SACOS GROUP LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2019
SACOS GROUP LIMITED
TABLE OF CONTENTS - 31 DECEMBER 2019
PAGES
CORPORATE INFORMATION 1
DIRECTORS' REPORT 2 - 3
AUDITOR'S REPORT 4 - 9
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 10 - 11
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 12
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY & STATEMENT OF LIFE ASSURANCE FUND 13
CONSOLIDATED STATEMENT OF CASH FLOWS 14 - 15
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS 16 - 69
SACOS GROUP LIMITED
CORPORATE INFORMATION 1
Board of Directors
Non-executive directors : Mrs. Lekha Nair Chairperson & C.E.O. Appointed April 22, 2015
Seychelles Pension Fund
Mr. Louis Rivalland C.E.O. Appointed July 16, 2007
Swan Group
Mr. Patrice Bastide Senior Manager Appointed March 28, 2013
Swan Group
Mr. Rod Thorrington Consultant Appointed April 2, 2015
Mrs. Ina Barbe Consultant Appointed October 19, 2015
Mr. Bernard Adonis Director Appointed September 25, 2017
Ms. Doreen Bradburn Corporate Manager Appointed September 18, 2018
Executive Directors : Ms. Jennifer Morel Chief Executive Officer Appointed January 12, 2018
Ms. Georgette Capricieuse Deputy Chief Executive Officer Appointed October 23, 2018
Mrs.Tacey Furneau Chief Financial Officer Appointed March 25, 2019
Company Secretary Valsen Fiduciaries (Seychelles) Limited Company Secretary Appointed July 1, 2017
Registered Office : Maison Esplanade, Francis Rachel Street,
Victoria, Mahe,
Seychelles
Legal Advisers : K.B Shah
Attorney-at-Law & Notary Public
S Aglae ( Resigned July 2019)
Attorney-at-Law & Notary Public
A Madeleine (Appointed December 2019)
Attorney-at-Law & Notary Public
Auditors : Pool and Patel
Chartered Accountants
Actuaries : QED Actuaries and Consultants South Africa
Bankers : Barclays Bank (Seychelles) Limited
Bank of Baroda (Seychelles)
Seychelles International Mercantile Banking Corporation Limited [Nouvobanq]
Al Salam Bank Seychelles
Seychelles Commercial Bank Limited
The Mauritius Commercial Bank (Seychelles) Limited [MCB]
Sponsor Advisor : Constant Capital (Seychelles) Ltd
Eden Island,
Seychelles
SACOS GROUP LIMITED
DIRECTORS' REPORT
2
PRINCIPAL ACTIVITIES & CURRENT YEAR EVENTS
RESULTS
2019 2018 2019 2018
SCR SCR SCR SCR
Profit / (loss) for the year 24,990,800 16,205,023 6,784,875 5,217,839
Other comprehensive income 9,145,621 (732,851) 2,661,821 -
Total comprehensive income 34,136,421 15,472,172 9,446,696 5,217,839
Retained earnings brought forward 39,797,066 37,263,746 53,395,156 51,177,317
Share of Shareholder's Surplus/(Deficit) 13,598,090 315,481 - -
Comprehensive income for the year (excl. fair value change) 6,784,875 5,217,839 6,784,875 5,217,839
Dividends (4,000,000) (3,000,000) (4,000,000) (3,000,000)
Retained earnings at end of period 56,180,031 39,797,066 56,180,031 53,395,156
Fair value reserve 5,057,131 2,395,310 5,057,131 2,395,310
Total reserves 61,237,162 42,192,376 61,237,162 55,790,466
1.
2.
3.
4.
5.
6.
DIVIDENDS
EQUIPMENT AND INVESTMENT PROPERTIES
31 DECEMBER 2019
The Directors are pleased to submit their report together with the audited financial statements of the Group and the Company for the year
ended 31 December 2019.
SACOS Group Limited (collectively "the Group" and referred as "The Company" for its separate financial statements here-after) is
underwriting of general insurance and life assurance policies. Pursuant to order dated 23rd January 2019 of the Supreme Court of
Seychelles, Sacos Insurance Company Limited and Sun Investment Limited have been amalgamated with the Sacos Group Limited with
effective from 1st January 2017.
Consequently, Sacos Insurance Company Limited and Sun Investment Limited have been amalgamated into Sacos Group Limited with
the principal activity of the Company is that of Short-term Insurance Business. These activities have remained unchanged during the
year under review. Activities of its 100% owned subsidiary SACOS Life Assurance Company Limited (hereafter referred as 'SLACL') is to
underwrite life assurance policies.
The Group The Company
Made judgments and estimates that are reasonable and prudent;
Taken reasonable steps for the prevention and detection of fraud and other irregularities; and
Considered appropriate disclosures for all events after the reporting period.
Prepared the financial statements on a going-concern basis;
Taken appropriate measures to safeguard the assets of the Group through the application of appropriate internal control, risk
management systems and procedures;
Additions to investment property during the year 2019 and 2018 were Nil for both Group and Company except for capitalization of work in
progress amounting to SCR 8,260,248 (2018: Nil) for the Group and SCR 7,428,161 (2018: Nil) for the Company.
The Directors confirm that in preparing these financial statements they have:
The Directors have estimated that the carrying amount of equipment and investment properties as at the date of the reporting period
approximate their fair values.
Dividends of SCR 2.00 per share amounting to SCR 4 million were proposed, approved and paid in 2019 (2018: SCR1.50 per share).
Additions to equipment during the year amounting to SCR 6,730,303 (2018: SCR 29,642,334) for the Group and SCR 6,625,456 (2018:
SCR 28,753,648) for the Company and these comprised mainly motor vehicles, computer equipment, furniture & fittings and Work in
progress.
DIRECTORS’ STATEMENT OF RESPONSIBILITIES
Selected suitable accounting policies that are compliant with International Financial Reporting Standards and applied them
consistently;
SACOS GROUP LIMITED
DIRECTORS' REPORT
3
DIRECTORS AND DIRECTORS' INTERESTS
SGL SLACL
2019 2018
L Nair (Chairperson) 280 280 a a
J Morel 120 120 a a
R Thorrington - 1 a a
I Barbe - - a a
L Rivalland - - a a
P Bastide - - a a
B Adonis - - a a
D Bradburn - - a a
G Capricieuse - - a a
T Furneau 130 130 a a
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors consider they have met the aforesaid responsibilities.
AUDITORS
Pool and Patel
Chartered Accountants
BOARD APPROVAL
L Nair L Rivalland P Bastide R Thorrington
Director Director Director Director
I Barbe B Adonis D Bradburn J Morel
Director Director Director Director
G Capricieuse T Furneau
Director Director
These financial statements have been approved for issue by the Board of Directors on 8th April 2020.
The Board is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial
Reporting Standards (IFRS) and in compliance with the Seychelles Companies Act, 1972 and the Insurance Act 2008. This responsibility
includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances. The Directors have the general responsibility of
safeguarding the assets, both owned by the Group and those that are held in trust and used by the Group.
Number of shares
held at year-end
31 DECEMBER 2019
The Directors are responsible for the overall management of the affairs of the Group including its operations and making investment
decisions.
SACOS GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019 10
Notes
The
Company Life Consolidated
The
Company Life Consolidated
SCR SCR SCR SCR SCR SCR
ASSETS
Non-current assets
Equipment 5 24,657,286 1,469,737 26,127,023 29,738,205 2,619,842 32,358,047
Right of use asset 6 21,363,408 - 21,363,408 - - -
Investment properties 7 66,339,314 212,995,101 279,334,415 85,173,940 218,381,147 303,555,087
Intangible assets 8 2,721,546 285,834 3,007,380 4,165,039 441,004 4,606,043
Investment in subsidiaries 9 3,000,000 - - 3,000,000 - -
Investment in preference share 9 45,000,000 - - 45,000,000 - -
Investment in financial assets 10 51,186,593 68,480,771 119,667,364 21,390,457 76,906,329 98,296,786
Loans and receivables 11 - 36,598,699 36,598,699 - 39,442,694 39,442,694
Investment in associates 13 - 21,284,705 21,284,705 - 20,508,967 20,508,967
214,268,147 341,114,847 507,382,996 188,467,642 358,299,983 498,767,625
Current assets
Investment in financial assets 10 10,884,746 93,323,106 104,207,851 615,308 73,317,120 73,932,428
Loans and receivables 11 - 19,006,977 19,006,977 - 21,981,809 21,981,809
Trade and other receivables 14 100,303,965 12,058,713 112,362,678 101,677,535 5,868,861 107,546,396
Intercompany receivables 15 - 35,729,340 - - 17,346,108 -
Cash and cash equivalents 16 16,468,297 17,551,144 34,019,441 32,342,752 24,525,786 56,868,538
Current tax asset 17 4,366,092 - 4,366,092 4,383,682 - 4,383,682
132,023,100 177,669,280 273,963,039 139,019,277 143,039,684 264,712,853
Total assets 346,291,247 518,784,127 781,346,035 327,486,919 501,339,667 763,480,478
EQUITY AND LIABILITIES
Capital and reserves
Share capital 18 70,000,000 3,000,000 70,000,000 70,000,000 3,000,000 70,000,000
Preference share - 45,000,000 - - 45,000,000 -
Solvency/Undistributed reserve 28,651,586 - 28,651,586 - - -
Retained earnings 27,528,445 - 27,528,445 53,395,161 (13,598,090) 39,797,071
Fair value reserve 5,057,131 - 5,057,131 2,395,310 - 2,395,310
Total equity 131,237,162 48,000,000 131,237,162 125,790,471 34,401,910 112,192,381
Technical provisions
Life assurance fund 19 - 455,858,950 455,858,950 - 444,767,315 444,767,315
Gross outstanding claims and IBNR20/25 66,935,232 2,255,147 69,190,379 82,887,872 3,534,123 86,421,995
Gross unearned premiums 20/25 67,031,629 - 67,031,629 64,123,960 - 64,123,960
Total technical provisions 133,966,861 458,114,097 592,080,958 147,011,832 448,301,438 595,313,270
LIABILITIES
Non-current liabilities
Retirement benefit obligations 23 4,470,036 829,495 5,299,531 4,204,115 919,112 5,123,227
Deferred tax liabilities 12 1,543,567 - 1,543,567 1,202,468 - 1,202,468
Funds under Management 21/22 2,349,295 - 2,349,295 2,321,284 - 2,321,284
8,362,898 829,495 9,192,393 7,727,867 919,112 8,646,979
Current liabilities
Trade and other payables 24(a) 14,977,795 11,840,535 26,818,330 29,610,644 17,717,207 47,327,851
Intercompany payables 15 35,729,340 - - 17,346,108 - -
Lease liability 24(b) 22,017,192 - 22,017,192 - - -
72,724,327 11,840,535 48,835,522 46,956,752 17,717,207 47,327,851
Total liabilities 81,087,225 12,670,030 58,027,915 54,684,619 18,636,319 55,974,830
Total equity and liabilities 346,291,247 518,784,127 781,346,035 327,486,919 501,339,667 763,480,478
(0.14) 0.72 0.27 0.11 - 0.34
THE GROUP
20182019
The notes on pages 16 to 69 form an integral part of these consolidated financial statements.
Auditors' report on pages 4 to 9.
SACOS GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019 11
BOARD APPROVAL
These financial statements have been approved for issue by the Board of Directors on 08th April 2020.
L Nair L Rivalland P Bastide R Thorrington
Director Director Director Director
I Barbe B Adonis D Bradburn J Morel
Director Director Director Director
G Capricieuse T Furneau
Director Director
The notes on pages 14 to 69 form an integral part of these consolidated financial statements.
Auditors' report on pages 4 to 5.
SACOS GROUP LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019 12
Notes The
Company Life Consolidated
The
Company Life Consolidated
SCR SCR SCR SCR SCR SCR
Turnover 169,676,615 70,926,001 240,602,616 162,552,080 64,503,589 227,055,669
Gross written premiums 25(b) 169,676,615 70,926,001 240,602,616 162,552,080 64,503,589 227,055,669
Premiums ceded to reinsurers 25(b) (66,504,485) (3,029,627) (69,534,112) (56,040,429) (5,540,143) (61,580,572)
Change in gross unearned premium 25(b) (2,907,668) - (2,907,668) 3,607,304 - 3,607,304
Recoverable from reinsurers 25(b) (1,091,218) - (1,091,218) (3,359,741) - (3,359,741)
Net premium earned 99,173,244 67,896,374 167,069,618 106,759,214 58,963,446 165,722,661
Gross claims paid 25(c) (97,423,537) (62,210,481) (159,634,018) (47,855,556) (48,668,083) (96,523,639)
Recoverable from reinsurers 25(c) 46,230,891 - 46,230,891 4,712,297 - 4,712,297
Movement in gross outstanding claims 25(c) 15,952,641 - 15,952,641 (45,319,455) - (45,319,455)
Recoverable from reinsurers 25(c) (2,600,109) - (2,600,109) 34,956,510 - 34,956,510
Net claims incurred (37,840,114) (62,210,481) (100,050,595) (53,506,204) (48,668,083) (102,174,287)
Commission receivable from reinsurers 7,629,909 765,754 8,395,663 5,812,093 1,137,367 6,949,460
Commission paid to agents and brokers (11,068,293) (3,073,971) (14,142,264) (9,216,222) (2,807,788) (12,024,010)
Net commission paid (3,438,384) (2,308,217) (5,746,601) (3,404,129) (1,670,421) (5,074,550)
Underwriting surplus 57,894,746 3,377,676 61,272,422 49,848,881 8,624,942 58,473,824
Rental income 7(d) 7,651,303 14,388,559 22,039,863 8,504,323 15,750,316 24,254,639
Investment income 26 2,982,936 11,670,276 14,653,212 622,145 10,641,866 11,264,011
Sundry income 27 2,531,209 519,742 3,050,951 3,478,538 582,325 4,060,863
Increase / (Decrease) in fair value of investment properties 3,008,928 17,078,055 20,086,983 - - -
Profit / (loss) on disposal of investment properties 6 (5,163,331) 158,229 (5,005,102) - (2,000,000) (2,000,000)
Total Other Income 11,011,045 43,814,861 54,825,906 12,605,006 24,974,507 37,579,513
Staff costs 28 (26,862,902) (2,648,504) (29,511,406) (29,811,084) (3,063,506) (32,874,590)
Sales and marketing expenses 29 (1,999,659) (259,128) (2,258,787) (1,713,077) (325,124) (2,038,201)
Operating and administrative expenses 29 (27,119,364) (16,630,397) (43,749,761) (19,783,542) (9,509,198) (29,292,740)
Depreciation and amortisation charges 30 (12,426,857) (630,130) (13,056,987) (3,637,354) (483,304) (4,120,658)
Intercompany recharge 29 9,594,191 (9,594,191) - 9,386,842 (9,386,842) -
(Impairment) / reversal of impairment on financial assets29 (1,341,248) - (1,341,248) (2,866,274) - (2,866,274)
Total Expenses (60,155,839) (29,762,350) (89,918,189) (48,424,489) (22,767,974) (71,192,463)
Share of Profit in associates 13(a) - 775,738 775,738 - 880,184 880,184
Profit / (loss) before taxation 8,749,952 18,205,925 26,955,877 14,029,398 11,711,659 25,741,058
Taxation 17 (1,965,076) - (1,965,076) (8,811,559) (724,476) (9,536,035)
Profit / (loss) for the year 6,784,875 18,205,925 24,990,800 5,217,839 10,987,183 16,205,023
2,661,821 6,483,800 9,145,621 - (732,851) (732,851)
Total comprehensive income / (loss) for the year 9,446,696 24,689,725 34,136,421 5,217,839 10,254,332 15,472,172
Earnings / (loss) per share (Basic and diluted):
- - 3.39 - - 2.61
Surplus transferred as follows:
Life Assurance Fund 14,659,655 10,254,332
Proprietors’ fund 10,030,069 -
24,689,725 10,254,332
20182019
THE GROUP
Profit / (loss) attributable to equity holders of the parent
Other comprehensive income/(loss) for the year,
Fair value change on available-for-sale assets
The notes on pages 16 to 69 form an integral part of these consolidated financial statements.
Auditors' report on pages 4 to 9.
