Crystal annive�ary... crystal financials, crystal clear vision �ere we are heading.

Annual Report2012

Financial Highlights 2012 4

Administrative details 5

Chairman’s Review 6

Managing Director’s Report 7

Director’s Profile 10

Profile of Management Team 12

Crystal Anniversary Celebration 14

Corporate Governance Report 18

Secretary’s Certificate 23

Independent Auditors’ Report 28

Consolidated Statement of Financial Position 30

Consolidated Statement of Comprehensive Income 31

Consolidated Statement of Changes in Equity 32

Consolidated Statement of Cash Flows 33

Note to the Consolidated Financial Statements 34

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Crystal anniversary...

FinancialHighlights 2012

2008

2008

2008

2008

2010

2010

2010

2010

2012

2012

2012

2012

50

30

20

70

100

33

40

80

150

36

60

90

200

39

80

100

250

42

100

110

300

45

120

120

350

48

140

130

400

51

160

140

450

54

180

150

Total Assets

Operating Profit

Gross Premium

Net Premium

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Annual Report 2012

Bankers ABC Banking Corporation LtdAfrasia Bank LtdBank One LtdBanque Internationale des Mas-careignes Ltée Barclays Bank PLCBramer Banking Corporation LtdHabib Bank Limited HSBC Limited The Mauritius Commercial Bank LtdThe Mauritius Post and Coopera-tive Bank Ltd SBI (Mauritius) Ltd

ActuariesMessrs K. A. Pandit, Consultants and Actuaries

Reinsurance Broker J.B. Boda & Co. Ltd

Stock Broker Bramer Securities Ltd

Registered And Head Office Marina House 16, Frère Félix de Valois Street Champ de Mars Port Louis Republic of Mauritius info@gfainsurance.muwww.gfainsurance.mu

Auditors Moore Stephens Chartered Accountants 6th Floor, Newton Tower Sir William Newton Street, Port Louis Republic of Mauritius

Company Secretary Jugdeo NAGINLAL, FCCA 35B Middle Road Belle Etoile Republic of Mauritius

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Crystal anniversary...

Indeed, time flies! In January 2012 we had completed 15 years of operation. I have been chairman of the company since its inception and I still have fond memories of our early years. We have been through many ups and downs but the company has never stopped progressing during the past 10 years. In fact, when we compare our growth and progress with a few companies that have been in existence for more than 30 years, that is, twice our life-time, we can see that we have outper-formed them on many fronts: innova-tion, excellence, average yearly growth of premium and assets. We also have accumulated bigger profits and a shareholders fund that demonstrates that creation of shareholder value has been achieved.

We have won another award yet again in June 2012 - the Mauritius Business Excellence Award 2011 in the area of Sales and Marketing Management in the category of Large companies. This brings the total number of business awards won by GFA to four!

Our Financial Results And DividendsIncrease in premium income com-bined with cost management mea-sures have helped spur growth in our profit margins. We recorded a turnover of Rs.155.2 million in 2012 (2011 – Rs144.8 million) and profit after tax of Rs.27.4 million (2011 – Rs.25.4 million). In view of the year’s results, the board declared total dividends of Rs.100 per share compared to Rs.80 the previous year.

Having this year again achieved good profits of Rs27.4 million after tax we will remain loyal to our Employee Prof-it-Sharing scheme.

Corporate Governance And Corporate Social ResponsibilityThe company remains committed to the values of good corporate governance and to the principles and best practices set out in the Code of Corporate Gover-nance. The Corporate Governance Committee continues to ensure that all of our operations are conducted with integrity, discipline, transparency and in a socially responsible manner.

We are particularly conscious of the im-portance of improving the well-being of our community to ensure sustainable development. Since the coming into force of the CSR levy we have allocated some Rs.1.3 million worth of funds to various social projects. For our 15th anniversary celebrations in November 2012 we offered our guests a paperweight in the form of a sphere as a corporate gift which was made from recycled glass. Guests were pleasantly surprised by the gift since it was an inno-vative concept and at the same time they were impressed by our commitment to environment protection. On the same occasion we also offered a special trophy to all employees - a glass pyramid also manufactured from recycled glass. Em-ployees with more than eight years of employment at GFA had the honour and privilege of having their names engraved on the glass pyramid.

OutlookIt is expected that the year ahead will remain difficult from a trading perspective. However, with the combined efforts of our management team, the commitment of our employees nationwide and the aegis of the board, and with a more active investment strategy and diversification of our operations into other sectors of the economy and other strategic alliances, we will continue to strive to create value for shareholders in the coming years. Our belief in the business is shared by our international partners. General Insur-ance Corporation of India (GIC) and Africa Reinsurance Corporation (Africa Re) have remained our lead reinsurers for fifteen consecutive years.Looking forward, management has earmarked to open at least two new branch offices to accelerate our expansion.

AppreciationNo message would be complete without expressing my deep and heartfelt ap-preciation to the members of the board, the Managing Director, the Deputy Managing Director, departmental heads, all intermediaries and to the person-nel at large for their continued belief in the future sustainability of the Group.

Crystal anniversary... crystal financials, crystal clear vision where we are heading.

Dr. Abdool Raouf Ruhomutally Chairman 26 March 2013

Crystal Celebrations...! Dear ShareholderOn behalf of the Board of Directors, I am pleased to present to you the 16th Annual Report of GFA Insurance Ltd (GFA) and its subsidiary GFA Invest-ments Ltd together with the Audited Financial Statements for the year ended 31 December 2012.

Chairman’s Review

We have been through many ups and downs but the

company has never stopped progressing during the past

10 years.

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Annual Report 2012

From a workforce of 17 in 1997, the company now employs more than 70 people. With a growing market and to ensure proximity to its customer base, GFA Insur-ance Ltd has expanded its activities throughout the island. GFA opened its first branch office in Flacq in 1998. In 2012 the company opened two more offices in Triolet and Rose-Belle. This brings the number of fully functional offices to ten. As at date, GFA is present in Port Louis (Champ de Mars), the north (Triolet, Terre-Rouge, Goodlands and Rivière du Rempart), the east (Central Flacq), the south (Rivière des Anguilles and Rose-Belle) and in the centre of the island (Rose-Hill and Quatre-Bornes). The company has plans to open more branch offices during the course of 2013 and 2014 in Phoenix, St Pierre, Chemin Grenier and Mahe-bourg. The company also has ten accredited agents scattered across the island.

In 2004, the company was the proud recipient of the MIM/MEF/AHRP Training Commitment Award. In 2011 we were awarded the Mauritius Business Excel-lence Award 2010 in the area of Leadership amongst Large Companies. In the same year the company received the HR Excellence Commitment Award which had been organised for the first time by the Human Resource Develop-ment Council (HRDC) under the aegis of the Ministry of Education and Human Resource. In 2012, we obtained a special jury mention as runner-up of the Mau-ritius Business Excellence Award 2011 in the area of Sales and Marketing Management amongst Large Companies. This year we are participating in the Mauritius Business Excellence Award competition for the fifth consecutive time.

In the year 2008 about 28,800 vehicles were insured with us. This figure grew by 77.08% in 5 years only to reach more than 51,000 vehicles in 2012. Hence, GFA has successfully ascertained itself as a leading motor insurer. Approximately 13% of the motor vehicle fleet registered on the Mauritian roads is insured with GFA. This demonstrates that GFA Insurance Ltd has over the past few years demon-strated that it is a reliable insurer with excellent customer service. This undeniable progress also demonstrates that GFA has had an effective Marketing and Com-munication strategy.

The company is strengthening its non-motor business development unit by recruit-ing qualified and experienced personnel. GFA remains one of the market leaders in Professional Indemnity Insurance with a large portfolio of medical practitioners, accountants and consultants insured with us. Financial OverviewThe Shareholders fund stands at Rs130.1 million as at 31 December 2012 com-pared to Rs.106.1 for the previous year. This represents a rise of 22.6%. Share-holders have benefitted from a capital gains of 420.4% (Rs.105.1 million) over 16 years – that is a return of 26.28% yearly – excluding dividend payouts. After all, one of the objectives of the company is “To ensure a favourable return to our share-holders whilst protecting their investment.” Turnover (Gross Premium Income) went up by Rs.10.4 million from Rs.144.8 million in 2011 to Rs. 155.2 million in 2012. This represents a growth of 7.19%. Investment and Interest Income rose by 10.38% from Rs.15.6 million to Rs.17.3 million. De-spite cut-throat competition driving premium rates downwards GFA has generated

Time to change, adapt and... Prosper!

Dear ShareholderTo commemorate our 15 years in operation the company has revamped its logo and corporate colours. We started by introducing the new corporate colours whilst initially keeping the same logo format. In November 2012, when we celebrated our 15th anniversary at Maison de l’Étoile Eureka, Moka we also took the opportunity to reveal a new logo. The second stage of our rebranding project started then and continues until we will have redesigned all the interior of our offices; changed all exterior signages; replaced old stationery with new ones bearing the new logo and corporate visuals. The new logo reflects our future ambitions.

profit after tax of Rs. 27.4 million against Rs25.4 for the year 2011. Underwriting Surplus has gone up by 18.76%. Re-insurance premiums have gone down by 5.84% from Rs.11,031,076 (2011) to Rs.10,386,373 (2012).

InvestmentsIn 2012, GFA purchased two build-ings. The first one is where the head office is presently located at Champ de Mars, Port-Louis. The second invest-ment was in a building that is adjacent to the head office. It was necessary to purchase the second building so as to accommodate current and future ex-pansion of our workforce and booming operations. The combined investment amounts to a total of Rs.22 million. A further Rs. 3 million has already been budgeted for renovation of the two buildings.

Investment in equipments such as com-puters, scanners and other tools for the swift operations of the company is an ongoing process. In January 2013, we have equipped all our branches with a scanner. This equipment is meant to assist in reducing the need for pho-tocopies of documents as well as the facilitation of transfer of documents to and from the Head Office. This is part of our paper-lite project. A special budget of Rs500,000 has been voted by the Board to replace our existing PABX te-lephony system with an up to date one. The new telephone system will have call recording features. The recording facility will assist us in monitoring calls to assess customer satisfaction levels.

Managing Director’s Report

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Crystal anniversary...Otherwise, investment was concen-trated mainly in term deposits and stock exchange shares. The board has remained consistent with its prudent business model. Hence, the invest-ment strategy of the company is also a prudential one. That is, most of the company’s money has been deposited with institutions licensed by the Bank of Mauritius in high-yielding long-term de-posits ranging from 12 to 36 months. Along the same lines, the company only invested in blue-chip shares of the Stock Exchange of Mauritius.

In 2011 our bank deposits, cash equiv-alents and stock exchange investments all together stood at Rs.297.2 million whilst in 2012 these items grouped to-gether amounted to Rs. Rs.317.3 mil-lion thus representing a rise of 6.95% or Rs.20.1 million.

Conservative dividend policyThe Board of Directors aims to retain most of our net income for future in-vestments and to keep building stron-ger reserves for the company. This clearly demonstrates that the Board as well as the Shareholders are commit-ted to the long-term sustainability and success of the company. A dividend of 10% payable in two equal instalments from profits of 2012 will be paid in April 2013 and October 2013.

Public relations, Communication and MarketingThe company is one of the first few Mauritian companies to have a Face-book page. GFA is the only insurance company, so far, to have a dedicated Youtube channel where it uploads vid-eos that can be viewed by everyone all over the world. The company’s corpo-rate film produced in November 2012 on the occasion of the 15th anniversary of the company can also be viewed on-line from its Youtube Channel .

In February 2012 we participated in the “Campagne de l’information” for SMEs under the patronage of the Small and Medium Enterprise Development Au-thority (SMEDA). Since it is our vision and mission to be the preferred insur-ance company for SMEs in the next five years it was only natural for us to join hands with the SMEDA to raise the consciousness of SMEs on the need to take adequate insurance to protect their assets and businesses. We have officially requested SMEDA to consider us as their preferred insurance partner for their future events.

To help develop our non-motor portfolio the company has joined hands with the Small and Medium Enterprises Development Authority (SMEDA). We participated in a “Campagne de l’information” road show organised by SMEDA at the Munici-pality of Quatre-Bornes in March 2012. We intend to hold many more workshops for members of the SMEDA to create awareness of the need for SMEs (Small and Medium Enterprises) to insure their assets and businesses.

In March 2012, we sponsored a Mega Blood Donation that took place at Riverside Complex in Rivière du Rempart. The laudable initiative was organised by Bénév-oles sans Frontières.

BrandingThe company changed its corporate colours in 2010. We did not change the logo then since we wanted to bring about this change in visuals step by step so as to avoid a cultural shock to employees and stakeholders. The logo was merely fine-tuned. However, in November 2012, the rebranding project was embraced full on for the occasion of the 15th anniversary of the company. The new image of the company is still in a soft launch phase. We are taking things one step at a time. Firstly, all stationeries are being redesigned professionally by a graphic designer. This phase is nearly completed. Secondly, we are changing all exterior signage of agents and our own branch offices. Thirdly, all offices will be repainted and refur-bished to reflect the new corporate image.

