of the consideration received • Recognises the fair value of any investment retained • Recognises any surplus or deficit in profit or loss • Reclassifies the parent's share of components previously recognised 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


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Changes in accounting policies and disclosures

15

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 2017:

Amendments Recognition of Deferred Tax Assets for Unrealised Losses - Amendments to lAS 12 Disclosure Initiative - Amendments to lAS 7

Annual Improvements 2014-201 6 Cycle I FRS 12 Disclosure of interests in other entities

Effective for accounting period

01 -Jan-17 01 -Jan-17

01 -Jan-17

Where the adoption of the standard or interpretation or inrovement is deemed to have an impact on the statements or performance of the Group, its impact is described below:

Amendments made to lAS 12 in January 2016 clarify the accounting for deferred tax where an asset is measured at fair value and

that fair value is below the asset's tax base. Specifically, the amendments confirm that:

• A temporary difference exists whenever the carrying amount of an asset is less than its tax base at the end of the reporting period.

• An entity can assume that it will recover an amount higher than the carrying amount of an asset to estimate its future taxable profit.

• Where the tax law restricts the source of taxable profits against which particular types of deferred tax assets can be recovered, the

recoverability of the deferred tax assets can only be assessed in combination with other deferred tax assets of the same type.

• Tax deductions resulting from the reversal of deferred tax assets are excluded from the estimated future taxable profit that is used

to evaluate the recoverability of those assets.

Amendments to lAS 7 - Disclosure initiative

The amendments to lAS 7 Statement of cash flows are part of the lASS's disclosure initiative and require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of the amendment, entities are not required to provide comparative information for preceding periods.

Annual improvements 2014- 2016 cycle

IFRS 12 Disclosure of interests in other entities- Clarification of the scope of the disclosure requirements in IFRS 12

The amendments clarify that the disclosure requirements in IFRS 12, other than those in paragraphs 810-816, apply to an entity's interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified or included in a disposal Group that is classified) as held for sale.

These amendments had no impact on the consolidated and separate financial statements.

2.3 Accounting standards and interpretations issued but not yet effective

The following standards, amendments to existing standards and interpretations were 1n rssue but not 'yet effective. They are mandatory for accounting periods beginning on the specified dates, but the Group has not early adopted them:

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:

New or revised standards lAS 28 Investments in associates and joint ventures - clarification that measuring investees at fair value through profit or loss is an investment by investment choice IFRS 9 Financial instruments I FRS 15 Revenue from contracts with customers IFRS 16 Leases IFRS 17 Insurance Contracts IFRIC Interpretation 22 Foreign currency transactions and advance consideration

Amendments Amendments to I FRS 10 and lAS 28 - Sale or contribution of assets between an investor and its associate or joint venture Amendments to lAS 40 - Transfers of investment property Amendments to I FRS 4- Applying I FRS 9 Financial instruments with I FRS 4 Insurance

01 -Jan-18 01 -Jan-18 01 -Jan-18 01-Jan-19 01-Jan-21 01 -Jan-18

Effective date postponed indefinitely

01 -Jan-18 01 -Jan-18



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

16

lAS 28 Investments in associates and joint ventures- Clarification that measuring investees at fair value through profit or loss is an investment by investment choice

The amendments clarify that:

An entity that is a venture capital organisation, or other qualifying entity, may elect, at initial recognition on an investment-byinvestment 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 recognised; (b) the associate or joint venture becomes an investment entity; and lc\ the investment entitv associate or ioint venture first becomes a oarent.

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.

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

IFRS 9 Financial instruments-effective 1 January 2018 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 I FRS 9 introduces a "fair value through other comprehensive income" category for certain debt instruments. Financial liabilities are classified in a similar manner as under lAS 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 recognised. 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 lAS 39.

The application of I FRS 9 has been deferred until the effective adoption and application of the new standard on insurance contracts. The Company plans to adopt the new standard on the required effective date. However, the Group is assessing the impact of the full adoption of I FRS 9, which it intends to adopt on the effective date, on the financial statements.

Amendments to I FRS 4 -Applying I FRS 9 Financial instruments with I FRS 4 Insurance contracts

The amendments address concerns arising from implementing the new financial instruments Standard, I FRS 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 /FRS 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 lAS 39 Financial Instruments: Recognition and Measurement while they defer the application of I FRS 9 until 1 January 2021 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.

The overlay approach

The overlay approach is an option for companies that adopt I FRS 9 and issue insurance contracts, to adjust profit or loss for eligible financial assets; effectively resulting in lAS 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

17

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 I FRS 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 I FRS 9.

The Group plans to defer the application of I FRS 9 until the earlier of the effective date of the new insurance contract standard (I FRS 17) of 1 January 2021, opting the temporary exemption from applying I FRS 9 by the amendments to I FRS 4.

IFRS 15 Revenue from contracts with customers- effective 1 January 2018

I FRS 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 • Recognise revenue when (or as) the entity satisfies a performance obligation. Guidance is provided on topics such as the point in which revenue is recognised, accounting for variable consideration, costs of

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

The Group is assessing the impact of this new standard.

IFRS 16 Leases- effective 1 January 2019

The IASB has redrafted this new leasing standard that would require lessees to recognise 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 I FRS would classify leases using the principle in lAS 17; in essence, lessor accounting would not change.


IFRS 17 Insurance Contracts- effective 1 January 2021

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 recognised as revenue over the coverage period.

The standard allows a choice between recognising 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 I FRS 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.


IFRIC Interpretation 22 Foreign currency transactions and advance consideration

The interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration.




18

Entities may apply the amendments on a fully retrospective basis. Alternatively, an entity may apply the interpretation prospectively to all assets, expenses and income in its scope that are initially recognised on or after:

(i) The beginning of the reporting period in which the entity first applies the interpretation; or (ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the interpretation.

Early application of interpretation is permitted and must be disclosed. First-time adopters of IFRS are also permitted to apply the interpretation prospectively to all assets, expenses and income initially recognised on or after the date of transition to IFRS. The amendments are intended to eliminate diversity in practice, when recognising the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration received or paid in foreign currency.

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

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

The amendments address the conflict between I FRS 10 and lAS 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 recognised in full.

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

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

Amendments to lAS 40 -Transfers of investment property

The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management's intentions for the use of a property does not provide evidence of a change in use.

Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date.

Retrospective application in accordance with lAS 8 is only permitted if that is possible without the use of hindsight. Early application of the amendments is permitted and must be disclosed.

The amendments will eliminate diversity in practice.

The amendments are effective for annual periods beginning on or after 1 January 2018.

2.4 Significant accounting pol icies

2.4.1 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).

Transactions and balances

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 recognised 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.



2.4 Significant accounting policies (continued)

2.4.2 Insurance contracts

Classification of insurance contracts

19

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.

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

(i) Short-term insurance contracts

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

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

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

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

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:

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

These contracts also insure events associated with human life (i.e. death or survival) over a long duration. Premiums are recognised directly as liabilities which are increased by credited interest and decreased by administration fees, mortality, surrender charges and any withdrawals. These types of contracts entitles the contract holders to a minimum guaranteed amount per annum. They contain a DPF which entitles the contract holders, in supplement to the minimum guaranteed amount, a contractual right to receive additional bonuses. A bonus is declared when the actual return on backing assets is higher than the expected return at inception of the contract.

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

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 periods.

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.




2.4.2 Insurance contracts (continued)

(iv) Reinsurance contracts

20

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 inceotion if insurance risk becomes sianificant.

(iii) Receivables and payables related to insurance contracts

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

(iv) Impairment of reinsurance assets

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.

2.4.3 Claims expenses and outstanding claims provisions

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 recognised when the Group considers that it

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.

2.4.4 Salvage and subrogation reimbursements

Estimates of salvage recoveries are included as an allowance in the measurement of the insurance liabilities for claims, and salvage property is recognised in other assets when the liability is settled. The allowance is the amount that can reasonably be recovered from the disposal of the property.

2.4.5 Provision for unearned premiums

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 recognised over the period of the risk. The provision is derecognized when the contract expires, discharQed or cancelled.




2.4.6 Liability adequacy test

(a) Short-term insurance

21

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 expenses)

(b) Long-term insurance

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.

2.4.7 Financial instruments

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

(a) Categories of financial assets

Financial assets within the scope of lAS 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 recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

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

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.

(c) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments. They are recognised 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.

(d) Held-to-maturity financial assets

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

(e) Available-for-sale financial assets

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.

(i) Measurement

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

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

Loans and receivables and held-to-maturity investments

These are subseauentlv carried at amortised cost usina the effective interest method.




2.4.7 Financial instruments (continued)

(i) Measurement (continued)

Available-for-sale financial assets

22

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.

(ii) Derecognition

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

when: • 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 recognised 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.

(f) Financial assets carried at amortised cost

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 recognised 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 recognised 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 recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in profit or loss.

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

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 recognised 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 recognised 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.




2.4.7 Financial instruments (continued)

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

23

The carrying amount of the asset is reduced and the amount of the loss is recognised 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.

If, in a subsequent period, the amount of the impairment loss decreases and the decreases can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the previously recognised 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 recognised.

2.4.8 Financial liabilities

(a) Categories offinancial/iabilities

The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities within the scope of lAS 39 are classified as either fair value through profit or loss or amortised cost as appropriate. All financial liabilities are recognised initially at fair value minus directly attributable transaction costs.

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

(b) Measurement

After initial recognition, financial liabilities of the Group are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised 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.

(c) Derecognition

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 recognised in profit or loss.

(d) Offsetting of financial instruments

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 recognised 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 Group.

2.4.9 Investment in subsidiary companies

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.

