corporation seychelles - welcome to sacos

State Assurance Corporation of Seychelles

Auditor's Report and Financial Statements

For the year ended 31 December 2005

F'

STATE ASSURANCE CORPORATION OF SEYCHELLES

DIRECTORSI REPORT AND AUDITED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2OO5

CONTENTS

Directors' Report

Report of the Auditors

Income Statement

General Insurance Business Revenue Account

Life Assurance Business Revenue Account

Balance Sheet

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

Analysis of General Insurance Underwriting Revenue

PAGE

1-3

8-9

tt-12

t3-29

10

30

Five Year Statistical Information 31


DIRECTORS' REPORT

The directors present their report together with the audited financial statements of the Corporationfor the year ended 31 December 2005.

The financial statements have been prepared in accordance with the Insurance Act, L994 that was

introduced in 1995 and made applicable to the Corporation effective 1996 to regulate the insurance

business in Seychelles.

PRINCIPAL ACTIVITIES

The Corporation is principally engaged in the life and general insurance business in Seychelles incompliance with the provisions of the Insurance Act,1.994.

There has been no significant change in the nature of these activities during the year under review.

RE,SULTS

Profit before taxationTaxation

Profit after taxation

Retained earnings brought forwardRetained earnings carried forward

SR

7,883,165

7,883,165

45,355,929

_szng,ogq

DIVIDENDS

The directors do not recommend declaration of dividend for the year under review.

PROPERTY, PLANT AND EQUIPMENT

During the year the Corporation acquired property, plant and equipment amounting toSR.1,487,285 comprising of furniture and fittings, computers and equipment and vehicles.Disposals comprised principally of a vehicle stated at net book value of SR. 18,750.


DIRECTORS' REPORT (Contd.)

The directors are of the opinion that the market or saleable value of property, plant and equipmentat 31 December 2005 does not differ substantially from the amounts at which it is included in thebalance sheet at that date.

DIRECTORS

The directors of the Corporation in office appointed by the Minister during the financialyear are:

A. A. Lucas

F. MorinJ. NourriceL. NairJ. Esparon

F. Chang Leng

M. A. Hoareau

(appointed effective 14 March 2005)(appointed effective 14 March 2005)(Retired effective 14 March 2005)

(Retired effective 14 March 2005)

STATEMENT OF DIRE,CTORSI RESPONSIBILITIES

The directors of the Company are required to prepare accounts for each financial year which give a

true and fair view of the state of affairs of the Company and of the profit or loss for the period. Inpreparing those accounts, the directors are required to:

ensure that the financial statements are on the going concern basis unless it is inappropriate toassume continuance of business;

select suitable accounting policies and then apply them consistently;

make judgement and estimates that are reasonable and prudent; and

disclose and explain any material departures from applicable accounting standards.

The Insurance Act, 1994 also requires the directors to keep proper accounting records whichdisclose with reasonable accuracy at any time the financial position of the Company. They alsohave the general responsibility for taking reasonable steps to safeguard the assets of the Companyand detect fraud and other irregularities.

The directors consider they have met their aforesaid responsibilities.


DIRECTORS' REPORT (Contd.)

SUBSEQUENT EVENTS

The Corporation was dissolved under the State Assurance Corporation of Seychelles (SACOS)(Dissolution) Act, 2005 that came into operation effective I January 2006. The whole of theundertaking of SACOS is vested in a company with limited liability called State Assurance

Company Limited incorporated under the Companies Act, 1972. The undertaking shall be deemedto be owned and held by this new Company for the same purposes as it was held by SACOS.

AUDITORS

The auditors, A. J. Shah & Associates, Seychelles retire and being eligible offer themselves for re-appointment"

( /rL/l!_a;!,uea<

Director

L.NairDirector

Victoria, Seychelles

18 April2006

F. MorinDirector

.. IL:l' l

J. NourriceDirector

/&. -$. Sm,,,uurr' ,e i&.5,$#ti,4?&s{,fo ar f *re# ;t cr,:*.revr; fol n l:,'

I!"f-i. lio:; tii[l"is: I-rr:cii, Spir! I

Quinly:itr*;:tVir:toria, li4rri-ro

iir: v,i:ha:il*r;

l'harn+ : {-1,.s."ti, rr'l :i r': ..:

I'ax : i)r'4{li r.rill ,:iii{riinilii : aish*il(irlr",,'r:i:r! :,.

REPORT OF THE AUDITORS TO THE MEMBERS OF


We have audited the financial statements set out on pages 5 to 31 prepared on the basis ofsignificant accounting policies set out on pages 13 to 19. As described on page 2, the directors are

responsible for the preparation of financial statements. Our responsibilify is to express an

independent opinion on those financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Seychelles.An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures

in the financial statements. It also includes an assessment of the significant estimates andjudgments made by the directors in the preparation of these financial statements and of whether the

accounting policies are appropriate to the Company's circumstances, consistently applied and

adequately disclosed.