To create awareness of the GFA Brand we have during 2012 participated in several public events:

SME event organised by the SMEDA at the Municipality of Quatre-Bornes, •Port-Louis and Montage Blanche and Swami Vivekananda International Conference Centre• Roadshow at Riverside complex, Riviere du Rempart • Iframac Fast and Furious car sale at Swami Vivekananda International •Conference Centre• Engen Motor show at Swami Vivekananda International Conference •Centre Heat Tuning show at Jumbo Phoenix•

Innovation and application of ICT In October 2011, we launched an innovative motor cover called Platinum Motor Policy (PIP). The Platinum policy features 13 additional covers on top of a standard motor insurance cover. It is meant for brand new vehicles only. A second version of the Platinum policy was introduced in 2012. It became necessary to update the benefits so as to match offers from our competitors.

In February 2012 we made a soft launch of our on-line GIS (GFA Information Sys-tem). The project was run on a pilot basis with one agent. It was subsequently deployed to other sub-offices and agents. With the online GIS, agents and sub-offices are now able to fill-in the computerised claim form. Therefore, claim details entered remotely at an agent’s office or one of GFA’s sub-offices will be available to the claims department of the Head Office instantaneously. Hence, the claim pro-cess will be highly enhanced by reducing administrative time. Earlier it would take many days or a few weeks to register an agent’s or sub-office claim as the Claim Department always had to wait for agents data to be imported onto the Head Of-fice server. Putting GIS online will considerably reduce administrative lead time thus giving added-value to both our own policyholders as well as Third Parties.

With the current rules, regulations and legislations and current market practices in place it is difficult to render insurance business processes paperless. Hence, we are instead promoting a “paper-lite” attitude.

Human capital and TrainingOur most prized asset has always been and remains our Human Capital. Winning the Training Commitment Award 2004 and winning the HR Excellence Commit-ment Award 2011 shows our dedication to our personnel by ensuring that we have good HR practices in place. We will continue to improve on our HR practices until we have excellent standards in place that parallel international HR practices. We are continuously empowering staff through training. Over the past five years the

9

Annual Report 2012company has spent nearly Rs.2 million on training activities. We have organised a number of training sessions and team building events, which we trust have helped individual employees to better understand the new challenges and opportunities within the industry and are now better equipped to offer the best services to all our customers. In January 2012, a group of 12 staff were sent on a course – Customer Care - organised by the National Productivity Council (NPCC). The group con-sisted of a mix of junior and senior staff from both Head Office and sub-offices. We have also sponsored exams of the Insurance Institute of India as well as courses of the Insurance Institute of Mauritius. We strongly encourage our Directors to regu-larly attend courses and workshops of the Mauritius Institute of Directors since we believe in continuous professional development.

Unfair competition, undesirable business practice and free choiceThe company continues its lobby to ensure that the Financial Services Commis-sion enforces Section 81 - Free Choice of insurance - of the Insurance Act 2005. In December 2012, the Competition Commission issued a report condemning sev-eral banks for abusing their position of monopoly to promote life insurance for only one insurance company. Eight of the thirteen banks that were under investigation have engaged in conduct that has the effect of preventing, restricting or distorting competition in breach of Section 46 of the Competition Act 2007.

In December 2012 we denounced publicly anti-competitive practices and ob-tained front page coverage from Capital newspaper. The article was entitled “Le terrorisme commercial perdure” (Commercial terrorism persists in practice). On the same day we also featured in Business Magazine under the heading “Des pratiques oligarchiques dans l’industrie des assurances” (Oligopolistic practices in the insurance market).

Corporate Social ResponsibilityOver the past three years GFA made donations or sponsored social activities total-ling nearly Rs.1.3 million to 30 organisations to assist and support them in their laudable social initiatives. Full details of our CSR involvement are found in the Cor-porate Governance Report.

By aiming to make our operations as paperless as possible we will be reducing en-vironmental pollution. We are currently working on an Electronic Document Man-agement system which will help reduce our reliance on paperwork and unneces-sary printing. Annual reports for the year 2011 have not been printed as part of our green initiatives. Instead a PDF version is available on CD or from our website.

In line with the concept of “Maurice Ile durable” we are also contemplating the idea of using solar power (photovoltaic) to generate electricity at our Head Office for our own consumption.

A number of other social measures we have undertaken under our Corporate So-cial Responsibility schemes are:

Our employee profit-sharing scheme forms part of our Corporate Social Re-•sponsibility. Redistributing part of the profits amongst our staff is our way of giving back to society for what society has given to us. Moreover, our staffs are from different financial backgrounds and such schemes are beneficial to their respective financial and social situations.Employees who have completed a year in full-time employment with our or-•ganisation are eligible to an unsecured interest free loan as per the terms of the company. We have applied to the National CSR committee for approval to run a nursery •costs refund project for our employees.We have an in-house medical scheme which refunds medical expenses of •employees.We carry on offering insurance for roadworthy vehicles older than 25 years as •opposed to other insurance companies which prefer not to provide cover for these types of vehicles. We understand that not all customers have the means to change vehicles on a frequent basis.On the occasion of the 15th anniversary of the company we offered a souvenir •corporate gift to our guests and a loyalty trophy to employees both made from recycled glass.

Time flies...After fifteen years of solid existence and positive contribution to the Mauritian economy as an insurer, GFA Insurance Ltd will be embarking on a strategic di-versification programme so as to trig-ger further progress. The company is currently studying several projects that would lead to vertical and/or horizontal integration. The future ambition and ob-jectives of the company requires some organisational restructuring. Hence, a tender has been launched for the ser-vices of an independent consultant to advise the company in four main areas: review the composition of the Board of Directors and its various committees; organisational and operational struc-ture; succession planning; salary, ben-efits and reward structure of employees (from top to bottom) and employee sat-isfaction.

The year 2013 will be a difficult year with all insurers competing for bigger market share. However, with constant innovation in our processes and our ICT infrastructure, staff training and a sincere endeavour to better our cus-tomer service level I trust GFA will meet its objectives. GFA has a great future with experienced founders supporting a young, dynamic and knowledgeable team.

On a final noteI would like to express my deepest gratitude and recognition to all our em-ployees and other associates for their hard work, dedication, passion and commitment to our Company. Last but not least, I would also like to thank our loyal customers for their continued support and trust over the years.

The future is bright! The future is fuchsia...

Alaoud RuhomutallyManaging Director 26 March 2013

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Crystal anniversary...The following Directors were in office at 31 december 2012

Members of the Board of Directors

Dr. Abdool Raouf Ruhomutally (Chairman)

Mr. Mohammad Alaoud Ruhomutally(Managing Director) Mr. Abdool Rahman (Abdel) Ruhomutally (Deputy Managing Director) Mr. Ahmud Ally Beebeejaun Miss Najah Ruhomutally alternate Director Mr Takoorpersad Seewoodoyal

Independent Directors Mr. Birendranauth Sowambur Mr. Ehsan Hosenie

Executive Chairman ap-pointed in September 1996.

Dr. A. Raouf Ruhomutally was appointed Chairman in 1996 at the inception of the

company. He is a consultant Radiologist. He has been

Chairman of S. Ruhomutally and Co Ltd, the exclusive

agent of Groupement Fran-çais D’Assurances for more

than ten years. He retired from civil service in Sep-

tember 2006. He is also the Director of Centre de Ra-

diologie et D’Echographie. Dr. Raouf is the current

president of the Radiological Society of Mauritius.

Dr. A. Raouf Ruhomutally – Executive Chairman

Executive Director appointed in June 2005. Mr Abdel Ruhomutally graduated in BA (Hons) Business Studies (Services - Finance) from the University of Westminster, United Kingdom. He also studied insurance at the London Guildhall University. Moreover, he holds Diplomas in Travel and Tourism and IATA Level II respectively. He joined the company in 2001, after having built significant work experience overseas. He also has a strong background in I.T Infrastructure and Systems. He is an Approved Trainer of the Mauritius Qualifications Authority (MQA). Abdel was appointed as a member of the Motor Vehicle Insurance Arbitration Committee (MVIAC) by the Minister of Land Transport & Public Infrastructure in March 2008. He is also a Fellow of the presti-gious Mauritius Institute of Directors since 2011. Abdel was elected a Council Member of the Insurance Institute of Mauritius in March 2013. He is a member of the Rotary Club of Port-Louis Citadelle and is the Chairperson of the Public Relations sub-committee of the same club. On 8th March 2013 Abdel was nominated Honorary President of the NGO Club Sportif Zenfan Vallée Pitot (Naw-N-Sha).

Executive Director appointed in September

1996. Mr M. Alaoud Ruhomutally has been associated with

the insurance sector for more than 30 years now.

During the period 1976 to 1985, he was the CEO of S. Ruhomutally and Co

Ltd, the sole representative of Groupement Français D’Assurances, a French

company based in Paris. After the departure of Groupement Français

D’Assurances from Mauritius in 1985, he was

appointed the exclusive sales representative of La Prudence, Reunion

Island up to August 1996. In September 1996 he

founded the GFA Insurance Ltd, a fully Mauritian owned

Company.

Mr M. Alaoud Ruhomutally - Managing Director

Mr Abdel Ruhomutally - Deputy Managing Director

Director’s Profile

11

Annual Report 2012

Mr Takoorpersad Seewoodoyal, also known as Dhan, joined the insurance industry in 1977.He has extensive knowledge and expertise in general insurance after having worked for several insurance agencies such as S. Ruhomutally & Co. Ltd. (representative of Groupement Français D’Assurance and Prudence Creole), Marina Agency and AFIA Agency. Presently, he acts as a Consultant on a contractual basis.

Director appointed in June 2006.

Mr Birendranath Sowambur was appointed as an

Independent Director of the company on 1st June,

2006. He is holder of several diplomas, namely

in Occupational Health and Safety, Industrial Psychology and Personnel management.

He reckons about twenty years’ experience in the field

of Health and Safety. He has served both in public

and private organisations. He attended various

international conferences on occupational Health and

Safety in Asian countries. He is presently working as

an Occupational Health and Safety

Consultant.

Director appointed in September 1996.

Miss Najah Ruhomutally pursued her tertiary studies

at the London Guildhall University, London,UK. She

is in the insurance sector since 1996. She is actually

the responsible officer of the Quatre-Bornes branch

office.

Director appointed in February 2010.Mr Ehsan Hosenie is a former Administror of the Ministry of Education. He reckons more than 40 years service in the Government. He has worked as a Deputy Returning Officer (Gen-eral, Municipal and Village elections). He possesses managerial experience as a Deputy Rector and Acting Rector of State Second-ary Schools. Mr Hosenie is a graduate and holds a B.A.(Hons) in Mathematics, Post Graduate Certificate in Education (P.G.C.E) from the Mauritius Institute of Education (M.I.E). He also holds certificates in Journal-ism and Public Relations. He is also a Post Graduate Diploma holder in Computer Studies from Napier Univer-sity (Scotland) and a Post Graduate Diploma holder in Education from Brighton University (UK) after fol-lowing the MA (Education) course. Mr Hosenie is a member of the Rameshwar Gujadhur Stable and of the Mauritius Turf Club. He is an executive member of the Flamboyant Club.

Director appointed in December 1996. Mr Ahmud Ally Beebeejaun joined the company since its incorporation in September, 1996. He is a holder of a certificate in Sugar Manufacture and Sugarcane Production from the University of Mauri-tius (1974). Mr Beebeejaun has wide-ranging experience in the sugar sector. He has been a Senior Test Chemist at the Ministry of Agriculture for more than thirty years. He sits on the board of the Food Service Commission, The Mauritius Sugar Terminal Corporation, The Mauritius Authority Advi-sory Council and the Mauritius Sugarcane Planters Association. Mr Beebeejaun was awarded with the distinction of Grand Officer of the Order of the Star and Key of the Indian Ocean (GOSK) on the occasion of the 45th Independence Day of Mauritius and the 21st anniversary of the Republic Day.

Takoorpersad Seewoodoyal (Alternate Director)

Mr Birendranath Sowambur – Independent Director

Miss Najah Ruhomutally

Mr Ehsan Hosenie – Independent Director

Mr Ahmud Ally Beebeejaun, G.O.S.K

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Crystal anniversary...

Mr Mohunpersad Jagdeo, FIAB, AIII – Finance ManagerJagdeo joined GFA in August 2006 and was promoted to the position of Finance Manager in 2009. He has more than 25 years of experience in the insurance industry. Mr Jagdeo is responsible for the day to day operations of the Finance Department. His areas of responsibilities also include liaison with regulatory au-thorities for financial issues. Besides his insurance and reinsurance accounting background, Mr Jagdeo has also completed his professional examinations leading to his admission as Associate Member of The Insurance Institute of India.

Mr Yaseen Jawaheer, FIII, MBA – Business Development Officer and Non-Motor UnderwriterYaseen was appointed on 01st August 2012. He has seventeen (17) years of experience in the general insurance sector. Yaseen is presently a Fellow of The Insurance Institute of India (FIII) and holds a Master in Business Administration (MBA) from Ireland. Backed by a strong background and wide experience, he worked for major international insurance groups before joining GFA Insurance Ltd. His field of expertise is non motor insurances. He is also a member of the Chartered Insur-ance Institute of the UK and is working actively towards obtaining his ACII - Associate of The Chartered Insur-ance Institute.