Separate financial statements

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 recognised in profit or loss. Upon disposal of the investment, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss.

2.4.10 Equity

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 recognised at the proceeds received, net of direct issue costs.




2.4.11 Dividends

24

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Group's shareholders.

2.4.1 2 Property and equipment

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.

Subsequent costs are included in the assets' carrying amount or recognised as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Depreciation on property and equipment is calculated on the straight line method to write off the cost of each asset to their residual values over their estimated useful life as follows:

Furniture and fittings Computer and equipment Motor vehicles

Rates 10%

15% - 20% 25%

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.

2.4.13 Investment properties

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.

Gains or losses arising from changes in fair values of investment properties are recognised in the consolidated statement of profit or loss and other comprehensive income.

2.4.14 Intangible assets

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 recognised 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.

Computer software

Acquired computer software licenses are capitalised on the basis of costs incurred to acquire and bring to use the specific software and are amortised using the straight line method over the estimated useful life of 3Y:. years.

Website

Costs that are directly associated with the development of the Group's website and which will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include staff costs of the software development team and an appropriate portion of relevant overheads. Website development costs recognised as assets are amortised using a straight-line method over their useful lives of 3Y:. years.




2.4.1 5 Impairment of non-financial assets

25

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.

2.4.16 Cash and cash equivalents

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.

2.4.1 7 Provisions

Provisions are recognised 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 recognised 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 recognised as

a borrowing cost.

2.4.18 Segment reporting

Segments reported are consistent with the historical Group structure.

2.4.19 Trade and other receivables

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

Interest on loans and receivables financial assets are recognised in the consolidated statement of profit or loss and other comprehensive income.

2.4.20 Trade and other payables

Trade and other payables financial liabilities are recognised 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 recognised 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 recognised in the consolidated profit or loss.

2.4.21 Taxes

(a) Current income tax

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 recognised as a charge in consolidated statement of profit or loss and other comprehensive income.

(b) Deferred tax

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.




2.4.21 Taxes (continued)

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

26

- 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 recognised 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 recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable orofit will be available aaainst which the temoorarv differences can be utilized.

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 recognised 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 realised 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 recognised outside profit or loss are not recognised in profit or loss. Deferred tax items are recognised 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.

2.4.22 Retirement benefit obligations

Defined benefit plans

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

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 recognised as part of staff costs in the consolidated statement of profit or loss and other comprehensive income.

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

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 recognised in consolidated statement of changes in equity and no share is transferred to life assurance fund.

SACOS GROUP LIMITED NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2017 27



2.4.24 Life Assurance Fund

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 trasnferred to the statement of profit or loss. When the actuarial valution of the liability exceeds the value of the fund, the difference is recognised immediately in income statement. The movement in the fund is recognised in other comprehensive income to the extent of the fair value aains on available-for-sale financial assets.

Life insurance liabilities are recognised when contracts are entered into and premiums are charged. These liabilities are measured using the net premium method. The liabilitiy 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 furture cash outflows based on the valuatin assumptions used. The liability is either based on current assumptions or calculated using the assumptions established at the time the cotract 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 recognised in the statement of profit or loss over the life of the contract, whereas losses are fully recognised in the statement of profit and loss during the first year of runoff. The liability is derecoanised whe the contract exoires. is discharaed or cancelled.

At each reporting date, an assesment is maded of whether the recognised 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 orofit or loss hv estahlishina an additional insurance liahilitv for the remain ina Joss.

2.4.25 Mortgage protection fund

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% manaQement fee for the Group.

2.4.26 Fisheries and Agricultural fund

The Fund is designated for contributions to premiums payable under a Government sponsored I subsidised 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 Fishires 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 I crew) in

case of loss or damage, death following natural disasters and accidents, depending on the scheme applicable.

2.4.27 Revenue recognition

(a)

(i)

Gross written premiums I

Short-term insurance

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

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

(ii) Long-term insurance

Premiums earned on long-term life contracts are recognised as revenue when they become payable by the policyholder, i.e. the date when payments are due.

Premiums on long term insurance contracts which have been in force for less than three years and for which not all premium have been received are accrued for three months. When these policies lapse due to non receipt of premium after three months, then all related premium income accrued but not received from the date they are deemed to have lapsed is released to the consolidated statement of profit or loss and other comprehensive income.




(b) Earned premiums

28

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

(c) Underwriting surplus

Underwriting surplus is determined for each class of business after taking into account inter alia, unearned premium reserves, outstanding claims and additional reserves.

2.4.28 Other income

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

- Interest income

Interest income is recognised 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 recognised as an adjustment to the effective interest rate of the instrument.

Investment income

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

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

- Commission

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

Rental Income

Rental income comprises of income from the lease of the Group's investment properties. Rental income is recognised 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 recognised in the separate financial statements when the services are rendered .

2.4.29 Fair value measurement:

The Company measures available for sale financial assets and investment properties in non-financial assets at fai r 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, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.




2.4.29 Fair value measurement (continued)

29

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

The level in the fair value hierarchy within which the fair value measurement is categorised 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 recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (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 occured 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.

SACOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2017

3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS

30

The Group issues contracts that transfer insurance or financial risk or both. This section summarises the main risks linked to longterm 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.

3.1 Insurance risk

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 Jess 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.

Factors that aggravate insurance risk include Jack of risk diversification in terms of type and amount of risk, accumulation of risk and type of industry covered.

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.

3.1.1 Insurance contracts

Concentration, frequency and severity of claims


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.

The reinsurance arrangements for proportional and non-proportional treaties are such that the Group is adequately protected and would only suffer predetermined amounts.

(b) Long-term insurance

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.


3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)

3.1.1 Insurance contracts (continued)

31

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 fami ly 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.

3.1.2 Concentration of insurance risk


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

The Grou12 2017

Number Class of business of Claims Gross Net

SCR SCR Non-life Fire & All ied Perils 104 3,446,773 2,541,382 Motor 3,307 7,510,096 7,510,096 Accident & Liability 259 7,249,360 1,839,262 Marine 22 80,000 65,000 Others 164 16,146,481 8,121,986

3,856 34,432,711 20,077,726 IBNR 3,135,707 2,489,941 Total outstanding claims at December 31, 2017 (notes 20 & 25(a)) 3 856 37,568,418 22,567,667

The Grou12 2016

Number Class of business of Claims Gross Net

SCR SCR Non-life Fire & All ied Perils 187 13,998,735 5,558,417 Motor 3,337 11,470,805 11,470,805 Accident & Liability 282 3,846,040 3,505,494 Marine 41 3,763,018 3,325,084 Others 12 363 258 68 487

3,859 33,441,856 23,928,287 IBNR 8 865 440 5,013,007 Total outstanding claims at December 31, 201 6 (notes 20 & 25(a)) 3 859 42,307,296 28,941 ,294

(b) Long-term insurance 2017

With Profit Without Profit Total SCR SCR SCR

Office Premium 53,821,386 1,098,495 54,919,881 Single Premium 21,118,027 21,118,027 Accrued Bonus 156,422,171 156,422,171 Sum Assured 826,307,749 602,196,399 1,428,504,148 Reserve before Bonuses 402,353,573 15,957,834 418,311,407 Reserve after Bonuses 403,910,370 15,957,834 419,868,204

Number of Policies 8,085 2,561 10,646

SAGOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2017 32


3.1.2 Concentration of insurance risk (continued)

(b) Long-term insurance (continued) 2016

With Profit Without Profit Movement Total during the year

SCR SCR SCR SCR

Office Premium 52,540,221 556,453 53,096,674 Single Premium 19,092,745 19,092,745 Accrued Bonus 159,774,877 160,226.00 159,935,103 Sum Assured 804,523,608 537,430,834 1,341,954,442 Reserve before Bonuses 398,564,084 19,808,654 418,372,738 Reserve after Bonuses 398,564,084 19,808,658 37,110 418,409,852

Number of Policies 7,943 3,056 10,999

3.1.3 Sources of uncertainty in the estimation of future claim payment


{b)

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.

2017

Impact on Change in gross

assum~tions liabilities SCR

Average claim cost 5% 1,721 ,636

2016

Change in Impact on gross assum12tions liabilities

SCR

Average claim cost 5% 1,672,093

Long-term insurance

THE GROUP

Impact on reinsurance

share of liabilities

SCR

717,749

THE GROUP Impact on

reinsurance share of liabilities

SCR

475,678

Impact on profit before

tax SCR

(1 ,003,886)

Impact on profit before tax

SCR

(1,196,414)

Impact on eguity SCR

(1,1 94,418)

Impact on eguity SCR

(995,072)

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.

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 liabil ity 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.

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.



3.1 .3 Sources of uncertainty in the estimation of future claim payment (continued)

{b) Long-term insurance (continued)

33

The Group manages long-term insurance risks through its underwriting strategy and re insurance 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.

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

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.

2017 2016

Percentage Actuarial Actuarial change relative Liabi lity Liabil ity to main basis

SCR SCR %

Main Basis 419,868,204 418,409,852 Renewal expenses plus 1 0% 431,860,752 430,543,738 2.9% Withdrawals plus 10% 419,923,804 417,573,032 0.0% Inflation plus 1% 426,405,848 424,686,000 1.6%

Investment return less 1% 452,802,277 451,464,230 7.8%

Mortality (and other claims) plus 10% 421 ,511,255 419,665,082 0.4%

Investment return plus 1% 391,887,498 389,121,162 -6 .7%

SAGOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2017


3.1 Insurance risk (Continued)

3.1 .4 Claims development

34

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, 2017 and December 31, 2016.