We planned and performed our audit so as to obtain all information and explanations, which weconsidered necessary in order to provide us with suffrcient evidence to give reasonable assurance

that the financial statements are free from material misstatements. In forming our opinion, we also

evaluated the overall adequacy of the presentation of information in the financial statements. Webelieve that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements are properly drawn up in accordance with the provisions ofthe Insurance Act, 1994 and generally accepted accounting standards in Seychelles so as to give atrue and fair view of the state of affairs of the Company as at 3l December 2005 and of the results

and the cash flows of the Company for the year then ended.

4i}.iirt,r-{".i ; S&;ili ii, *. .9ftarr

A.Jia, Seychelles

18 April2006


INCOME STATEMENTFOR YEAR ENDED 31 DECEMBER 2OO5

Note

Surplus from General Insurance Business

(See page 6 - General Insurance Business Revenue Account)

Transfer of Surplus from Life Assurance Fund Valuation(see page 7 - Life Assurance Business Revenue Account)

Investment income

Other income

Profit before taxation

Taxation

Profit for the year

Dividend

Balance of profit carried forward

2005

SR

1,500,568

917,700

169,169

5,295,729

7,883,165

2004

SR

1,171,273

1,340,220

1,937,507

10.732.1t2

15,181,112

t18.944

7,883,165 15,300,056

7,993,165 13,300,056

The annexed notes form an integral part of the financial statements


GENERAL INSURANCE BUSINESS REVENUE ACCOUNTFOR YEAR ENDED 31 DECEMBER 2OO5

Note

Gross written premiums

Premiums ceded on reinsurance

Net written premiums

Gross claims

Claims (to)/from reinsurers

(Decrease)/increase in outstanding claims reserve

Net Claims expense

Premiums net of claims

Commission income

Increase in unearned premium reserve

Commission expense

Operating expenses

Excess of loss insurance

Surplus from General Insurance Business

2005

SR

50,285,299

(6,611,624)

43,673,665

(9,504,664)

(438,077)

(15,477,299)

2004

SR

51,123,037

(6,649,076)

44,474,961

(97,72A382)

53,201,243

19,901,119

(24,420,04A) (24,619,021)

19,253,625 19,856,940

1,257,1741,075,976

20,329,601

(5s,477)

(3,115,695)

(12,549,969)

(3,109,903)

1,500,569

21,114,114

09t,aa6)(2,520,522)

(11,953,635)

(4,677,619)

_IJ?12?3


STATE ASSURANCE CORPORATTON OF SEYCHELLES

LIFE ASSURANCE BUSINESS REVENUE ACCOUNTF'OR YEAR ENDED 31 DECEMBER 2OO5

Note

Gross written premium

Premium on reinsurance ceded

Net premium

Claims to policy holders

Commissions

Transfer of Surplus on Acturial Valuation

Life Business Income

lncome from investments

Commission income

Other income

Total income

Operating expenses

Surplus trasferred to Life Fund

9

10

2005

SR

33,696,546

(635,382)

33,061,164

(r2,738,199)

(2,470,215)

(917,700)

16,935,050

7,217,181

69,064

263,461

24,484,756

(7,916,0A4)

16,668,752

2004

SR

30,035,690

(629,144)

29,406,546

(11,578,022)

(2,131,999)

(1,340,220)

14,356,315

4,434,209

69,018

172,306

19,031,849

(5,538,429)

131493,419



BALANCE SHEET AS AT 31 DECEMBER 2OO5

Property, plant and equipment

Loans on life assurance policies

lnvestment in subsidiary company

Other investments

CURRENT ASSETS

Due from brokers

Debtors for direct premium

Other debtors and prepayments

Taxation recoverable

Cash and short term funds

CURRENT LIABILITIES

Due to brokers

Outstanding claims reserve

Uneamed premium reserve

Premiums received in advance

Other creditors and accruals

Taxation provision

Proposed dividend

t7

l8

Note 2005 2004

SR SR

11 4,055,594 3,391,105

1,2 12,97t,152 11,653,946

13 22,669,973 73,165,995

t4 139,019,16t 66,591,119

15

t6

21,250,937

2,670,799

24,555,349

5,099,636

17,220,062

70,785,772

24,001,397

2,295,956

28,971,215

1,575,132

35,476,729

92,320,329

10,087,417

19,670,976

20,131,947

9,391,745

58,211,995

L3,996,771

35,088,175

20,076,370

537,077

7,431,,455

2,000,000

79,129,949

12,573,997 13,190,491Net current assets

190,299,667 1,67,982,545


BALANCE SHEET AS AT 31 DECEMBER 2005 (Contd.)