Mr Raffeek Sufurhally, BSc, AIII- Head of Claims and Money Laundering Officer.Mr Raffeek Sufurhally reckons more than 30 years experience as Internal Controller in public/parastatal or-ganisations. He holds a BSc (Hons) in Management and he is an Associate member of the Insurance Institute of India. Raffeek joined GFA in 2007.

Mr Dhan Seewoodoyal – ConsultantDhan has over 30 years experience in the insurance sector. He usually liaises with the company’s Legal advisers regarding court cases. He has extensive knowledge and expertise in general insurance after hav-ing worked for several insurance agencies such as S. Ruhomutally & Co. Ltd. (representative of Groupement Français D’Assurance and Prudence Creole), Marina Agency and AFIA Agency. Presently, he acts as a Con-sultant on a contractual basis.

Mr Jugdeo Naginlal, FCCA– Financial ConsultantJugdeo Naginlal is a qualified accountant since June 1979. He has worked in the civil service, in industry, and in the profession with one of the big firms. He is work-ing as a freelance since 1992 and has wide experience, inter alia, in the following fields: accounting, auditing, taxation, vat, secretarial. He has been the company secretary of GFA Insurance Ltd since its incorporation in September 1996.

Mr Amit Maharaja, BSc, (PGDCA)– IT OfficerAmit is originally from India. He joined GFA on 18th March 2011. He holds a Bachelor in Science and a Post Graduate Diploma in Computer Application (P.G.D.C.A). He has 12 years of strong professional experience of IT administration, networking & IT business develop-ment. Amit looks after our whole IT infrastructure from hardware to our in-house Insurance software as well as administration of our servers, intranet and website. His regular on-the-spot IT training is highly beneficial to all our staff.

Profile Of Management Team

Crystal Anniversary Celebration

Official Ceremony

Hon. Xavier Duval, Minister of Finance and Hon. Jim Seetaram, Minister of Commerce, Enterprise and Cooperatives surrounded by the Directors of GFA Insurance.

Abdel Ruhomutally with Mr Max Fulton, Director of Surveillance of the Financial Services Commission.

Hon. Razack Peeroo, Speaker of the National Assembly with Dhan Seewoodoyal and Dr Raouf Ruhomutally

Mr M.A.Shah Senior Executive Director, J.B. Boda Reinsurance Brokers Pvt. Ltd., remitting a shield to the Directors of GFA Insurance in the presence of Hon. Jim Seetaram, Minister of Commerce, Enterprise and Cooperatives

Staff Party

“We value your commitment

to the organisation!”

18

Crystal anniversary...

Statement Of Compliance

The company is committed to the highest standard of business integrity, transparency and professionalism in all its endorsement to ensure that the activities within the company are man-aged ethically and responsibly to en-hance values for all stakeholders. As an essential part of this commitment, the board of Directors of the company subscribes to and is fully committed to complying with good governance prac-tices.

The fundamental concern of corporate governance is to ensure the condi-tion whereby the company’s directors and managers act in the interest of the company and its various stakeholders.

Our company strongly believes in main-taining a simple and transparent corpo-rate structure which define the division of power and establish mechanism for achieving accountability between board of directing management and shareholders driven solely by a busi-ness needs.

In line with above, the board, manage-ment and staff of the GFA Insurance Ltd fully support and are committed to the principle of business integrity, transparency and professionalism as recommended by the Code of Cor-porate Governance. Furthermore, our company strives to ensure that all its activities are conducted in such a way as to satisfy the characteristics of good governance namely: discipline, trans-parency, accountability, responsibility, fairness and social responsibility.

GFA Insurance Ltd, as an insurance company, wishes to comply with the Code of Corporate Governance (the Code), as far as is reasonably possible and practical. The Board of Directors has set up a Corporate Governance Committee and an Audit & Risk Com-mittee.

The Directors are thus continually fo-cusing on maintaining the sustainability of the Company’s business and dis-charging their responsibility of stew-ardship of the Company’s assets with integrity through the existence of a proper control environment and a well

functioning system of internal control.

Shareholders holding more than 5% shares of the company

Shareholders agreement

The company is not aware of any Shareholder’s Agreement.

Management agreement

The company has not entered into any management agreement with third par-ties.

Dividend policy

The company’s policy is to pay an interim dividend in August / September on the current year’s profit and a final dividend in April of the next year based on the au-dited accounts, subject to complying with solvency requirements.

Board of Directors

The Board is presently composed of seven members, including two independent directors. Four members are full-time executive directors and one member is em-ployed on a part-time basis.

The Board has met thrice during the year under review. However, regular Manage-ment meetings are held on a monthly basis.

The Board bears the responsibility of organising and directing the affairs of the Company in a manner that is in the best interest of shareholders and other stake-holders. It is also responsible for continually reviewing the activities, practices and trends of the company so that these are in conformity with legal and regulatory requirements, and with the principles of good governance set out in the ‘Report of Corporate Governance for Mauritius’.

The Board retains full and effective control over the company, delegating the day-to-day running and operational issues to the Managing Director and his manage-ment team. The board of directors is appointed by the shareholders on the basis of integrity, skill, acumen and experience to make sound judgements relevant to the business of the Company. In compliance with the Code, the Board of direc-tors comprises of two independent directors, one non-executive director and four executive directors.

The board of directors ensures that the principles of Corporate Governance are followed and are fully committed to comply with the Code of Corporate Govern-ance for Mauritius. In addition the board aims at higher standard of corporate governance with a culture of best practice as a performance benchmark for the company. The Board, being the focal point of the corporate governance system is ultimately accountable and responsible for the performance and affairs of the Company.

The compliance with the principles of Corporate Governance is viewed by the company, its board and the management, as an integral part of the company’s

Corporate Governance Report

Shareholders % holding

Mohammad Alaoud Ruhomutally 40.90 Dr. Abdool Raouf Ruhomutally 13.00 Del Ltd 7.28 Ahmud Ally Beebeejaun & Others (Jointly) 10.00

19

Annual Report 2012business activities and are respected at all levels of the company.

The board also monitors and evaluates the implementation of strategies, policies management performance criteria and business plans. It provides guidance and maintains effective control over the company and monitors management to carry out board plans and strategies.

In line with those principles, the Board has set up Committees and has put in place the required structure, internal control systems, policies and procedures to ensure strict adherence thereto.

Board Committees

The Board has set up four subsidiary committees namely the Corporate Govern-ance Committee, the Audit and Risk Committee, Investment Committee and Re-muneration Committee with the aim of maintaining quality standards of corporate governance and streamlining the tasks of the Board.

The Board formally appointed the members of the following Committees:

Corporate Governance Committee:

Mr E. Hosenie (Chairman), Mr B. Sowambur and Mr A. A. Beebeejaun

Audit & Risk Committee : Mr E. Hosenie (Chairman), Mr B. Sowambur and Mr A. A. Beebeejaun

Investment Committee : Dr A. R Ruhomutally (Chairman), Mr M. Alaoud Ruhomutally (Managing Director), Mr A. R. Ruhomutally (Dy Managing Director), Mr J. Naginlal (Company Secretary)

Remuneration Committee :

Mr A. A Beebeejaun (Chairman), Mr E. Hosenie and Mr B. Sowambur

Corporate Governance Committee

The terms of reference of the Corporate Governance Committee was duly ap-proved and the committee membership duly constituted by the Board.The terms of the Corporate Governance Committee are :

To make recommendations to the Board on all corporate governance provi-•sions to be adopted so that the Board remains effective in ensuring that the Company complies with prevailing corporate principles and practices.To ensure that the disclosure requirements with regard to corporate govern-•ance, whether in the annual report or other reports on an ongoing basis, are in accordance with the principles of the Code of Corporate Governance as recommended by the National Committee on Corporate Governance.To develop a Related Party Transaction Policy; to review related party trans-•actions and approve, ratify, revise or reject such transactions in accordance with the Related Party Transaction policy; to review, at least on an annual basis, and recommend changes to the Related Party Transaction Policy

To review the independence, both •in appearance and in fact, and develop and recommend to the Board criteria to assess the inde-pendence of directors

Audit and Risk Committee

The terms of reference of the Audit and Risk Committee and its composition were duly approved by the Board.The terms of reference of the Audit and Risk Committee are :

To review the appropriateness of •the company’s accounting poli-ciesTo assess the effectiveness of the •internal control processesTo review the annual financial •statements before their submis-sion to the BoardTo discuss the results of the exter-•nal audit process with the external auditorsTo direct the Risk Management •Function with the support of the internal and external auditors.To review and approve the budg-•et, including the budget for capital expenditure

Investment Committee

The terms of reference and composi-tion of the Investment committee were duly approved by the Board.

The terms of reference of the Invest-ment committee are :

To review and approve periodically •the investment policies and overall strategies of the company.To determine an appropriate in-•vestment strategy, including asset mixTo set asset portfolio performance •targets.To monitor the performance of the •asset portfolio against the agreed benchmarks and targets, seeking all necessary explanations to per-form appropriate analysis

Remuneration Committee

The terms of reference and composi-tion of the Remuneration Committee were duly approved by the Board.The terms of reference of the Remu-neration Committee are :

To determine the basic salary and other

Name of DirectorsNo of meetings attended

ExecutiveDr Abdool Raouf Ruhomutally (Chairman) 3 out of 3Mohammad Alaoud Ruhomutally (Managing Director) 3 out of 3Abdel Ruhomutally (Deputy Managing Director) 3 out of 3Najah Ruhomutally-Chonee (Alternate : Takoorpersad Seewoodoyal)

2 out of 3

Non-ExecutiveAhmud Ally Beebeejaun 3 out of 3IndependentBirendranath Sowambur 3 out of 3Mohammad Ehsan Hosenie 3 out of 3

20

Crystal anniversary...benefits attributable to the Senior Management of the company and that of the directors.

The Remuneration Committee also sees to it that efforts and hard work of em-ployees, at all levels – Executive Directors to Staff grade - are adequately com-pensated. Salaries of employees are revised regularly depending however among other factors, on the capacity of the company to pay.

The Remuneration Committee further ensures that a sense of belonging to the organisation is created among the employees and takes steps to enhance the standard of work of employees. In that connection, regular training courses are organised for the benefit of employees. Furthermore employees are sponsored in their attempts at professional and technical examinations so as to increase their knowledge and skills and thus increase their employability and their earning bar-gaining power.

It is worthwhile to note that GFA Insurance Ltd won the MIM/MEF/AHRP Training Commitment Award in 2004. The company was also awarded the Mauritius Busi-ness Excellence Award 2010 in the area of Leadership.

Internal audit

The mission of the internal audit is to provide independent, objective assurance services, designed to add value and improve the Company’s operations. It derives its authority from the Board through the Audit & Risk Committee. The scope of the Internal Auditor’s work encompasses:

Identifying risk areas and evaluating the level of risk for each risk area. •Reviewing internal control processes and making appropriate recommenda-•tions to the Audit & Risk committee and the Management, Monitoring the implementation of the recommendations and reporting on •these implementations to the Audit & Risk Committee.

Reporting lines

The Internal Auditor has a direct reporting line to the Audit & Risk Committee and maintains an open and con-structive communication with the Management. She also has direct access to the Chairman of the Board. This structure allows the Internal Auditor to remain independent.

Coverage

The Internal Audit Plan, which is approved by the Audit & Risk Committee, is based on the principles of risk management designed to ensure that the scope of work aligns with the degree of risk attributable to the area being audited.

Restrictions

The Internal Auditor has unrestricted access to the Company’s accounting records, to management and employees.

Risk Management and Internal Control System

The Board of Directors is responsible for risk management and for the Company’s systems of internal control. The company’s policy on risk management encom-passes all significant business risks including physical, operational, business conti-nuity, financial compliance and reputational which could influence the achievement of the company’s objectives.

The risk management mechanism in place includes:

A system for the ongoing identification and assessment of risk ;•

Development of strategies in re-•spect of risks and definition of ac-ceptable and non-acceptable lev-els of risk;Reviewing the effectiveness of the •system of internal control and Processes to reduce or mitigate •identified risks and contain them within the levels of tolerance de-fined by the Board.

Risk Management refers to the proc-ess used by the Company to monitor and mitigate its exposure to risk. The objective of risk management is not to eliminate risk altogether, but to reduce it to an acceptable level having regard to the objectives of the Company.

While the Board is responsible for the overall risk management and internal control systems, oversight of the Com-pany’s risk management process, with the exception of the legal risk, has been delegated to the Audit & Risk Commit-tee.

To strengthen control, a Risk Manage-ment Framework is being implemented to:

ensure all material risks are identi-•fied and reported to management, to the Audit & Risk Committee and to the Board ensure mitigation activities are de-•veloped, communicated, agreed and measured to ensure objec-tives are achieved ensure continuous identification of •new risks that may arise so as to implement mitigation controls.

The following risk areas have been identified for the Company:

Insurance Risks

The main activity of the Company is the acceptance of risk under an insurance contract where in return for a consid-eration (the premium), a policyholder is compensated for pecuniary loss suf-fered as a result of a specified uncertain future event, or of a certain future event where the timing of the occurrence is uncertain.