Net insurance contract liabilities- 2017 Accident year 2010 2011 2012 2013

SCR SCR SCR SCR

At end of accident year 29,741 48,912 35,267 37,912 One year later 36,927 63,847 47,892 50,384

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

Three years later 36,729 62,074 52,563 53,252 Four years later 35 470 62 298 52 566 53 252

Current estimate of cumulative claims incurred 35 470 62 298 52 566 53 252

At end of accident year (23,684) (48,912) (33,331) (37,043) One year later (32,374) (63,847) (46,971) (47,335) Two years later (35,085) (62,558) (50,706) (58,709)

Three years later (35,400) (61 ,355) (51,614) (59,073)

Four years later (35,446) (61,606) (51,964) (62,897)

Cumulative claims paid to date (35,446) (61,606) (51,964) (62,897)

Net contract liabilities at reporting date 24 692 602 (9,645)

Incurred but not reported (IBNR)

Net outstanding claims at December 31, 2017 (notes 20 & 25(a))

THE GROUP 2014 2015 SCR SCR

34,775 44,258 47,183 48,938 52,690 49,002 52,707

52 707 49 002

(27,912) (30,248) (45,381) (39,857) (46,644) (40,872)

(47,118)

(47,118) (40,872)

5,589 8,130

2016 SCR

40,999 47,596

47,596

(27,695) (42,462)

(42,462)

5,134

2,017 SCR

46,438

46,438

(36,886)

(36,886)

9,552

Total SCR

399,329

(379,251)

20,078

2,490

22,568

SACOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2017 35


3.1 Insurance risk (Continued)

3.1 .4 Claims development (continued)

Net insurance contract liabilities - 2016 THE GROUP

Accident year 2010 2011 2012 2013 201 4 2015 2016 Total

SCR SCR SCR SCR SCR SCR SCR SCR

At end of accident year 29,741 48,912 35,267 37,912 34,775 44,258 40,999

One year later 36,927 63,847 47,892 50,384 47,183 48,938

Two years later 37,426 62,558 51,995 51,677 52,690

Three years later 36,729 62,074 52,563 53,252

Four years later 35,470 62,298 52,566

THE GROUP 2010 2011 2012 2013 2014 2015 2016 Total SCR SCR SCR SCR SCR SCR SCR SCR

Current estimate of cumulative claims incurred 35 470 62 298 52 566 53 252 52 690 48 938 40 999 346,213

At end of accident year (23,684) (48,912) (33,331) (37,043) (27,912) (30,248) (27,695)

One year later (32,374) (63,847) (46,971) (47,335) (45,381 ) (39,857)

Two years later (35,085) (62,558) (50,706) (58,709) (46,644)

Three years later (35,400) (61,355) (51,614) (59,073)

Four years later {35,446) {61,606) {51,964)

Cumulative claims paid to date (35,446) (61,606) (51,964) (59,073) (46,644) (39,857) (27,695) {322,285)

Net contract liabilities at reporting date 24 692 602 (5,821) 6 046 9 081 13 304 23 928

Incurred but not reported {IBNR) 5,013

Net outstanding claims at December 31, 2015 (notes 20 & 25(a)) (Restated*) 28,941

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



3.2 Financial risk

36

The Group's activities are exposed to financial risks through its financial assets, financia l 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 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.

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 re liable and up-to-date administrative and information systems.

The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice. The Board recognises the critical importance of having efficient and effective risk management policies and systems in place. To this end, there is a clear organisational structure with delegated authorities and responsibilities from the Board to Board Committees, executives and senior management. Individual responsibility and accountability are designed to deliver a disciplined, conservative and constructive culture of risk management and control.

3.2.1 Market risk

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 financia l 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.

Currency risk

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 .

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

Management closely monitors currency risk exposures against pre-determined limits. Exposure to foreign currency exchange risk is not hedged.

THE GROUP

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

At December 31, 2017 Ru(!ee USD Euro SCR SCR SCR

Assets Investment in financial assets 123,451,637 40,446,502

Trade and other receivables 27,200,357 52,996,137 616,054

Cash & cash equivalents 25,994,477 8,642,029 1,631

Total assets 176,646,472 102,084,669 617,685

GBP SCR

2,814

2,814

Total SCR

163,898,140

80,812,548

34,640,952

279,351,640



3.2 Financial risk (Continued)

3.2.1 Market risk (Continued)

Currency risk (Continued)

At December 31, 2017 Ru~ee USD Euro GBP Total SCR SCR SCR SCR SCR

Liabilities Trade and other payables 53,399,678 11,024,358 1,238,691 123,869 65,786,596

Total liabilities 53.399.678 11.024.358 1.238.691 123.869 65.786.596

At December 31, 2016 Rupee USD Euro GBP Total

SCR SCR SCR SCR SCR Assets Investment in financial assets 143,687,373 41,918,450 185,605,823 Trade and other receivables 71,847,157 9,273,100 1,085,797 88,424 82,294,478 Cash & cash equivalents 21 048 104 13,923,890 15 121 5 376 34 992 491

Total assets 236,582,634 65,115,440 1,100,918 93,800 302,892,792

Liabilities Trade and other payables 19 137 523 16 114 682 892 335 36,144,540

Total liabilities 19,137,523 16,114,682 892,335 36,144,540

THE COMPANY

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

Sensitivity analysis

If the Seychelles Rupee had weakened I 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 I losses.

Impact of a 5% change in exchange rate on consolidated statement of profit or loss and OCI

At December 31, 2017 Increase of 5% in the exchange rate Decrease of 5% in the exchange rate

At December 31, 2016 Increase of 5% in the exchange rate Decrease of 5% in the exchange rate

Interest rate risk

GBP SCR

(6,053) 6 053

4,690 (4 ,690)

THE GROUP Euro USD SCR SCR

(31,050) 4,553,016 31 050 (4.553.016)

10,429 2,450,038 (10,429) (2,450,038)

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 low interest rates is also regularly monitored.

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.

As at 31 December 2017, the Group only has fixed interest rate financial instruments and thus is not exposed to risk of movement in interest rates.

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

Held-to-maturity investments Short term deposits Loans and receivables Bank balances

THE GROUP 2017 2016

%

2.99% - 3.32% 1.20%-6.34%

4.50% -12.00% 1.00% - 1.50%

%

1.15% - 8.50% 3.10% - 4.50% 4.50%- 12.00% 1.00% - 1.50%


%

2.36% -3.75%

1.00%

%

2.36% - 7.94% 3.1 0% - 3.40%

12.00% 1.00%




3.2.1 Market risk (Continued)

Interest rate risk (continued)

38

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.

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.

Management regularly monitors the sensitivity of reported interest rate movements.

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:

Impact on Life Assurance Fund

+1% -1%

Equity price risk

2017 SCR million

14.2 11 4.2)

2016 SCR million

13.4 (13.4)

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'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:

The Group 2017 2016

Change in Impact on profit Impact on Impact on profit Impact on Market indices variables before tax egu it:£ before tax eguit~

% SCR SCR SCR SCR

Foreign markets +15% 1,521,028 1,521,028 1,208,421 1,208,421 Foreign markets -15% (1 ,521 ,028) (1 ,521 ,028) (1 ,208,421) (1 ,208,421)

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:

- 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.

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.

Reinsurance credit exposures

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 re insurers 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 Group manages its reinsurance counterparty exposures and the reinsurance department has a monitoring role over this risk. The Group's largest reinsurance coLinterparties are:

2017

Swiss Re Swan Life Ltd Africa Re

Group excluding

life

35%

27%

Life

95% 5%




3.2.2 Credit risk

This exposure is monitored on a regular basis for any shortfall in the claims history to verify that the contract is progressing as expected and that no further exposure for the Group will arise.

Management also monitors the financial strength of reinsurers and there are policies in place to ensure that risks are ceded to top-rated and credit worthy reinsurers only.

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

Neither past due nor impaired

Impaired

Carrying amount at year-end

Neither past due nor impaired Impaired

Carrying amount at year-end

Trade & other receivables THEGROUP THECOMPANY

2017 2016 2017 2016 SCR SCR SCR SCR

79,983,186 829,362

80.812.548

81,465,116 829 362

82 294 478

2,451 ,349

2.451.349

Loans and receivables

9,770,796

9 770 796

THEGROUP THECOMPANY 2017 2016 2017 2016 SCR SCR SCR SCR

63,615,048 439 555

64.054.603

32,613,479 3 870 521

36.484.000

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

The following table provides information regarding the carrying value of trade and other receivables that expose the Group and the Company to credit risk.

Financial instruments

Loans and receivables at amortised cost

Investments in financial assets* Trade and other receivables

Bank balances and cash

*Exclude equity instruments

Collateral on policy loans


64,054,603

163,898,140 80,812,548

34,640,952

36,484,000 164,137,795

82,294,478 34,992,491

THE COMPANY 2017 2016 SCR SCR

548,781 2,451,349 5,966,482

24,010,386 9,770,796 7,151,239

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:


Collateral is from the counterparty and is repayable if the contract terminates . 40.125.711 39,015,925

Loan amount against the above collateral 36.113.140 35,114,332

The loan to the associate and the Group staff loans are also collateralised as appropriate to minimise the risk of credit losses.




3.2.3 Liquidity risk

3.2.4

The Group has strong liquidity positions and liquidity risk is considered to be low. Through the application of the liquidity management policy, the Group seeks to maintain sufficient financial resources to meet its obligations as they fall due.

The tables below analyses the Group and the Company's financial assets and liabilities to the relevant maturity groupings based on the remaining years of repayment.