SACOS GROUP LIMITEDCONSOLIDATED STATEMENT OF CHANGES IN EQUITY & STATEMENT OF LIFE ASSURANCE FUNDAS AT 31 DECEMBER 2019 13
a) STATEMENT OF CHANGES IN EQUITY
THE GROUP
Share Retained Fair value
capital earnings reserve Total
SCR SCR SCR SCR
At 1 January 2018 70,000,000 37,263,746 2,395,310 109,659,056
Share of Shareholder's Surplus/(Deficit) (i) - 315,481 - 315,481
Total comprehensive income for the year - 5,217,839 - 5,217,839
Dividends (note 35) - (3,000,000) - (3,000,000)
At 31 December 2018 70,000,000 39,797,066 2,395,310 112,192,376
Share of surplus to shareholders - 10,030,069 - 10,030,069
Share of profit attributed to shareholders fund (i) - 3,568,021 - 3,568,021
Total comprehensive income for the year - 6,784,875 2,661,821 9,446,696
Dividends (note 35) - (4,000,000) - (4,000,000)
At 31 December 2019 70,000,000 56,180,026 5,057,131 131,237,162
70,000,000 56,180,031 5,057,131 131,237,162
THE COMPANY
Share Share Retained
capital premium earnings Total
SCR SCR SCR SCR
At 1 January 2018 70,000,000 51,177,317 2,395,310 123,572,627
Total comprehensive income for the year - 5,217,839 - 5,217,839
Dividends (note 35) - (3,000,000) - (3,000,000)
At 31 December 2018 70,000,000 53,395,156 2,395,310 125,790,466
Total comprehensive income for the year - 6,784,875 2,661,821 9,446,696
Dividends (note 35) - (4,000,000) - (4,000,000)
At 31 December 2019 70,000,000 56,180,026 5,057,131 131,237,162
70,000,000 56,180,031 5,057,131 131,237,162
b) STATEMENT OF LIFE ASSURANCE FUND
SCR SCR
At 1 January 444,767,315 434,828,465
Fair value change on available-for-sale assets 6,483,800 (732,851)
Surplus the year 18,205,925 10,987,182
Share of surplus to shareholders (i) (3,568,021) (315,481)
Share of profit attributed to shareholders fund (10,030,069) -
At 31 December 455,858,950 444,767,315
(i) After the actuarial valuation, transfer of surplus was as follows:
2019 2018
SCR SCR
With Profit Fund 648,485 315,481
Without Profit Fund 2,919,536 -
Total 3,568,021 315,481
2019 2018
During the year, the Company split its Life Fund into segregated With Profit and Without Profit Funds and a Shareholders Fund to cater
for all excess assets of the company. All new Decreasing Term Assurance policies issued as from 01 January 2019 have been allocated
to the Without Profit Fund, whilst the existing business was allocated to the With Profit Fund. The majority of the Company’s business is
still held within the With-Profits Fund (98.5% of reserves), where 90% of the surplus generated accrues to policyholders and 10% to
shareholders. As for the Without Profit Fund, surplus accrues 100% to shareholders.
As per the Insurance Act 2008, the surplus of the Life Assurance Fund is to be shared by the policyholders and shareholders in the
maximum ratio of 90:10 respectively and as prescribed by our independent actuaries. The share of surplus due to the shareholders has
been calculated by the Actuary and recorded in their valuation report amounting to SCR 648,485 in 2019 (SCR 315,481 in 2018). This
has been recognised in the statement of changes in equity and Life assurance Fund.
(ii) With the creation of the 3 designated funds i.e. With Profit, Without Profit and Shareholders funds, net revenue generated from the
assets allocated to the With Profit and Without Profit fund are transferred to the Life Fund whereas assets allocated to the shareholders
fund will be transferred directly to the retained earnings.
The notes on pages 14 to 69 form an integral part of these consolidated financial statements.
Auditors' report on pages 4 to 5.
SACOS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 2019 14
2019 2018 2019 2018
Notes SCR SCR
S SCR SCR
Cash flows from operating activities:
Profit/(Loss) before taxation 26,955,877 25,741,057 8,749,952 14,029,398
Profit/(Loss) before taxation attributable to shareholders 26,955,877 25,741,057 8,749,952 14,029,398
Adjustments for:
Depreciation and Amortisation 30 13,056,989 4,120,658 12,426,857 3,637,354
(Profit) / loss on disposal of equipment 14,936,026 (343,092) 5,072,882 (2,336,510)
Provision for Doubtful Debt 14 (1,341,248) - (1,341,248) -
Change in fair value of investment in financial assets (46,288) - (116,676) -
Change in fair value of investment Properties (20,086,982) 2,000,000 (3,008,928) 2,000,000
Profit from associate (775,738) (880,184) - -
Release of mortgage protection fund - (64,499) - (64,499)
Release of fisheries and agricultural fund - (1,463) - (1,463)
Release of policy protection fund 21/22 28,011 44,208 28,011 44,208
Movement in retirement benefit obligations 23 984,785 538,717 996,678 516,434
Interest income 26 (957,348) (11,264,011) (957,348) (11,264,011)
Charge of impairment provision 10 - 2,866,273 - 2,866,273
Effect of change in exchange rates 27 - (247,244) - (247,244)
32,754,083 22,510,420 21,850,180 9,179,940
Changes in working capital:
- (Increase) / Decrease in Trade and other receivables 14 (21,858,266) (29,600,121) 2,714,818 (19,699,366)
- Increase / (Decrease) in Trade and other payables 24 (2,126,290) (18,458,745) 3,750,383 (26,635,376)
- Gross claims liabilities 25(a) (14,323,948) 46,985,314 (13,044,971) 41,712,149
- Unearned premium 25(b) - (3,607,305) - -
(5,554,420) 17,829,563 15,270,409 4,557,347
Net tax paid 17 (1,606,388) 3,307,212 (1,606,388) 4,031,688
Interest received 9 & 26 (6,844,575) 4,765,739 - 11,091,051
Retirement benefit obligation paid 23 (808,481) (603,443) (730,757) (573,137)
Net cash inflow / (outflow) from operating activities (14,813,864) 25,299,071 12,933,265 19,106,949
Cash flows from investing activities:
Purchase of equipment 5 (5,655,432) (29,642,333) (6,382,672) (28,753,647)
Proceeds from disposal of equipment 556,850 450,000 556,850 405,000
Purchase of intangible assets 8 (33,165) (488,477) (33,165) -
Proceed from loans and receivables 11 27,157,892 26,223,808 (7,428,161) -
Disbursement loans and receivables 11 (20,462,384) (22,470,023) - -
Additions to investment in financial assets 10 (231,574,863) (144,949,217) (72,566,099) (5,017,468)
Reclassification/additions to investment properties 7 (21,712,528) - - -
Proceeds from sale of investment properties 51,642,390 30,025,000 24,809,160 14,025,000
Redemption of investment in financial assets 10 196,046,006 141,507,120 36,236,370 19,056,953
Net cash inflow from investing activities (4,035,234) 655,878 (24,807,717) (284,162)
THE GROUP THE COMPANY
The notes on pages 16 to 69 form an integral part of these consolidated financial statements.
Auditors' report on pages 4 to 9.
SACOS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOW (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019 15
2019 2018 2019 2018
Notes SCR SCR
S SCR SCR
Cash flows from financing activity:
Dividends paid 35 (4,000,000) (3,000,000) (4,000,000) (3,000,000)
Net cash outflow from financing activity (4,000,000) (3,000,000) (4,000,000) (3,000,000)
Net change in cash and cash equivalents (22,849,097) 22,954,951 (15,874,455) 15,822,787
Movement in cash and cash equivalents:
At 1 January 56,868,538 33,913,587 32,342,752 16,519,965
Change (22,849,097) 22,954,951 (15,874,455) 15,822,787
At 31 December 16 34,019,441 56,868,538 16,468,297 32,342,752
THE GROUP THE COMPANY
The notes on pages 16 to 69 form an integral part of these consolidated financial statements.
Auditors' report on pages 4 to 9.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 16
1. GENERAL INFORMATION
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
Statement of compliance
Basis of consolidation
The consolidated and separate financial statements are presented in Seychellois rupee (SCR), unless otherwise indicated.
The consolidated and separate financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) and comply with the Companies Act 1972 and the Insurance Act 2008.
The principal accounting policies adopted in the preparation of these consolidated and separate financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated and separate financial statements comprise the financial statements of the Group and its subsidiary as at 31
December 2019. The Group controls an investee if and only if the Group has:
• Power over the investee (i.e.it holds existing rights that give it the current ability to direct the relevant activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee, and
• The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
SACOS Group Limited (collectively "the Group" and referred to as "The Company" for its separate financial statements here-after)
was incorporated under the Companies Act, 1972 on 22 November 2005. Pursuant to order dated 23rd January 2019 of the
Supreme Court of Seychelles, Sacos Insurance Company Limited and Sun Investment Limited have been amalgamated with the
Company with effective 1st January 2017.
Consequently, Sacos Insurance Company Limited and Sun Investment Limited have been amalgamated into Sacos Group
Limited with the principal activity of the Company is that of Short-term Insurance Business. These activities have remained
unchanged during the year under review. Activities of its 100% owned subsidiary SACOS Life Assurance Company Limited
(hereafter referred as 'SLACL') is to underwrite life assurance policies.
The Group is domiciled in Republic of Seychelles and its registered office is Maison Esplanade, Francis Rachel Street, Victoria,
Mahe, Seychelles.
These consolidated and separate financial statements will be submitted for approval at the forthcoming Annual General Meeting of
the shareholders of the Group.
The consolidated and separate financial statements have been prepared under the historical cost basis except for the revaluation
of land and buildings and financial assets and investment properties which are stated at their fair values.
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and
ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary are included in the consolidated financial statements from the date the
Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the
Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full upon consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary, it:
• Derecognizes the assets (including goodwill) and liabilities of the subsidiary
• Derecognises the carrying amount of any non-controlling interests
• Derecognises the cumulative translation differences recorded in equity
• Recognizes the fair value of the consideration received
• Recognizes the fair value of any investment retained
• Recognizes any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components previously recognized in OCI to profit or loss or retained earnings, as appropriate,
as would be required if the Group had directly disposed of the related assets or liabilities
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 17
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures
Amendments
IFRS 16 Leases 01-Jan-19
IFRS 16 Leases – effective 1 January 2019
The Group has assessed the impact of this new standard.
a) Transition accounting and effective date
Modified Retrospective Approach has been followed for the purpose of Transition Impact - IFRS 16 "Leases".
IFRS 16 - Para C5b
For Transition Impact of Sacos Group, initial application date is 1 January 2019.
Leases previously classified as Operating Lease IFRS 16 Para C8
Measurement of Lease Liability
Measurement of Right to Use Asset
b) Incremental Rate of Borrowing
c)
d) Fixed Monthly lease payments are exclusive of Value Added Tax.
The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended
IFRSs and IFRIC interpretations adopted in the year commencing 1 Jan 2019:
Effective for accounting period
The IASB has redrafted this new leasing standard that requires lessees to recognize assets and liabilities for most leases.
Lessees applying IFRS would have a single recognition and measurement model for all leases (with certain exemptions). Lessors
applying IFRS would classify leases using the principle in IAS 17; in essence, lessor accounting would not change.
Under this approach, a lessee does not restate comparative information. Consequently, the date of initial application is the first
day of the annual reporting period in which a lessee first applies the requirements of the new leases standard. At the date of initial
application of the new leases standard, lessees recognize the cumulative effect of initial application as an adjustment to the
opening balance of equity as of 1 Jan 2019.
The lessee shall measure that lease liability at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate at the date of initial application.
Amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease
recognized in the statement of financial position immediately before the date of initial application.
For the purpose of Discounting of Present Value of Cash Flows, implicit rate is not mentioned in the Agreement, in the absence
we have discounted the Cash Flows considered the Interest Rate of 7.50%.
However, since Initial Application Date of the IFRS -16 Leases is 1 January 2019 & as per Para C8 - IFRS 16 - Leases
"lease liability should be measured at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate at the date of initial application."
However - IFRS 16 Para C8 requires Cash flows should be discounted using the lessee’s incremental borrowing rate at the date of
initial application. In accordance with the same, Lease Payments should be adjusted/discounted at the Incremental Borrowing
Rate as at 1 January 2019.
As per IFRS 16 Para 27, Variable lease payments that depend on an index or a rate such as payments that vary to reflect
changes in market rental rates are initially measured using the Index or rate at commencement date.
Appendix II of the Agreement states that Basic Monthly Rent shall escalate on every anniversary date of Lease Commencement
Date either in lien with the CPI or 5% whichever is higher.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2018 18
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.3 Accounting standards and interpretations issued but not yet effective
New or revised standards
IFRS 9 Financial instruments 01-Jan-18
IFRS 15 Revenue from contracts with customers 01-Jan-18
IFRS 17 Insurance Contracts 01-Jan-21
Exemption to insurance companies to apply IFRS 9,15,and 17 concurrently in 2023
The amendments clarify that:
These amendments will not have an impact on the Group’s consolidated and separate financial statements.
IFRS 9 Financial instruments
The following standards, amendments to existing standards and interpretations were in issue but not 'yet effective. They are
mandatory for accounting periods beginning on the specified dates, but the Group has not early adopted them:
The amendments should be applied retrospectively and are effective from 1 January 2018, with earlier application permitted. If
an entity applies those amendments for an earlier period, it must disclose that fact.
Financial assets are classified by reference to the business model within which they are held and their contractual cash flow
characteristics. The 2014 version of IFRS 9 introduces a “fair value through other comprehensive income” category for certain
debt instruments. Financial liabilities are classified in a similar manner as under IAS 39; however there are differences in the
requirements applying to the measurement of an entity’s own credit risk.
The 2014 version of IFRS 9 introduces an “expected credit loss” model for the measurement of the impairment of financial assets,
so it is no longer necessary for a credit event to have occurred before a credit loss is recognized. A new hedge model is designed
to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk
exposures.
The requirements for derecognition of financial assets and liabilities are carried forward from IAS 39.
The application of IFRS 9 has been deferred until the effective adoption and application of the new standard on insurance
contracts. Exemption to insurance companies to apply IFRS 9 concurrently in 2023 and the Company plans to adopt the new
standard on that required date. However, the Group is assessing the impact of the full adoption of IFRS 9, which it intends to
adopt, on the financial statements.
Amendments to IFRS 4 - Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts
Where the adoption of the standard or interpretation or improvement is deemed to have an impact on the financial statements or
performance of the Group when applicable, its impact is described below:
IAS 28 Investments in associates and joint ventures – Clarification that measuring investees at fair value through profit
or loss is an investment by investment choice
An entity that is a venture capital organization, or other qualifying entity, may elect, at initial recognition on an investment-by-
investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss. If an entity that is
not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when
applying the equity method, elect to retain the fair value measurement applied by that investment entity associate or joint venture
to the investment entity associate’s or joint venture’s interests in subsidiaries. This election is made separately for each
investment entity associate or joint venture, at the later of the date on which:
(a) the investment entity associate or joint venture is initially recognized;
(b) the associate or joint venture becomes an investment entity; and
(c) the investment entity associate or joint venture first becomes a parent.
The amendments address concerns arising from implementing the new financial instruments Standard, IFRS 9, before
implementing the new insurance contracts standard that International Accounting Standard Board (IASB) is developing to replace
IFRS 4. The amendments introduce two options for entities issuing insurance contracts: a temporary exemption from applying
IFRS 9 and an overlay approach.
Temporary exemption from IFRS 9
The optional temporary exemption from IFRS 9 is available to the Companies whose activities are predominantly connected with
insurance. The temporary exemption permits such companies to continue to apply IAS 39 Financial Instruments: Recognition and
Measurement while they defer the application of IFRS 9 until 1 January 2023 at the latest. Predominance must be initially
assessed at the annual reporting date that immediately precedes 1 April 2016 and before IFRS 9 is implemented. Also the
evaluation of predominance can only be reassessed in rare cases. Companies applying the temporary exemption will be required
to make additional disclosures.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 19
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.3 Accounting standards and interpretations issued but not yet effective (continued)
IFRS 15 Revenue from contracts with customers
IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.
The five steps in the model are as follows:
• Identify the contract with the customer;
• Identify the performance obligations in the contract;
• Determine the transaction price;
• Allocate the transaction price to the performance obligations in the contracts; and
• Recognize revenue when (or as) the entity satisfies a performance obligation.
The Group is assessing the impact of this new standard.
IFRS 17 Insurance Contracts
The Group is assessing the impact of this new standard.
These amendments will not have an impact on the consolidated and separate financial statements.
The temporary exemption is first applied for reporting periods beginning on or after 1 January 2018. The Company may elect the
overlay approach when it first applies IFRS 9 and apply that approach retrospectively to financial assets designated on transition
to IFRS 9. The Company restates comparative information reflecting the overlay approach if, and only if, the Company restates
comparative information when applying IFRS 9.
The Group plans to defer the application of IFRS 9 until the earlier of the effective date of the new insurance contract standard
(IFRS 17) of 1 January 2023, opting the temporary exemption from applying IFRS 9 by the amendments to IFRS 4.
Guidance is provided on topics such as the point in which revenue is recognized, accounting for variable consideration, costs of
fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.
IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance Contracts. It requires a current measurement model where
estimates are re-measured each reporting period. Contracts are measured using the building blocks of:
• discounted probability-weighted cash flows
• an explicit risk adjustment, and
• profit of the contract which is recognized as revenue over the coverage period.
The standard allows a choice between recognizing changes in discount rates either in profit or loss or directly in other
comprehensive income. The choice is likely to reflect how insurers account for their financial assets under IFRS 9.