The main risk that the Company faces under its insurance contracts is that the actual claims and benefit payments ex-ceed the carrying amount of the insur-ance liabilities. Risks are mainly associ-

21

Annual Report 2012ated with the Company’s underwriting, reinsurance and claims handling activi-ties.

Motor and liability Insurance

The Company’s underwriting strategy attempts to ensure that the underwrit-ten risks are acceptable, well priced and diversified in type. Statistics cap-tured and analysed by computer soft-ware are extensively used to assess and review risks and the Company re-serves the right not to renew policies and/or to impose deductibles.

The Company determines the extent of risks retainable and transfers, through reinsurance led by top rated reinsurers, risks in excess of its capacity. Thus, through effective proportional, excess of loss and facultative reinsurance cov-ers, the maximum loss for a given risk that the Company may suffer in any one year is predetermined.

Claims handling is closely monitored so as to ensure that the loss reported is covered and properly assessed. Where relevant, the Company may sue third parties for payment of some or all li-abilities (subrogation). The Company ensures that claims provisions are de-termined using the best information available of claims settlement patterns, forecast inflation and settlement of claims. Estimation techniques also in-volve obtaining corroborative evidence from as wide a range of sources as possible and combining these to form the best overall estimates.

Financial Risks

The Company is exposed to financial risks through its financial assets, finan-cial liabilities, reinsurance assets and insurance liabilities. In particular, the key financial risk is that proceeds from financial assets are not sufficient to fund the obligations arising from insurance contracts. The main risks to which the Company is exposed include:

Credit risk •Liquidity risk •Market risk •Reinsurers’ default •

Credit risk

The Company’s credit is primarily at-tributable to debtors including agents

for insurance premium payable. The amounts presented in the Statement of Fi-nancial Position are net of allowances for doubtful receivables, estimated by the Company’s management based on prior experience and the current economic environment. The Company structures the levels of its credit risk it accepts by placing limits on its exposure to a single counter party. Such risks are subject to frequent review.

Prudent liquidity risk management implies maintaining sufficient cash and market-able securities to meet short-term debts. Liquidity risk is considered to be very low.

Market risk

Market risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices whether these changes are caused by factors specific to the individual security or its issuer or factors affecting all securities traded in the market. The Investment Committee ensures that investments are sufficiently diver-sified in order to match assets and liabilities and liquidity requirements.

Reinsurer’s default

The Company is exposed to the possibility of default by its Reinsurers for their share of insurance liabilities and refunds in respect of claims already settled by it. Management monitors the financial strength of its Reinsurers and the Company’s set procedures ensure that risks are only ceded to top-rated and credit-worthy Reinsurers.

Operational Risks

Operational risks are risks of loss/or opportunity gain foregone resulting from inad-equate or failed internal processes, people and systems or from external events. These losses may be caused by one or more of the following:

Human Resources Risk

That the personnel responsible for managing and controlling different sectors of the organisation or a business process do not possess the requisite knowledge, skills and experience needed to ensure that critical business objectives are achieved and significant business risks are reduced to an acceptable level.

Compliance Risk

Compliance risk, also referred to as non-conformance risk, results in lower quality, higher costs, lost revenues and unnecessary delays. Non-conformance also gives rise to product/service failure risk because if not detected and corrected before a product or service is delivered to the customer, a product or performance failure could result. A Compliance Department has been set up to monitor these issues.

Business Interruption Risk

The Company’s capability to continue critical operations and processes are highly dependent on availability of information technologies, skilled labour and other re-sources. If people with the requisite experience and skills or other critical resourc-es were unavailable or if critical systems broke down, the Company would experi-ence difficulty in continuing operations. A business interruption plan has been set up involving the duplication of our records and information systems on back up media which are stored. Insurance transactions are backed-up daily in branch offices and same is exported to Head Office by removable media on a weekly basis. (Each office operates independently and is not linked to a single server. Full customer service can be restored within a maximum of two hours).

22

Crystal anniversary...Product/Service Failure Risk

During insurance operations there may be a risk of customers receiving faulty insurance policies or service. These failures would result in customer complaints, litigated claims, cancelled policies, increased claim frequency or severity. These can significantly affect the Company’s reputation, profitability, future business and market share. A Customers’ Complaints Handling unit has been implemented.

Health and Safety Risk

Worker health and safety risks are sig-nificant if not controlled because they can expose the Company to substantial liability in respect of workers’ compen-sation. Non-compliance with Health & Safety Legislation may result in heavy fines. The Health & Safety Committee ensures that these risks are minimised through control, follow-up and com-munication procedures. The Human Resources Department ensures com-pliance with labour laws. With regards to the operational risks, management is currently rating the risks by applying appropriate methods based on the recurring nature of the risk and the financial and operational impact of the risk. Under the risk management framework that is currently being established, a priority plan of action aimed at develop-ing and implementing mitigating con-trols will be prepared. Clear responsi-bilities and targets will be established and monitored. The overall effort to es-tablish a risk management framework is being undertaken under the close supervision of the Audit & Risk Com-mittee.

Corporate Social Responsibility

GFA Insurance Ltd has always rec-ognised its social responsibility within the wider community in which it oper-ates. Our company has been actively involved in the support of social aid and sports. Consequently, the company has established a social policy, both for the welfare of its employees and for the community, thus helping to contribute to the social and economic uplifting of the country.

A CSR committee has been formed and its mission is:

“To assist GFA Insurance Ltd in its economic role as a pillar of the Mauritian society supporting its stakeholders and as an organisation committed to social respon-sibility, making good use of its resources in order to give Mauritian children the opportunity to grow and develop themselves within a safe environment as well as the necessary tools to face the economic challenges of tomorrow. GFA believes in the potential of the young generation and is convinced that it represents the rich-est and strongest resource on which all the hopes and the future of our country are built.”

Over the past three years GFA made donations or sponsorships totalling nearly Rs 1,500,000 (One million five hundred thousand rupees) to 20 organisations to assist and support them in their laudable social initiatives. The beneficiaries of our CSR undertakings are:

The Humanitarian Education Liberation Project•L`Etoile du Berger- We are only sponsoring the project for the creation of a •centre for the sheltering and rehabilitation of children in distress Etoile d`Esperance - Association Alcool femme•SOS Children`s Village•Mauritian Wildlife Foundation•Le Mouvement pour L`Eradication de la Pauvreté- •Naw-N-Sha- Club Sportif Zenfan Vallee Pitot- Housing, Food, Education & •SportsMuslim Benevolent & Welfare Society•Mauritius Mental Health Association•United Skills Workers Cooperative Society Ltd•Transparency Mauritius•Foyer Père Laval•Association Don Bosco of Sainte Croix•EDYCSE•Defenders Social and Welfare Association•PILS•Link to life•Mouvement pour le progrès de Roche Bois•Cité Martial Barbell Gym•Gayasingh Ashram•Plaine-Verte Judo Club •Mauritius Employers Federation CSR Fund•

The company believes it is its social responsibility to recruit employees from de-prived areas around its Head Office (like Vallée Pitot and Tranquebar) and at the same time relieves them of the pain of encountering transport problem to and from their place of work.

Interest Of Directors In The Equity Capital

Shares held by Directors at 31st December 2012

Directors’ Service Contracts

There are no service contracts between the company and its directors.

Directly Indirectly

Dr.Abdool Raouf Ruhomutally 3,250 315

Mohammad Alaoud Ruhomutally 10,226 1,224

Abdool Rahman (Abdel) Ruhomutally 1,000 50

Ahmud Ally Beebeejaun 450 683

Najah Ruhomutally-Chonee 1,000 50

(Alternate- Takoorpersad Seewoodoyal) 5 Nil

Birendranauth Sowambur Nil Nil

Mohammad Ehsan Hosenie Nil Nil

23

Annual Report 2012Remuneration of Directors

The directors’ remuneration is disclosed by category in view of the confidentiality and sensitivity of the information.

Contribution to political parties

No contribution was made to any political party during the year under review.

Statement of directors’ responsibilities in respect of the financial statements

The directors are required to ensure that adequate records are maintained so as to disclose at any time, and with reasonable accuracy, the financial position of the company: they are also responsible for the preparation of financial statements which give a true and fair view of the financial position , performance and cash flows of the Company and comply with the Mauritius Companies Act 2001 and with International Financial Reporting Standards.The directors are also responsi-ble for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Company law requires the directors to prepare financial statements for each fi-nancial year, which give a true and fair view of the state of affairs and of the Profit or Loss of the company. In preparing these financial statements, the directors are required to:

Select suitable accounting policies and then apply them consistently;

Make judgments and estimates that are reasonable and prudent;

State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

Prepare the financial statements on the going concern basis unless it is inappropri-ate to presume that the company will continue in business.

The directors confirm that they have complied with the above requirements in preparing the financial statements.

2012 Rs

2011 Rs

Executive Directors 5,359,000 5,682,506

Non-executive Director & Independent 185,950 190,950

The directors are responsible for keep-ing proper accounting records, which disclose with reasonable certainty and accuracy at any time the financial posi-tion of the company and to enable them to ensure that the financial statements comply with the Mauritian Companies Act 2001. They are also responsible for safeguarding the assets of the com-pany and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are also responsible to institute proper systems and proce-dures to comply with the Financial In-telligence and Anti-Money Laundering Act 2002 (FIAML Act) and the Code on the Prevention of Money Launder-ing and Terrorist Financing intended for Insurance Entities (the PMLTF code). Management has taken actions to im-plement proper systems, procedures and controls to comply with the FIAML Act and the PMLTF code.

Approved by the Board of Directors and signed on its behalf by:

Dr Abdool Raouf RuhomutallyChairman

M.Alaoud RuhomutallyManaging Director

26 March 2013

Secretary’s Certificate(pursuant to Section 166 (d) of the Companies Act 2001) I confirm that, based on records and information made available to me by the directors and shareholders of GFA Insurance Ltd, the Company has filed with the Registrar of Companies, for the year ended 31 December 2012, all such returns as are required for a Private Domestic Company under the Mauritian Companies Act 2001.

Jugdeo NAGINLAL, FCCA Secretary 26 March 2013

01 • Engen motor show 2012

02 • HEAT Tuning and Moto Expo 2012

03 • Iframac Fast and Fabulous Sales

04 • Mega Blood Donation - Riverside

05 • P-Verte Judo Club Trophée de l’Espoir

06 • SMEDA Road Show - Mont. Blanche

01

01

02 02

03

04 04

06

03

05

03

05

Hon. Rajesh Jeetah, Minister of Tertiary Education, Science, Research and Technology Mauritius with personnel of GFA.

07 • SMEDA Road Show - Port Louis

08 • Road Show - Riverside

09 • SMEDA Road Show - Quatre-Bornes

10 • Mauritius Business Award 2011

08

07

07

07

07

07

Mrs Indranee Seebun, Managing Director SMEDA with her team and participants.

Hon. Rashid Beebeejaun, Deputy Prime Minister, visiting the stand of GFA.

10

09

09

Hon. Jim Seetaram, Minister of Commerce, Enterprise and Coop-eratives surrounded by Ludmilla Bundhoo and Abdel Ruhomutally.

Mr . Ehsan Hosenie with Amar Deerpalsing, President of the Federation of SMEs

The Mauritius Business Excellence Award 2011 remitted by

Honorable Cader Sayed Hossen Minister of Industry, Commerce and

Consumer Protection

28

Crystal anniversary...

30 to 49

29

Annual Report 2012

30 to 49

30

Crystal anniversary...Statements Of Financial PositionAs At 31 December 2012

The Group The Company

Assets Notes 2012 2011 2012 2011

Rs. Rs. Rs. Rs.

Non-current assets

Property, plant and equipment 5 34,366,951 10,722,752 34,179,233 10,464,963

Investment property 6 37,106,120 31,726,120 11,405,000 6,025,000

Intangible asset 7 12,999 53,624 12,999 53,624

Investment in financial assets 8 28,510,700 27,078,804 28,510,700 27,078,804

Investment in subsidiary company 9 - - 15,000,000 10,000,000

Statutory deposit 10 8,000,000 8,000,000 8,000,000 8,000,000

Long term deposits 11 153,115,000 120,500,000 153,115,000 120,500,000

Deferred taxation 12 578,386 289,012 568,120 297,135

Loan to related party 31 2,193,020 - 2,193,020 -

263,883,176 198,370,312 252,984,072 182,419,526

Current assets

Trade and other receivables 13 17,589,312 18,400,221 17,502,477 18,312,159

Loan receivable from subsidiary 14 - - 11,371,054 16,618,330

Loan to related party 31 606,980 - 606,980

Short term deposits 11 77,900,000 68,900,000 77,900,000 68,900,000

Cash and cash equivalents 15 49,870,630 72,894,795 49,771,204 72,725,803

145,966,922 160,195,016 157,151,715 176,556,292

Total Assets 409,850,098 358,565,328 410,135,787 358,975,818

Equity And Liabilities

Capital and reserves

Share capital 16 25,000,000 25,000,000 25,000,000 25,000,000

Revenue reserves 17 107,790,472 82,286,660 108,265,419 82,903,784

Fair value reserves (4,115,302) (2,724,240) (4,115,302) (2,724,240)

Revaluation reserves 17 956,000 956,000 956,000 956,000

Shareholders' interests 129,631,170 105,518,420 130,106,117 106,135,544

General business fund 18 72,851,227 63,751,157 72,851,227 63,751,157

Non-current liabilities

Obligations under finance lease agreement 19 4,388,078 4,836,932 4,388,078 4,836,932

Retirement benefit obligations 20 5,390,062 3,898,735 5,390,062 3,898,735

9,778,140 8,735,667 9,778,140 8,735,667

Current liabilities

Trade and other payables 21 193,384,906 177,484,125 193,195,648 177,277,491

Obligations under finance lease agreement 19 1,713,358 1,323,757 1,713,358 1,323,757

Current tax liabilities 24 2,491,297 1,752,202 2,491,297 1,752,202

197,589,561 180,560,084 197,400,303 180,353,450

Total Equity and Liabilities 409,850,098 358,565,328 410,135,787 358,975,818

Approved by the Board of Directors on 26th March 2013

DIRECTOR

DIRECTOR

The notes on pages 34 to 49 form an integral part of these financial statements.