Maturities of financial liabilities

THE GROUP 2017 Less than

1 llear 1 to 5 years

More than Total

5Jlears SCR SCR SCR SCR

Trade and other payables 65,786,596 65,786,596 Gross outstanding claims and IBNR 37,568,418 1,868,263 39,436,681 Gross unearned premiums 67,731,265 67,731,265 Bank overdraft 727,365 727,365 Total liabilities 171,813,643 1,868,263 173,681,906

2016 Less than 1 year

More than Total

5 years 1 to 5 years

SCR SCR SCR SCR

Trade and other payables 36,144,540 36,144,540 Gross outstanding claims and IBNR 42,307,296 2,327,595 44,634,891 Gross unearned premiums 61,769,706 61,769,706 Bank overdraft 206 712 206 712

Total liabilities 140 428 254 2,327,595 142,755,849

Capital management

THE GROUP

The operations of the Group are subject to regulatory requirements within the jurisdiction where it operates, such regulations not only prescribe approval and monitoring of activities but also impose certain restrictive provisions to minimise the risk of default and insolvency on the part of the Group to meet unforeseen liabilities as these arise.

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 2017 shows a valuation surplus of SCR 16,690,035 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 2017 with a Solvency ratio of 1.05. The Actuaries recommend a target solvency ratio of 1.5 and this can be achieved by having a balanced investment portfolio providing a better match for the liabilities held by the Group.

The Group has established the following capital management objectives, policies and approach to managing the risks that affect its capital position:

To maintain the required level of stability of the Group thereby providing a degree of security to policyholders

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 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

To maintain financial strength to support new business growth and to satisfy the requirements of the policyholders, regulators and stakeholders

To maintain strong credit ratings and healthy capital ratios in order to support its business objectives and maximise shareholders value

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.




3.2.4 Capital management (Continued)

41

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:


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.

Highest of:

(a) SR 2 million fund (b) 20% of net premium income of the Fund in the preceding accounting period; or

(c) 20% of loss reserves of the fund at the end of the preceding accounting period.

Long-term insurance

Solvency margin based on preceding accounting period

SCR

2,000,000 19,172,300

8,461,459

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.

3% of without profit liabilities plus 2% of with profit liabilities

plus 1% of the sum assured for initial terms of 2 years or less plus 0.2% of the sum assured for initial terms of more than 2 years

Approach to capital management

Solvency margin based on preceding accounting period

SCR 478,735

8,078,207

41,623 1 854 346

10 452 911

The Group seeks to optimise the structure and sources of capital to ensure that it consistently maximises returns to the shareholders and policyholders.

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 COMPANY

The Company has no long term debt.

3.3 Fair Value estimation

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 fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

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



3.3 Fair Value estimation - (continued)

(a) This note provides information on how the Group and Company determine fair value of various assets and liabilities.

42

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 Grou

Fair value at Carrying value Fair value at 31 Carrying value Fair Value 31 December at 31 December Fair Value December at 31 December Hierarchl£ 201 7 2017 Hierarchl£ 2016 2016

SCR SCR SCR SCR SCR SCR Assets

Investment properties (note 3.3 (i) : Land (note 3.3 (i) (i.ii)) Level 3 46,563,550 46,563,550 Level 3 35,816,341 35,816,340 Buildings (note 3.3 (i) (ii)) Level2 289,016,538 289,016,538 Level2 289,016,538 289,016,538

335,580,088 335,58Q,Q88 324,832,879 324,832,878

Available-for-sale investment (note 3.3 (ii): Level 1 26,236,202 26,236,202 Level 1 21,468,027 21 ,468,027

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, 2017 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.

During the year ended 31 December 2017, SCR 46.563 million land was transferred from level2 to level 3.

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.

The carrying values of loans and receivables approximate its fair value .

(b) 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.

4. RISK MANAGEMENT FRAMEWORK

Governance Framework

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 recognised the critical importance of having efficient and effective risk management systems in place.

The board of directors approves the Group risk management policies and meets regularly to approve any commercial, regulatory and organisational 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.

Regulatory Framework

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 minimise the risk of default and insolvency on the part of insurance companies to meet unforeseen liabilities as these arise.


4. RISK MANAGEMENT FRAMEWORK (CONTINUED)

4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

43

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 .

Critical accounting estimates and assumptions

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.

(a) Insurance Contracts

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).

Estimates of future claims payments


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.

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 xear 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:

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.

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 .

Long-term insurance

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

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.


4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)

Critical accounting estimates and assumptions (Continued)

(a) Insurance Contracts (Continued)

Estimates of future claims payments (Continued)

Short-term insurance (Continued)

44

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.

Long-term insurance (Continued)

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.

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.

Sensitivity

The reasonableness of the estimation process is tested by an analysis of sensitivity around several different scenarios and the best estimate is used.

Uncertainties and judgements

The uncertainty arising under insurance contracts may be characterised under a number of specific headings, such as:

uncertainty as to whether an event has occurred which would give rise to a policy holder suffering an insured loss; uncertainty as to the amount of insured loss suffered by a policyholder as a result of the event occurring; and

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

The degree of uncertainty will vary by policy class according to the characteristics of the insured risks. For certain classes of policy, the maximum value of the settlement of a claim may be specified under the policy terms while for other classes, the cost of a claim will be determined by an actual loss suffered by the policyholder.

There may be some reporting lags between the occurrence of the insured event and the time it is actually reported. Following the identification and notification of an insured loss, there may still be uncertainty as to the magnitude and timing of the settlement of the claim. There are many factors that will determine the level of uncertainty such as judicial trends, unreported information etc.

(b) Reinsurance

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.

(c) Pe11sion benefits

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.

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.


4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)

Critical accounting estimates and assumptions (Continued)

(d) Revaluation of investment property

45

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 recognised in the statement of profit or loss and other comorehensive 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 amounts.

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.

As allowed by I FRS 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.

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.

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.

SACOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

5. EQUIPMENT

(a) THE GROUP

COST

At January 1, 2016

Additions

Disposals

At December 31, 2016

Additions

Disposals

At December 31 , 2017

ACCUMULATED DEPRECIATION

At January 1, 2016

Charge for the year (note 30)

Disposals


Charge for the year (note 30)

Disposals


NET BOOK VALUE



(b) THE COMPANY

NET BOOK VALU E



Furniture and fittings

SCR

8,952,095

576,771

(106,504)

9,422,362

56,540

(3,961)

9 474 941

5,255,343

545,849 (6,601)

5,794,591

971,996

(3,961)

6.762,626

2.712.315

3 627 771

Furniture and fittings

SCR

(c) Depreciation has been charged to other operating expenses (note 30).

46

Motor Computer vehicles egui12ment Total

SCR SCR SCR

6,022,144 9,261,506 24,235,745 237,741 814,512

(732, 135) (838,639)

5,290,009 9,499,247 24,211,618 1,205,652 148,410 1,410,602

(1 ,513, 751) (17,661 ) (1 ,535,373)

4,981,911 9,629,996 24,086,847

3,629,833 7,909,094 16,794,270 682,615 510,679 1 ,739,143

(652,287) (658,888)

3,660,161 8,419,773 17,874,526 826,062 570,637 2,368,696

(1,513,751 ) (17,661) (1 ,535,373)

2,972,473 8,972,749 18,707,849

2,009,438 657,247 5,378,998

1 629 848 1 079 474 6 337 091

Furniture Computer and fittings egui12ment Total

SCR SCR SCR

(d) There is no restriction (pledge/security) on realisability of equipment or the remittance of income and proceeds of disposal.

6. INVESTMENT PROPERTIES II:IE GBOUE!

2017 2016

SCR SCR

At January 1, 324,832,877 268,062,556 Additions 94,480,927 Disposals (1 0,042,495) Reclassification of Deferred Lease rental (b) 10,747,211 Increase I (decrease) in fair value (27,668,111)

At December 31 , 335,580,088 324,832,877

(a) 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, 2017 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.


6. INVESTMENT PROPERTIES (CONTINUED)

47

(b) 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.

(c) The following amounts have been recognised: THE GROUP

7.

(a)

8.

Rental income

Related expenses: Direct operating expenses arising from investment property that generated income Direct operating expenses arising from investment property that did not generate income Other expenses

2017 2016

SCR SCR

23.489.735 20 751 796

6,591,943 5,962,793 1,196,588 40,848

178 107 7.788.531 6 181 748

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.

INTANGIBLE ASSETS

THE GROUP

COST

At January 1, 2016 Additions Write-off (note 30)

At December 31,2016 Additions Write-off {note 30)

At December 31,2017

AMORTISATION

At January 1, 2016 Charge for the year (note 30)

At December 31, 2016 Charge for the year {note 30)


NET BOOK VALUE



INVESTMENT IN SUBSIDIARIES

Investment at cost (note 8(a)) Investment at cost - preference shares (note 8(d)) Investment recognised upon split (note 8(b)) Long-term receivables (note 8(c))

THE GROUP Computer software Website

SCR SCR

2,382,180 95,840 7,348,531 (417,385)

9,313,326 95,840 28,750 28,628

9,342,076 124 468

1,620,658 95,840 462 301

2,082,959 95,840 1,603,031 2 863

3,685,990 98 703

5 656 086 25 765

7 230,367

THE COMPANY Computer

Total software SCR SCR

2,478,020 95,840 7,348,531 (417,385)

9,409,166 95,840 57,378

9.466,544 95 840

1,716,498 95,840 462 301

2,178,799 95,840 1,605,894

3,784,693 95 840

5 681 851

7 230,367


13,100,000 45,000,000 28,651,590 22,519,772

109 271,362

13,100,000

28,651,590 22,519,772

64 271 362

(a) Details of the subsidiary companies are as follows:

Name of subsidiaries

SACOS Insurance Company Limited SACOS Life Assurance Company Limited Sun Investment (Seychelles) Limited

Activities Shareholding %

Short-term insurance business 100 Long-term insurance business 100

Investment property management 100

2017 Amount SCR'OOO

10,000 48,000

100 58100


8. INVESTMENT IN SUBSIDIARIES /CONTINUED\

48

(b) An amount of SR 35.7 million resulted upon the split of the SAGOS Group Limited on January 1, 2009 when the retained earnings generated by the general insurance business up to the spl it date were transferred to a capital contribution account. Subsequently in 2011 , SR 7 mill ion was used to issue bonus shares to the Company's shareholders, thus resulting in remaining balance of SR 28.7 million. No movement has been noted since then as well as during the year ended December 31, 2017.