Note

FINANCED BY

Share capital

Retained profits

Revaluation reserve

Gratuity and length of service provision

Mortgage Protection Fund

Insurance funds

General Insurance fund

Life Assurance fund

19

58,239,094

3,796,975

2,000,000

126,252,699

2004

SR

5,000,000

39,006,862

6,349,067

50,355,929

2,535,91,9

3,506,751

2,000,000

109,583,946

l4

20

21

),

23

/r--\./ 'r/ )r"i / L/< l-Yfa.:#-rnu.

Director

190,289,667 167,982,545

fl {1rii , lii

J.NourricirDirector

WF.MorinDirector

L.NairDirector

The annexed notes form an integral part of these financial statements

2005

SR

5,000,000

53,239,094

W"r

9


STATEMENT OF CHANGES IN EQUITY

Share Revaluationcapital Reserve

SR SR

5,000,000 6,349,067At I January 2004

Profit for the year

Proposed dividend

At 31 December 2004

At 1 January 2005

Profit for the year

Realised gain from revaluation reserve

At 31 December 2005

Retainedearnings

SR

25,706,906

15,300,056

(2,000,000)

TotalSR

37,055,973

15,300,056

(2,000,000)

5,ooo,o0o q349,067 39,006,962 501355,929

5,000,000 6,349,067 39,006,962 50,355,929

- 7,993,165 7,993,165

(6,349,067) 6,349,067

5,000,000 - 53,239,094 5g,239,094

-


10


CASH FLOW STATEMENTFOR YEAR ENDED 31 DECEMBER 2OO5

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation

Adjustments for:

Depreciation

Rental income from investment in property

Other income

Profit on disposal of fixed assts

Operating profit before working capital changes

Decrease/(increase) in balance due from brokers

(Increase)/decrease in direct premium receivables

Decrease/(increase) in other debtors and prepayments

(Decrease)/increase in balance due to brokers

(Decrease)/increase in outstanding claims reserve

Increase in unearned premium reserve

Decrease in premium received in advance

Increase in other creditors and accruals

lncrease in Life assurance funds

(Decrease)/increase in gratuity and length of service provision

Increase in mortgage protection fund

Cash inflow from operating activities

Taxation paid

Net cash inflow from operating activities

2005

SR

7,883,165

794,046

tt69,169)

{5,254,478)

(41,250)

3r2l2r3l4

2,750,460

(374,933)

4,415,967

(3,909,354)

{15,477,299)

55,477

(537,A77)

950,290

16,669,752

t2,535,919)

290,T24

2004

SR

15,181,1 12

913,075

(1,937,507)

(10,461,081)

(271,031)

31324,569

(20,043,199)

470,957

(3,872,197)

6,733,024

19,901 ,1 1 g

791,006

1,000,459

13,493,419

182,527

2,370,992

51509,702

(3,513,504)

1,g95,1gg

24,352,684

(6,856,199)

171496,496

1l


CASH FLOW STATEMENT (Contd.)FOR THE YEAR ENDED 31 DECEMBER 2OO5

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

Proceeds from disposal of property, plant and equipment

Increase in other investments

Proceeds from disposal of CONDO project work-in-process

Rental income from investment in property received

Other income received

Net cash outflow from investing activities

CASH FLOWS FROM FINAIICING ACTIVITIES

Decrease/(increase) in long term advance to Subsidiary Company

Increase in loans on Life assurance policies

Dividends paid

Net cash inflod(outflow) from financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at 1 January

Cash and cash equivalents at 31 December


2005

SR

(1,487,285)

60,000

(71,421,043)

169,169

{524,070)

25,000

(14,633,306)

1,100,000

1,937,507

10,461,081

2004

SR

5,254,478

(67,430,681) (1,633,788)

50,496,022 (16,166,631)

(1 ,3 17 ,206) (2 , I g 7 ,23 l)(2,000,000) (2,000,000)

47,178,816 (20,353,962)

(18,256,667) (4,491,r54)

35,476,729 39,967,993

171220,062 35,476,729

t2

STATE ASSURANCE CORPORATION OF' SEYCHELLES

NOTES TO THE FINAIICIAL STATEMENTS .31 DECEMBER 2OO5

1. GENERAL

The Corporation is registered under State Assurance Corporation of Seychelles Act, 1980 andis governed by the provisions of Seychelles Insurance Act, 1994. The Corporation is domiciledin Seychelles.

The administrative office of the Corporation is located at Victoria, Mahe, Seychelles.

The principal place at which business is carried on is located in Seychelles.

The Corporation in principally engaged in life and general insurance business in Seychelles.

The Corporation is wholly owned by the Government of Seychelles.

The number of employees in the Corporation at the end of the financial year was 102 (2004 :

10s).

The financial statements are expressed in Seychelles Rupee (SR).

The financial statements were authorised for issue in accordance with a resolution of theBoard of Directors on the 18 April 2006.