31

Annual Report 2012Statements Of Comprehensive IncomeFor The Year Ended 31 December 2012

The Group The Company

Notes 2012 2011 2012 2011

Rs. Rs. Rs. Rs.

Gross premium 3 155,238,811 144,828,154 155,238,811 144,828,154

Less : Reinsurance premium (10,386,373) (11,031,076) (10,386,373) (11,031,076)

Net premium 144,852,438 133,797,078 144,852,438 133,797,078

Release to General Business Fund 18 (9,100,070) (14,040,266) (9,100,070) (14,040,266)

Net retained premium 135,752,368 119,756,812 135,752,368 119,756,812

Gross claims paid 86,772,255 69,882,234 86,772,255 69,882,234

Claims recovered from reinsurers (11,916,550) (10,192,075) (11,916,550) (10,192,075)

Movements in claims outstanding and IBNR 14,809,412 21,420,552 14,809,412 21,420,552

Commission receivable from reinsurers (1,238,431) (1,234,023) (1,238,431) (1,234,023)

Commission paid to agents 8,592,706 7,266,793 8,592,706 7,266,793

(97,019,392) (87,143,481) (97,019,392) (87,143,481)

Underwriting surplus 38,732,976 32,613,331 38,732,976 32,613,331

Investment and interest income 25 17,266,818 15,644,932 17,261,674 15,638,916

Operating profit 55,999,794 48,258,264 55,994,650 48,252,248

Other income 26 10,449,879 9,785,130 10,419,879 9,785,130

66,449,673 58,043,394 66,414,529 58,037,378

Administrative expenses 29,535,054 25,896,428 29,693,769 25,639,108

Depreciation and amortisation 3,427,816 2,022,186 3,357,745 1,952,228

(32,962,870) (27,918,614) (33,051,514) (27,591,336)

Profit from operations 27 33,486,803 30,124,780 33,363,015 30,446,042

Net finance costs 28 (601,535) (354,191) (601,535) (354,191)

Profit before taxation 32,885,268 29,770,589 32,761,480 30,091,851

Taxation 24 (5,381,456) (4,731,930) (5,399,845) (4,683,741)

Net profit for the year 27,503,812 25,038,659 27,361,635 25,408,110

Other comprehensive income:

Decrease in fair value of available-for-sale financial assets (1,391,062) (1,233,847) (1,391,062) (1,233,847)

Other comprehensive income, net of income tax (1,391,062) (1,233,847) (1,391,062) (1,233,847)

Total comprehensive income for the year 26,112,750 23,804,812 25,970,573 24,174,263

Earnings per share 29 1,045 952 1,039 967

The notes on pages 34 to 49 form an integral part of these financial statements.

32

Crystal anniversary...Statements Of Changes In Equity For The Year Ended 31 December 2012

The GroupShare capital

Revaluationreserves

Fair value reserve on availablefor sale financial assets

Revenue reserves Total

Rs. Rs. Rs. Rs. Rs.

Balance at 1 January 2011 25,000,000 956,000 - 57,007,608 82,963,608

Profit for the year - - - 25,038,659 25,038,659

Other comprehensive income for the year - - - (1,233,847) (1,233,847)

Dividends - - - (1,250,000) (1,250,000)

Balance at 31 December 2011 25,000,000 956,000 - 79,562,420 105,518,420

Reclassification adjustment (2,724,240) 2,724,240 -

Balance at 31 December 2011 (as reclassified) 25,000,000 956,000 (2,724,240) 82,286,660 105,518,420

Profit for the year - - - 27,503,812 27,503,812

Other comprehensive income for the year (1,391,062) (1,391,062)

Dividends - - - (2,000,000) (2,000,000)

Balance at 31 December 2012 25,000,000 956,000 (4,115,302) 107,790,472 129,631,170

The CompanyShare

capitalRevaluation

reservesRevaluation

reservesRevenue reserves Total

Rs. Rs. Rs. Rs. Rs.

Balance at 1 January 2011 25,000,000 956,000 - 57,255,281 83,211,281

Profit for the year - - - 25,408,110 25,408,110

Other comprehensive income for the year - - - (1,233,847) (1,233,847)

Dividends - - - (1,250,000) (1,250,000)

Balance at 31 December 2011 25,000,000 956,000 - 80,179,544 106,135,544

Reclassification adjustment - - (2,724,240) 2,724,240 -

Balance at 31 December 2011 (as reclassified) 25,000,000 956,000 (2,724,240) 82,903,784 106,135,544

Profit for the year - - - 27,361,635 27,361,635

Other comprehensive income for the year - - (1,391,062) - (1,391,062)

Dividends - - - (2,000,000) (2,000,000)

Balance at 31 December 2012 25,000,000 956,000 (4,115,302) 108,265,419 130,106,117

The notes on pages 34 to 49 form an integral part of these financial statements.

33

Annual Report 2012Consolidated Statement Of Cash FlowsFor The Year Ended 31 December 2012

The Group The Company

2012 2011 2012 2011

Note Rs. Rs. Rs. Rs.

Cash flows from operating activities

Profit before taxation 32,885,268 29,770,589 32,761,480 30,091,851

Adjustments for:-

Depreciation and amortisation 3,427,816 2,022,186 3,357,745 1,952,228

Release to the General Business Fund 9,100,070 14,040,266 9,100,070 14,040,266

Loss / (gain) on sale of investment 3 (30,887) 3 (30,887)

Reclassification of intangible assets - 5,000 - 5,000

Retirement benefit obligations 1,491,327 53,305 1,491,327 53,305

Profit on disposal of property, plant and equipment (70,500) - (70,500) -

Operating profit before working capital changes 46,833,984 45,860,459 46,640,125 46,111,763

Decrease / (increase) in trade and other receivables 810,909 (1,669,783) 809,682 (1,674,540)

Increase in trade and other payables 15,900,781 26,561,806 15,918,157 26,382,481

Cash generated from operations 63,545,674 70,752,482 63,367,964 70,819,704

Taxation paid (4,373,302) (4,460,432) (4,373,302) (4,460,432)

CSR paid (558,433) (440,033) (558,433) (440,033)

Net cash flows from operating activities 58,613,939 65,852,017 58,436,229 65,919,239

Cash flows from investing activities

Transfers to fixed deposit accounts (41,615,000) (31,800,000) (41,615,000) (31,800,000)

Loan to subsidiary repaid - - 5,247,276 (2,726)

Loan to related party (2,800,000) - (2,800,000) -

Lease repayments (1,719,256) (1,329,510) (1,719,256) (1,329,510)

New lease contracted 1,660,000 3,835,000 1,660,000 3,835,000

Additional investment in subsidiary - - (5,000,000) -

Acquisition of financial assets (2,822,958) (7,152,519) (2,822,958) (7,152,519)

Proceeds from disposal of financial assets - 855,112 - 855,112

Purchase of property, plant and equipment (27,031,390) (5,078,297) (27,031,390) (5,074,897)

Payments for acquisition of investment property (5,380,000) - (5,380,000) -

Proceeds from disposal of property, plant and equipment 70,500 - 70,500 -

Net cash flows used in investing activities (79,638,104) (40,670,214) (79,390,828) (40,669,540)

Cash flows from financing activities

Dividends paid (2,000,000) (1,250,000) (2,000,000) (1,250,000)

Net cash flows used in financing activities (2,000,000) (1,250,000) (2,000,000) (1,250,000)

Net (decrease) / increase in cash and cash equivalents (23,024,165) 23,931,803 (22,954,599) 23,999,699

Movements in cash and cash equivalents

Cash and cash equivalents at the beginning of the year 72,894,795 48,962,992 72,725,803 48,726,104

Cash and cash equivalents at the end of the year 15 49,870,630 72,894,795 49,771,204 72,725,803

Net (decrease) / increase in cash and cash equivalents (23,024,165) 23,931,803 (22,954,599) 23,999,699

The notes on pages 34 to 49 form an integral part of these financial statements.

34

Crystal anniversary...Notes To The Financial Statements For The Year Ended 31 December 2012 1. Corporate information GFA Insurance Ltd is a private limited company incorporated in Mauritius and is engaged in General (Non-Life) Insurance Business.

The address of its registered office is 16, Frère Felix de Valois St, Champs de Mars, Port Louis.

2. Application of new and revised international financial reporting standards (IFRSs) 2.1 New and revised IFRSs affecting amounts reported in the current year (and/or prior years)

The following new and revised IFRSs have been applied in the current year and have affected the amounts reported in these financial statements. Details of other new and revised IFRSs applied in these financial statements that have had no material effect on the financial statements are set out in section 2.2.

2.1.1 New and revised IFRSs affecting presentation and disclosure only.

• Amendments to IFRS 7 Disclosures – Transfers of Financial Assets

The amendments increase the disclosure requirements for transactions involving the transfer of financial assets in order to provide greater transparency around risk exposures when financial assets are transferred.

•Amendments to IAS 1 Presentation of Items of Other Comprehensive Income

The amendments introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to IAS 1, the statement of comprehensive income’ is renamed the ‘statement of profit or loss and other comprehensive income’ and the ‘income statement’ is renamed the ‘statement of profit or loss’. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified

to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income. Amendments to IAS 1 Presentation of Financial Statements (as part of the Annual Improvements to IFRSs 2009-2011 Cycle issued in May 2012) IAS 1 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatement or reclassification to present a statement of financial position as at the beginning of the preceding period (third statement of financial position). The amendments to IAS 1 clarify that an entity is required to present a third statement of financial position only when the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position and that related notes are not required to accompany the third statement of financial position.

2.1.2 Amendments to IFRSs affecting the reported financial performance and/or financial position • Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets Under the amendments, investment properties that are measured using the fair value model in accordance with IAS 40 Investment Property are presumed to be recovered entirely through sale for the purposes of measuring deferred taxes unless the presumption is rebutted.

2.2 New and revised IFRSs in issue but not yet effective The Group and the Company have not applied the following new and revised IFRSs that have been issued but are not yet effective: Effective for annual periods beginning on or after 1 January 2013. • IFRS10 ConsolidatedFinancialStatements• IFRS11 JointArrangements• IFRS12 DisclosureofInterestsinOtherEntities• IFRS13 FairValueMeasurement• AmendmentstoIFRS7 Disclosures – Offsetting Financial Assets and Financial Liabilities • AmendmentstoIFRS10,IFRS11andIFRS12 Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance • IAS19(asrevisedin2011) EmployeeBenefits• IAS27(asrevisedin2011) Separate Financial Statements • IAS28(asrevisedin2011) Investments in Associates and Joint Ventures • AmendmentstoIFRSs Annual Improvements to IFRSs 2009-2011 Cycle except for the amendment to IAS 1 (see note 2.1.1)

35

Annual Report 2012 Effective for annual periods beginning on or after 1 January 2014. • Amendments to IAS 32- Offsetting financial assets and financial liabilities Effective for annual periods beginning on or after 1 January 2015. • IFRS9-Financialinstruments • Amendments to IFRS 9 and IFRS 7 - Mandatory effective Date of IFRS 9 and transition disclosures

3. Significant accounting policies (a) Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards. (b) Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for the revaluation of certain non-current assets and financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for assets. (c) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its subsidiary). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interest of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

(d) Revenue recognition Revenue represents earned premiums receivable net of reinsurance. Other revenues earned by the company are recognised on the following bases:

(i) Interest income - on a time proportion basis taking into account the effective yield on the investments. (ii) Dividend income - when the shareholder’s right to receive payment is established. (iii) Reinsurance commission receivable - as it accrues in accordance with the substance of the relevant agreements.

(e) Property, plant and equipment All property, plant and equipment are initially recorded at cost. Cost comprises of any costs directly attributable to bringing the asset to working condition for its intended use. Depreciation is calculated to write off the cost or revalued amount of the assets on a straight line basis over the expected useful lives as follows :-

Buildings 2% Motor vehicles 20% Furniture and fittings 10% Office equipment 20% Land is not depreciated.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken into account in determining profit before tax.