(c) This is unsecured and interest free long-term shareholders' loan given to SISL by the Company with no fixed repayment terms.

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

(d) 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 Sa cos Life Assurance Company Limited and Sa cos Group Limited are solvent.

9. INVESTMENT IN FINANCIAL ASSETS

Available-for-sale financial assets (note a & d) Held-to-maturity financial assets (note b)

The Group AVAILABLE-FOR-SALE

Current asset Non-current asset

The Company

2017

SCR

26,236,202

26,236,202

2016

SCR

13,411,888 8,056,139

21,468,027

THE GROUP 2017 2016

SCR

26,236,202 137,661,938

163,898,140

SCR

21,468,028 164,137,795

185,605,823

HELD-TO-MATURITY

2017 2016

SCR SCR

82,444,873 164,137,796 55,217,065

137,661,938 164 137 796

548 781 24,010,386

(a) The movement in investments in available-for-sale financial assets is summarised as fol lows:

At January 1, Investments purchased during the year Transfer of investments Investments sold during the year Fair value changes (note 9(a)(i)) Foreign exchange gain I (loss)

At December 31,

THE GROUP 2017 2016

SCR

21,468,028

4,768,174

26.236.202

SCR

7,435,373 13,174,113

(33,357) (109,266) 763,357 237,808

21,468,028


SCR SCR

548,781 24,010,386

548,781 24,010,386

Total 2017 2016

SCR SCR

82,444,873 177,549,684 81,453,267 8,056,139

163,898,140 185,605,823

548,781 24,010,386


SCR SCR

The disclosure for fair value changes is restated . Previously, fair value changes were directly presented in Life Assurance Fund while the restated presentation take the fair value changes to other comprehensive income in consolidated statement of profit or loss and other comprehensive income as required by lAS 39- Financial Instruments: Recognition and Measurement.

(b) The movement in investments in held-to-maturity financial assets is summarised as follows:

THE GROUP THE COMPANY 2017 2016 2017 2016

SCR SCR SCR SCR

At January 1, 164,137,795 205,528,947 24,010,386 34,648,935 Investments purchased during the year 173,942,4 78 341 ,973,067 21,344,732 68,520,683 Transfer of investments 33,357 Investments matured during the year (205,614,244) (392,203,245) (45,663,039) (80,404,516) Accrued interest 5,195,909 8,805,669 856,701 1 245 284

At December 31, 137,661,938 164 137 795 548 781 24,010,386


9. INVESTMENT IN FINANCIAL ASSETS- (CONTINUED)

(c) Investments in financial assets include the following :

(i) THE GROUP

Available-for-sale: Equity investment

Held-to-maturity: Term deposit Treasury bills

(ii) THE COMPANY

Held-to-maturity: Term deposit Treasury bills

Maturity date

No fixed date of maturity

January 2018 to January 2021 March 2018

January to March 2018 Matured

(d) Available-for-sale investments are quoted in active market.

10. LOANS AND RECEIVABLES

Interest rate

%

1.20% - 6.34% 2.99% - 3.32%

2.36% - 3.75%

2017

SCR

26,236,201

96,432,328 41.229.610

137 661 938

548,781

548.781

49

2016

SCR

21,468,027

70,637,334 93 500 461

164 137 795

10,670,873 13,339,513 24 010 386

(a) Loans and receivables of the Group consist of loans on life assurance policies and the movement is shown below:

At January 1, Impairment on loans (note 10 (c)) Loans repaid Loans granted

At December 31,

THE GROUP 2017 2016

SCR SCR

36,484,000 34,091,929 (3,870,521)

(20,543,598) (16, 112,000) 21,424,283 22,374,592

37,364,685 36 484 000

(b) Loans and receivables of the Group consist of staff loan movement is shown below:

At January 1, Loans repaid Loans granted

At December 31 ,

THE GROUP 2017 2016

SCR SCR

12,761,058 5,932,535 (2,869,573) (1 ,036,977) 3,778,514 7 865 500

13,669,999 12 761 058

(c) Loans and receivables of the Group consist of loan to associate company and movement is shown below:

At January 1, Accrued Interest Loans repaid Loans granted

At December 31,

(d) Classification between current and non-current assets:

Current asset Non-current asset

THE GROUP 2017 2016

SCR SCR

19,919

13,000,000

13,019,919

The Group 2017 2016

SCR

24,232,641 39,821,962

64,054 603

SCR

22,257,022 26,988,036

49 245 058


SCR SCR

40,024,464 (3,870,521)

(16, 112,000) 29,203,115

49,245,058


SCR SCR


SCR SCR

The Company 2017 2016

SCR SCR


10. LOANS AND RECEIVABLES (CONTINUED)

(e) The movement in the provision for credit impairment is as follows:

At January 1, Charged I (reverse) to the profit or loss Write-offs

At December 31,

THE GROUP 2017 2016

SCR SCR

3,870,521 439,555 3,870,521

4,310,076 3 870 521

(f) Loans and receivables are secured as appropriate to minimise credit risk.

(g) The rate of interest on loans vary from 4.5% to 12% (2016: 4.5% to 12%).

11. DEFERRED LEASE RENTAL

At January 1, Released to profit or loss Reclassification of deferred lease rental

At December 31 ,

12. DEFERRED TAX ASSETS I (LIABILITIES)

THE GROUP 2017 2016

SCR

10,647,256

(10.647,256)

SCR

10,797,217 (149,961)

10 647 256

(a) Deferred income tax is calculated on all temporary differences under the liability method:

At January 1, (Charge) I credit for the year (note 12(i & ii))

At December 31,


240,514 46,025

361 974 194 489

602.488 240 514

50


SCR SCR


SCR SCR


(24,654)

24 654

(b) 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:

Deferred tax assets Deferred tax liability

THE GROUP

2017 SCR

1,446,727 (844,239)

602 488

(c) Deferred tax assets and liabilities during the year are attributable to the following items:

(i) Deferred tax assets:

THE GROUP

At January 1, 2017 Charge to consolidated statement of profit or loss and other comprehensive income




2016 SCR

240,514

240,514

THE COMPANY

2017 SCR

2016 SCR

Retirement benefit

obligations SCR

1,335,034 85,641

1.420,675

878,108 456,926

1 335 034


12. DEFERRED TAX ASSETS I (LIABILITIES) (CONTINUED)

(ii) Deferred tax liability:

THE GROUP




AtDecember31,2016

THE COMPANY

At January 1, 2017 Credit to consolidated statement of profit or loss and other comprehensive income


At January 1, 2016 Charge to statement of profit or loss


13. INVESTMENT IN ASSOCIATES

(a) Company's share of net assets in associated Company As previously reported Additions Share of results of associated Company Dividends Other movements At 31 December,

{b) Details of the associate at the end of the reporting period as follows:

Name Yearend

St Claire Devlopment Co Ltd Dec-31

(i) The above associate is accounted for using the equity method.

Accelerated tax

depreciation SCR

(559,339)

Unrealised exchange

differences SCR

(535,181)

51

Total SCR

(1 ,094,520)

(284,900) ---=5:.::c3.::.~5,..:..;18:....:1 ____ ....:.2::.::5;.::.0:.:,2.::..81!....

(844.239) ======== ===::!:l(8~4g,45.2"'39~l

(490,047) (342,036) (832,083)

__ ___,;(>,.;;6~9,..=2.=..:92=.) __ ..>..,;( 1C::.9.=..!3,...:...14.:.:::5"-) __ ___,(2::..::6:.::.2,_,,4=-37~)

(559.339) ==:!:::(5:.l:f3:l:f:!5.::!::18~1:f:) ==.b(1~.0:=:;9g,4~.5§:20~)

Principal Place of Business

Seychelles

2017 SCR

19,345,360 283,423

19.628.783

Proportion of ownership

interest

49%

Accelerated tax

depreciation SCR

(24,654) 24 654

2016 SCR

Nature of Business

Management of owned Shopping Centre

(ii) The StClaire Development Company Ltd owns the Maison Ste Claire building in Victoria, Mahe. The Company holds 49% of the shares of the Ste 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.

SACOS GROUP LIMITED CONSOLIDATED NOTES TO TH E FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

14. TRADE AND OTHER RECEIVABLES

Premium receivables Provision for credit impairment (note 14(a))

Recoverable from reinsurers - share of notified claims

(notes 20 & 25(a)) - share of unearned premiums

(notes 20 & 25(b)) Amount receivable from related company

Other receivables and prepayments (note 14(d}}

(a) The movement in the provision for impairment is as follows:

At January 1, Charged I (reverse) to the consolidated statement of profit or

At December 31,

THE GROUP 2017 2016

SCR SCR

37,407,240 30,079,504

(829 ,362) (829,362)

36,577,878 29,250,142

15,000,751 13,366,002

22,412,886 19,383,118

6,821 ,033 20,295,216

80,812,548 82,294,478

THE GROUP 2017 2016

SCR

829,362

829,362

SCR

265,847 563 515

829 362

(b) The carrying amount of trade and other receivables are denominated in the following currencies:

Seychelles rupee US dollar Euro UK pound sterling

THE GROUP 2017 2016

SCR SCR

64,613,994 71,847,157 15,582,500 9,273,100

616,054 1,085,797 88 424

80,81 2,548 82,294,478

52


SCR SCR

2,451,348 9,770,796

2,451 ,348 9 770 796


SCR SCR


SCR SCR

2,451,348 9,770,796

2,451 ,348 9,770,796

(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.