2, SIGNIF'ICANT ACCOUNTINGPOLICIES

(a) Basis of preparation

The financial statements of the Corporation have been prepared under the historical costconvention method modified to include the revaluation of certain property investmentsand comply with generally accepted accounting standards in Seychelles and provisions ofthe Insurance Act, L994.

13


NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2OO5

2. SIGNIFICANT ACCOUNTING POLICIES (Contd.)

(b) Property, plant & equipment and depreciation

Freehold land and buildingsFurniture and fittingsComputers and equipmentMotor vehicles

(c) Investments

Property, plant & equipment are stated at cost less accumulated depreciation.

The cost of an asset comprises its purchase price and any attributable costs of bringingthe asset to working condition for its intended use. Expenditure for additions,improvements and renewals are capitalised and expenditure for maintenance and repairsis charged to the Income Statement.

Capital work in progress is not depreciated. Depreciation on property, plant &equipment is provided at the rates calculated to write off their cost, less estimatedresidual value, of each asset evenly over its expected useful life. The principal annualdepreciation rates are as follows:

ao/L/O

t0%rs - 20%

2s%

Investments consisting of Seychelles Government and other securities redeemable atfixed dates are stated at cost adjusted to reflect amortisation and accretion of premiumsand discounts on acquisition on a straight line basis over the residual period of maturity.

Investments in non-publicly traded securities and investments in subsidiaries are held forlong term and are stated at cost.

L4


NOTES TO THE FINANCIAL STATEMENTS .31 DECEMBER 2OO5

2. SIGNIFICAI\T ACCOUNTING POLICIES (Contd.)

(c) Investments (Contd.)

Investments in leasehold and freehold immoveable properties are stated at cost orvaluation. These properties are normally revalued by independent professional valuers atleast once in every three years. [r addition to the aforesaid, additional revaluations arealso performed if market conditions indicate that the carrying values of the revaluedassets are considered materially higher than the existing market value at that time. Anyincrease in the value of these properties is credited to revaluation reserve, except to theextent that it reverses a revaluation decrease for the same investments previouslyrecognised as an expense, in which case the increase is recognised in the incomestatement to the extent of the decrease previously recognised. A revaluation decrease isfirst offset against an increase on unutilised earlier valuations in respect of the sameproperties and is thereafter recognised as an expense. Upon the disposal of theimmoveable properties, the attributable revaluation surplus remaining in the revaluationreserve is transferred to retained profits. Revaluation of investment in properties wascarried out in March 2004 and the necessary effect on such revaluation has been reflectedin the financial statements.

Life assurance fund invested with commercial banks is classified as investments as theseare long term in nature. Interest accrued on these term deposits is recognised to LifeAssurance Revenue Account.

(d) Cash and cash equivalents

For the pu{poses of cash flow statement, cash and cash equivalents comprise balanceswith less than 90 days maturities from the date of acquisition including cash and bankbalances with central bank, treasury bills and other eligible bills, amounts due from otherbanks and trading securities.

(e) Provisions

Provisions are recognised when the Company has a present obligation (legal orconstructive) as a result of a past event. It is probable that an outflow of resourcesembodying economic benefits will be required to settle the obligation and a reliableestimate can be made of the amount of the obligation.

15




(0 General insurance underwriting results

General insurance underwriting results are determined for each class of business after

taking into account inter alia, unearned premium reserves, outstanding claims and

additional reserves.

Premium income

Premium income is recognised on the date of assumption of risk.

Unearned premium reserve

Unearned Premium Reserve represents unearned portion of premium income at the

balance sheet date. The Unearned Premium Reserve is computed on the llz4th methodfor all classes of business.

Provision for claims

In respect of claims notified but not settled on the balance sheet date, a provision is made

for the claims which includes estimated related expenses less reinsurance claimrecoverable. Further, in respect of claims incurred but not reported at the balance sheet

date, the managment estimates the provision for claims that include estimated related

expenses less reinsurance claim recoverable and includes it in the provision for claims.

(g) Life assurance underwriting results

The long term liabilities to policyholders are determined by an actuarial valuationannually and the surplus is transferred to the life assurance revenue account.

Premium income

Premium incomes on new policies are recognised to income on the date of assumption ofrisks. Subsequent premiums on the policies are recognised on due dates. Premiumsoutstanding at balance sheet date are recognised to income for the period falling in the

financial year where the grace period allowed for payment is due subsequent to the end ofthe financial year.

t6




(g) Life assurance underwriting results (Contd.)

Commission and agency expenses

Commission and agency expenses represent costs directly incurred in securing premiumon insurance policies. Income derived from reinsurers in the course of ceding of premiumto reinsurers is netted off against the commission and agency expenses and the balance is

charged to the revenue account in the period in which they are incurred.