An optional, simplified premium allocation approach is permitted for the liability for the remaining coverage for short duration
contracts, which are often written by non-life insurers. There is a modification of the general measurement model called the
policyholders share in the returns from underlying items. When applying, the underlying items are included in the contractual
service margin, The results of insurers using this model are therefore likely to be less volatile than under the general model.
The new rules will affect the financial statements and key performance indicators of all entities that issue insurance contracts or
investment contracts with discretionary participation features.
The overlay approach
The overlay approach is an option for companies that adopt IFRS 9 and issue insurance contracts, to adjust profit or loss for
eligible financial assets; effectively resulting in IAS 39 accounting for those designated financial assets. The adjustment eliminates
accounting volatility that may arise from applying IFRS 9 without the new insurance contracts standard. Under this approach, an
entity is permitted to reclassify amounts between profit or loss and other comprehensive income (OCI) for designated financial
assets.
Company must present a separate line item for the amount of the overlay adjustment in profit or loss, as well as a separate line
item for the corresponding adjustment in OCI.
Transition
The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or
contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of
assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture, is recognized in full.
Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognized only to
the extent of unrelated investors’ interests in the associate or joint venture. The IASB has deferred the effective date of these
amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively.
Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 20
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies
2.4.1
Transactions and balances
2.4.2 Insurance contracts
Classification of insurance contracts
Insurance contracts issued by the Group are classified within the following main categories:
(i) Short-term insurance contracts
(ii) Long-term insurance contracts with fixed and guaranteed terms
(iii) Long-Term insurance contracts without fixed terms and with DPF
- which are likely to be significant portion of the total contractual benefits; and
- whose amount or timing is contractually at the discretion of the issuer;
and which are contractually based on the:
- performance of specified pool of contracts or a specified type of contract; and
- realized and unrealized investment returns on a specified pool of assets held by the Group.
Short-term insurance contracts are mainly in respect of motor business but the Group also sells fire and allied perils, health,
marine, engineering and other miscellaneous insurance contracts. These contracts protect the Group’s customers from damage
suffered to property or goods, value of property and equipment lost, losses and expenses incurred, sickness and loss of earnings
resulting from the occurrence of the insured events.
These contracts insure events associated with human life, i.e. death, disability or survival over a long term. Life insurance liabilities
are recognized when contracts are entered into and premiums are charged. These liabilities are measured by using the Gross
Premium method. The liability is determined as the sum of the discounted value of the expected future benefits, claims handling
and policy administration expenses, policyholder options and guarantees and investment income from assets backing such
liabilities, which are directly related to the contract, less the discounted value of the expected premiums that would be required to
meet the future cash outflows based on the valuation assumptions used. The liability is either based on current assumptions or
calculated using the assumptions established at the time the contract was issued, in which case, a margin for risk and adverse
deviation is generally included. A separate reserve for longevity may be established and included in the measurement of the
liability. Furthermore, the liability for life insurance contracts comprises the provision for claims outstanding. Adjustments to the
liabilities at the end of each reporting period are recorded in profit or loss in Transfer to life assurance fund’. The liability is
derecognised when the contract expires, is discharged or is cancelled.
Insurance contracts are further classified as being either with or without Discretionary Participation Features (DPF). DPF is a
contractual right to receive, as a supplement to guaranteed benefits, additional benefits:
Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using Seychellois rupee (SCR), the
currency of the primary economic environment in which the Group operates (“functional currency”). The consolidated and separate
financial statements are presented in Seychellois rupee (SCR).
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of
the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date the fair value was determined.
The Group issues contracts which transfer insurance risk. Insurance contracts are those contracts which transfer significant
insurance risk at the inception of the contract. Such contracts remain insurance contracts until all rights and obligations are
extinguished or expired. Investment contracts are those contracts that transfer financial risk with no significant insurance risk.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 21
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies (continued)
2.4.2 Insurance contracts (continued)
(iv) Reinsurance contracts
(v) Receivables and payables related to insurance contracts
(vi) Impairment of reinsurance assets
2.4.3 Claims expenses and outstanding claims provisions
These contracts also insure events associated with human life (i.e. death or survival) over a long duration. Premiums are
recognized directly as liabilities which are increased by credited interest and decreased by administration fees, mortality, surrender
charges and any withdrawals. These types of contracts entitles the contract holders to a minimum guaranteed amount per annum.
They contain a DPF which entitles the contract holders, in supplement to the minimum guaranteed amount, a contractual right to
receive additional bonuses. A bonus is declared when the actual return on backing assets is higher than the expected return at
inception of the contract.
The amount and timing of the settlement of the DPF element is however at the discretion of the Group. The bonus is derived from
the DPF eligible surplus available arising mainly upon revaluation of backing assets, carried out by independent actuaries on a
The Group has legal obligation to eventually pay to contract holders at least 90% of the DPF eligible surplus. Any portion of the
DPF eligible surplus that is not declared as a bonus and not credited to individual contract holders accounts is retained as a
liability in the life assurance fund for the benefit of all contract holders until declared and credited to them individually in future
Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises
during the reporting year. If a reinsurance asset is impaired, the Group reduces the carrying amount accordingly and recognizes
that impairment in profit or loss. A reinsurance asset is impaired if there is objective evidence, as a result of an event that occurred
after initial recognition of that asset, that the Group may not recover all amounts due under the terms of the contract and that the
event has a measurable impact on the amounts that the Group will receive from the reinsurer.
Outstanding claims provisions are based on the ultimate costs of all claims incurred but not settled at the end of financial reporting
period, whether reported or Incurred But Not Reported (IBNR). Notified claims are only recognized when the Group considers that
it has a contractual liability to settle the claims. IBNR has been provided for on the South African benchmark. Claims expenses are
charged to profit or loss as incurred based on the estimated liability for compensation owed to contract holders or third parties.
There are often delays between the occurrence of the insured event and the time it is actually reported to the Group, particularly in
respect of liability business, the ultimate cost of which cannot be known with certainty at the end of the financial reporting period.
Following the identification and notification of the insured loss, there may still be uncertainty as to the magnitude and timing of the
settlement of the claim. Outstanding claim provisions are not discounted and exclude any allowances for expected future
recoveries. Recoveries represent claims recoverable from third party insurers. Recoveries are accounted for as and when
received. However, non-insurance assets that have been acquired by exercising rights to sell, salvage or subrogate under the
terms of the insurance contracts are included when providing for outstanding claims. The liability is not discounted due to the fact
that the exact timing and actual amount to be paid cannot be determined.
Equity holders' share of the DPF eligible surplus equally to 10%, is transferred from the Life Assurance Fund to them on a yearly
basis when bonuses are declared.
Contracts entered into by the Group with reinsurers under which the Group is compensated for losses on one or more contracts
issued by the Group are classified as reinsurance contracts held. Insurance contracts entered into by the Group under which the
contract holder is another insurer (inwards reinsurance) are included with insurance contracts.
Reinsurance contracts used by the Group are proportional and non-proportional treaties and facultative arrangements.
Proportional reinsurance can be either ‘quota share’ where the proportion of each risk reinsured is stated or “surplus” which is a
more flexible form of reinsurance and where the Group can fix its retention limit. Non-proportional reinsurance is mainly ‘excess of
loss’ reinsurance where, in consideration for a premium, the reinsurer agrees to pay all claims in excess of a specified amount, i.e.
the retention, and up to a maximum amount. Facultative insurance contracts generally relate to specific insured risks which are
underwritten separately. Under treaty arrangements, risks underwritten by the Group falling under the terms and limits of the
treaties are reinsured automatically.
Reinsurance assets or liabilities are derecognized when the contractual rights are extinguished or expired or when the contract is
transferred to another party.
Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its life time,
even if insurance risk reduces significantly during this period, unless all rights and obligations are extinguished or expired.
Investment can, however, be classified as insurance contracts after inception if insurance risk becomes significant.
Receivables and payables are recognized when due. These include amounts due to and from agents, brokers and insurance
contract holders.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 22
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4.4 Salvage and subrogation reimbursements
2.4.5 Provision for unearned premiums
2.4.6 Liability adequacy test
(a) Short-term insurance
(b) Long-term insurance
2.4.7 Financial instruments
(a) Categories of financial assets
(b) Financial assets at fair value through profit or loss (FVTPL)
(c) Loans and receivables
(d) Held-to-maturity financial assets
(e) Available-for-sale financial assets
Estimates of salvage recoveries are included as an allowance in the measurement of the insurance liabilities for claims, and
salvage property is recognized in other assets when the liability is settled. The allowance is the amount that can reasonably be
recovered from the disposal of the property.
The provision for unearned premiums represents the portion of premiums written on short-term insurance contracts relating to
periods of insurance risks subsequent to the reporting date. It is calculated on the inception basis (daily method). The movement
on the provision is taken to profit or loss in order for revenue to be recognized over the period of the risk. The provision is
derecognized when the contract expires, discharged or cancelled.
At end of financial reporting period, a liability adequacy test is performed to ensure the adequacy of the contract liabilities. In
performing the test, current best estimates of future contractual cash flows (including claims handling and administration
Loans and receivables are non-derivative financial assets with fixed or determinable payments. They are recognized initially at fair
value plus any directly attributable transactions costs. Subsequent to initial recognition, loans and receivables are measured at
amortised cost using the effective interest method, less any impairment. Interest on loans and receivables financial assets are
included in the income statement.
Held-to-maturity financial assets are non-derivative instruments with fixed or determinable payments and fixed maturities that the
Group has the positive intention and ability to hold to maturity. Interest on held-to-maturity financial assets are included in the
statement of profit or loss and other comprehensive income. Held-to-maturity financial assets are treasury bonds which are
recognized initially at fair value and subsequently at amortised cost using the effective interest method.
Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other
categories. They are included in non-current assets unless management intends to dispose of the investment within twelve
months of the end of the reporting period.
The Group’s Independent Actuaries review the adequacy of insurance liabilities for long term contracts on an annual basis and
ensure that provisions made by the Group are adequate.
Financial instruments carried on the statement of financial position include financial assets classified into the following categories:
Financial assets within the scope of IAS 39 are classified as loans and receivables and investment in financial assets which
comprise of held-to-maturity and available for sales investments as appropriate. The Group determines the classification of its
financial assets at initial recognition.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in
the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell
the asset.
All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss,
directly attributable transaction costs.
This category has two sub-categories: ‘financial assets held for trading and those designated at fair value through profit or loss at
inception’. A financial asset is classified into the ‘financial assets at fair value through profit or loss category at inception if
acquired principally for the purpose of selling in the short term, if it forms part of a portfolio of financial assets in which there is
evidence of short-term profit-taking, or if so designated by management.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 23
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies
2.4.7 Financial instruments (continued)
(i) Measurement
Financial assets at fair value through profit or loss (FVTPL)
(ii) Derecognition
(f) Financial assets carried at amortised cost
(g) Financial assets classified as available-for-sale
Subsequent to initial recognition, they are re-measured at fair value. Changes in fair value are recorded in profit or loss on
financial assets at fair value through profit or loss.
Loans and receivables and held-to-maturity investments
These are subsequently carried at amortised cost using the effective interest method.
Available-for-sale financial assets
These are subsequently carried at their fair values. Changes in fair value are recorded in statement of life assurance fund for life
business and other comprehensive income for group excluding life business.
A financial asset (or, where applicable a part of a financial asset or part of the Group of similar financial assets) is derecognised
• The rights to receive cash flows from the asset have expired;
• The Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third party under a ‘pass through’ arrangement; and either
(a) has transferred substantially all the risks and rewards of the asset, or
(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the
Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset
is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group
could be required to repay.
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if
there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a
‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated.
The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually
significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively
assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or
continues to be recognized are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been incurred on loans and receivables carried at amortised cost, the
amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future
cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through
the use of an allowance account and the amount of the loss is recognized in consolidated statement of profit or loss and other
comprehensive income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of
interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded
as part of investment income in profit and loss.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized, the previously recognized impairment loss is reversed by adjusting the allowance
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of
financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in
the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence
exists for available-for-sale financial assets, the cumulative loss, measured as the difference between acquisition cost and the
current fair value, less any impairment loss on that financial asset is recognized in the statement of life assurance fund for life
business and profit or loss for group excluding life business. Impairment losses for life business previously recognized in Life
Assurance Fund for an investment in an equity instrument classified as available-for-sale is also reversed through the statement of
life assurance fund and for group excluding life business reversal of impairment is reversed through profit or loss in statement of
profit or loss and other comprehensive income.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 24
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies (continued)
2.4.7 Financial instruments (continued)
(g) Financial assets classified as available-for-sale (continued)
2.4.8 Financial liabilities
(a) Categories of financial liabilities
(b) Measurement
(c) Derecognition
(d) Offsetting of financial instruments
2.4.9 Investment in subsidiary companies
Separate financial statements
2.4.10 Equity
If, in a subsequent period, the amount of the impairment loss decreases and the decreases can be related objectively to an event
occurring after the impairment was recognized (such as an improvement in the debtor's credit rating), the previously recognized
impairment loss is reversed through the statement of life assurance fund for life business and profit or loss for group excluding life
business to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what
the amortised cost would have been had the impairment not been recognized.
The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities within the scope of IAS 39
are classified as either fair value through profit or loss or amortised cost as appropriate. All financial liabilities are recognized
initially at fair value minus directly attributable transaction costs.
The Group's financial liabilities include trade and other financial payables and bank overdrafts.
After initial recognition, financial liabilities of the Group are subsequently measured at amortised cost using the effective interest
rate method. Gains and losses are recognized in profit or loss when the liabilities are derecognised as well as through the effective
interest rate method (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral
part of the EIR. The EIR amortisation is included in finance cost in profit or loss.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. Where an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.
The carrying amount of the asset is reduced and the amount of the loss is recognized in the statement of life assurance fund for
life business and profit or loss for group excluding life business. If an available for sale investment has a variable interest rate,
the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of financial position if, and
only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net
basis, or to realize the assets and settle the liabilities simultaneously. Income and expenses will not be offset in the profit or loss
unless required or permitted by any accounting standard or interpretation, as specifically disclosed in the accounting policies of the
Subsidiaries are all entities (including structured entities) over which the Group has control. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Investments in subsidiaries in the separate financial statements of the Company are carried at cost, net of any impairment. Where
the carrying amount of an investment is greater than its estimated recoverable amount, it is written down immediately to its
recoverable amount and the difference is recognized in profit or loss. Upon disposal of the investment, the difference between the
net disposal proceeds and the carrying amount is recognized in profit or loss.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Shares issued by the Group are recognized at the proceeds received, net of direct issue costs.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 25
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies (continued)
2.4.11 Dividends
2.4.12 Property and equipment
Rates
Furniture and fittings 10%
Computer and equipment 15% - 20%
Motor vehicles 25%
2.4.13 Investment properties
2.4.14 Intangible assets
Computer software
Website
Subsequent costs are included in the assets' carrying amount or recognized as a separate asset as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably.
Depreciation on property and equipment is calculated on the straight line method to write off the cost of each asset to their
residual values over their estimated useful life as follows:
The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Where the carrying amount is greater than its recoverable amount, it is written down to its recoverable amount.
Gains and losses on disposal of property and equipment are determined by reference to their carrying amounts and are taken into
profit or loss . On disposal of revalued assets, any amounts in revaluation reserve relating to those assets are transferred to
retained earnings.
Investment properties held to earn rentals/or for capital appreciation or both and not substantially occupied by the Group are
initially stated at cost, including transaction costs and then are subsequently carried at fair value, representing open market value
determined annually by external valuers and or the Directors as appropriate.
Dividends on ordinary shares are recognized as a liability and deducted from equity when they are approved by the Group’s
shareholders.
Property and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost
excludes the cost of day to day servicing. Replacement or major inspection costs are capitalized when incurred and if probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Gains or losses arising from changes in fair values of investment properties are recognized in the consolidated statement of profit
or loss and other comprehensive income.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset
with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization
period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible
assets with finite lives are recognized in consolidated statement of profit or loss and other comprehensive income in the expense
category that is consistent with the function of the intangible assets.
Acquired computer software licenses are capitalized on the basis of costs incurred to acquire and bring to use the specific
software and are amortised using the straight line method over the estimated useful life of 3⅓ years.
Costs that are directly associated with the development of the Group's website and which will probably generate economic
benefits exceeding costs beyond one year, are recognized as intangible assets. Direct costs include staff costs of the software
development team and an appropriate portion of relevant overheads. Website development costs recognized as assets are
amortised using a straight-line method over their useful lives of 3⅓ years.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 26
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies (continued)
2.4.15 Impairment of non-financial assets
2.4.16 Cash and cash equivalents
2.4.17 Provisions
2.4.18 Segment reporting
2.4.19 Trade and other receivables
2.4.20 Trade and other payables
2.4.21 Taxes
(a) Current income tax
(b) Deferred tax
Cash and short-term deposits in the consolidated statement of financial position comprise cash at banks, in hand and short-term
deposits with a maturity of less than three months. Cash and cash equivalents are measured at fair value.