15. INTERCOMPANY RECEIVABLES AND PAY ABLES

Amount Receivable bl£ Grou12 excluding life

2017

Amount (payable) by: The Company SLACL SISL SICL

2016

Amount (payable) by: The Company SLACL SISL SICL

The Com12anl£ SCR

(451,349) (2,000,000) 5,408.202

2,956,853

The Com12anl£ SCR

869,819

3,503,088

4 372 907

SISL SICL SCR SCR

2,000,000 (5,408,202) 254,005 5,461,409

1,200,226 (1.200.226)

1.o:i3 ,779 1,253,434

Amount Receivable bl£ Grou12 excluding life

SISL SICL SCR SCR

(8,900,977) 630,786 5,230,942

674,431 (674,431)

(43,645} (2,995,604}

53

Life SLACL Consolidated

SCR SCR

451,349 (2,956,853) 5,264,065

(254,006) (1 ,053, 779) (5,461 ,409) (1.253.434)

(5,264,066}

Life SLACL Consolidated SCR SCR

4,528,069 (4,372,908) 6,731,547

(630,785) 43,646 (5,230,942) (2,402 ,285)

(1 ,333,658}

(a) Intercompany receivables and payables represent the net balance receivable or payable by group excluding life companies to life company as disclosed above.

(b) Intercompany rece ivables and payables are interest free unsecured balances with not fixed repayment terms or maturity.

16. CASH AND CASH EQUIVALENTS

Cash in hand Call account balances Bank balances Cash and bank balances Bank Overdraft

The bank overdraft was unsecured and resulted from book entries.

17. CURRENT TAX ASSETS I (LIABILITIES)

(a) Current Tax Assets

(i) Statement of financial position

At January 1, Paid during the year Refund received during the year Charge for the year

At December 31,

Current tax assets Current tax liabi lity

(ii) Statement of profit or loss

Tax charge on the adjusted profit for the year (note 17(b)) Overprovision in the prior years Deferred tax (charge) I credit (note 12)

THE GROUP 2017 2016

SCR SCR

109,005 75,904 351,977 346,524

34,179,970 34,570,063 34,640,952 34,992,491

(727,365) (206,712) 33,913,587 34,785,779

THE GROUP 201 7 2016

SCR SCR

7,277,648 (769 ,831) 9,330,330 10,300,592

(1 '186,006) (2 ,253, 113)

15.421,973 7 277 648

15,421,973 7,277,648

15,421,973 7 277 648

THE GROUP 2017 2016

SCR SCR

1 '186,01 0 2,253,113


SCR SCR

63,410 63,410 62,196 62,196

5,840,876 7,025,633 5,966,482 7,151 ,239

5,966,482 7,151 ,239

THE COMPANY 201 7 2016

SCR SCR

1,672,682 880,411 1,528,460 2,343,892

(181,824) (1 ,551 ,621)

3,019,318 1,672,682

3,019,318 1,672,682

3,019,318 1 672 682


SCR

181,824

SCR

1 ,551,621 (753,829)

(361,974) __ __,(""2""1 •.;;.85;;..;8;.L..) ----- ___ ('"'2-"4,"'-65,;;_4:..L.,)

824,036 2,231 ,255 181 824 773138


17. CURRENT TAX ASSETS I (LIABILITIES) (CONTINUED)

54

(b) The tax on the Group's profit before tax differs from the theoretical amount that would arise using the basic rate of the Group as follows:


SCR

(4,341. 737)

SCR SCR SCR

(Loss) I profit before taxation (6.224.229) ==1:!::l!2~.6~5~3.:!::!73;g4:.. ====18=.6=6=3=.1=66==

Tax calculated at rates as shown below (note 17(c)) Income not subject to tax (Excess of capital allowance over depreciation) I excess of depreciation over capital allowance tax purposes

Unused I (utilised) tax losses Tax charge for the year

(c) Applicable tax rates for 2017 and 2016 tax years are as follows :

Taxable income threshold

Less than or equal to SCR. 1,000,000 More than SCR. 1,000,000

18. SHARE CAPITAL

Authorised and fully paid up Ordinary shares of SR 10 each

3,132,090 (3,769,088)

1,823,008

1,186,010

(5,722,409)

54,928 1,168,647

6,751,947 2,253,113

The authorised share capital of the group and the company is 50 million shares (2016: 50 million shares).

19. LIFE ASSURANCE FUND

3,746,1 20 (3,564,296)

181,824

THE GROUP

%

25% 33%

5,602,674 (4,051,053)

1,551,621

THE COMPANY

%

25% 25°£'9

THE GROUP AND THE COMPANY

2017 2016 SCR SCR

70.000,000 70 000 000

(a) 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 2017. 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 14.5 million was transferred to statement of Life Fund (2016: Share of Deficit SCR 19.5 million). This share of deficit and I 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.

(b) The liability component of the Discretionary Participating Feature (DCF) is included in the Life Assurance Fund.

Claims notified are only reinsured in case the limit exceeds SR 0.5 million per occurrence which is very rare . There is no recoverable from reinsurers for the year ended December 2017 (2016: Nil).

20. INSURANCE LIABILITIES AND REINSURANCE ASSETS THE GROUP

Claims reported and loss adjustment expenses (note 25(a)) Claims Incurred But Not Reported (IBNR) (note 25(a)) Unearned premiums (note 25(b))

Total gross insurance liabilities (note 25)

Recoverable from reinsurers

Claims reported and loss adjustment expenses (note 25(a)) Claims Incurred But Not Reported (IBNR) (note 25(a)) Unearned premiums (note 25(b))

Total reinsurer's share of insurance liabilities (note 25)

Net

Claims reported and loss adjustment expenses Claims Incurred But Not Reported (IBNR) Unearned premiums (note 25)

Total net insurance liabi lities (note 25)

Gross outstanding claims and IBNR (group excluding life) Gross outstanding claims (life business)

2017

SCR

34,432,711 3,135,707

67,731,265

105,299,683

14,354,985 645,766

22.412,886

37.413,637

20,077,726 2,489,941

45,318,379

67.886.046

37,568,418 1,868,263

39,436,681

2016

SCR

33,441,856 8,865,440

61 769 706

104 077 002

9,513,569 3,852,433

19 383 118

32 749 120

23,928,287 5,013,007

42,386,588

71 327 882

42,307,296 2,327,595

44 634 891


21 . MORTGAGE PROTECTION FUND

At January 1, Released during the year to statement of profit or loss and other comprehensive income

At December 31,

55


259,080 (30,169)

228.911

370,503 (111.423)

259 080

(a) 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.

22. FISHERIES AND AGRICULTURAL FUND

At January 1, Released during the year to statement of profit or loss and other comprehensive income

At December 31,


873,207 (392,981 )

480.226

1,282,687 (409.480)

873 207

The fund is designated for contributions to premiums payable under a Government sponsored/subsidised 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 I crew) in case of loss or damage, death following natural disasters and accidents, depending on the scheme applicable.

23. RETIREMENT BENEFIT OBLIGATIONS

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:

At January 1, Charge for the year (note 28)

Benefits paid during the year Actuarial losses recognised in other comprehensive income

At December 31 ,

24. TRADE AND OTHER PAY ABLES

Amount payable to re insurers Commission payable Staff cost Rent retention Trade payables Insurance premium With-holding tax Policy protection fund

Other accruals and payables Other tax payables

THE GROUP 2017 2016

SCR

18,953,41 3 5,773,325 5,396,061

819,905

26,110,731 8,733.161

65.786.596

SCR

18,822,215 2,91 0,178 1,515,935 1,227,742

970,580 697,816 334,094 183,140

6,022,999 3 459 841

36 144 540

THE GROUP 2017 2016

SCR SCR

7,388,01 6 4,547,718 1,685,323 2,675.433

(3,885,385) (562,771) 727,636

5,1 87,954 7,388,016


SCR

24,184,824 11 818

24.196.642

SCR

8,275,908 11 818

8 287 726

The amounts payable to related companies are unsecured, interest free and with no fixed repayment terms. These have been classified as current liabilities based on Directors' opinion.

The carrying amount of trade and other payables approximate its amortised costs.

SACOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 56

25. MOVEMENTS IN INSURANCE LIABILITIES AND REINSURANCE ASSETS

(a) Outstanding claims THE GROUP

2017 2016 Gross Reinsurance Net Gross Reinsurance Net SCR SCR SCR SCR SCR SCR

At January 1, 33,441,856 (9,513,569) 23,928,287 22,705,962 (8,814,404) 13,891,558 Claims incurred 72,312,855 (19,197,393) 53,11 5,462 50,237,492 (4,682,319) 45,555,173 Cash paid for claims settled in the year (71,322,000} 14,355,977 {56,966,023} {39 ,501 ,598) 3,983,154 {35,518,444)

Recogn ised notified c laims 34,432,711 (1 4,354,985) 20,077,726 33,441,856 (9,513,569) 23,928,287

Incurred But Not Reported (IBNR) 3,135,707 {645,766} 2,489,941 8,865,440 (3,852,433) 5,013,007

At December 31 , (note 14) 37,568,418 (15,000,751} 22,567,667 42,307,296 (13,366,002) 28,941 ,294

Movement during the year recognised in profit or loss {4,738,878} {1,634,749} {6,373,627) 16,601,334 (4,551 ,598) 12,049,736 Movement in outstanding claims (group excluding life) (4,738,878) (1,634,749) (6,373,627) 16,601,335 (1,104,745) 12,049,736 Movement in outstanding claims (life Movement during the year recognised in profit or loss {4,738,878} {1,634,749} {6,373,627} 16,601 ,335 {1,104,745) 12,049,736

Total claims and benefits paid

Claims (group excluding life) (71 ,322,000) 14,355,977 (56,966,023) 39,501,598 (3,983,154) 35,518,444 Claims and benefits (life) (41,542,826} (41,542,826} 39,488,438 39,488,438

(112,864,826) 14,355,977 (98,508,849) 78,990,036 (3,983,154) 75,006,882

(b) Provision for unearned premiums THE GROUP

2017 2016 Gross Reinsurance Net Gross Reinsurance Net SCR SCR SCR SCR SCR SCR

At January 1, 61,769,714 (19,383,11 8) 42,386,596 61,133,773 (19,107,793) 42,025,980 Premium written during the year

161,653,742 (59,923,946) 101,729,796 160,402,342 (64, 180,227) 96,222,115 Premium earned during the year

{155,692,191} 56,894,178 {98,798,014} {159,766,401) 63,904,902 (95,861,499)

At December 31 ,(note 14) 67,731,265 (22,41 2,886} 45,318,379 61 769 714 (19,383,118) 42,386,596

The Grou~ (c) Net earned premium 2017 2016

SCR SCR (i) Gross premium earned:

Group excluding life 160,163,615 159,994,367 Life business 60,930,796 63,205,995

221,094,411 223,200,362 Change in unearned premiums (5,961,551 } (635,941)

215,132,860 222,564,421

(ii) Premium ceded to reinsurers:

Group excluding life (59,923,946) (64, 180,227) Life business (4,012,835} (2,300,091)

(63,936, 781) (66,480,318) Change in unearned premiums 3,029,768 275,325

(60,907,013) (66,204,993)

Net earned premiums 154,225,848 156,359,428


26. INVESTMENT INCOME

Interest income was in respect of:

- Financial assets

- Bank Deposits - Loans and receivables

- Others

Dividend income and share of profit

27. SUNDRY INCOME

Gain on foreign exchange

Management fee

(Loss) I profit on sale of equipment

Other income Adjustment of fisheries and agricultural fund

Adjustment mortgage protection fund release

Housing loan scheme income

Insurance levy

28. STAFF COSTS

Salaries and wages Retirement benefit obligations (note 23(a)) Other staff costs

THE GROUP 2017 2016

SCR SCR

5,692,002 11,708,247

9,781 20,763

4,690,121 3,555,057

240,000

10,391,904 15,524,067

THE GROUP 201 7 2016

SCR SCR

288,820 2,160,449

530,350 (1 ,691 '125)

3,01 2,620 1,397,005

409,480 111,423

218,796

1,452,013

3,831,790 4058041

THE GROUP 2017 2016

SCR

26,668,706 1,572,004 6,528,097

34,768,807

SCR

24,589,696 2,675,433

560,810 27,825,939

57


SCR SCR

906,282 2,252,720

12,000,000 13,000,000

12,906,282 15,252,720

THE COMPANY 201 7 2016

SCR SCR

3,543,306

194,195 346,075

194195 3,889,381


SCR SCR

(a) Other staff costs includes welfare, compensation, termination, leave pay accruals, overtime, pension, uniforms, training and health insurance.


29. MARKETING AND ADMINISTRATIVE EXPENSES

tal Lease rentals Software Maintenance Electricity and water charges Marketing fees Repairs and maintenance Legal and professional fees Tourism and Other taxes Taxation on residential property income Auditors' remuneration Insurance cost Telecommunication Printing, postage and stationery Travelling expenses Other administrative expenses Bad debts (note 14(a)) Commission expenses Policy protection fee Directors' emoluments (note 29(a)) Bank charges Office security Sponsorships Annual General Meeting expenses Rebates Foreign exchange loss Donations Entertainment Security for investment properties

(b) Directors' emoluments

P Bastide J C D'Offay MInch L Nair B Hoareau R Tharrington I Barbe L Rivalland B Adonis J Esther M Sinovich

30. OTHER OPERATING EXPENSES

Depreciation on equipment (note 5(a)) Amortisation on intangible asset (note 7) Write-off of intangible assets (note 7) Other expenses

58


SCR SCR SCR SCR

6,657,891 7,984,131 1,684,851 2,519,861 3,010,950 2,472,669 3,457,831 2,459,040 3,288,373 2,305,655 4,973,472 2,272,797 3,813,248 1,831,789 36,781 22,470

1,623,359 1,444,599 1,567,288 258,625 393,000 1,344,443 1,191,271 1,315,331 1,186,538 2,709,099 1,143,228

414,659 1,050,844 2,025,544 6,329,591 148,975 47,016

563,515 615,837

426,168 583,637 959,984 583,207 735,833 564,079 2,361 16,449 524,416 500,597

476,634 99,850 457,341

2,363,084 436,715 (3,609) 361,001

727,436 157,923 35,708 3,380

844,925

42,854,084 41 241 927 446 743 478 935

THE GROUP 2017 2016

Fees Emoluments Total Total SCR SCR SCR SCR

70,588 70,588 69,000 70,588 70,588 69,000 70,588 70,588 69,000

517,647 517,647 69,000 115,000

70,588 70,588 69,000 70,588 70,588 82,957 70,588 70,588 40,250 18,807 18,807

2,380,000 2,380,000 1,680,000 1,844,405 1,844,405

959,984 4.224.405 5.184,388 2,263,207


SCR SCR SCR SCR

2,368,695 1,740,869 1,605,894 462,301

417,384 526,476

3,974,589 3 147 030


31 . RELATED PARTY TRANSACTIONS

(a) Following are transactions and balances with the re lated parties:

(b)

Transactions with: third parties (Note 31(a)(d)

Sales of services Loans and receivables Management Fees Dividends Investment Amount receivable Amount payable

Key_ management personnel Sales of services Loans and receivables

Shareholders Dividends

Directors Remuneration

Key management personnel compensation :

Salaries and short-term employee benefits Post-employment benefits

THE GROUP 2017 2016

SCR SCR

7,021,769 4,641,756

540,874 5,149,188

176,846 7,114,910 739,799 11,734,066

159,195 260,692 1,706,603 1,678,072

14,000;000 17,000,000

5,184,388 2,263,207

Key management personnel consist of the chief executive officer, directors and other key personnel.

59


SCR SCR

Transactions with: fellow subsidiaries (Note 31(a)(e)

22,519,772

12,000,000 86,751,590

2,451,348 7,020,304

14,000,000

22,519,772 3,543,305

13,000,000 41,751,590

9,770,796

17,000,000

THE GROUP 2017 2016

SCR

5.305,264 840,000

SCR

4.292.383 515,661

(c) The sales, purchases, receivables and payables related to related parties are made on arms length basis and outstand ing balances for related party receivables and payables are unsecured and interest free.

(d) Related party transactions of the Group pertain to Swan Life Ltd and Swan General Ltd, who has indirect shareholding in Sacos Group. Swan Life Ltd and Swan General Ltd also act as re insurers for Sacos Life Assurance Company Ltd and Sacos Insurance Company Ltd respectively.

(e) The Group include the parent entity i.e. SAGOS Group Limited ("the Company") and the subsidiaries for which it has 100% ownersh ip I control in: a) SAGOS Life Assurance Company Limited; b) SAGOS Insurance Company Limited ; and c) Sun Investment Seychelles Limited.

Related party transactions of the Company re late to fellow subsidiaries as explained above.

(f) For the year ended December 31, 2017, the Group and the Company has not recorded any impairment on receivables owed by related parties (2016: nil) and th is assessment is undertaken at the end of each financia l year by examining the financial position of the related party and the market in wh ich the latter operates.

(g) 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:


32. SEGMENT INFORMATION (CONTINUED)

(a) Basis of segmentation (Continued)

Insurance services:

General

This segment provides protection against liability claims of individuals I organisations for negligent acts I omissions property, risks such as fire, theft and some weather damage.

Life Revenue in the above segment is derived primarily from insurance premiums, investment income and realised gain on financial assets.

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 el iminated in the below disclosure for operating segment.