(f) Investment property

Investment properties held to earn rentals and/ or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value. Gains and losses arising from changes in the fair value of investment properties are included in profit or loss in the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefit are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

36

Crystal anniversary...(g) Investment in subsidiary

Separate financial statements

Investments in subsidiary companies are carried at cost. The carrying amount is reduced to recognise any impairment in the value of individual investments.

(h) Cash and cash equivalents

Cash comprises cash at bank and in hand, demand deposits and bank overdrafts. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

(i) Insurance contracts Insurance contracts are those contracts that transfer significant insurance risk at the inception of the contract. Such contracts remain insurance contracts until all rights and obligations are extinguished or expired. Insurance risk is transferred when the Group and the Company agree to compensate a policyholder if a specified uncertain event adversely affects the policyholder. Insurance contracts are mainly in respect of motor business but the Group and the Company also sell fire and allied perils, marine, engineering and other miscellaneaous insurance contracts. These contracts protect the Group’s and Company’s customers from damage suffered to property or goods, value of property and equipment lost, losses and expenses incurred, sickness and loss of earning resulting from the occurence of the insured events. Claims expenses and outstanding claims provisions

Outstanding claim provisions are based on the ultimate costs of all claims incurred but not secured at the end of the reporting period, whether reported or not (IBNR). Notified claims are only recognised when the Group and the Company consider that they have a contractual liability to settle the claims. There are often delays between the occurrence of the insured event and the time it is actually reported to the Group and the Company, particularly in respect of the liability business, the ultimate cost cannot be known with certainty as to 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 or subrogate under the terms of the insurance contracts are included when providing for outstanding claims.

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 liabilitiy is settled. The allowance is the amount that can reasonably be recovered from disposal of property.

Claims development table The development of insurance liabilities provides a measure of both the Group’s and the Company’s ability to estimate the ultimate value of claims. The table below illustrates how the estimates of total claims outstanding for each year have changed at successive year ends and reconciles the cumulative claims to the amount appearing in the statement of financial position.

Analysis of claims development gross of reinsurance

The Group and the Company 2008 2009 2010 2011 2012 Total

Rs. Rs. Rs. Rs. Rs. Rs.

Estimate of cumulative claims

At end of accident year 14,566,206 48,706,723 58,685,162 59,126,503 73,874,681 254,959,275

- One year later 23,998,589 70,314,008 45,244,332 44,248,579 - 183,805,508

- Two years later 20,471,266 25,058,914 24,063,078 - - 69,593,258

- Three years later 26,282,051 26,793,989 - - - 53,076,040

- Four years later 21,540,791 - - - - 21,540,791

Estimate of cumulative claims 21,540,791 26,793,989 24,063,078 44,248,579 73,874,681 190,521,118

Cumulative payments to date in respect of motor claims (5,147,458) (3,717,256) (6,828,970) (20,451,769) (44,473,579) (80,616,032)

Gross outstanding liabilities 16,393,333 23,076,733 17,234,108 23,796,810 29,401,102 109,905,086

Liabilities recognised in the statement of financial position in respect of prior years 28,813,062

Liabilities in respect of non motor claims 11,225,245

IBNR 19,000,000

Gross claims outstanding in the statement of financial position 168,943,393

37

Annual Report 2012(j) Reinsurance contracts Contracts entered into by the Group and the Company with reinsurers under which the Group and the Company are compensated for losses on one or more contracts issued by the Group and the Company are classified as reinsurance contracts held. Insurance contracts entered into by the Group and the Company under which the Contract holder is another insurer (inward reinsurance) are included with insurance contracts. Reinsurance contracts used by the Group and the Company 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 and the Company can fix its retention limit. Non-proportional reinsurance is mainly “excess-of-loss” type of reinsurance where, in consideration for a premium, the reinsurer agrees to pay all claims in excess of a specified amount, i.e. the retention, and up to a maximum amount. Facultative insurance contracts generally relate to specific insured risks which are underwritten separately. Under treaty arrangements, risks underwritten by the Group and the Company falling under the terms and limits of the treaties are reinsured automatically.

Reinsurance assets primarily include balances due from reinsurance companies for ceded insurance liabilities. Short-term balances due from reinsurers are classified within trade and other receivables. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provisions or settled claims associated with the reinsured policies and in accordance with the relevant reinsurance contracts.

Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as expenses when due. (k) Impairment At the end of each reporting period, the Group and the Company review the carrying amounts of the tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the loss (if any). An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset’s net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows.

(l) Deferred income tax Deferred income taxation is provided using the liability method on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting

purposes. Provisions are required to be made by the Group and the Company for deferred income taxes on the revaluation of certain non-current assets and in relation to acquisitions on assets acquired and their tax base.

Temporary differences arise mainly from depreciation on property, plant and equipment, revaluation of certain non-current assets, tax losses carried forward, provision for doubtful debts and on retirement benefit obligations. Recognition of deferred tax assets relating to the carry forward of unused tax losses are to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

(m) Provision for claims outstanding

Outstanding claims provision is determined based upon knowledge of events, terms and conditions of relevant policies, on interpretation of circumstances as well as previous claims experience. Similar cases, historical claims payment trends, judicial decisions and economic conditions are also relevant and are taken into consideration. Outstanding claims provisions are made up of: (a) Provision for claims Incurred But Not Reported (IBNR) and (b) The net estimated costs of claims admitted or intimated but not yet settled at the end of the reporting period.

(n) Provisions Provisions are recognised when the Group and the Company have a present or constructive obligation as a result of past events which it is probable will result in an outflow of economic benefits that can be reasonably estimated. (o) Retirement benefit obligations

The Group and the Company do not operate any retirement benefit plan. However provision on retirement benefit obligations has been made for employees according to the Employment Rights Act 2008 and IAS 19.

(p) Related parties Related parties are considered to be related if one party has ability to control the other party in making financial and operating decisions. All transactions undertaken with related parties are at commercial terms and conditions.

(q) Finance leases Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payments is allocated between the liability and finance charges so as to achieve a constant rate on the finance

38

Crystal anniversary...balance outstanding. The corresponding rental obligations, net of finance charges, are included in Current and Non-Current Liabilities. The interest element of the finance charge is charged to the statement of comprehensive income over the lease period. (r) Investments in financial assets

The Group and the Company classify their investments into the following categories: held-to-maturity and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this at the end of every reporting period. (i) Held-to-maturity financial assets Held-to-maturity financial assets are financial assets that the Group and the Company have the positive intention and ability to hold to maturity. They are measured at amortised cost using the effective interest rate method.

(ii) Available-For-Sale Financial Assets Available-for-sale investments are financial assets that are either designated in this category or not classified in any other categories. Initial recognition Purchases and sales of investments are recognised on trade-date, the date on which the Group and the Company commit to purchase or sell the asset. Investments are initially recorded at fair value plus transaction costs. Subsequent recognition Marketable securities are carried at market value on the statement of financial position. Market value is calculated by reference to Stock Exchange and DEM quoted selling prices at the close of business. Fixed assets investments excluding marketable securities are shown at cost and provision is only made where, in the opinion of the Directors, there is a permanent diminition in value. Where there has been permanent diminition in the value of an investment, it is recognised as an expense in the period in which the diminition is identified. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of comprehensive income. On disposal of a marketable security classified as a long term asset, amounts in revaluation and other reserves relating to that marketable security are transferred to retained earnings or to the statement of comprehensive income. (s) Intangible asset Intangible asset which comprises of computer software is

initially recorded at cost and amortised using the straight-line method over its remaining useful life. The carrying amount is reviewed annually and adjusted for any permanent diminution where it is considered necessary. (t) Financial instruments Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group and the Company become a party to the contractual provision of the instrument.

Trade receivables and payables relate to insurance contracts and are rev cognised when due. These include amounts due to and from reinsurers, agents and insurance contract holders.

The Group’s and the Company’s accounting policies in respect of the main financial instruments are set out below:- (i) Fair value estimation The carrying amount of the financial assets and liabilities approximate their fair values. (ii) Insurance receivables Insurance receivables are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. (iii) Insurance payables Insurance payables are stated at their nominal value. (u) Non-Life insurance business (i) Gross written premium Gross written premium relates to insurance covers granted during the year. (ii) Reinsurance premium Reinsurance premium expense is accounted for in the same accounting period as the gross written premium to which it relates. (iii) Claims

Claims incurred include provisions for the estimated cost of claims and related handling expenses in respect of incidents up to 31 December 2012 including those which have not yet been notified. Any difference between the estimated cost and subsequent settlements are dealt with in the statement of comprehensive income in the following year.

39

Annual Report 2012(v) Management of insurance and financial risk

The Group and the Company’s activities expose them to a variety of insurance and financial risks. A description of the significant risk factors is given below together with the risk management policies applicable.

(i) Insurance risk

Insurance risk is transferred when the Group and the Company agree 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 main risk that the Group and the Company face under their insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This may occur if the frequency or severity of claims and benefits are greater than estimated. Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected outcome. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the portfolio.

The Group and the Company have developed their 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 lack of risk diversification in terms of type and amount of risk, accumulation of risk and type of industry covered. Motor and liability insurance The frequency and severity of claims can be affected by several factors. The most significant claims result from

accident, liability claims awarded by the Court, fires and allied perils and their consequences. Inflation is also a significant factor due to the long period typically required to settle some claims. The Group’s and the Company’s underwriting strategy attempts to ensure that the underwritten risks are well diversified in type, amount of risk and industry. The Group and the Company have underwriting limits by type of risks and by industry. Performances of individual insurance policies are reviewed by management and the Group and the Company reserve the right not to renew individual policies.

The Group and the Company can impose deductibles and have the right to reject the payment of a fraudulent claim. Where relevant, the Group and the Company may pursue third parties for payment of some or all liabilities (subrogation). Claims development and provisioning levels are closely monitored. The reinsurance arrangements of the Group and the Company include proportional, excess-of-loss and catastrophe coverage and as such, the maximum loss that the Group and the Company may suffer in any one year is predetermined.

Property insurance For property insurance contracts, climatic changes give rise to more frequent and severe external weather events (for example cyclone claims). Property insurance is subdivided into different risk groups, fire, business interruption, cyclone damage and other perils. The insurance risk arising from these contracts are balanced between commercial and personal properties in the overall portfolio of insured buildings. Although the reinsurers are liable to the extent of the reinsurance ceded, the Group and the Company remain those the primarily liable to the policy holder as the direct insurers of all risks reinsured.

Analysis of claims development gross of reinsurance

2012 2011

No. of Gross Net No. of Gross Net

claims Rs Rs claims Rs Rs

Accident and health - - - - -

Engineering - - -

Guarantee - - -

Liability 11 10,529,250 10,529,250 10 9,229,250 9,229,250

Miscellaneous - - - - - -

Motor 4,376 138,718,148 131,640,391 3,922 128,138,731 120,774,787

Property 3 592,295 592,295 - - -

Transportation 1 103,700 103,700 - - -

IBNR 19,000,000 19,000,000 - 16,766,000 16,766,000

168,943,393 161,865,636 154,133,981 146,770,037

Concentration of insurance risks The following table discloses the concentration of oustanding claims by class of business, gross and net reinsurance.

40

Crystal anniversary...Sources of uncertaintyMotor and liability insurance

Claims on motor and liability insurance contracts are pay-able on a claims-occurrence basis for motor and liability business and on a risk attaching basis for non-motor. Under the claims-occurrence basis, the Group and the Company are liable for all insured events that occurred during the term of the contract, even if the loss is dis-covered after the end of the contract. As a result, liability claims may be settled over a long period of time and an element of the claims provision relates to incurred but not reported claims (IBNR). For the risk attaching basis, the Group and the Company are liable only if the claims are reported within the specific underwriting year, based on the terms of the contract.

The estimated costs of claims include direct expenses to be incurred in settling claims, net of subrogation and salvage recoveries. The Group and the Company ensure that claims provisions are determined using the best in-formation available of claims settlement patterns, forecast inflation and settlement of claims. Estimation techniques also involve obtaining corroborative evidence from as wide a range of sources as possible and combining these to form the best overall estimates. However, given the uncertainty in claims provisions, it is very probable that estimated costs and subsequent settlement amounts would differ.

Property insurance

Property claims are analysed separately for cyclone and non-cyclone claims. The development of large losses /

catastrophes is analysed separately. Non-cyclone claims can be estimated with greater reliability, and the Group and the Company estimation processes reflect all the fac-tors that influence the amount and timing of cash flows from these contracts. The shorter settlement period for these claims allows the Group and the Company achieve a higher degree of certainty about the estimated cost of claims, and relatively little (Incurred But Not Reported) IBNR is held at the end of the reporting period.

(ii) Financial risk The Group and the Company issue insurance contracts that transfer financial risk. This section summarises the main risks and the way they are managed. The Group’s and the Company’s activities are exposed to financial risks through their financial assets, financial liabilities, reinsurance assets and insurance liabilities. In particular, the key financial risk is that the proceeds from their financial assets are not sufficient to fund the obliga-tions arising from their insurance and investment con-tracts. The most important components of these financial risks are: Interest rate risk The Group and the Company are exposed to interest rate fluctuations on the domestic market with respect to inter-est income and expense.The Group and the Company earn interest income on their surplus cash. Management closely monitors interest rate trends and their impact on interest income and expense.