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, and it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the
reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to
any provision is presented in consolidated statement of profit or loss and other comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognized as a borrowing cost.
Segments reported are consistent with the historical Group structure.
Trade and other receivables are recognized at fair value less provision for impairment.
Interest on loans and receivables financial assets are recognized in the consolidated statement of profit or loss and other
comprehensive income.
Trade and other payables financial liabilities are recognized at fair value minus directly attributable transaction costs (transaction
costs are only taken into account or the financial liability instruments not classified as fair value through profit and loss). Interest
paid on loans and other payables is recognized in the consolidated statement of profit or loss and other comprehensive income.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. Where an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated profit or loss.
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An
asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into
account, if available.
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the reporting date, in the countries where the Group operates and generates taxable income. The
income tax is recognized as a charge in consolidated statement of profit or loss and other comprehensive income.
Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 27
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies (continued)
2.4.21 Taxes (continued)
2.4.22 Retirement benefit obligations
Defined benefit plans
2.4.23 Shareholders’ share of the surplus generated by the Life Business
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Unrecognized deferred income tax assets are reassessed at each reporting date and are recognized to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss are not recognized in profit or loss. Deferred tax items are
recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current
income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the
same taxation authority.
The Group and the Company have disclosed deferred income tax assets and deferred income tax liabilities separately as it does
not meet the above criteria.
The Group provides for a payment of compensation to permanent employees as is required by Regulation 24(2) of S.I. 34 of 1991
read with section 47(2)(b)(i) of the Employment Act as amended by Act 18 of 2010. The amount provisioned every year is based
on the number of months the employee has worked. This type of employee benefits has the characteristics of a defined benefit
plan. The liability recognized in the statement of financial position in respect of the defined benefit plan is the value of the defined
obligation at the reporting date. The value of the defined benefit obligation is determined by use of the formula as required by the
Act, being "the rate of five-sixths of one day's wage for each completed month of service in the case of continuous employment".
Payments, reflecting the obligation are made on termination of employment.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax credits and unused tax losses can be utilized except:
• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred income tax assets are recognized only to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
The Group does not carry out an actuarial valuation since the obligation is calculated on the method as prescribed by the
Seychelles Employment Act and frequently adjusted to reflect the present obligation using the current salary and months of
service. Movements in the compensation obligation are recognized as part of staff costs in the consolidated statement of profit or
loss and other comprehensive income.
As per the Insurance Act 2008, the surplus of the Life Assurance Fund is to be shared irrespectively by the policyholders and
shareholders in the ratio 90:10. The determination of the share of surplus is usually done by the Actuary based on assumptions
and judgement. As the life business made a deficit during the year, the deficit amount is recognized in consolidated statement of
changes in equity and no share is transferred to life assurance fund.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 28
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies (continued)
2.4.24 Life Assurance Fund
2.4.25 Mortgage protection fund
2.4.26 Fisheries and Agricultural fund
2.4.27 Revenue recognition
(a) Gross written premiums
(i) Short-term insurance
(ii) Long-term insurance
At each reporting date, an assessment is made of whether the recognized life insurance liabilities are adequate by using an
existing liability adequacy test. The liability value is adjusted to the extent that it is insufficient to meet expected future benefits and
expenses. In performing the adequacy test, current best estimates of future contractual cash flows such as claims handling and
policy administration expenses, policyholder options and guarantees, as well as investment income from assets backing such
liabilities are used. A number of valuation methods are applied, including discounted cash flows, option pricing models and
stochastic modelling. To the extent that the test involves discounting of cash flows, the interest rate applied may be prescribed or
may be based on managements prudent expectation of current market interest rates. Any inadequacy is recorded in the statement
of profit or loss by establishing an additional insurance liability for the remaining loss.
The Fund is designated for Mortgage Protection Insurance under a Home Ownership Scheme. Under this scheme, upon approval
of their mortgage loan, borrowers are automatically charged 6% of the nominal value of the loan towards mortgage protection
which is expected to cover the loan repayments in case of death or permanent disability. The 6% consists of 4% risk premium
and 2% management fee for the Group.
The Fund is designated for contributions to premiums payable under a Government sponsored / subsidized voluntary scheme.
Under this Agricultural Disaster and Fisheries Voluntary Insurance Scheme, farmers registered with the Seychelles Agriculture
Agency (SAA) and boat owners registered with the Seychelles Fisheries Authorities (SFA) are charged 4% of the insured values,
to which the fund contributes 50%. The contributions would cover the insured items (crop, livestock, boats and employees / crew)
in case of loss or damage, death following natural disasters and accidents, depending on the scheme applicable.
Gross written premium comprise the total premium for the whole period of cover provided by contracts entered into and are
recognized as revenue (earned premiums) on the date on which the policy commences, proportionally over the period of
coverage.
Premiums earned on long-term life contracts are recognized as revenue when they become payable by the policyholder, i.e. the
date when payments are due.
Premiums on long term insurance contracts which have been in force for less than three years and for which not all premium have
been received are accrued for three months. When these policies lapse due to non receipt of premium after three months, then all
related premium income accrued but not received from the date they are deemed to have lapsed is released to the consolidated
statement of profit or loss and other comprehensive income.
The Life Assurance Fund represents the net assets of the Company attributable to policy holders of the Fund. At each reporting
date the amount of the liabilities of the life assurance fund is established and the adequacy of the fund is determined by actuarial
valuation. A portion of the surplus or deficit between the value of the assets and the value of the liabilities is transferred to the
statement of profit or loss. When the actuarial valuation of the liability exceeds the value of the fund, the difference is recognized
immediately in income statement. The movement in the fund is recognized in other comprehensive income to the extent of the fair
value gains on available-for-sale financial assets.
Life insurance liabilities are recognized when contracts are entered into and premiums are charged. These liabilities are measured
using the net premium method. The liability is determined as the sum of the discounted value of the expected future benefits,
claims handling and policy administration expenses, policyholder options and guarantees and investment income from assets
backing such liabilities , which are directly related to the contract, less the discounted value of the expected premiums that would
be required to meet future cash outflows based on the valuation assumptions used. The liability is either based on current
assumptions or calculated using the assumptions established at the time the contract was issued, in which case, a margin for risk
and adverse deviation is generally included. Furthermore, the liability for the life insurance contracts includes claims outstanding.
Profits originated from margins for adverse deviations on run-off contracts are recognized in the statement of profit or loss over the
life of the contract, whereas losses are fully recognized in the statement of profit and loss during the first year of runoff. The
liability is derecognised when the contract expires, is discharged or cancelled.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 29
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies (continued)
2.4.27 Revenue recognition (continued)
(b) Earned premiums
(c) Underwriting surplus
2.4.28 Other income
Other income earned by the Group is recognized on the following bases:
- Interest income
- Investment income
- Commission
- Rental Income
-
2.4.29 Fair value measurement:
The Company measures available for sale financial assets and investment properties in non-financial assets at fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the
asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use.
When pricing the asset or liability, it is assumed that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits
by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest
and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Interest income is recognized in profit or loss using the effective interest rate method. Fees and commissions that are an
integral part of the effective yield of the financial asset or liability are recognized as an adjustment to the effective interest rate
of the instrument.
Investment income comprises dividend and rental income from investment property business. Dividend income is recognized
when the shareholders' right to receive payment is established while rental income is recognized on an accrual basis.
Commission income is recognized as it accrues in accordance with the substance of the relevant agreements.
Rental income comprises of income from the lease of the Group's investment properties. Rental income is recognized on an
accrual basis and where appropriate using the straight line methodology over the lease term.
Management fees
Management fees are charged to subsidiaries and are recognized in the separate financial statements when the services are
rendered.
Earned premiums represent gross written premiums net of reinsurance ceded to reinsurers and adjusted for unearned premiums,
if any.
Underwriting surplus is determined for each class of business after taking into account inter alia, unearned premium reserves,
outstanding claims and additional reserves.
SACOS GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.4 Significant accounting policies (continued)
2.4.29 Fair value measurement (continued)
The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the
basis of the lowest level input that is significant to the fair value measurement in its entirety.
For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value
measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a
Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires
judgement, considering factors specific to the asset or liability.
The determination of what constitutes ‘observable’ requires significant judgement by the Company. Management considers
observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively involved in the relevant market.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether
transfers have occurred between Levels in the hierarchy by re-assessing categorization (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period. If there is a transfer occurred between
the levels, it is deemed to have occurred from the date of assessment.
For fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics
and risks of the asset or liability and the level of the fair value hierarchy as explained above.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 31
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS
3.1 Insurance risk
3.1.1 Insurance contracts
Concentration, frequency and severity of claims
(a) Short-term insurance
(b) Long-term insurance
Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount of risk, accumulation of risk and
type of industry covered.
The Group issues contracts that transfer insurance or financial risk or both. This section summarizes the main risks linked to long-
term and short-term insurance business and the way they are managed.
A description of the significant risk factors are given below together with the risk management policies applicable.
Insurance risk is transferred when the Group agrees to compensate a policyholder if a specified uncertain future event (other than a
change in a financial variable) adversely affects the policyholder. By the very nature of an insurance contract, this risk is random and
therefore unpredictable. The Group is exposed to short-term and long-term insurance risks.
The main risk that the Group faces under its insurance contracts is that actual claims and benefit payments exceed the carrying
amount of the insurance liabilities. This may occur if the frequency or severity of claims and benefits are greater than estimated.
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected
outcome. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the
portfolio. The Group has developed its insurance underwriting strategy so as to diversify the type of insurance risks accepted and
within each of these categories to achieve a sufficiently large population of risks to reduce the variability of the expected outcome.
For contracts where death is the insured risk, the most significant factors that could increase the overall frequency of claims are
epidemics or wide spread changes in lifestyle, such as eating, smoking and exercise habits, resulting in earlier or more claims than
expected. For contracts where survival is the insured risk, the most significant factor is continued improvement in medical science
and social conditions that would increase longevity. Insurance risk is therefore subject to contract holders' behaviours and the
impact of contract holders' behaviours have been factored into the assumptions used to measure insurance liabilities.
For contracts with fixed and guaranteed benefits and fixed future premiums, there are no mitigating items and conditions that reduce
the insurance risk accepted.
For contracts with Discretionary Participation Feature (DPF), the participating nature of these contracts results in a significant portion
of the insurance risk being shared with the insured party.
The reinsurance arrangements for proportional and non-proportional treaties are such that the Group is adequately protected and
would only suffer predetermined amounts.
The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty of the amount of the
resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable.
For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk that the
Group faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the
insurance liabilities.
The Group has developed its insurance underwriting strategy to diversify the type of insurance risks accepted and within each of
these categories to achieve a sufficiently large population of risks to reduce the variability of the expected outcome.
The frequency and severity of claims can be affected by several factors, the most significant resulting from severe weather events
like natural calamities, fire and allied perils and their consequences and liability claims awarded by the Court. Inflation is another
factor that may affect claims payments.
Underwriting measures are in place to enforce appropriate risk selection criteria. For example, the Group has the right to review
terms and conditions on renewal or not to renew an insurance contract.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 32
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.1.1 Insurance contracts (continued)
3.1.2 Concentration of insurance risk
(a) Short-term insurance
Number
Class of business of Claims
SCR SCR
Non-life
Fire & Allied Perils 72 2,974,272 1,214,985
Motor 2,025 10,835,285 10,334,785
Accident & Liability 201 29,644,043 2,041,527
Marine 38 15,840,373 2,200,498
Others 67 2,910,578 629,926
2,403 62,204,551 16,421,721
IBNR - 4,730,681 3,156,358
2,403 66,935,232 19,578,079
Number
Class of business of Claims
SCR SCR
Non-life
Fire & Allied Perils 39 32,066,451 3,233,984
Motor 3,197 10,999,611 10,999,611
Accident & Liability 209 7,431,298 1,387,644
Marine 18 90,000 75,000
Others 73 23,626,246 12,013,410 3,536 74,213,606 27,709,649
IBNR - 8,674,267 5,220,962
3,536 82,887,872 32,930,611
(b) Long-term insurance
With Profit Without Profit Total
SCR SCR SCR
Office Premium 59,977,744 - 59,977,744
Single Premium 30,402,215 7,637,274 38,039,489
Accrued Bonus 133,237,188 - 133,237,188
Sum Assured 1,472,933,346 152,862,408 1,625,795,754
Reserve before Bonuses 421,870,084 6,490,115 428,360,199
Reserve after Bonuses 427,706,499 6,490,115 434,196,614
Number of Policies 9,574 301 9,875
Total outstanding claims at December 31, 2018 (notes 20 & 25(a))
The Group
Gross
2018
2019
Net
Total outstanding claims at December 31, 2019 (notes 20 & 25(a))
The Group manages these risks through its underwriting strategy and reinsurance arrangements. The underwriting strategy is
intended to ensure that the risks underwritten are well diversified in terms of type of risk and the level of insured benefits. For
example, death risk and survival risk are balanced across its portfolio. Medical selection is also included in the underwriting
procedures with premiums varied to reflect the health condition and family medical history of the applicants. There are defined
retention limit on any single life or group life insured and reinsures the excess of the insured benefit over its retention limit. The
Group does not have any reinsurance covers for contracts that insure survival risk.
2019
The following tables disclose the concentration of claims by class of business gross and net of reinsurance for short-term insurance:
The Group
Gross Net
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 33
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.1.2 Concentration of insurance risk (continued)
(b) Long-term insurance (continued)
With Profit Without Profit Total
SCR SCR SCR
Office Premium 59,577,288 62,580 59,639,868
Single Premium - 21,665,563 21,665,563
Accrued Bonus 142,941,506 - 142,941,506
Sum Assured 871,593,297 672,923,949 1,544,517,246
Reserve before Bonuses 403,541,004 18,800,647 422,341,651
Reserve after Bonuses 406,380,331 18,800,647 425,180,978
Number of Policies 8,325 1,935 10,260
3.1.3 Sources of uncertainty in the estimation of future claim payment
(a) Short-term insurance
2019
Change
in
assumpti
ons
Impact on
gross
liabilities
Impact on
reinsurance
share of
liabilities
Impact on
profit before
tax Impact on equity
SCR SCR SCR SCR
Average claim cost 5% 3,110,228 821,086 (3,931,314) (3,644,722)
2018
Change in
assumptio
ns
Impact on
gross
liabilities
Impact on
reinsurance
share of
liabilities
Impact on
profit before
tax
Impact on
equity
SCR SCR SCR SCR
Average claim cost 5% 3,710,680 1,385,482 (5,096,163) (4,371,096)
(b) Long-term insurance
Uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance contracts arises from the
unpredictability of long-term changes in overall levels of mortality and the variability in contract holders' behaviour.
The Group uses appropriate base tables of standard mortality according to the type of contract being written and statistical data are
used to adjust the crude mortality rates to produce a best estimate of expected mortality for the future. When data is not sufficient to
be statistically credible, the best estimate of future mortality is based on standard industry tables adjusted for experience.
THE GROUP
THE GROUP
Claims can be either long tail or short tail. Short tail claims are settled within a short time and the estimation processes reflect with a
higher degree of certainty of all the factors that influence the amount and timing of cash flows about the estimated costs of claims.
However, for long tail claims (e.g. bodily injury), the estimation process is more uncertain and depends largely on external factors
such as Court awards for example.
Claims are payable on a mix of claims-occurrence and claims-made basis. On a claims-occurrence basis, mostly for the liabilities
classes of business, the Group is liable for all insured events that occurred during the term of the contract, even if the loss is
discovered after the end of the contract term. On a claims-made basis, which is mostly with respect to the property classes of
business, the claim is only entertained if the policy was in force at the time the claim is asserted for coverage to apply. As a result,
liability claims are settled over a long period of time. There are several variables that affect the amount and timing of cash flows
from these contracts. These mainly relate to the inherent risks of the business activities carried out by individual contract holders
and the risk management procedures adopted. The compensation paid on these contracts is the monetary awards granted for bodily
injury by employees (for employer's liability covers) or members of the public (for public liability covers). Such awards are lump-sum
payments that are calculated as the present value of the lost earnings and rehabilitation expenses that the injured party will incur as
a result of the accident.
All reasonable steps are taken to ensure that appropriate information is available regarding claims exposures. However, given the
uncertainty in establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability
established. The liability for these contracts comprise a provision for IBNR and a provision for reported claims not yet paid at the
reporting date. The Group has ensured that liabilities on the statement of financial position at reporting date for existing claims
whether reported or not, are adequate.
2018
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 34
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.1.3 Sources of uncertainty in the estimation of future claim payment (continued)
(b) Long-term insurance (continued)
2019 2018
Actuarial
Liability
Actuarial
Liability
Percentage
change relative
to main basis
SCR SCR %
Main Basis 434,196,564 425,181,000
Renewal expenses plus 10% 444,803,841 436,324,000 2.4%
Withdrawals plus 10% 433,300,403 416,835,000 -0.2%
Inflation plus 1% 439,852,263 431,201,000 1.3%
Investment return less 1% 469,593,809 450,655,000 8.2%
Mortality (and other claims) plus 10% 435,789,355 418,656,000 0.4%
Investment return plus 1% 443,784,311 395,602,000 2.2%
The table below indicated the level of the respective variables that will trigger an adjustment and then indicates the liability
adjustment required as a result of a further deterioration of the variable.