(b) Operating segment for the Group

December 31, 2017

Income Gross written premiums

Net earned premiums

Underwriting surplus Rental income Investment income Other income Intercompany income

Expenses Staff costs Marketing and administrative expenses Other operating expenses (Impairment) I reversal of impairment on financial assets Intercompany expenses Share of profit in associate Profit before taxation Taxation charge Profit for the year

General SCR

161,109,429

98,253.701

41,298,156 4,422,048

842,191 1,751,121 9,744,958

(27,005,641) (30,073,423)

(2,720,845)

(421,151)

(2, 162,587) (674,486)

(2,837,073)

Life SCR

60,930.796

56,917.961

13,853,650 16,317,713

8,643,431 1,707,372

(3,447,413) (12,353, 720)

(587,328) (439,555)

(9,470,028) 283,423

14,507,544

14.507.544

Property Management

SCR

2,749,975

179,102 3,045,813

(4,315,753) (4,436,547)

(245,266)

(354,521)

(3,377,198) 32,275

(3.344.923)

Other SCR

906,282 194,195

(446,743)

653,734 (181,824) 471,910

60

Total SCR

221.094.411

154.225.848

54,205,991 23,489,735 10,391,904

3,831,790

(34, 768,807) (43,275,234)

(3,553,439) (439,554)

283,423 10,1 65,809

(824,036) 9,341,773



(b) Operating segment for the Group (Continued)

December 31, 2017 (Continued) Property General Life Management other Total

SCR SCR SCR SCR SCR

Segment assets 194,063,986 476,262,818 45,839,037 9,534,581 725,700,423

Segment liabilities 39,772A61 10,743,727 2,397,287 18,788,440 71,701,914

Technical liabilities: 107,642z121 436,696,728 - - 544,339,449 Life Assurance Fund - 434,828,465 - - 434,828,465 Gross outstanding claims and IBNR 37,568,418 1,868,263 - - 39,436,681 Gross unearned premiums 67,731,265 - - - 67,731,265 Mortgage protection fund 228,911 - - - 228,91 1 Fisheries and agricultural fund 480,226 - - - 480,226 Policy Protection Fund 1,633,901 - - - 1,633,901

Equity holders' interest 4,348,472 {13,913,571} 19,768,199 27,060,649 37,263,751

Capital expenditure: 1,369,002 31,350 10,250 1,410,602

Depreciation 1,669A26 454,003 245,266 2,368,695

Amortisation 1,472,569 133 325 - 1,605,894

December 31, 2016 General Life

Property Other Total

Management SCR SCR SCR SCR SCR

Income Gross written premiums 159.994.367 63,205,995 - - 223,200,362

Net earned premiums 95,453,524 60,905,905 - 156,359,429

Underwriting surplus 41,117,985 19,317,527 - 60,435,513 Rental income 1,091,067 14,207,721 5,453,007 - 20,751,796 Investment income 2,963,078 10,308,268 2,252,720 15,524,067 Other income 1,991,151 663,077 285,282 1,11 8,532 4,058,041 Intercompany income 3,951,279 - 2,770,849 Increase in fair value of investment properties 599,985 (29,235,241) 967,146 (27,668,111)

Expenses Staff costs (18,201,013) (8,435,166) (1,189,759) - (27,825,939) Marketing and administrative expenses (25,773,649) (13,439,056) (1,550,285) (478,937) (41,241,926) Other operating expenses (1,766,107) (1,138,357) (242,567) - (3,147,030) (Impairment) I reversal of impairment on financial assets - (3,870,521) - - (3,870,521) Intercompany expenses (2,1 01,215) (4,620,913) Transfer to Life Assurance Fund - (3,240, 117) - (3,240, 117) Profit before taxation 3,872,561 (19,482, 777) 3,722,824 5,663,164 (6,224,228) Taxation charge (1 ,512, 155) - 54,037 {773,137) {2,231,255)

Profit for the year 2,360,406 (19,482.777) 3.776,861 4.890.027 (8,455,483)



(b) Operating segment for the Group (Continued)

December 31, 2016 (Continued)

Segment assets

Segment liabilities

Technical liabilities Life Assurance Fund Gross outstanding claims and IBNR Gross unearned premiums Mortgage protection fund Fisheries and agricultural fund

Equity holders' interest

Capital expenditure

Depreciation

Amortisation

GEOGRAPHIC INFORMATION

Seychelles

33. SHAREHOLDERS SHARE OF LIFE SURPLUS

General SCR

182,364,021

21,861,917

105,209,289

42,307,296 61,769,706

259,080 873,207

16.641.228

7,611,959

1,103,771

244,951

Life SCR

422,223,046

11,238,486

420,737,447 418,409,852

2,327,595

(11.086.546)

423,457

394,532

217,350

Property Management

SCR

50,084,031

2,351,139

25.113.120

131,419

242,566

Income from external customers 2017 2016 SCR SCR

223,200,362

Other SCR

41,271,447

8,287,725

95.588.739

62

Total SCR

695,942,545

43,739,267

525,946,736 418,409,852

44,634,891 61,769,706

259,080 873,207

126.256.541

8,166,836

1,740,869

462,301

Non current assets 2017 2016 SCR SCR

488,147,437

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 recognised in statement of Life Assurance Fund. Assets in the Life Fund meets the Insurance Acts Minimum Solvency Requirement and this covers 105% of the Solvency Margin as well as 1/9th of the Cost of Bonus that can be transferred to shareholders. In addition to he Solvency margin a bonus stabilisation reserve in 2017 of SCR 4.2m providing additional retained surplus in the Life Fund.

SACOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

34. EARNINGS I (LOSS) PER SHARE

The following reflects the income and share data used in the computations:

THE GROUP 2017 2016

SCR

(Loss) I profit attributable to equity holders of the parent

9,341,773

Weighted average number of ordinary shares ranking for dividend 7,000,000

(Loss) I earnings per share -Basic and diluted 1.33

35. DIVIDEND PAID

Authorized dividend in 2017 and paid in 2018 @ SCR 8.50 per share; (2016: SCR 7.00 per share).

Dividend Guideline

SCR

(8,455,484)

7,000,000

(1.21)

63


SCR SCR

12,471,910 17,890,028

7,000,000 7,000,000

1.78 2.56

THE GROUP AND THE COMPANY 2017 2016 SCR SCR

14,000,000 17,000,000

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.

36. CAPITAL COMMITMENTS

There are no capital commitments as at 31 December 2017 (31 December 2016: nil).

37. CONTINGENT LIABILITIES AND ASSETS

There are no contingent liabilities and assets as at 31 December 2017 (31 December 2016: nil).

38. EVENT AFTER THE REPORTING PERIOD

(a) Amalgamation

In accordance with PART VI -Transfer and Amalgamation, Sections 52, 53 and 54 of the Insurance Act, 2008 and Section 22 of the Companies Act 1972, the SACOS Insurance Group applied to the Financial Services Authority (FSA) for the amalgamation of SACOS Insurance Company Limited and Sun Investment (Seychelles) Limited into SACOS Group Limited.

The objectives of amalgamation are to accomplish the following:

Amalgamation of SACOS Group Limited, SACOS Insurance Company Limited and the Sun Investments (Seychelles) Limited into SACOS Group Limited.

Post amalgamation, the surviving entities will be SACOS Group Limited and SACOS Life Assurance Company Limited.

SACOS Group Limited will continue to be the listed entity on the Stock Exchange of Trop-X in the Seychelles and SACOS Life Assurance company Limited will remain a subsidiary company of SACOS Group Limited.

SACOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017

Progress of amalgamation process:

1. The scheme for the amalgamation was approved by FSA on 11 April 2017.

64

2. SACOS Group Limited was subsequently granted a license by FSA to carry on the insurance business that is currently being conducted by SACOS Insurance Company Limited.

3. An amended Memorandum of Association (MoA) has been drawn to reflect the amalgamation. This is has been approved by the

shareholders on 28th April 2017 in an Extraordinary General Meeting (EGM).

4. The transfer of asset resolution will be executed as the audited consolidated financial statements are available and court approval will be sought to complete the process.

39. COMPARATIVE FIGURES

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.


40. FIVE YEAR FINANCIAL SUMMARY

(a) THE GROUP 2017 2016 2015 2014 2013 (Restated*) (Restated*)

SCR SCR SCR SCR SCR

Profit before tax 10,165,808 (6,224,229) 31 '131 ,000 25,806,000 23,866,000 Tax charge (824,036) (2,231 ,255) (5,099,305) (7,264,000) (6,955,000)

Profit for the year 9,341,773 (8,455,484) 26,031,695 18,542,000 16,911,000 Other comprehensive income I (loss)

---~ - (727,636) (727,636)

Total comprehensive income I (loss) for the year 9,341,773 (9, 183, 120) 25,304,059 18,542,000 16,911,000

Retained earnings brought forward 59,813,940 85,997,059 74,693,000 79,912,000 71,405,000 Prior period adjustment Effect of adopting I FRS - 3,596,000 Transfer to share capital - (11 ,761 ,000) Dividends (17,000,000) (17,000,000) (14,000,000) (12,000,000) (12,000,000)

Retained earnings carried forward 52.155.712 59.813.940 85,997,059 74,693,000 79,912,000

EQUITY Share capital 70,000,000 70,000,000 70,000,000 70,000,000 35,000,000 Capital contribution - 23,239,000 Retained earnings 37,263,750 56,256,541 82,267,029 74,693,000 79,912,000

Total equity 107,263,750 126,256,541 152.267,029 144,693,000 138,151 ,000

SACOS GROUP LIMITED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017 66

40. FIVE YEAR FINANCIAL SUMMARY (CONTINUED)

(b) THE COMPANY 2017 2016 2015 2014 2013

(Restated*) (Restated*)

SCR SCR SCR SCR SCR

Profit before tax 12,653,734 18,663,166 18,794,000 14,721,000 16,790,000 Tax charge (181,824) (773, 138) 783,369 (1,148,000) (2, 162,000)

Profit for the year 12,471,910 17,890,028 19,577,369 13,573,000 14,628,000

Retained earnings brought forward 37,652,397 36,762,369 31 '185,000 41,373,000 38,770,000 Prior period adjustment - - (25,000) Effect of adopting I FRS - - (11 ,761 ,000) Dividends (17,000,000) (17,000,000) (14,000,000) (12,000,000) (12,000,000)

Retained earnings carried forward 33.124.307 37.652.397 36.762.369 31.185.000 41.373.000

EQUITY Share capital 70,000,000 70,000,000 70,000,000 70,000,000 35,000,000 Capital contribution - - 23,239,000 Retained earnings 27,060,649 28,588,739 27,698,711 31,185,000 41,373,000

Total equity 97.060.649 98.588.739 97.698.711 101.185.000 99,612,000

Documents

SACOS GROUP LIMITED FINANCIAL STATEMENTS FOR THE …€¦ · Company and these comprised mainly motor vehicles, computer equipment and furniture & fittings. The Directors have estimated