The Group The Company

2012 2011 2012 2011

Sensitivity analysis Rs. Rs. Rs. Rs.

Impact of change in fixed interest income:

± 250 basis points ± 5,872,839 ± 4,780,983 ± 5,872,839 ± 4,780,983

The Group The Company

Sensitivity analysis 2012 2011 2012 2011

Impact of change in price of equity Rs. Rs. Rs. Rs.

Investment on overall investments:

± 2.5 % ± 662,768 ± 676,970 ± 662,768 ± 676,970

Equity price risk

The valuations of the company's available-for-sale equity portfolio are subject to equity price risk. Exposure to price risk on the equity portfolio is not hedged.

Credit risk

The Group’s and the Company’s credit risk is primarily attribut-able to insurance contract holders, insurance intermediaries, i.e trade receivables. The amounts presented in the statement of financial position are net of allowances for estimates of doubtful receivables. Except for amount receivable from reinsurers, the Group and the Company have no significant concentration of credit risk, with exposure spread over a large number of clients and agents.

Liquidity risk

Prudent liquidity risk management implies maintaining suffi-cient cash and marketable securities, the availability of fund-ing through an adequate amount of committed credit facili-ties and the ability to close out market positions. The Group and the Company aims at maintaining flexibility in funding by keeping committed credit lines available.

41

Annual Report 2012Premium risk

Premium risk is defined as the danger of insurance pre-mium not being sufficient to cover expenses. This risk is closely evaluated and action has to be taken to arrange for reinsurance and building up of adequate reserves within the Group and the Company.

Investment risk

It concerns the liquidity, rate of interest and the stability of the institution where the investments are made. The Group and the Company monitors the activities and progress of these functions.

Market risk

Market risk is the risk that the value of the financial instru-ments will fluctuate as a result of changes in market prices whether these changes are caused by factors specific to the individual security or its issuer or factors affecting all securi-ties traded in the market. Foreign currency risk

The Group and the Company have no outstanding foreign currency denominated monetary items and is not exposed to the currency risk. Reinsurers’ default The Group and the Company is exposed to the possibility of default by reinsurers for their share of insurance liabilities and refunds in respect of claims already paid. Management monitors the financial strength of reinsurers and the Group and the Company have policies in place to ensure that risks are ceded to top-rated and credit-worthy reinsurers only. (w) Presentation currency

The financial statements are presented in Mauritian Rupees (“Rs”), which is the Company’s functional and presentation currency and represents the currency of the primary eco-nomic environment in which the entity operates. 4. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s and the Company’s account-ing policies, which are described in note 3, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are rec-ognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revi-sion and future periods if the revision affects both current and future periods.Where applicable, the notes to the consolidated financial statements set out areas where management has applied a

higher degree of judgement that have a significant effect on the amounts recognised in the consolidated financial state-ments, or estimations 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. (a) Key sources of estimation of uncertainty With regards to the nature of the Group’s and the Company’s business, there were no key assumptions concerning the future, and other key sources of estimation of uncertainty at the end of the reporting period, that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(b) Insurance contracts

The uncertainty inherent in the consolidated financial state-ments of the Group and the Company arises mainly in respect of insurance liabilities, which include liabilities for unearned premiums, outstanding claims provision (including IBNR). In addition to the inherent uncertainty when estimating liabilities, there is also uncertainty as regards the eventual outcome of claims. As a result, the Group and the Company applies esti-mation techniques to determine the appropriate provisions. Claims provision Outstanding claims provision is determined based upon knowledge of events, terms and conditions of relevant poli-cies, on interpretation of circumstances as well as previous claims experience. Similar cases, historical claims payment trends, judicial decisions and economic conditions are also relevant and are taken into consideration. Large claims are generally assessed separately, being mea-sured either based on loss adjusters’ estimates, or on man-agement’s experience. (c) Held for maturity investments The Group and the Company applies International Account-ing Standard IAS 39, “Financial Instruments: Recognition and Measurement” on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. This classification requires significant judge-ment. In making this judgement, the Group and the Company evaluates its intention and ability to hold such investments to maturity.If the Group and the Company fails to keep these invest-ments to maturity other than in the specific circumstances explained in IAS 39, it will be required to reclassify the whole class as available-for-sale. The investments would then be measured at fair value and not amortised cost.

(d) Impairmentofavailable-for-salefinancialassets

The Group and the Company follows the guidance of IAS 39 on determining when an investment is impaired. This deter-mination requires significant judgement. In making this judge-ment, the Group and the Company evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost, and the financial health of and near-term business outlook for the investee, including factors such as industry and sector performance, changes in

42

Crystal anniversary...technology and operating and financing cash flow. (e) Impairment of other assets

At the end of each reporting period, management reviews and assesses the carrying amounts of other assets and, where relevant, writes them down to their recoverable amounts based on best estimates.

The GroupFreehold

LandFreeholdBuilding

improvement to Building

MotorVehicles

Furniture& Fittings

OfficeEquipment Total

Cost/ Valuation Rs. Rs. Rs. Rs. Rs. Rs. Rs.

At 01 January 2011 - 1,500,000 - 9,886,299 2,508,715 4,518,008 18,413,022

Additions - - - 4,668,500 132,504 277,293 5,078,297

At 31 December 2011 - 1,500,000 - 14,554,799 2,641,219 4,795,301 23,491,319

Additions 9,604,000 13,913,000 382,423 1,705,200 398,696 1,028,071 27,031,390

Disposal - - - (3,329,100) - - (3,329,100)

At 31 December 2012 9,604,000 15,413,000 382,423 12,930,899 3,039,915 5,823,372 47,193,609

Accumulated Depreciation

At 01 January 2011 - 221,278 - 5,393,964 1,740,549 3,441,015 10,796,806

Charge for the year - 30,000 - 1,429,984 158,814 352,963 1,971,761

Disposal - - - - - - -

At 31 December 2011 - 251,278 - 6,823,948 1,899,363 3,383,368 12,768,567

Charge for the year - 244,387 13,083 2,500,920 171,304 457,497 3,387,191

Disposal - - - (3,329,100) - - (3,329,100)

At 31 December 2012 - 495,665 13,083 5,995,768 2,070,667 3,840,865 12,826,658

Net Book Value

At 31 December 2012 9,604,000 14,917,335 369,340 6,935,131 969,248 1,982,507 34,366,951

At 31 December 2011 - 1,248,722 - 7,730,851 741,856 1,411,933 10,722,752

At 31 December 2010 - 1,278,722 - 4,492,335 768,166 1,076,993 7,616,216

The CompanyCost/ Valuation

At 01 January 2011 - 1,500,000 - 9,886,299 2,486,867 4,149,291 18,022,457

Additions - - - 4,668,500 129,104 277,293 5,074,897

At 31 December 2011 - 1,500,000 - 14,554,799 2,615,971 4,426,584 23,097,354

Additions 9,604,000 13,913,000 382,423 1,705,200 398,696 1,028,071 27,031,390

Disposal - - (3,329,100) (3,329,100)

At 31 December 2012 9,604,000 15,413,000 382,423 12,930,899 3,014,667 5,454,655 46,799,644

Accumulated Depreciation

At 01 January 2011 - 221,278 - 5,393,964 1,731,978 3,383,368 10,730,588

Charge for the year - 30,000 - 1,429,984 148,824 292,995 1,901,803

At 31 December 2011 - 251,278 - 6,823,948 1,880,802 3,676,363 12,632,391

Charge for the year - 244,387 13,083 2,500,920 161,201 397,529 3,317,120

Disposal - - - (3,329,100) - - (3,329,100)

At 31 December 2012 - 495,665 13,083 5,995,768 2,042,003 4,073,892 12,620,411

Net Book Value

At 31 December 2012 9,604,000 14,917,335 369,340 6,935,131 972,664 1,380,763 34,179,233

At 31 December 2011 - 1,248,722 - 7,730,851 735,169 750,221 10,464,963

At 31 December 2010 - 1,278,722 - 4,492,335 754,889 765,923 7,291,869

5. Property, plant and equipment

Note: - The freehold building situated at Flacq was revalued at Rs 1,500,000 by Mr M. Irsaad Nuckchady, a qualified land sur-veyor, on 23rd December 2003 and its Net Book Value on the revalued amount at 31 December 2012 was Rs 1,218,722 . If the freehold building situated at Flacq had been carried under the cost model then the carrying amounts for freehold building would have been Rs 434,802 as at 31 December 2012. - Net book value of motor vehicles under finance lease amounted to Rs 6,341,751 (2011 - Rs 6,976,811).

43

Annual Report 20126. Investment property The Group The Company

2012 2011 2012 2011

Rs. Rs. Rs. Rs.

Opening balance 31,726,120 - 6,025,000 -

Transfer from property, plant and equipment - 6,025,000 - 6,025,000

Transfer from building under construction - 25,701,120 - -

Additions 5,380,000 - 5,380,000 -

37,106,120 31,726,120 11,405,000 6,025,000

The investment property consists of land and building situated at Rose Hill. The property has been carried at cost. The invest-ment property is held to earn rentals or for capital appreciation and is not occupied by the group/company. In the opinion of the directors, the carrying amount of the investment property approximates its fair value.

7. Intangible asset - Computer software

The Group The Company

Cost Rs. Rs.

At 01 January 2012 695,125 695,125

Reclassification - -

At 31 December 2012 695,125 695,125

Amortisation

At 01 January 2012 641,501 641,501

Charge for the year 40,625 40,625

At 31 December 2012 682,126 682,126

Net Book Value

At 31 December 2012 12,999 12,999

At 31 December 2011 53,624 53,624

8. Investment in financial assets: Fair value Fair value Cost Cost

2012 2011 2012 2011

The Company Rs. Rs. Rs. Rs.

(i) Available for sale:

At 1 January 2012 27,078,804 21,984,357 27,307,097 20,659,526

Additions 822,958 7,152,519 822,958 7,152,519

Redemptions/Disposals - (824,225) - (504,948)

Fair value reserve (1,391,062) (1,233,847) - -

At 31 December 2012 26,510,700 27,078,804 28,130,055 27,307,097

(ii) Investment in debentures

At 1 January 2012 - - - -

Additions 2,000,000 - 2,000,000 -

At 31 December 2012 2,000,000 - 2,000,000 -

Total at 31 December 2012 28,510,700 27,078,804 30,130,055 27,307,097

Note:(i) Available for sale financial assets Available -for-sale investments comprise of unquoted and listed and quoted equity securities. The directors are of the opin-ion that the cost of the unquoted available-for-sale securities approximate its fair value. The fair value of the listed and quoted available-for-sale securities is based on the Stock Exchange official market quoted prices at the close of business at the end of the reporting period.

(ii) Investment in debentures Investment in debentures consists of debentures held in Dolberg Asset Finance Ltd for a period of 36 months starting from 5 December 2012 to 4 December 2014. The coupon rate is at 7.5% per annum payable monthly.

44

Crystal anniversary...9. Investment in subsidiary company 2012 2011

The Company Rs. Rs.

Cost

At 1 January 10,000,000 10,000,000

Additions 5,000,000 -

At 31 December 15,000,000 10,000,000

Nameofcompany Class of shares Number of shares % held CountryofIncorporation

Unquoted shares

GFA Investments Ltd Ordinary shares 15,000 100 Mauritius

The results of GFA Investments Ltd have been consolidated and the amounts involved are not material. The directors are of the opinion that the investments in GFA Investments Ltd is fairly stated at cost.

The Group The Company

2012 2011 2012 2011

10. Statutory deposit Rs. Rs. Rs. Rs.

Fixed deposits 8,000,000 8,000,000 8,000,000 8,000,000

Fixed deposit of Rs 8 M is pledged at the bank in favour of the Financial Services Commission.

11. Deposits

Maturing:

up to 3 months 23,800,000 34,000,000 23,800,000 34,000,000

3 to 6 months 8,700,000 16,400,000 8,700,000 16,400,000

6 to 12 months 45,400,000 18,500,000 45,400,000 18,500,000

> 12 months 153,115,000 120,500,000 153,115,000 120,500,000

231,015,000 189,400,000 231,015,000 189,400,000

Analysisasfollows:

Within one year 77,900,000 68,900,000 77,900,000 68,900,000

Between second and fifth year 153,115,000 120,500,000 153,115,000 120,500,000

Total 231,015,000 189,400,000 231,015,000 189,400,000

12. Deferred taxation

Deferred tax liabilities / (asset)

Balance at 01 January 2012 (289,012) (524,495) (297,135) (484,429)

Charge for the year (289,374) 235,483 (270,985) 187,294

Balance at 31 December 2012 (578,386) (289,012) (568,120) (297,135)

13. Trade and other receivables

Insurance receivables:

-Premiums and agents' balances (Refer to Note 23) 9,410,761 9,619,895 9,410,761 9,619,895

Reinsurance recoveries 7,077,757 7,363,944 7,077,757 7,363,944

Other receivables 1,100,794 1,416,382 1,013,959 1,328,320

17,589,312 18,400,221 17,502,477 18,312,159

14. Loan receivable from subsidiary

Loan receivable from subsidiary - - 11,371,054 16,618,330

15. Cash and cash equivalents

Bank and cash balances 49,870,630 72,894,795 49,771,204 72,725,803

45

Annual Report 2012The Group The Company

2012 2011 2012 2011

16. Share capital Rs. Rs. Rs. Rs.

Authorised, Issued and Fully Paid

1 Founder share of Rs 1,000 1,000 1,000 1,000 1,000

24,999 ordinary shares of Rs 1,000 each 24,999,000 24,999,000 24,999,000 24,999,000

25,000,000 25,000,000 25,000,000 25,000,000

Note: All above shares are at par value.