The following table presents the sensitivity of the value of insurance liabilities disclosed to movements in assumptions used in the
estimation of insurance liabilities.
The Group has a predetermined retention limit on any single life insured and the Group reinsures the excess of the insured benefit
above the retention limit.
The Group manages long-term insurance risks through its underwriting strategy and reinsurance arrangements. Management
ensures that risks underwritten are well diversified in terms of type of risk and the level of insured benefits. Medical selection is
included in the Group’s underwriting procedures, with premiums varied to reflect the health condition and family medical history of
the applicant. Insurance risk may also be affected by the contract holder's behaviour who may decide to amend terms or terminate
the contract or exercise a guaranteed annuity option.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 35
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.1 Insurance risk (Continued)
3.1.4 Claims development
Net insurance contract liabilities - 2019
Accident year 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total
SCR SCR SCR SCR SCR SCR SCR SCR SCR SCR
At end of accident year 48,912,375 35,267,010 37,912,041 34,774,860 44,258,000 40,999,000 46,438,000 43,334,580 20,499,000
One year later 63,846,696 47,892,219 50,383,622 47,183,000 48,938,000 47,596,000 53,928,609 43,335,796 -
Two years later 62,557,680 51,994,611 51,677,000 52,690,000 49,002,000 47,600,842 53,928,720 - -
Three years later 62,073,827 52,563,000 53,252,000 52,707,000 - - - - -
Four years later 62,322,000 52,566,000 53,252,000 - - - - - -
62,322,000 52,566,000 53,252,000 52,707,000 49,002,000 47,600,842 53,928,720 43,335,796 20,499,000 435,213,358
At end of accident year (48,912,375) (33,331,299) (37,043,163) (27,912,469) (30,248,000) (27,695,000) (36,886,000) (26,415,274) (17,164,000)
One year later (63,846,696) (46,971,029) (47,334,734) (45,381,000) (39,857,000) (42,462,000) (51,268,816) (26,426,212) -
Two years later (62,557,680) (50,706,486) (58,709,000) (46,644,000) (40,872,000) (43,296,450) (51,268,986) - -
Three years later (61,355,452) (51,614,000) (59,073,000) (47,118,000) (41,019,000) (43,302,450) - - -
Four years later (61,606,000) (51,964,000) (62,897,000) (48,532,000) (41,022,684) - - - -
Cumulative claims paid to date (61,606,000) (51,964,000) (62,897,000) (48,532,000) (41,022,684) (43,302,450) (51,268,986) (26,426,212) (17,164,000) (404,183,332)
Net contract liabilities at reporting date 716,000 602,000 (9,645,000) 4,175,000 7,979,316 4,298,392 2,659,734 16,909,584 3,335,000 31,030,026
Incurred but not reported (IBNR) 3,162,000
Net outstanding claims at December 31, 2019 (notes 20 & 25(c)) 34,192,026
The development of insurance liabilities for the short-term insurance business provides a measure of the Group's ability to estimate the ultimate value of claims. The table below illustrates how the estimates
of net claims outstanding for each year have changed at successive year ends and the table reconciles the cumulative claims to the net amount appearing in the statements of financial position (see notes
20 and 25) for the net claims outstanding at December 31, 2019 and December 31, 2018.
Current estimate of cumulative claims
incurred
THE GROUP
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 36
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.1 Insurance risk (Continued)
3.1.4 Claims development (continued)
Net insurance contract liabilities - 2018
Accident year 2011 2012 2013 2014 2015 2016 2017 2018 Total
SCR SCR SCR SCR SCR SCR SCR SCR SCR
At end of accident year 48,912,375 35,267,010 37,912,041 34,774,860 44,258,000 40,999,000 46,438,000 43,334,580
One year later 63,846,696 47,892,219 50,383,622 47,183,000 48,938,000 47,596,000 53,928,609 -
Two years later 62,557,680 51,994,611 51,677,000 52,690,000 49,002,000 - - -
Three years later 62,073,827 52,563,000 53,252,000 52,707,000 - - - -
Four years later 62,322,000 52,566,000 53,252,000 - - - - -
Current estimate of cumulative claims incurred 62,322,000 52,566,000 53,252,000 52,707,000 49,002,000 47,596,000 53,928,609 43,334,580 414,708,189
At end of accident year (48,912,375) (33,331,299) (37,043,163) (27,912,469) (30,248,000) (27,695,000) (36,886,000) (26,415,274)
One year later (63,846,696) (46,971,029) (47,334,734) (45,381,000) (39,857,000) (42,462,000) (51,268,816) -
Two years later (62,557,680) (50,706,486) (58,709,000) (46,644,000) (40,872,000) (43,296,450) - -
Three years later (61,355,452) (51,614,000) (59,073,000) (47,118,000) (41,019,000) - - -
Four years later (61,606,000) (51,964,000) (62,897,000) (48,532,000) - - - -
Cumulative claims paid to date (61,606,000) (51,964,000) (62,897,000) (48,532,000) (41,019,000) (43,296,450) (51,268,816) (26,415,274) (386,998,540)
Net contract liabilities at reporting date 716,000 602,000 (9,645,000) 4,175,000 7,983,000 4,299,550 2,659,793 16,919,306 27,709,649
Incurred but not reported (IBNR) 5,220,962
Net outstanding claims at December 31, 2018 (notes 20 & 25(c)) 32,930,611
The Group has in place a series of proportional and non-proportional or surplus and excess of loss covers in each of the last four years to cover for losses on these contracts.
THE GROUP
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 37
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.2 Financial risk
The most important components of this financial risk are:
▪ Market risk (which includes currency risk, interest rate risk and equity price risk);
▪ Credit risk;
▪ Liquidity risk;
▪ Capital management; and
▪ Fair value estimation.
3.2.1 Market risk
Currency risk
THE GROUP
The Group's financial assets and financial liabilities in foreign currencies are detailed below:
At December 31, 2019 SCR USD Euro GBP Total
SCR SCR SCR SCR SCR
Assets
Investment in financial assets 137,298,320 86,576,896 - - 223,875,216
Trade and other receivables 99,320,131 9,472,846 3,569,700 - 112,362,678
Cash & cash equivalents 30,596,551 3,422,890 - - 34,019,441
Total assets 267,215,002 99,472,632 3,569,700 - 370,257,335
At December 31, 2019 Rupee USD Euro GBP Total
SCR SCR SCR SCR SCR
Liabilities
Trade and other payables 27,386,641 - - - 27,386,641
Total liabilities 27,386,641 - - - 27,386,641
The Group's activities are exposed to financial risks through its financial assets, financial liabilities, insurance and reinsurance
assets and liabilities. In particular, the key financial risk is that investment proceeds are not sufficient to fund the obligations
arising from insurance contracts.
The Group's risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and
control, and to monitor the risks and adherence to limits by means of reliable and up-to-date administrative and information
The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging
best practice. The Board recognizes the critical importance of having efficient and effective risk management policies and
systems in place. To this end, there is a clear organizational structure with delegated authorities and responsibilities from the
Board to Board Committees, executives and senior management. Individual responsibility and accountability are designed to
deliver a disciplined, conservative and constructive culture of risk management and control.
Market risk is the risk of adverse financial impact due to changes in fair values or future cash flows of financial instruments from
fluctuation in interest rates, equity prices, property prices and foreign currency exchange rates.
The Group has established policies which set out the principles that they expect to adopt in respect of management of the key
market risks to which they are exposed. The Group monitors adherence to the market risk policy through the Group’s
Investment Committee which is also responsible for managing market risk at Group level.
The financial impact from market risk is monitored at board level through investment reports which examine impact of changes
in market risk on investment returns and asset values. The Group’s market risk policy sets out the principles for matching
liabilities with appropriate assets and the approach to be taken when liabilities cannot be matched and the monitoring processes
required.
The Group purchases reinsurance contracts internationally, thereby exposing it to foreign currency fluctuations. The Group's
primary exposures are with respect to the Euro, US Dollar and British pound.
Management closely monitors currency risk exposures against pre-determined limits. Exposure to foreign currency exchange
risk is not hedged.
The Group also has a investments in foreign currencies, namely US Dollar, which are exposed to currency risk.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 38
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.2 Financial risk (Continued)
3.2.1 Market risk (Continued)
Currency risk (Continued)
At December 31, 2018
SCR USD Euro GBP Total
SCR SCR SCR SCR SCR
Assets
Investment in financial assets 140,698,573 31,530,641 - - 172,229,214
Trade and other receivables 28,025,390 63,658,629 15,862,377 - 107,546,396
Cash & cash equivalents 40,542,553 16,321,540 1,631 2,814 56,868,538
Total assets 209,266,515 111,510,810 15,864,008 2,814 336,644,148
Liabilities
Trade and other payables 34,638,033 9,161,991 3,527,828 - 47,327,851
Total liabilities 34,638,033 9,161,991 3,527,828 - 47,327,851
THE COMPANY
The Company's financial assets and financial liabilities in foreign currencies are detailed below:
At December 31, 2019 Rupee USD Euro GBP Total
SCR SCR SCR SCR SCR
Assets
Investment in financial assets 15,689,771 46,381,568 - - 62,071,339
Trade and other receivables 87,261,418 9,472,846 3,569,700 - 100,303,965
Cash & cash equivalents 13,045,407 3,422,890 - - 16,468,297
Total assets 115,996,596 59,277,304 3,569,700 - 178,843,601
At December 31, 2019 Rupee USD Euro GBP Total
SCR SCR SCR SCR SCR
Liabilities
Trade and other payables 15,546,104 - - - 15,546,104
Total liabilities 15,546,104 - - - 15,546,104
At December 31, 2018
Rupee USD Euro GBP Total
SCR SCR SCR SCR SCRAssetsInvestment in financial assets 5,662,506 16,343,259 - - 22,005,765 Trade and other receivables 22,156,529 63,658,629 15,862,377 - 101,677,535
Cash & cash equivalents 16,016,767 16,321,540 1,631 2,814 32,342,752
Total assets 209,266,515 111,510,810 15,864,008 2,814 336,644,148
Liabilities
Trade and other payables 16,920,826 9,161,991 3,527,828 - 29,610,645
Total liabilities 16,920,826 9,161,991 3,527,828 - 29,610,645
The Company's financial assets and financial liabilities are denominated in Seychelles Rupees.
Sensitivity analysis
Impact of a 5% change in exchange rate on consolidated
statement of profit or loss and OCI GBP Euro USD
SCR SCR SCRAt December 31, 2019
Increase of 5% in the exchange rate - 178,485 4,973,632
Decrease of 5% in the exchange rate - (178,485) (4,973,632)
At December 31, 2018
Increase of 5% in the exchange rate (141) (616,809) (5,117,441)
Decrease of 5% in the exchange rate (141) (616,809) (5,117,441)
If the Seychelles Rupee had weakened / strengthened against the following currencies with all variables remaining constant, the
impact on the results for the year would have been as shown below as a result of foreign exchange gains / losses.
THE GROUP
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 39
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.2 Financial risk (Continued)
3.2.1 Market risk (Continued)
Interest rate risk
The interest rate profiles of the financial assets of the Group as at December 31, were as follows:
2019 2018 2019 2018
% % % %
Held-to-maturity investments 5.00%-6.34% 2.00%-6.34% 5.75% -
Short term deposits - 3.10% - 4.50% - -
Loans and receivables 4.5%-12% 4.5%-12% - -
Management regularly monitors the sensitivity of reported interest rate movements.
2019 2018
Impact on Life Assurance Fund SCR million SCR million
+1% 16.2 15.4
-1% (16.2) (15.4)
Equity price risk
The Group
Market indices
Change in
variables
Impact on
profit before
tax
Impact on
equity
Impact on
profit before
tax Impact on equity
% SCR SCR SCR SCR
Foreign markets + 15% 10,648,552 10,648,552 12,515,467 12,515,467
Foreign markets - 15% (10,648,552) (10,648,552) (12,515,467) (12,515,467)
- reinsurer's share of insurance liabilities;
- amounts due from reinsurers in respect of claims already paid;
- amounts due from insurance contract holders, and
- amounts due from insurance intermediaries.
Short term insurance liabilities are not directly sensitive to the level of market interest rates as they are undiscounted and
contractually non-interest bearing. However, due to the time value of money and the impact of interest rates on the level of
bodily injury related claims incurred by certain insurance contract holders, a reduction for interest rates would normally produce
a higher insurance liability.
Interest rate risk arises from the Group’s investments in fixed income securities: loans & receivables, held-to-maturity
Investments, bank balances and deposits which are exposed to fluctuations in interest rates. Exposure to interest rate risk is
monitored by the Investment Committee through a close matching of assets and liabilities. The impact of exposure to sustained
As at 31 December 2019, the Group only has fixed interest rate financial instruments and thus is not exposed to risk of
movement in interest rates.
THE COMPANY
For liabilities under long term insurance contracts with fixed and guaranteed terms, changes in interest rate will not cause a
change to the amount of liability because their carrying amounts are not affected by the level of market interest rates.
2019
Credit risks is a risk that a counterparty will be unable to pay an amount in full when due. Credit risk is the risk of financial loss to
the Group if a customer or counterparty to a financial instruments fails to meet all or part of their obligations. The Group's credit
risk is primarily attributable to:
However for insurance contracts with Discretionary Participation Feature (DPF), the DPF element liabilities are directly affected
by changes in the level of interest rates to the extent that they affect the carrying amount of underlying assets. An increase in
the value of the assets would require all other assumptions being equal, an increase in the DPF liability and vice versa.
The Group’s equity price risk exposure relates to quoted equity instrument financial assets whose values will fluctuate as a
result of changes in market prices. The sensitivity analysis of the risk is disclosed below:
2018
Equity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
equity prices (other than those arising from interest rate or foreign exchange rate risk), whether those changes are caused by
factors specific to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in
the market.
THE GROUP
The impact of changes of 100 basis points in the interest rates used for discounting the liabilities within the Life Assurance Fund
are as follows:
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 40
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.2 Financial risk (Continued)
3.2.1 Market risk (Continued)
Equity price risk (Continued)
Reinsurance credit exposures
The
CompanyLife
40% -
- 95%
30% 5%
2018 2018 2019 2018
SCR SCR SCR SCR
Neither past due nor impaired 111,021,430 104,680,122 98,962,717 98,811,261
Impaired 1,341,248 2,866,274 1,341,248 2,866,274
Carrying amount at year-end 112,362,678 107,546,396 100,303,965 101,677,535
2019 2018 2019 2018
SCR SCR SCR SCR
Neither past due nor impaired 55,605,676 61,424,503 - 2,866,274
Impaired - - - -
Carrying amount at year-end 55,605,676 64,054,603 - 2,866,274
The Group is however is exposed to concentrations of risks with respect to its reinsurers due to the nature of the reinsurance
market and the restricted range of reinsurers that have acceptable credit ratings. The Group is exposed to the possibility of
default by its reinsurers in respect of share of insurance liabilities and refunds in respect of claims already paid.
THE COMPANY
The Group manages its reinsurance counterparty exposures and the reinsurance department has a monitoring role over this
risk. The Group's largest reinsurance counterparties are:
Swan Life Ltd
2019
Management also monitors the financial strength of reinsurers and there are policies in place to ensure that risks are ceded to
top-rated and credit worthy reinsurers only.
Loans and receivables
Africa Re
Swiss Re
This exposure is monitored on a regular basis for any shortfall in the claims history to verify that the contract is progressing as
expected and that no further exposure for the Group will arise.
THE GROUP THE COMPANY
THE GROUP
The following table provides information regarding the carrying value of trade and other receivables that have been impaired.
Trade & other receivables
The amounts presented in the consolidated statements of financial position are net of allowances for estimated irrecoverable
amount receivables, based on management's prior experience and the current economic environment.
The Group has no significant concentration of credit risk in respect of its insurance business with exposure spread over a large
number of clients, agents and brokers. The Group has policies in place to ensure that sales of services are made to clients and
brokers with sound credit history.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 41
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.2 Financial risk (Continued)
3.2.3 Liquidity risk
Financial instruments
2019 2018 2019 2018
SCR SCR SCR SCR
55,605,676 61,424,503 - -
223,875,214 172,229,214 62,071,339 22,005,765
112,362,678 107,546,396 100,303,965 101,677,535
Bank balances and cash 34,019,441 56,868,538 16,468,297 32,342,752
2019 2018
SCR SCR
Collateral is from the counterparty and is repayable if the contract terminates. 42,329,022 43,964,020
Loan amount against the above collateral 38,096,120 39,567,618
Maturities of financial liabilities
THE GROUP
2019 Less than
1 year 1 to 5 years
More than
5 years Total
SCR SCR SCR SCR
Trade and other payables 26,818,330 - - 26,818,330
Gross outstanding claims and IBNR 69,190,379 - - 69,190,379
Gross unearned premiums 67,031,629 - - 67,031,629
Bank overdraft - - - -
Total liabilities 163,040,339 - - 163,040,339
2018 Less than
1 year 1 to 5 years
More than
5 years Total
SCR SCR SCR SCR
Trade and other payables 47,327,851 - - 47,327,851
Gross outstanding claims and IBNR 86,421,995 - - 86,421,995
Gross unearned premiums 64,123,960 - - 64,123,960
Bank overdraft - - - -
Total liabilities 197,873,806 - - 197,873,807
The following table provides information regarding the carrying value of loans and receivables that have been impaired.