Provision for claims

Provision for claims together with related expenses, in respect of claims notified but notsettled at the balance sheet date, is estimated using the case-basis method.

Managementfee

The Corporation charges 0.5% of the balance in the life fund at the end of each financialyear as management fee for managing the life fund. The aforesaid management fee ischarged to the life assurance revenue account.

Rental income

Rental income is recognised on an accrual basis and is stated at net of related expenses.

(h) Foreign Currencies

Transactions in foreign currencies are recorded in Seychelles Rupees at the rates ofexchange ruling at the date of the transactions. Monetary assets and liabilitiesdenominated in foreign currencies are translated at the rate of exchange ruling at thebalance sheet date. Exchange differences on all foreign curency transactions are dealt inthe income statement.

t7


NOTES TO THE FINAAICIAL STATEMENTS .31 DECEMBER 2OO5

2. SIGNIFICAI\T ACCOUNTING POLICIES (Contd.)

(i) Taxation

Current tax is the expected amount of business tax payable in respect of the taxable profitfor the year and is measured using the tax rates that have been enacted at the balance

sheet date. No provision is made for deferred taxation.

CI) Revenue recognition

Revenue is recognised when it is probable that the economic benefits associated with thetransaction will flow to the enterprise and the amount of the revenue can be measuredreliably.

In accordance with general practice within the insurance industry, premium and otherrevenues are recognised as operating revenue on the assumption of risk on due dates ofthe renewal of policies. Unearned premiums and premiums received in advance areincluded in current liabilities as deferred income.

(k) Compensation and gratuity reserve

The Corporation had provided for compensation and gratuity payable to its existingemployees based on the length of service as per guidelines provided by the Governmentof Seychelles for parastatal organisations. This reserve was utilised for payment ofcompensation and gratuity liability on dissolution of the Coqporation during the year2005.

(l) tr'inancialinstruments

Financial instruments are recognised in the balance sheet when the Corporation hasbecome aparty to the contractual provisions of the instrument.

Financial instruments are classified as liabilities or equity in accordance with thesubstance of the contractual arangement. Interest, dividends and gains and lossesrelating to a financial instrument classified as a liability, are reported as expense orincome. Distributions to holders of financial instruments classified as equity are chargeddirectly to equity. Financial instruments are offset when the Corporation has a legallyenforceable right to offset and intends to settle either on a net basis or to realise the assetand settle the liability simultaneously.

18


NOTES TO THE F'INAI\CIAL STATEMENTS - 31 DECEMBER 2OO5


0) Financial instruments (Contd.)

3. SURPLUS FROM LIFE ASSURANCE FUND VALUATIONYear

Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off whenidentified. An estimate is made for doubtful debts based on a review of all outstandingamounts as at the balance sheet date.

Payables

Payables are ca:ried at cost which is the fair value of the consideration to be paid in thefuture for goods and services received whether billed or not billed to the Corporation.

Surplus from valuation in the year 2000Surplus from valuation in the year 2001

Surplus from valuation in the year 2002Surplus from valuation in the year 2003Surplus from valuation in theyear 2004

Rental income from investment in propertyInterest on treasury billsInterest on call depositsInterest on term deposits

2005

SR

(300,000)

2004

SR

300,360

1,039,960

1,277,700

_et?Joo_ _!340220

Negative surplus of SR.300,000 in the year 2000 represents adjustment of over charge ofdistributable surplus to shareholders based on final assessment of actuarial valuation.

4, INVESTMENT INCOME

2005

SR

120,000

19,642

29,527

2004

SR

1,835,040

15,844

25,075

61,548

t9

-U9 - J'231,s07


NOTES TO THE FINAAICIAL STATEMENTS - 31 DECEMBER 2OO5

5. OTHER INCOME

200s 2004SR SR

Interest on long term loans to Subsidiary Company 3,980,369 g,451,039

Interest on current accounts 46,201 54,550Miscellaneous income - Premium on Home Ownership Scheme 1,060,638 l,g5},82lSurplus on policy protection fee collected lll,l43 127,592Profit on disposal of fixed assets 4l,Z5O 271,031Profiti(loss) on exchange 56,12g (122,921)

5,295,729 l0r732rll2

6. TAXATION

Current taxation based on profit for the year

Over provision in prior year

7. DIVIDENDS

Proposed final dividend (2004: SR 400 per share)

8. OPERATING EXPENSES. GENERAL BUSINESS

Staff costs

Repairs and maintenanceLegal and professional feeManagement expenses

Marketing expenses

Depreciation

(118,944)(118,944)

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

7,364,613206,259410,1lg

2,gg2,lg5791,737

794,04612,549,969

6,072,441

167,029

424,920

3,413,463

1,062,909

913,075

11,953,635

20



9. INVESTMENT INCOME . LIFE BUSINESS

Rental income - OceanviewRental income - CSB and Pirate's Arms buildingsInterest on treasury billsInterest from call depositInterest on advances to commission agents