17. Reserves Revenue reserves

Fair value reserves

Revaluation reserves TOTAL

The Group Rs. Rs. Rs. Rs.

Reserves are analysed as follows:

At 01 January 2012 82,286,660 (2,724,240) 956,000 80,518,420

Profit for the year 27,503,812 - - 27,503,812

Other comprehensive income - (1,391,062) - (1,391,062)

Dividends (2,000,000) - - (2,000,000)

At 31 December 2012 107,790,472 (4,115,302) 956,000 104,631,170

The Company

Reserves are analysed as follows:RevenueReserves

Fair value Reserves

RevaluationReserves TOTAL

Rs. Rs. Rs. Rs.

At 01 January 2012 82,903,784 (2,724,240) 956,000 81,135,544

Profit for the year 27,361,635 - - 27,361,635

Other comprehensive income - (1,391,062) (1,391,062)

Dividends (2,000,000) - - (2,000,000)

At 31 December 2012 108,265,419 (4,115,302) 956,000 105,106,117

18. General business fund The Group The Company

2012 2011 2012 2011

Rs. Rs. Rs. Rs.

At 01 January 2012 63,751,157 49,710,891 63,751,157 49,710,891

Transfer from net premium 9,100,070 14,040,266 9,100,070 14,040,266

At 31 December 2012 72,851,227 63,751,157 72,851,227 63,751,157

2012Rs.

2011Rs.

Unexpired Risk Reserve:

Property 929,791 829,677

Motor 69,442,950 61,133,729

Transport 169,422 122,786

Engineering 47,249 95,335

Guarantee 480,028 569,203

Accident & Health 137,147 147,626

Liability 1,419,678 736,363

Miscellaneous 224,962 116,438

72,851,227 63,751,157

Unearned premiums are set aside to provide for periods of risk extending beyond the end of the financial year. The Company has opted as recommended by the Actuary in their report since 2007 for the One- three sixty-fifth (1/365th) method which is believed to give more accurate results.

46

Crystal anniversary...

The Group The Company

2012 2011 2012 2011

19. Obligations under finance lease agreement Rs. Rs. Rs. Rs.

Within one year (Current)

Minimum lease payments 2,198,880 1,850,760 2,198,880 1,850,760

Less: Finance charges allocated to the future periods (485,522) (527,003) (485,522) (527,003)

1,713,358 1,323,757 1,713,358 1,323,757

After more than one year and less than five years (Non-Current)

Minimum lease payments 4,898,440 5,588,799 4,898,440 5,588,799

Less: Finance charges allocated to the future periods (510,362) (751,867) (510,362) (751,867)

4,388,078 4,836,932 4,388,078 4,836,932

20. Retirement benefit obligations

At 01 January 2012 3,898,735 3,845,430 3,898,735 3,845,430

Provision for the year 1,491,327 53,305 1,491,327 53,305

At 31 December 2012 5,390,062 3,898,735 5,390,062 3,898,735

21. Trade and other payables

Insurance payables (Note 23):

- Amounts due to reinsurers 9,993,555 8,376,131 9,993,555 8,376,131

- Outstanding claims provision including IBNR 168,943,393 154,133,981 168,943,393 154,133,981

Other payables 14,447,958 14,974,013 14,258,700 14,767,379

193,384,906 177,484,125 193,195,648 177,277,491

22. Dividends

Revenue reserves 107,790,472 82,286,660 108,265,419 82,903,784

Dividends payable as at 31 December 2012 - - - -

Dividends payable during the year 2,000,000 1,250,000 2,000,000 1,250,000

Dividends paid 2,000,000 1,250,000 2,000,000 1,250,000

No. of shares in issue 25,000 25,000 25,000 25,000

Dividends per share 80 50 80 50

23. Insurance liabilities and reinsurance assets

Amount due by reinsurers

At 01 January 7,363,944 6,547,769 7,363,944 6,547,769

Movement during the year (286,187) 816,175 (286,187) 816,175

At 31 December 7,077,757 7,363,944 7,077,757 7,363,944

Amount due to reinsurers

At 01 January 8,376,131 6,866,558 8,376,131 6,866,558

Movement during the year 1,617,424 1,509,573 1,617,424 1,509,573

At 31 December 9,993,555 8,376,131 9,993,555 8,376,131

Insurance liabilities and reinsurance assetsShort term insurance contracts:Gross

Claims reported and loss adjustment expenses 149,943,393 137,367,981 149,943,393 137,367,981

Provision for claims incurred but not reported "IBNR" 19,000,000 16,766,000 19,000,000 16,766,000

Total gross insurance liabilities 168,943,393 154,133,981 168,943,393 154,133,981

Net

Claims reported and loss adjustment expenses 149,943,393 137,367,981 149,943,393 137,367,981

Provision for claims incurred but not reported "IBNR" 19,000,000 16,766,000 19,000,000 16,766,000

Total net insurance liabilities 168,943,393 154,133,981 168,943,393 154,133,981

47

Annual Report 2012The Group The Company

23. Insurance liabilities and reinsurance assets (Continued)

2012 2011 2012 2011

Rs. Rs. Rs. Rs.

Receivables and prepaymentsThe ageing analysis of premium receivable is as follows:

< 2 months 5,957,422 6,166,556 5,957,422 6,166,556

2 to 12 months 3,060,918 3,060,918 3,060,918 3,060,918

> 12 months 392,421 392,421 392,421 392,421

At 31 December 9,410,761 9,619,895 9,410,761 9,619,895

24. Taxation

Movement in statement of financial position

Taxation

Opening balance 1,322,925 1,716,187 1,322,925 1,716,187

Current tax liabilities 4,862,104 4,067,170 4,862,104 4,067,170

Tax paid during the year (4,373,302) (4,460,432) (4,373,302) (4,460,432)

1,811,727 1,322,925 1,811,727 1,322,925

Corporate Social Responsibility (CSR)

Opening balance 429,277 440,033 429,277 440,033

Provision for the year 542,289 429,277 542,289 429,277

Provision for the current year (2012) 266,437 - 266,437 -

Payment during the year (558,433) (440,033) (558,433) (440,033)

679,570 429,277 679,570 429,277

Statement of financial position 2,491,297 1,752,202 2,491,297 1,752,202

Charge to statement of comprehensive income

Current tax liabilities 4,862,104 4,067,170 4,862,104 4,067,170

Provision for CSR for the year 808,726 429,277 808,726 429,277

Deferred tax asset charge/ (release) (Note 12) (289,374) 235,483 (270,985) 187,294

Statement of comprehensive income 5,381,456 4,731,930 5,399,845 4,683,741

Tax Reconciliation

The company is taxed at 15% on its adjusted profits for the year.

Profit before taxation 32,885,268 28,536,742 32,761,480 28,858,004

Tax applicable at the rate of 15% 4,932,790 4,280,511 4,914,222 4,328,701

Disallowed expenses 259,526 233,029 259,526 195,334

Depreciation 514,172 303,328 503,662 292,834

Income not subject to tax (352,722) (332,657) (352,722) (332,657)

Net capital allowances (491,662) (417,042) (462,583) (417,042)

Current tax liabilities 4,862,104 4,067,170 4,862,104 4,067,170

25. Investment and interest income

Rental income from investment property 68,000 - 68,000 -

Interest income 15,680,669 14,243,786 15,675,525 14,237,770

Dividends received 1,518,149 1,401,146 1,518,149 1,401,146

17,266,818 15,644,932 17,261,674 15,638,916

Investment income represents mainly interests received from deposits with financial instituition and money at call.

48

Crystal anniversary...The Group The Company

2012 2011 2012 2011

26. Other income Rs. Rs. Rs. Rs.

Policy fees 10,202,990 9,189,650 10,202,990 9,189,650

IVTB refund 82,200 289,768 82,200 289,768

Profit on disposal of property, plant and equipment 70,500 - 70,500 -

Gain on disposal of financial assets 3 30,887 3 30,887

Bad debts recovered 11,300 98,650 11,300 98,650

Sundry income 82,886 176,175 52,886 176,175

10,449,879 9,785,130 10,419,879 9,785,130

30. Financial summary 2012 2011 2010 2009 2008

The Group Rs. Rs. Rs. Rs. Rs.

Share Capital 25,000,000 25,000,000 25,000,000 25,000,000 25,000,000

Revenue reserves 107,790,472 82,286,660 57,007,608 40,035,326 17,971,064

Fair value reserve (4,115,302) (2,724,240) - - -

Revaluation reserves 956,000 956,000 956,000 956,000 956,000

Profit before taxation 32,885,268 29,770,589 25,511,753 26,980,904 2,095,231

Profit after taxation 27,503,812 25,038,659 21,222,282 23,564,262 386,080

Total comprehensive income for the year 26,112,750 23,804,812 21,222,282 23,564,262 386,080

Dividend 2,000,000 1,250,000 4,250,000 1,500,000 2,000,000

Earnings per share 1,045 952 849 943 15

The Company 2012 2011 2010 2009 2008

Rs. Rs. Rs. Rs. Rs.

Share Capital 25,000,000 25,000,000 25,000,000 25,000,000 25,000,000

Revenue reserves 108,265,419 82,286,660 57,255,281 40,107,432 17,977,020

Fair value reserve (4,115,302) (2,724,240) - - -

Revaluation reserves 956,000 956,000 956,000 956,000 956,000

Profit before taxation 32,761,480 29,770,589 25,727,386 27,047,054 2,095,807

Profit after taxation 27,361,635 25,038,659 21,397,849 23,630,412 386,656

Total comprehensive income for the year 25,970,573 24,174,263 21,397,849 23,630,412 386,656

Dividend 2,000,000 1,250,000 4,250,000 1,500,000 2,000,000

Earnings per share 1,039 967 856 945 15

27. Profit from operations

Profit from operations is arrived at after charging the following items:-

Staff Costs 10,150,465 9,247,343 10,150,465 9,247,343

Depreciation on property, plant and equipment 3,387,191 1,971,761 3,317,120 1,901,803

Amortisation of intangible assets 40,625 50,425 40,625 50,425

Directors' emoluments 4,974,950 5,493,456 4,974,950 5,493,456

Auditors' remuneration 272,000 272,000 255,000 255,000

Number of employees at end of year 76 63 76 63

28. Net finance costs

Interest on finance lease 601,488 354,180 601,488 354,180

Interest on overdraft 47 11 47 11

601,535 354,191 601,535 354,191

29. Earnings per shareThe calculation of earnings per share is based on total comprehensive income for the year after taxation attributable to ordinary shareholders and on the number of shares in issue throughout the two years ended 31 December 2012.

49

Annual Report 2012

Details of related Parties Relationship

Type of Transaction The Group The Company

2012 2011 2012 2011

Sale of services: Rs. Rs. Rs. Rs.

Directors ShareholderInsurance Premium 82,670 30,000 82,670 30,000

Agents ShareholderInsurance Premium 13,050,135 8,841,091 13,050,135 8,841,091

Amount owed by:

AgentsShareholder/ Agents

Insurance Receivables 1,099,314 193,360 1,099,314 193,360

Executive Director

Shareholder / Executive Director Loan 2,800,000 - 2,800,000 -

Other related party transactions:

Director Shareholder/ Agents Rent Paid 71,250 840,000 71,250 840,000

Director

Agents Shareholder/ Agents Commissions Paid 2,489,451 1,234,615 2,489,451 1,234,615

DirectorDirector / Shareholder

Purchase of freehold land and building 15,000,000 - 15,000,000 -

Amount owed by:

GFA Investments Ltd Subsidiary Loan - - 11,371,054 16,615,604

31. Related party transactions During the year ended 31 December 2012, the Group and the Company traded with related parties. The nature, volume of transactions and the balances as at 31 December 2012 with the parties were as follows:

The following companies are also shareholders of GFA Insurance Ltd:

S. Ruhomutally & Co. Ltd 4% Del Ltd 7%

The two companies have at least one common director / shareholder.

The Group The Company

Remuneration of key management personnel 2012 2011 2012 2011

Rs. Rs. Rs. Rs.

Salaries and short-term employee benefits 5,792,400 6,056,432 5,792,400 6,056,032

Key Management personnel consist of Chief Executive Offficers, Senior managers and Deputy senior managers.

32. Capital risk management The Group’s objectives when managing capital are: - to comply with the minimum capital requirements of the Insurance Act 2005 and the Insurance Rules and Regulations 2007 - to safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for its policyholders. - to provide an adequate return to shareholders by pricing insurance contracts in line with the level of risk and therefore solvency. For the year ended 31 December 2012, the Group and Company have satisfied the minimum capital requirement. 33. Events after the reporting period There are no events after the reporting period which may have a material effect on the financial statements at 31 December 2012.

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