THE GROUP
The following table provides information regarding the carrying value of trade and other receivables that expose the Group and
the Company to credit risk.
Loans and receivables at amortised cost
Trade and other receivables
The tables below analyses the Group and the Company’s financial assets and liabilities to the relevant maturity groupings
based on the remaining years of repayment.
Investments in financial assets*
The loan to the associate and the Group staff loans are also collateralized as appropriate to minimize the risk of credit losses.
Collateral on policy loans
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are
implemented regarding the acceptability of types of collateral and the valuation parameters. Collateral is mainly obtained for
loans and receivables which are secured by corresponding life assurance policies and amount granted is limited to 90% of the
surrender value. Management monitors the value of the collateral, requests additional collateral when needed.
The amounts for collateral as at the year-end are:
The Group has strong liquidity positions and liquidity risk is considered to be low. Through the application of the liquidity
management policy, the Group seeks to maintain sufficient financial resources to meet its obligations as they fall due.
THE COMPANYTHE GROUP
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 42
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.2 Financial risk (Continued)
3.2.3 Liquidity risk (Continued)
THE COMPANY2019 Less than
1 year 1 to 5 years
More than
5 years Total
SCR SCR SCR SCR
Trade and other payables 14,977,795 - - 14,977,795
Gross outstanding claims and IBNR 66,935,232 - - 66,935,232
Gross unearned premiums 67,031,629 - - 67,031,629
Bank overdraft - - - -
Total liabilities 148,944,656 - - 148,944,656
2018 Less than
1 year 1 to 5 years
More than
5 years Total
SCR SCR SCR SCR
Trade and other payables 29,610,644 - - 29,610,644 Gross outstanding claims and IBNR 82,887,872 - - 82,887,872 Gross unearned premiums 64,123,960 - - 64,123,960 Bank overdraft - - - -
Total liabilities 176,622,476 - - 176,622,477
3.2.4 Capital management
THE GROUP
•
•
•
•
•
•
The Group manages its capital structure and makes adjustment to it, in light of changes in economic conditions. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares
or sell assets to reduce debts. The Actuarial valuation report as at 31 December 2019 shows a valuation surplus of SCR 11.2
million and the Assets in the Life Fund meets the Insurance Act Minimum Solvency Requirement in the Life Fund . The Life
Fund is therefore solvent as at 31 December 2019 with a Solvency ratio of 5.14.
The Group has established the following capital management objectives, policies and approach to managing the risks that
affect its capital position:
To allocate capital efficiently and support the development of business by ensuring that returns on capital employed
meet the requirements of its capital providers and of its shareholders
To maintain financial strength to support new business growth and to satisfy the requirements of the policyholders,
regulators and stakeholders
To retain financial flexibility by maintaining strong liquidity and access to a range of capital markets
To align the profile of assets and liabilities taking account of risks inherent in the business
The solvency margin of an insurance fund established in respect of short (general) and long term insurance business to be
maintained by a licensed insurer at all times during any accounting period shall be:
The operations of the Group are subject to regulatory requirements within the jurisdiction where it operates, such regulations not
only prescribe approval and monitoring of activities but also impose certain restrictive provisions to minimize the risk of default
and insolvency on the part of the Group to meet unforeseen liabilities as these arise.
To maintain the required level of stability of the Group thereby providing a degree of security to policyholders
As per Section 15 of the Insurance Regulations 2009 and Insurance Act, 2008, the stated capital of a licensed insurer carrying
short (general) insurance and long term (life) insurance businesses shall be SCR 3 million which the Group is currently
compliant with.
To maintain strong credit ratings and healthy capital ratios in order to support its business objectives and maximize
shareholders value
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 43
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.2 Financial risk (Continued)
3.2.4 Capital management (Continued)
Short-term insurance
- Not less than SCR 2 million;
- 20% of net premium income of the Fund in the preceding accounting period; or
- 20% of loss reserves of the fund at the end of the preceding accounting period, whichever is the highest.
Solvency margin
based on preceding accounting period
Highest of: SCR
(a) SR 2 million fund 2,000,000
(b) 20% of net premium income of the Fund in the preceding accounting period; or 21,302,330
(c) 20% of loss reserves of the fund at the end of the preceding accounting period. 16,577,574
Long-term insurance
-
-
2019 2018
SCR SCR
3% of without profit liabilities 663,493 564,019
plus 2% of with profit liabilities 8,241,603 8,127,607
plus 1% of the sum assured for initial terms of 2 years or less 15,896 27,204
plus 0.2% of the sum assured for initial terms of more than 2 years 2,156,154 1,976,495
11,077,146 10,695,325
Approach to capital management
THE COMPANY
The Company has no long term debt.
3.3 Fair Value estimation
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting
period. A market is regarded as active if quoted prices are readily and regularly available from for example, a stock exchange
and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market
price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1. Instruments
included in Level 1 comprise primarily quoted equity investments classified as trading securities or available-for-sale.
The Group’s approach in managing capital involves managing assets, liabilities and risks in a coordinated way, assessing
shortfalls between reported and required capital levels on a regular basis and taking appropriate actions to influence the capital
position of the Group in the light of changes in economic conditions and risk characteristics. An important aspect of the Group's
overall capital management process is the setting of target risk adjusted rates of return, which are aligned to performance
objectives and ensure that the Group is focused on the creation of value for shareholders.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques.
These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on
specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level
2.
3% of the insurer's liabilities as determined under regulation 19 in respect of non-participating policies, and 2% of such
liabilities in respect of participating policies, as at the end of the preceding accounting period; and
1% of the sum insured at risk for policies the original term of which is 2 years or less, and 0.2% of the sum insured at
risk for policies the original term of which is more than 2 years, as at the end of the preceding accounting period.
The Group seeks to optimize the structure and sources of capital to ensure that it consistently maximizes returns to the
shareholders and policyholders.
Solvency margin based on
preceding accounting period
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 44
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
3.2 Financial risk (Continued)
3.3 Fair Value estimation - (continued)
(a)
Fair Value
Hierarchy
Fair value at
31 December
2019
Carrying
value at 31
December
2019
Fair Value
Hierarchy
Fair value at
31 December
2018
Carrying value
at 31 December
2018
SCR SCR SCR SCR SCR SCR
Assets
Land (note 3.3 (i) (iii)) Level 3 13,056,727 13,056,727 Level 3 46,338,550 46,338,550
Buildings (note 3.3 (i) (ii)) Level 2 266,277,688 266,277,688 Level 2 257,216,537 257,216,537
279,334,415 279,334,415 303,555,087 303,555,087
Level 1 99,925,728 99,925,728 Level 1 81,953,527 81,953,527
Level 2 19,741,636 19,741,636 Level 2 16,343,259 16,343,259
119,667,364 119,667,364 98,296,786 98,296,786
Fair Value
Hierarchy
Fair value at
31 December
2019
Carrying
value at 31
December
Fair Value
Hierarchy
Fair value at
31 December
2018
Carrying value
at 31 December
2018
SCR SCR SCR SCR SCR SCR
Assets
Land (note 3.3 (i) (iii)) Level 3 2,330,314 2,330,314 Level 3 46,338,550 46,338,550
Buildings (note 3.3 (i) (ii)) Level 2 64,009,000 64,009,000 Level 2 38,835,390 38,835,390
66,339,314 66,339,314 85,173,940 85,173,940
Level 1 31,444,957 31,444,957 Level 1 5,047,198 5,047,198
Level 2 19,741,636 19,741,636 Level 2 16,343,259 16,343,259
51,186,593 51,186,593 21,390,457 21,390,457
The carrying values of loans and receivables approximate its fair value.
(b)
Available-for-sale investment
(note 3.3 (ii):
This note provides information on how the Group and Company determine fair value of various assets and liabilities.
Available-for-sale investments comprise of equity instruments that are listed on stock exchange. Active market prices on stock
exchange are used to revalue these investments.
Investment properties (note
3.3 (i):
Some of the Group and Company's assets and liabilities are measured at fair value at the end of each reporting period. The
following table gives the information about how the fair value of these assets and liabilities are determined:
The Group
The Company
Investment properties (note
Available-for-sale investment
Given the prevailing stable political and economic environment in the Seychelles, the Directors assess that it is currently
appropriate to have each of the investment properties valued by an independent valuer in 3 - 5 year cycles as a rule and more
frequently if the Board assesses that it is appropriate for any particular property. The valuation for the year ended December 31,
2019 was based on a mix of Directors' best estimates and independent professional valuation reports which were requested as
appropriate to the individual circumstances. Management and the Board considered that the carrying amounts of the
investment properties approximate their fair values.
Available-for-sale investments comprise of equity instruments that are listed on stock exchange. Active market prices on stock
exchange are used to revalue these investments.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 45
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
4. RISK MANAGEMENT FRAMEWORK
Governance Framework
Regulatory Framework
4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
Critical accounting estimates and assumptions
(a) Insurance Contracts
Estimates of future claims payments
Short-term insurance
▪ terms and conditions of the insurance contracts;
▪ knowledge of events;
▪ court judgement;
▪ economic conditions;
▪ previously settled claims;
▪ estimates based upon a projection of claims numbers and average cost; and
▪ expected loss ratios.
The board of directors approves the Group risk management policies and meets regularly to approve any commercial,
regulatory and organizational requirements of such policies. These policies define the Group’s identification of risk and its
interpretation and limit structure to ensure the appropriate quality and diversification of assets aligning underwriting and
reinsurance strategy to the corporate goals, and specify reporting requirements.
The primary objective of the Group’s risk and financial management framework is to protect the Group’s shareholders from
events that hinder the sustainable achievement of financial performance objectives, including failing to exploit opportunities. Key
management recognized the critical importance of having efficient and effective risk management systems in place.
Specifically, long-tail lines of business, which often have low frequency, high severity claims settlements, are generally more
difficult to project and subject to greater uncertainties than short-tail, high frequency claims. Further, not all catastrophic events
can be modelled using actuarial methodologies, which increases the degree of judgment needed in estimating general
insurance loss reserves. At each reporting date, prior year claims estimates are reassessed for adequacy and changes are
made to the provision.
The Group adopts multiple techniques to estimate the required level of provisions, thereby setting a range of possible
outcomes. The most appropriate estimation technique is selected taking into account the characteristics of the business class
and risks involved. The techniques Group use involves review of following:
The estimation of ultimate liability arising from the claims made under insurance contracts is one of the Group's most critical
accounting estimates. There are sources of uncertainty that need to be considered in the estimate of the liability that the Group
will eventually pay for such claims. Estimates have to be made both for the expected ultimate cost of claims reported at the
reporting date and for the expected ultimate cost of claims incurred but not reported (“IBNR”) at the reporting date. The Group
uses a range of actuarial methodologies to estimate these provisions. Liabilities for unpaid reported claims are estimated using
the input of assessments for individual cases reported to the Group and management estimates based on past claims
settlement trends for the claims IBNR. Technical provisions for general insurance contracts require significant judgment relating
to factors and assumptions such as inflation, claims development patterns and regulatory changes.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Regulators are primarily interested in protecting the rights of policyholders and monitor them closely to ensure that the Group is
satisfactorily managing affairs for their benefit. At the same time, regulators are also interested in ensuring that the Group
maintains an appropriate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters.
The operations of the Group are subject to regulatory requirements within the jurisdictions in which it operates. Such regulations
not only prescribe approval and monitoring of activities, but also impose certain restrictive provisions (e.g. capital adequacy) to
minimize the risk of default and insolvency on the part of insurance companies to meet unforeseen liabilities as these arise.
The preparation of these consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent
liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that
could require a material adjustment to the carrying amount of the asset or liability affected in the future.
The uncertainty inherent in the consolidated financial statements of the Group arises principally in respect of the technical
provisions. The technical provisions of the Group include provision for unearned premiums, Life Assurance Fund, Fisheries
and Agricultural Fund, Mortgage Protection Fund and outstanding claims (including IBNR).
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 46
3. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED)
4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)
Long-term insurance
Long-term business technical provisions are computed using statistical or mathematical methods.
Provisions are calculated gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be
recoverable from reinsurers based upon the gross provision and having due regard to collectability.
For short-term business, the Group is regulated by local authority to maintain a solvency margin under Insurance Act 2008
(note 3.2.4). Management assessed the appropriateness of the liability for short-term insurance contracts at the year-end.
The liability for life insurance contracts with DPF is either based on current assumptions or on assumptions established at the
inception of the contract, reflecting the best estimate at the time increased with a margin for risk and adverse deviation.
The liability for life insurance contracts with DPF is either based on current assumptions or on assumptions established at the
inception of the contract, reflecting the best estimate at the time increased with a margin for risk and adverse deviation. All
contracts are subject to a liability adequacy test, which reflect actuarial’ s best current estimate of future cash flows.
The determination of the liabilities under long-term insurance contracts is dependent on estimates made by the Group.
Estimates are made as to the expected number of deaths for each of the years in which the Group is exposed to risk. The
Group bases these estimates on standard industry mortality tables that reflect recent historical mortality experience, adjusted
where appropriate to reflect the Group's own experience. For contracts that insure the risk of longevity, appropriate but not
excessively prudent allowance is made for expected mortality improvements. However, continuing improvements in medical
care and social conditions could result in improvements in longevity in excess of those allowed for in the estimates used to
determine the liability for contracts where the Group is exposed to longevity risk.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 47
4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)
Critical accounting estimates and assumptions (Continued)
(a) Insurance Contracts (Continued)
Estimates of future claims payments (Continued)
Short-term insurance (Continued)
Long-term insurance (Continued)
Sensitivity
Uncertainties and judgements
▪
▪
▪ uncertainty over the timing of a settlement to a policyholder for a loss suffered.
(b) Reinsurance
(c) Pension benefits
The uncertainty arising under insurance contracts may be characterized under a number of specific headings, such as:
uncertainty as to whether an event has occurred which would give rise to a policy holder suffering an insured loss;
A margin for risk and uncertainty is added to these assumptions. These assumptions are ‘locked in‘ for the duration of the
contract. New estimates are made each subsequent year in order to determine whether the previous liabilities are adequate in the
light of these latest estimates. If the liabilities are considered adequate, the assumptions are not altered. If they are not adequate,
the assumptions are altered (‘unlocked’) to reflect the best estimate assumptions.
For contracts without fixed terms, it is assumed that the Group will be able to increase mortality risk charges in future years in line
with emerging mortality experience.
Estimates are also made as to the future investment income arising from the assets backing long-term insurance contracts.
These estimates are based on current market returns as well as expectations about future economic and financial developments.
For long-term insurance contracts with fixed and guaranteed terms and with DPF, estimates are made in two stages. Estimates of
future deaths, voluntary terminations, investment returns and administration expenses are made at the inception of the contract
and form the assumptions used for calculating the liabilities during the life of the contract.
The reasonableness of the estimation process is tested by an analysis of sensitivity around several different scenarios and the
best estimate is used.
uncertainty as to the amount of insured loss suffered by a policyholder as a result of the event occurring; and
The Group has not carried out any actuarial valuation since the Directors have based themselves on the method as prescribed by
the Seychelles Employment Act and they have estimated that the amount of liability provided will not be materially different had it
been computed by an external Actuary.
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a
number of assumptions. The assumptions used in determining the net cost for pensions include the discount rate. Any changes in
these assumptions will impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to
determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In
determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the
related pension liability.
There may be some reporting lags between the occurrence of the insured event and the time it is actually reported. Following the
identification and notification of an insured loss, there may still be uncertainty as to the magnitude and timing of the settlement of
the claim. There are many factors that will determine the level of uncertainty such as judicial trends, unreported information etc.
The degree of uncertainty will vary by policy class according to the characteristics of the insured risks. For certain classes of
policy, the maximum value of the settlement of a claim may be specified under the policy terms while for other classes, the cost of
a claim will be determined by an actual loss suffered by the policyholder.
The Group is exposed to disputes on, and defects in, contract wordings and the possibility of default by their Reinsurers. The
Group monitors the financial strength of their Reinsurers.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR YEAR ENDED 31 DECEMBER 2019 48
4.1 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)
Critical accounting estimates and assumptions (Continued)
(d) Revaluation of investment property
For commercial and residential rent earning investment properties where the determined fair value is arrived at using the income
approach, the calculated fair value amount is most sensitive to the assumptions of estimated yield and the long-term occupancy
rate.