Interest on other loans - Life business

IO. OPERATING EXPENSES . LIFE BUSINESS

Staff costs

Repairs and maintenanceLegal and professional feeManagement expenses

Marketing expenses

2005

SR2,lg0,gg22,676,276

348,654382,054

36,041

r,583,1747,2l7,lgl

2004

SR

2,157,049

108,500

l79,5lg483,380

14,349

1,491,413

3,520,899

167,327

237,974

3,431,198458,606

7,8161004

2,143,726

32,197

253,275

2,419,427

6gg,g04

5r53gr42g

21



11. PROPERTY, PLANT AND EQUIPMENT

Landand

buildinesSR

Furnitureand

fittingsSR

Computersand

equipment

SR

Motorvehicles

SRTotalSR

COST

At 1 January 2005

AdditionsDisposals

At 31 December 2005

ACCUMULATEDDEPRECIATION

At 1 January 2005

Charge for the year

Disposals

At 31 December 2005

895,315 4,169,296 6,96g,959- 247,952 955,772

895,315 4,4t7,139 7,924,731 1,733,779

1,500,119

383,661

13,533,679

1,497,295

(150,000)

14,970,963

165,624

15,237

190,961

2,843,795

260,r1,0

6,252,447230,353

890,717299,346

(131,250)

1,047,9I3

10,152,573

794,046(131,250)

10,915,369

NET BOOK VALUE

At 31 December 2005

3,103,995 6,482,900

714,454 1,313,243 l,34l,g3l 685.966 4,055,594

At 31 December 2004 729,691 1,325,501 716,512

Land and buildings at cost:

Land and buildingsCapital work in progress

609,40r 3,381,105

200s

SR

761,834133,491

2004

SR761,834

133,491

22

895,315 895,315



12. LOANS ON LIFE ASSURANCE POLICIES

These represent loans advanced to the policy holders against their life policies.

13. INVESTMENT IN SUBSIDIARY COMPANY

Unquoted shares at cost in Sun Investment(Seychelles) Limited

Long term advance

Movements in Investments in Subsidiary

Investments at the beginning of the yearAmounts advanced during the financialyear

Amounts recovered during the financial yearInvestments (Net)Interest for the year

Receivable at 31 December

General Business

Treasury Bonds

7o Holding

60%

2005

SR

60,000

22,609,97322,669,973

73,165,895

411,26t73,577,156

(54,997,025)

18,690,131

3,979,742

2004

SR

60,000

73,105,89573,165,995

56,999,264

7,776,562

64,775,826

64,775,826

8,390,069

22,669,973 73.165.895

Long term advance is partly secured by a charge on the properties of the subsidiary companyamounting to SR 11,924,268, bears interest @ 8% per annum and is repayable after a grace periodof 2 years from each advance in monthly instalments over a 10 year period. The balance of the longterm advance is unsecured.

14, OTHER INYESTMENTS

2005

SR2004

SR

47,887,025

23

7o Holding

47,997,025



14. OTHER INVESTMENTS (Contd.)

7o HoldingLife Business

Equity shares - UnlistedSun Investment (Seychelles) Limited

- a company incorporated in Seychelles 40%Premium on shares of Sun Investment (Seychelles)

Limited

Leasehold land and buildings - Life - OceanviewLeasehold land and buildings - Life - Pirate's ArmsFreehold land - Anse Forbans - LifeCSBBuilding-LifeLife Property - Anse RoyaleCapital work in progress- Life

Term deposit with commercial bank

Other term deposits with banks

Treasury Bonds

2005

SR

40,000

17,522,073

2004

SR

17,562,073

20,568,447

2,653-,5gg

11,933,936

17,787,000

6,597,025

6,560,000

2,637,025

8,634,51 1

Term deposit with a commercial bank is from life assurance fund, bears interest at 8o/o per annumand is redeemable in monthly instalments upto the financial year 2010.

400 shares representing40% equity securities in Sun Investment (Seychelles) Limited were acquiredfrom Island Construction (Pty) Limited for an aggregate consideration of SR.17,562,073 (includingadjustment of loan of SR.2,562,063 advanced to the Company during the year 2001).