The Directors and Valuer used the valuation techniques as deemed appropriate to each of the individual investment properties.
They considered that the carrying amounts of the assets to approximate their fair values.
As allowed by IFRS 13, more than one valuation technique is used to arrive at the Fair Value based primarily on availability of
market information for transactions on similar properties/ indicative purchase offers on the property and or the income approach.
Given the prevailing stable political and economic environment in the Seychelles, the Directors assess that it is currently
appropriate to have each of the investment properties valued by an independent valuer in 3 - 5 year cycles as a rule and more
frequently if the Board assesses that it is appropriate for any particular property.
Investment properties are re-measured at fair value, which is the amount for which the property could be exchanged between
knowledgeable, willing parties in an arm's length transaction. Fair value reflects the actual market state and circumstances as at
the balance sheet date for a given investment property. Changes in fair value are recognized in the statement of profit or loss and
other comprehensive income.
Management and the Board (particularly the Investment Committee) frequently evaluate property values. Where deemed
appropriate, the Company also engages an Independent Professional Valuer to determine the market fair value revalued
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 49
5. EQUIPMENT
(a) THE GROUP Furniture Motor Computer Total Work in
and fittings vehicles equipment PPE Progress Total
SCR SCR SCR SCR SCR SCR
COST
At January 1, 2018 9,474,941 4,981,910 9,629,996 24,086,847 - 24,086,847
Additions 22,244,559 278,500 611,634 23,134,693 6,507,640 29,642,333
Disposals (158,244) (859,936) (153,491) (1,171,671) - (1,171,671)
At December 31, 2018 31,561,256 4,400,474 10,088,139 46,049,869 6,507,640 52,557,509
Additions 94,230 475,246 768,787 1,338,263 5,392,040 6,730,303
Disposals - (1,337,877) - (1,337,877) - (1,337,877)
W/offs (4,325,203) (768,354) (7,706,097) (12,799,654) - (12,799,654)
Transfer to Investment Property (832,087) - - (832,087) (7,428,161) (8,260,248)
At December 31, 2019 26,498,197 2,769,489 3,150,829 32,418,514 4,471,519 36,890,033
ACCUMULATED DEPRECIATION
At January 1, 2018 6,762,626 2,972,473 8,972,749 18,707,847 - 18,707,847
Charge for the year (note 30) 1,238,873 939,155 378,347 2,556,376 - 2,556,376
Disposals (115,915) (948,847) - (1,064,762) - (1,064,762)
At December 31, 2018 7,885,584 2,962,780 9,351,096 20,199,461 - 20,199,461
Charge for the year (note 30) 3,276,224 563,421 423,883 4,263,528 - 4,263,528
Disposals - (1,028,471) - (1,028,471) - (1,028,471)
W/offs (4,309,026) (768,354) (7,594,128) (12,671,508) - (12,671,508)
At December 31, 2019 6,852,782 1,729,376 2,180,851 10,763,010 - 10,763,010
NET BOOK VALUE
At December 31, 2019 19,645,415 1,040,112 969,978 21,655,504 4,471,519 26,127,023
At December 31, 2018 23,675,673 1,437,693 737,043 25,850,408 6,507,640 32,358,048
(b) THE COMPANY Furniture Motor Computer Total Work in
and fittings vehicles equipment PPE Progress Total
SCR SCR SCR SCR SCR SCR
COST
At January 1, 2018 3,021,261 4,828,419 8,548,541 16,398,221 - 16,398,221
Additions 21,355,872 278,500 611,634 22,246,007 6,507,640 28,753,647
Disposals (6,094) (859,936) - (866,030) - (866,030)
At December 31, 2018 24,371,040 4,246,983 9,160,175 37,778,198 6,507,640 44,285,838
Additions 36,739 475,246 721,431 1,233,416 5,392,040 6,625,456
Disposals - (1,337,877) - (1,337,877) - (1,337,877)
W/offs (1,943,553) (768,354) (6,726,993) (9,438,900) - (9,438,900)
Transfer to Investment Property - - - - (7,428,161) (7,428,161)
At December 31, 2019 22,464,226 2,615,998 3,154,613 28,234,837 4,471,519 32,706,356
ACCUMULATED DEPRECIATION
At January 1, 2018 2,331,455 3,650,469 7,732,387 13,714,311 - 13,714,311
Charge for the year (note 30) 971,996 826,061 570,637 2,368,694 - 2,368,694
Disposals (3,961) (1,513,751) (17,661) (1,535,373) - (1,535,373)
At December 31, 2018 3,299,490 2,962,780 8,285,363 14,547,633 - 14,547,633
Charge for the year (note 30) 2,834,118 563,421 414,274 3,811,813 - 3,811,813
Disposals - (1,028,471) - (1,028,471) - (1,028,471)
W/offs (1,893,331) (768,354) (6,620,220) (9,281,905) - (9,281,905)
At December 31, 2019 4,240,277 1,729,376 2,079,417 8,049,070 - 8,049,071
NET BOOK VALUE
At December 31, 2019 18,223,949 886,622 1,075,196 20,185,767 4,471,519 24,657,286
At December 31, 2018 21,071,550 1,284,203 874,812 23,230,565 6,507,640 29,738,205
(c) Depreciation has been charged to other operating expenses (note 30).
(d) There is no restriction (pledge/security) on realisability of equipment or the remittance of income and proceeds of disposal.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 50
6. RIGHT OF USE ASSET (Relating to Office Rental-Maison Esplanade)
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 28,484,544 - 28,484,544 -
Additions - - - -
Disposals - - - -
Depreciation (note 30) (7,121,136) - (7,121,136) -
Increase / (decrease) in fair value - - - -
21,363,408 - 21,363,408 -
This Right of use asset is relevant for rental of Head Office Building - Maison Esplanade
7 INVESTMENT PROPERTIES
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 303,555,087 335,580,088 85,173,940 88,451,730
Right Of Use Assets (IFRS 16) 7 (a) 9,051,727 - 1,731,314 -
Transfer from PPE 8,260,248 - 7,428,161 -
WIP - Life 11,523,334 - - -
Disposals (56,647,491) (32,025,001) (29,972,491) (3,277,790)
Write-off (10,000,000) - - -
Increase / (decrease) in fair value 13,591,510 - 1,978,390 -
At December 31, 279,334,415 303,555,087 66,339,314 85,173,940
(a) Right Of Use Assets
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 2,646,972 - 718,025 -
Additions - - - -
Disposals - - - -
Depreciation (90,716) - (17,248) -
Increase / (decrease) in fair value 6,495,501 - 1,030,537 -
9,051,727 - 1,731,314 -
(b)
(c)
(d) The following amounts have been recognized:
2019 2018 2019 2018
SCR SCR SCR SCR
Rental income 22,039,863 24,254,639 7,651,303 8,504,323
Related expenses:
4,418,355 3,582,078 1,824,552 1,075,645
337,002 461,777 207,000 243,151
4,755,357 4,043,855 2,031,552 1,318,796
There is no restriction on realisability of investment property or the remittance of income and proceeds of disposal. The Group has no contractual
obligation to purchase, construct or develop investment property or for repairs, maintenance or enhancement.
THE GROUP THE COMPANY
THE GROUP THE COMPANY
THE COMPANY
Direct operating expenses arising from investment property that
generated income
Direct operating expenses arising from investment property that
did not generate income
The fair market value of each of the investment properties was determined on an open-market basis by reference to market evidence of expected
fair value and the income approach as deemed appropriate to each investment property. The valuation for the year ended December 31, 2019
was based on a mix of Directors' best estimates and independent professional valuation reports which were requested as appropriate to the
individual circumstances. Management and the Board considered that the carrying amounts of the investment properties approximate their fair
values.
THE GROUP
THE COMPANYTHE GROUP
The fair value arrived at falls primarily within category level 2 of the hierarchy. Where deemed necessary and appropriate, Level 3 inputs also
were used to assess and or corroborate the fair value amount. Investment properties have not been increased in value based on inflation.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 51
8. INTANGIBLE ASSETS
(a) THE GROUP Computer Website Total
software
SCR SCR SCR
COST
At January 1, 2018 9,342,076 124,468 9,466,544
Additions 488,477 - 488,477
At December 31, 2018 9,830,553 124,468 9,955,021
Additions - 33,165 33,165
At December 31, 2019 9,830,553 157,633 9,988,186
AMORTISATION
At January 1, 2018 3,685,990 98,703 3,784,693
Charge for the year (note 30) 1,539,391 24,894 1,564,285
At December 31, 2018 5,225,381 123,597 5,348,978
Charge for the year (note 30) 1,624,876 6,952 1,631,828
At December 31, 2019 6,850,257 130,549 6,980,806
NET BOOK VALUE
At December 31, 2019 2,980,296 27,084 3,007,380
At December 31, 2018 4,605,172 871 4,606,043
(b) THE COMPANY Computer Website Total
software
SCR SCR SCR
COST
At January 1, 2018 6,860,054 124,468 6,984,522
Additions 488,477 488,477
At December 31, 2018 7,348,531 124,468 7,472,999
Additions - 33,165 33,165
Write-off (note 30) - - -
At December 31, 2019 7,348,531 157,633 7,506,164
AMORTISATION
At January 1, 2018 1,714,657 98,703 1,813,360
Charge for the year (note 30) 1,469,706 24,894 1,494,600
At December 31, 2018 3,184,363 123,597 3,307,960
Charge for the year (note 30) 1,469,706 6,952 1,476,658
At December 31, 2019 4,654,069 130,549 4,784,618
NET BOOK VALUE
At December 31, 2019 2,694,462 27,084 2,721,546
At December 31, 2018 4,164,168 871 4,165,039
9 INVESTMENT IN SUBSIDIARIES THE COMPANY
2019 2018
SCR SCR
Investment at cost 3,000,000 3,000,000
Investment at cost - preference shares 45,000,000 45,000,000
48,000,000 48,000,000
(a) Details of the subsidiary company is as follows:
2019
Name of subsidiaries Shareholding Amount
% SCR'000
SACOS Life Assurance Company Limited 100 48,000
48,000
Activities
Long-term insurance business
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 52
9 INVESTMENT IN SUBSIDIARIES (CONTINUED)
(b)
10. INVESTMENT IN FINANCIAL ASSETS
2019 2018 2019 2018
SCR SCR SCR SCR
Available-for-sale financial assets (note a & d) 91,381,830 43,484,074 51,186,593 21,390,457
Held-to-maturity financial assets (note b) 132,493,385 128,745,139 10,884,746 615,308
223,875,215 172,229,213 62,071,339 22,005,765
The Group
2018 2019 2018 2019 2018
SCR SCR SCR SCR SCR
Current asset - 104,207,851 73,932,428 104,207,851 73,932,428
Non-current asset 43,484,074 28,285,534 54,812,711 119,667,364 98,296,785
43,484,074 132,493,385 128,745,139 223,875,215 172,229,213
The Company
Current asset - - 10,884,746 615,308 10,884,746 615,308
Non-current asset 51,186,593 21,390,457 - - 51,186,593 21,390,457
51,186,593 21,390,457 10,884,746 615,308 62,071,339 22,005,765
(a) The movement in investments in available-for-sale financial assets is summarized as follows:
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 43,484,075 26,236,202 21,390,457 16,096,019
Reclassification of Investment 9,812,711 - - -
Investments purchased during the year 28,716,570 17,703,753 26,911,944 5,047,198
Interest Accrued 392,172 29,730 - -
Interest Paid (321,299) - - -
Fair value changes 9,191,906 (732,851) 2,778,497 -
Foreign exchange gain / (loss) 105,695 247,240 105,695 247,240
At December 31, 91,381,830 43,484,074 51,186,593 21,390,457
(b) The movement in investments in held-to-maturity financial assets is summarized as follows:
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 128,745,139 137,661,938 615,308 548,780
Investments purchased during the year 202,752,601 127,245,464 45,548,463 -
Reclassification of Investment (9,812,711) - - -
Investments matured during the year (196,046,006) (141,507,120) (36,236,370) -
Accrued interest 6,854,362 5,344,857 957,348 66,528
At December 31, 132,493,385 128,745,139 10,884,749 615,308
SCR
-
91,381,830
91,381,830
2019
THE COMPANYTHE GROUP
AVAILABLE-FOR-SALE HELD-TO-MATURITY Total
THE COMPANY
Sacos Group Limited fully subscribed to 45,000 shares of SCR1,000 each which were issued by Sacos Life Assurance Company Limited
(SLACL) and this has been treated as an investment in subsidiary in the Company financial statements and equity in the financial statements of
SLACL. The main terms of the preference shares are that the shares be redeemable at the option of Sacos Life Assurance Company Limited and
attract a target 5% annual dividend rate, payable at the discretion of the management of the Sacos Life Assurance Company Limited. At the end
of the transaction both Sacos Life Assurance Company Limited and Sacos Group Limited are solvent.
THE GROUP
THE GROUP THE COMPANY
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 53
10. INVESTMENT IN FINANCIAL ASSETS - (CONTINUED)
(c) Investments in financial assets include the following:
(i) THE GROUP
Interest rate 2019 2018
% SCR SCR
Available-for-sale:
Equity investment 91,381,830 43,484,074
Held-to-maturity:
Term deposit 5.00%-6.34% 132,493,385 82,556,309
Treasury bills N/A - 46,188,830
132,493,385 128,745,139
(ii) THE COMPANY
Held-to-maturity:
Term deposit 5.75% 10,884,749 615,308
10,884,749 615,308
(d) Available-for-sale investments are quoted in active market.
11. LOANS AND RECEIVABLES
(a)
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 39,567,618 37,364,685 - -
Loans granted 20,462,384 22,470,023 - -
Loans repaid (21,933,882) (20,267,090) - -
At December 31, 38,096,120 39,567,618 - -
(b)
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 11,136,092 13,669,999 - -
Movement during the year (1,446,454) (2,533,908) - -
At December 31, 9,689,638 11,136,092 - -
(c)
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 10,720,792 13,019,919 - -
Loans granted - - - -
Loans repaid (3,777,557) (3,422,811) - -
Accrued Interest 876,684 1,123,684 - -
At December 31, 7,819,919 10,720,792 - -
(d)
2019 2018 2019 2018
SCR SCR SCR SCR
Current asset 19,006,977 21,981,809 - -
Non-current asset 36,598,699 39,442,694 - -
55,605,677 61,424,503 - -
Loans and receivables of the Group consist of staff loan movement is shown below:
Loans and receivables of the Group consist of loans on life assurance policies and the movement is shown below:
THE GROUP THE COMPANY
THE GROUP THE COMPANY
THE GROUP THE COMPANY
THE GROUP THE COMPANY
Classification between current and non-current assets:
Loans and receivables of the Group consist of loan to associate company and movement is shown below:
Maturity date
No fixed date of maturity
March 2020 to September 2021
N/A
Jun-20
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 54
11. LOANS AND RECEIVABLES (CONTINUED)
(e)
(f)
(i) Policy Loan from 12% (2018: 10% to 12%).
(ii) Staff Loan 4.5% (2018: 4.5 %).
(iii) Loan to Associate Company 9.5% (2018: 9.5%)
12. DEFERRED TAX ASSETS / (LIABILITIES)
(a) Deferred income tax is calculated on all temporary differences under the liability method:
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, (1,202,468) 602,488 (1,202,468) 602,488
(Charge) / credit for the year
(note 12(i & ii)) (341,099) (1,804,956) (341,099) (1,804,956)
At December 31, (1,543,567) (1,202,468) (1,543,567) (1,202,468)
(b)
2019 2018 2019 2018
SCR SCR SCR SCR
Deferred tax assets 1,475,112 154,213 1,475,112 154,213
Deferred tax liability (3,018,679) (1,356,681) (3,018,679) (1,356,681)
(1,543,567) (1,202,468) (1,543,567) (1,202,468)
(c) Deferred tax assets and liabilities during the year are attributable to the following items:
(i) Deferred tax assets:
THE GROUP THE COMPANY
Retirement Retirement
benefit benefit
obligations obligations
SCR SCR
At January 1, 2018 1,446,727 1,446,727
Charge to consolidated statement of profit or loss and other comprehensive income (1,292,514) (1,292,514)
At December 31, 2018 154,213 154,213
At January 1, 2019 154,213 154,213
Charge to consolidated statement of profit or loss and other comprehensive income 1,320,899 1,320,899
At December 31, 2019 1,475,112 1,475,112
(ii) Deferred tax liability:
THE GROUP THE COMPANYTHE GROUP Accelerated Accelerated
tax tax
depreciation depreciation
SCR SCR
At January 1, 2018 (844,239) (844,239)
(512,442) (512,442)
At December 31, 2018 (1,356,681) (1,356,681)
At January 1, 2019 (1,356,681) (1,356,681)
(1,661,998) (1,661,998)
At December 31, 2019 (3,018,679) (3,018,679)
THE GROUP THE COMPANY
Loans and receivables are secured as appropriate to minimize credit risk.