Analysis of cost and valuation of leasehold land and buildings

23,222,0365,160,000

3,239,05240,947,975

72,569,063138,018,161

2005

SR

20,568,447

54,149,497

6,290,000

3,161,621

3,000,000

66,591,11866,591,118

2004SR

tt,933,93611,437,933

Leasehold land and buildings at cost - Oceanview - LifeLeasehold land and buildings at cost - Pirate's Arms - LifeRevaluation surplus (revaluation carried out on Pirate's Arms

property in the years 1998 and 2004) 6,349,067

24

20,568,447 29,720,936



15. OTHER DEBTORS AND PREPAYI\{ENTS

Debtors and prepayments

Provision for doubtful debts

Advance for project in progress

16. CASH AND SHORT TERM FUNDS

Cash and bank balances

Short call and term deposits with commercial banks

2005

SR9,561,402

(1,000,000)

2004

SRL4,147,679(1,000,000)

8,561,40215,993,946

13,147,679

15,823,53624,555,348 28,971,215

16,734,728

495,33417,220,062

35,088,175(15,477,299)

33,025,841

2,450,888

35,476,729

17. OUTSTANDING CLAIMS RESERVE

At l January

(Decrease)/increase during the yearAt 31 December

18. TJNEARNED PREMIUM RESERVE

At l January

Increase during the year (net)At 31 December

19. SHARE CAPITAL

Authorised10,000 ordinary shares of SR 1,000 each

Issued and fully paid5,000 ordinary shares of SR 1,000 each

15,181,057

19,901,118

19,610,876 35,088,175

20,076,370

55,477

19,285,364

79t,00620,131,847 20,076,370

__1!p99p99_

5,000,000

[0,000,000

25

5,ooo,ooo


NOTES TO THE FINANCIAL STATEMENTS.3l DECEMBER 2OO5

20. GRATUITY AND LENGTH OF SERVICE PROVISIONS

At I January

Provision for Compensation for the year

Provision for Gratuity for the yearBenefits paid during the year

Provision as at 31 December

2I. MORTGAGE PROTECTION FUND

At I January

Provision for the year

Payments during the yearAt 31 December

22, GENERAL INSURANCE FUND

At I January and 31 December

23. LIFE ASSURANCE FUND

Movements in fund

At I January

Transfer from Life Revenue Account

2005

SR2,535,919

1,112,906(3,648,825)

2004SR

2,353,392

363,256

128,000(308,729)

3,506,751448,r24

(158,000)

3r7961875

2,535,919

1,135,769

2,370,982

3,506,751

2,ooo,ooo 2,000,000

109,583,946

16,668,752

96,090,527

13,493,419126,252,698 109,583,946

Represented byShares in Sun Investment (Seychelles) LimitedInvestment in leasehold land and buildings and fixed assets

Term deposit with Commercial Bank (SSB)

Other term deposits

Treasury bonds

Balances including call and term deposits with banks

Loans on life assurance policies (see note 12)

Net current assets

Due to General Insurance

17,562,073

23,741,877

5,160,000

3,239,05240,947,975

6,607,287

t2,971,15216,138,575

54,988,867

6,290,000

3,161,621

3,ooo,ooo

15,094,706

r1,653,94618,867,615

126,367,991(115,293)

113,046,755

(3,462,809)109,583,946

26

126,252,698



24, CAPITAL COMMITMENTS

2005SR

2004SR

Approved and contracted for fixed assets

from life assurance fund:

Victoria bus terminal complex - SACOS Tower 500,000 2,500,0002.500.000 2,500,000

25. CONTINGENT LIABILITIES

In the normal course of business, the Corporation makes various commitments and incurscertain liabilities on behalf of the customers. No material losses are anticipated as a result ofthese transactions. The commitments and contingencies outstanding as at 31 December 2005relate to security performance bonds amounting to SR.13,256,240 (2004 - 5,798,983).

26, FINANCIAL INSTRUMENTS

(a) Financial risk management objectives and policies

The Corporations's financial risk management policy seeks to ensure that adequate

financial resources are available for the development of the Corporation's businesses

whilst managing its interest rate, foreign exchange, liquidity and credit. The Corporationoperates within clearly defined guidelines that are approved by the Board and the

Corporation's policy is not to engage in speculative transactions.

(b) Interest rate risk

The Corporation finances its operations through operating cash flows which are

principally denominated in Seychelles Rupee and United States Dollar. The Corporation'sprimary interest rate risk relates to deposits with commercial banks in call and termdeposits and on advances to its subsidiary company. The Corporation does not have anyinterest swap to minimise its exposure to interest rate volatility.

27


NOTES TO THE FINANCIAL STATEMENTS.3l DECEMBER 2OO5

26. FINANCIAL INSTRUMENTS (Contd.)

(c) Foreign exchange risk

The Corporation operates in Seychelles but is exposed to currency risk in respect of re-insurance premiums payable in foreign currencies. However, the re-insurance claimsare received in foreign currencies and the claims are mostly payable in SeychellesRupees. The revenue of the Corporation in foreign exchange is not sufficient to meetthe requirement for settlement of re-insurance premiums to re-insurers on an yearlybasis.

(d) Liquidity risk

The Corporation practices prudent liquidity risk management by maintaining adequatefrrnds to meet its funding needs.

(e) Credit risk

The Corporation seeks to invest cash assets safely and profitably. The Corporation alsoseeks to control credit risk by setting counterparty limits and ensuring that credit facilityis made to customers with appropriate credit history and monitoring customers'financialstanding through periodic credit review and credit checks at point of sales. TheCorporation considers the risk of material loss in the event of non-performance by afinancial counterparty to be unlikely.

(f) Fair values

The on-balance sheet financial assets and liabilities of the Corporation for investmentsproperty, property, plant and equipment, inventories and current taxation estimated fairvalues as at the balance sheet date approximate their carrying amounts as reflected in thebalance sheets, except for the following financial assets and liabilities:

2005

Carryingamount

SR

Fairvalue

SR

2004Carrying

amountSR

Fairvalue

SR

Unquoted shares:

in subsidiary company _l?,622,g?3 L7,622,073

28

60,000 60,000



27. COMPARATIVE FIGURES

The following comparative figures have been re-stated to conform with the current year's

presentation:

As stated As

previously restatedSR SR

BALANCE SHEET

CURRENT ASSETSDebtors from direct premiumDebtors from direct premium

Less: Intemal fund transfers (classified under cash and

bank balances)

2,432,092 2,432,092

2,4321092 21295,856

Cash and Bank balancesCash and Bank balances

Add: Internal fund transfers (classified under debtors

from direct premium)Less: Treasury bonds and term deposits (classified

under other investmentts

NON.CURRENT ASSETSOther Investments

Other investments

Add: Treasury bonds and term deposits (classified

under cash and bank balances)

41,502,114 41,502,114

136,236

- (6,161,621)

41,502,114 35,476,729

60,429,497 60,429,497

- 6,16r,62160,429,497 66,591,119

28. CONSOLIDATION OF SUBSIDIARY

The financial statements of Sun Investment (Seychelles) Limited, a wholly owned subsidiarycompany, has not been consolidated in these financial statements to reflect the Group financialstatements for the year under review as the audit of the subsidiary has not been completed atthe date of this report. Provisional figures were also not available for consideration to includethe same for the purpose of preparing goup accounts.

29


ANALYSIS OF GENERAL INSURANCE UNDERWRITING REVENUE

FOR YEAR EI\DED 31 DECEMBER 2OO5

Gross written premium

Net premium income

Commission from Reinsurers

Income for the year

Claims, net

Increase/(decrease) in:Provision for claims

Unearned premium reserve

Operating expenses

Excess of loss insurance

Commission

Expenditure for the year

Profit/(loss) for the year

Profit/(loss) for the prior year

House

Motor Fire Holder Others Total

sR'000 sR'000 sR'000 sR'000 sR'000

24,918 9,085 7,152 9,130 50,285

24,915 5,117 7,068 6,574 43,674

- 714 18 344 r,076

16,193 8,039 12,735 2,930 39,897

464 (6,s63) (8,865) (513) (1s,477)(320) 433 (181) r24 56

6,218 2,267 1,785 2,279 12,549

202 896 792 r,218 3,108

613 588 526 1,389 3,116

23,370 5,660 6,792 7,427 43,249

t,545 t7t 294 (509) 1,501

_37u_ _s,e8l_ (2;-l_U_ _8se_ _tlu_

30


FIVE YEAR STATISTICAL INFORMATION - 31 DECEMBER 2OO5

GENERAL INSURANCE

Gross Written PremiumMotorFire

Householder

Miscellaneous

Retained in CorporationGross Premiums net of ReinsuranceMotorFireHouseholder

Miscellaneous

Proportions Retained:MotorOthers

Overall

Profit / (loss)

MotorFire

Householder

Miscellaneous

LIFE ASSURANCE

Gross Written Premium

Retained in the Corporation:Gross Premium net of Reinsurance

Life Insurance Fund Revenue

2005 2004

sR'000 sR'0002003

sR'000

25,08110,316

6,558

10,168

52,123

2002 2001

sR'000 sR'000

24,918

9,085

7,152

9,130

_50,285_

24897

9087

8038

9101

51,123

23,t258,911

6,02411,654

49,714

21,597

8,21,9

5,497

10,380

45,693

24,915

5,1r77,068

6,574

100%

74%

87%

1,545

t7l294

(s0e)

1,501

248744974

7963

6666

25,037

4,422

6,4936,977

23,125

4,2035,967

7,568

2r,5973,892

5,433

7,025

rc0%75%

87%

100%66%

82%

2,561773

(1 11)

1,959

100%

67%

82%

3,570(3,411)

1,051

928

t00%68%

83%

4,969(s02)

917

1,447

6,830

3781

598r(9,318)

859

1,303 5,081 2,138

33,697 30036 27,316 25,178 23,815

33,061

16,669

31

29407

13493

26,704

14,534

23,742 23,385

13,345 10,926

corporation seychelles - welcome to sacos

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