The rate of interest on loans are as follows;
Deferred tax assets and liabilities are offset for the income taxes related to the same fiscal authority of the same entity. The
following amounts are shown in the consolidated statements of financial position:
Charge to consolidated statement of profit or loss and other
comprehensive income
Charge to consolidated statement of profit or loss and other
comprehensive income
THE GROUP THE COMPANY
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 55
13. INVESTMENT IN ASSOCIATES2019 2018
SCR SCR
(a) Company's share of net assets in associated Company
As previously reported 20,508,967 19,628,783
Share of results of associated Company 775,738 880,184
At 31 December, 21,284,705 20,508,967
(b) Details of the associate at the end of the reporting period as follows:
Year endPrincipal Place of
Business
Proportion of
ownership
interest
St Claire Development Co Ltd Dec-31 Seychelles 49%
(i) The above associate is accounted for using the equity method.
(ii)
14. TRADE AND OTHER RECEIVABLES
2019 2018 2019 2018
SCR SCR SCR SCR
Premium receivables 43,152,867 31,608,390 35,714,722 29,685,655
Provision for credit impairment
(note 14(a)) (4,869,474) (3,695,636) (4,869,474) (3,695,636)
38,283,393 27,912,754 30,845,248 25,990,019
Recoverable from reinsurers
- share of notified claims (notes 20 & 25(a)) 47,357,153 49,957,262 47,357,153 49,957,262
- share of unearned premiums (notes 20 & 25(b)) 17,961,927 19,053,146 17,961,927 19,053,146
Other receivables and prepayments (note 14(c)) 8,760,205 10,623,234 4,139,637 6,677,108
112,362,678 107,546,396 100,303,965 101,677,535
(a) The movement in the provision for impairment is as follows:
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 3,695,636 829,362 3,695,636 829,362
1,173,838 2,866,274 1,173,838 2,866,274
At December 31, 4,869,474 3,695,636 4,869,474 3,695,636
(b) The carrying amount of trade and other receivables are denominated in the following currencies:
2019 2018 2019 2018
SCR SCR SCR SCR
Seychelles rupee 100,255,534 94,716,350 88,196,822 88,847,491
US dollar 8,537,442 8,450,304 8,537,442 8,450,304
Euro 3,569,700 4,379,741 3,569,700 4,379,741
UK pound sterling - - - -
112,362,676 107,546,395 100,303,964 101,677,536
(c) Other receivables and prepayments comprise of advances to staff, commission receivable, rent receivables and other prepaid.
(d) The carrying amounts of 'trade and other receivables' approximate their fair values.
(e) The Group and the Company do not hold any collateral as security against any of trade and other receivables.
(f) The other classes within trade and other receivables do not contain any impaired assets.
Charged / (reverse) to the statement of profit or loss
2019
The St Claire Development Company Ltd owns the Maison St Claire building in Victoria, Mahe. The Company holds 49% of
the shares of the St Claire Development Company which means that there is no effective control in that the remaining 51% is
held by one non-related party giving them the effective control.
Nature of Business
Own, manage & renting of shopping
center.
Name
THE GROUP THE COMPANY
THE GROUP THE COMPANY
THE GROUP THE COMPANY
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 56
15. INTERCOMPANY RECEIVABLES AND PAYABLES
Amount (payable)/
receivable by Consolidated
Amount (payable)/
receivable by Consolidated
SCR SCR SCR SCR
The Company (35,729,340) (35,729,340) (17,346,108) (17,346,108)
35,729,340 35,729,340 17,346,108 17,346,108
- - - -
(a)
(b)
16. CASH AND CASH EQUIVALENTS
2019 2018 2019 2018
SCR SCR SCR SCR
Cash in hand 120,012 194,344 117,718 192,050
Call account balances 444,762 898,083 444,762 372,824
Bank balances 33,454,667 55,776,111 15,905,817 31,777,877
Cash and bank balances 34,019,441 56,868,538 16,468,297 32,342,752
17. CURRENT TAX ASSETS / (LIABILITIES)
(a) Current Tax Assets
(i) Statement of financial position
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 4,383,682 15,421,972 4,383,682 15,421,972
Paid/(Refund) during the year 1,606,387 (4,031,688) 1,606,387 (4,031,688)
Charge for the year (1,649,319) (7,006,603) (1,649,319) (7,006,603)
(Under)/Over provision for prior year 25,342 - 25,342 -
At December 31, 4,366,092 4,383,682 4,366,092 4,383,682
Current tax assets 4,366,092 4,383,682 4,366,092 4,383,682
Current tax liability - - - -
4,366,092 4,383,682 4,366,092 4,383,682
(ii) Statement of profit or loss
2019 2018 2019 2018
SCR SCR SCR SCR
Tax charge on the adjusted profit for the year (note 17(b)) (1,649,319) (7,006,603) (1,649,319) (7,006,603)
(Under)/Over provision for prior year 25,342 - 25,342 -
Tax charge for prior years - (724,476) - (724,476)
Deferred tax (charge) / credit (note 12) (341,099) (1,804,956) (341,099) (1,804,956)
(1,965,076) (9,536,035) (1,965,076) (9,536,035)
(b) Applicable tax rates for 2019 and 2018 tax years are as follows:
THE THE
Taxable income threshold GROUP COMPANY
% %
Less than or equal to SCR. 1,000,000 25% 25%
More than SCR. 1,000,000 33% 33%
2019
Life
Intercompany receivables and payables represent the net balance receivable or payable by The Company to Life as disclosed
above.
THE GROUP THE COMPANY
2018
THE GROUP THE COMPANY
THE GROUP THE COMPANY
Intercompany receivables and payables are interest free unsecured balances with not fixed repayment terms or maturity.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 57
18. SHARE CAPITAL
2019 2018
SCR SCR
Authorized and fully paid up
Ordinary shares of SR 35 each 70,000,000 70,000,000
The authorized share capital of the group and the company is 2 million shares (2018: 2 million shares).
19. LIFE ASSURANCE FUND
(a)
(b)
20. INSURANCE LIABILITIES AND REINSURANCE ASSETS
2019 2018
SCR SCR
Claims reported and loss adjustment expenses (note 25(c)) 62,204,551 74,213,606
4,730,681 8,674,267
Unearned premiums (note 25(a)) 67,031,629 64,123,960
Total gross insurance liabilities (note 25) 133,966,861 147,011,832
Recoverable from reinsurers
Claims reported and loss adjustment expenses (note 25(c)) 45,782,830 46,503,956
Claims Incurred But Not Reported (IBNR) (note 25(c)) 1,574,323 3,453,305
Unearned premiums (note 25(a)) 17,961,927 19,053,145
Total reinsurer's share of insurance liabilities (note 25) 65,319,080 69,010,406
Net
Claims reported and loss adjustment expenses (note 25(c)) 16,421,721 27,709,649
Claims Incurred But Not Reported (IBNR) (note 25(c)) 3,156,358 5,220,962 Unearned premiums (note 25(a)) 49,069,702 45,070,815
Total net insurance liabilities (note 25) 68,647,781 78,001,426
Gross outstanding claims and IBNR (The Company) 66,935,232 82,887,872
Gross outstanding claims (life business) 2,255,147 3,534,123
69,190,379 86,421,995
21. MORTGAGE PROTECTION FUND
2019 2018
SCR SCR
At January 1, 164,412 228,911
- (64,499)
At December 31, 164,412 164,412
(a)
Released during the year to statement of profit or loss and other comprehensive income
THE GROUP
Claims Incurred But Not Reported (IBNR) (note 25(c))
The liability component of the Discretionary Participating Feature (DCF) is included in the Life Assurance Fund.
THE GROUP
AND THE COMPANY
The actuary of Sacos Life Assurance Company Limited is QED Actuaries & Consultants (Pty) Ltd. The latest actuarial valuation of the Life
assurance fund was done at 31 December 2019. At the end of every year, the amount of the liabilities of the Life assurance fund is established.
As the Company made a surplus during the year, the total surplus of SCR 14.6 million was transferred to statement of Life Fund (2018: Share of
Deficit SCR 10.2 million). This share of deficit and / or surplus is calculated and approved by the actuaries on the basis that sufficient reserves
are held to maintain the solvency of the life assurance fund over the long term.
THE GROUP
The fund is designated for mortgage protection insurance under a Home Ownership Scheme. Under this scheme, upon approval of their
mortgage loans, borrowers are automatically charged 6% of the nominal value of the loan towards mortgage protection which is expected to cover
the loan repayments in case of death or permanent disability. The 6% consist of 4% risk premium and 2% management fee for the Company
which arises at the inception of the loan.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 58
22. FISHERIES AND AGRICULTURAL FUND
2019 2018
SCR SCR
At January 1, 478,763 480,226
- (1,463)
At December 31, 478,763 478,763
23. RETIREMENT BENEFIT OBLIGATIONS
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 5,123,227 5,187,954 4,204,115 4,260,819
Transfer to Trade and Other Payables (111,397) - (111,397) -
Charge for the year 1,096,182 538,717 1,108,075 1,663,040
Benefits paid during the year (808,481) (603,444) (730,757) (1,719,744)
At December 31, 5,299,531 5,123,227 4,470,036 4,204,115
24. TRADE AND OTHER PAYABLES
2018 2018 2019 2018
(a) Trade and Other Payables SCR SCR SCR SCR
Trade payables (10,879,574) 9,966,082 (11,050,540) 8,350,652
Commission payable 4,233,759 4,615,367 3,967,981 1,139,498
Lease Liability 2,636,516 - 716,836 -
Other accruals and payables 19,318,147 28,872,293 10,113,290 15,465,118
Other tax payables 11,509,482 3,874,108 11,230,228 4,655,376
.26,818,330 47,327,850 14,977,795 29,610,644
The carrying amount of trade and other payables approximate its amortised costs.
(b) (i) Lease Liability ( ME Lease)
2019 2018 2019 2018
SCR SCR SCR SCR
At January 1, 28,484,544 - 28,484,544 -
Finance Cost 1,921,227 - 1,921,227 -
Lease Repayment (8,388,579) - (8,388,579) -
At December 31, 22,017,192 - 22,017,192 -
(ii) Amounts recognized in the P&L THE GROUP THE COMPANY
2019 2018 2019 2018
SCR SCR SCR SCR
Amortisation of Right of use asset 7,121,136 7,121,136 -
Finance Cost 1,921,227 - 1,921,227 -
9,042,363 - 9,042,363 -
Released during the year to statement of profit or loss and other comprehensive income
THE GROUP
The fund is designated for contributions to premiums payable under a Government sponsored/subsidized voluntary scheme. Under this
Agricultural Disaster and Fisheries Voluntary Insurance Scheme, farmers registered with the Seychelles Agriculture Agency (SAA) and boat
owners registered with the Seychelles Fisheries Authorities (SFA) are charged 4% of the insured values, to which the fund contributes 50%. The
contributions would cover the insured items (crop, livestock, boats and employees / crew) in case of loss or damage, death following natural
disasters and accidents, depending on the scheme applicable.
THE GROUP THE COMPANY
THE GROUP THE COMPANY
Retirement benefit obligations is in respect of length-of-service compensation as per the Seychelles Employment Act, 1995. Movement during
the year is shown below:
THE GROUP THE COMPANY
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 59
25.MOVEMENTS IN INSURANCE LIABILITIES AND REINSURANCE ASSETS
(a) Provision for unearned premiums
Gross Reinsurance Net Gross Reinsurance NetSCR SCR SCR SCR SCR SCR
At January 1, 64,123,960 (19,053,145) 45,070,815 67,731,265 (22,412,886) 45,318,379
169,676,615 (66,504,485) 103,172,130 162,552,080 (56,040,429) 106,511,651
(166,768,947) 67,595,703 (99,173,244) (166,159,384) 59,400,170 (106,759,214)
At December 31,(note 20) 67,031,629 (17,961,927) 49,069,701 64,123,960 (19,053,145) 45,070,815
(b) Net earned premium 2019 2018
SCR SCR
(i) Gross premium earned:
The Company 169,676,615 162,552,080
Life business 70,926,001 64,503,589
240,602,616 227,055,669
Change in unearned premiums (2,907,668) 3,607,304
237,694,948 230,662,973
(ii) Premium ceded to reinsurers:
The Company (66,504,485) (56,040,429)
Life business (3,029,627) (5,540,143)
(69,534,113) (61,580,572)
Change in unearned premiums (1,091,218) (3,359,741)
(70,625,331) (64,940,313)
Net earned premiums 167,069,618 165,722,660
(c) Outstanding claims
Gross Reinsurance Net Gross Reinsurance Net
SCR SCR SCR SCR SCR SCR
At January 1, 74,213,606 (46,503,956) 27,709,649 34,432,711 (14,354,985) 20,077,726
Claims incurred 85,414,482 (45,509,765) 39,904,718 87,636,451 (36,861,268) 50,775,183
(97,423,537) 46,230,891 (51,192,646) (47,855,556) 4,712,297 (43,143,260)
Recognized notified claims 62,204,551 (45,782,830) 16,421,721 74,213,606 (46,503,956) 27,709,649
4,730,681 (1,574,323) 3,156,358 8,674,267 (3,453,305) 5,220,962
At December 31, (note 20) 66,935,233 (47,357,153) 19,578,079 82,887,872 (49,957,261) 32,930,611
(15,952,639) 2,600,108 (13,352,532) 45,319,455 (34,956,510) 10,362,944
(15,952,639) 2,600,108 (13,352,532) 45,319,455 (34,956,510) 10,362,944
- - - -
(15,952,639) 2,600,108 (13,352,532) 45,319,455 (34,956,510) 10,362,944
Gross Reinsurance Net Gross Reinsurance NetSCR SCR SCR SCR SCR SCR
Total claims and benefits paid
Claims (The Company) (97,423,537) 46,230,891 (51,192,646) (47,855,556) 4,712,297 (43,143,259)
Claims and benefits (life) (62,210,481) - (62,210,481) (48,668,083) - (48,668,083)
(159,634,018) 46,230,891 (113,403,127) (96,523,639) 4,712,297 (91,811,342)
2019 2018
The Group
The Group
THE COMPANY2019 2018
Premium written during the year
Premium earned during the year
The Company
2019 2018
Cash paid for claims settled in the year
Movement in outstanding claims (The
Company)
Movement in outstanding claims (life
Movement during the year recognized in
profit or loss
Incurred But Not Reported (IBNR)
Movement during the year recognized in
profit or loss
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 60
26. INVESTMENT INCOME
2019 2018 2019 2018
SCR SCR SCR SCR
Interest income was in respect of:
- Financial assets 8,869,255 5,994,342 2,982,936 622,145
- Loans and receivables 5,783,957 5,269,669 - -
14,653,212 11,264,011 2,982,936 622,145
0 27. OTHER INCOME
2019 2018 2019 2018
SCR SCR SCR SCR
Gain on foreign exchange 8,744 362,624 8,744 362,624
(Loss) / profit on sale of equipment 247,444 340,318 247,444 340,318
Other income 2,794,763 3,357,922 2,275,021 2,775,596
3,050,951 4,060,864 2,531,209 3,478,538
28. STAFF COSTS
2019 2018 2019 2018
SCR SCR SCR SCR
Salaries and wages 20,618,414 24,481,871 18,702,782 21,559,969
Retirement benefit obligations (note 23(a)) 1,096,182 538,717 1,108,075 1,663,040
Other staff costs 7,796,810 7,854,003 7,052,044 6,588,075
29,511,406 32,874,591 26,862,901 29,811,084
(a)
THE COMPANY
THE GROUP THE COMPANY
THE GROUP THE COMPANY
THE GROUP
Other staff costs includes welfare, compensation, termination, leave pay accruals, overtime, pension, uniforms, training and
health insurance.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 61
29. Marketing and administrative expenses
2019 2018 2019 2018
SCR SCR SCR SCR
(a) Sales and Marketing 2,258,787 2,038,201 1,999,659 1,713,077
Investment Property Expenses 4,755,357 4,043,855 2,031,552 1,318,796
Utilities 1,924,642 1,833,827 1,924,642 1,741,878
Legal and professional fees 11,957,901 11,070,406 10,261,544 7,888,404
Travelling expenses 955,526 1,039,106 840,320 855,840
Printing, postage and stationery 3,838,159 3,257,203 3,380,178 3,422,024
Telecommunication 1,458,397 1,293,786 1,456,447 1,282,820
Other Taxes 2,508,954 2,284,696 1,558,763 1,382,401
Finance Charges 4,052,535 (4,827,206) 3,433,788 5,174,332
Write-Offs (i) 10,177,723 - 156,349 -
Other expenses 3,461,816 12,163,338 (6,177,161) (9,803,519)
47,349,796 34,197,215 20,866,080 14,976,051
(i) The write-off relates to St. Claire Land amounting to SCR10m and the remaining relating to fixed asset write-off.
Marketing and Administrative expenses is presented by:
2019 2018 2019 2018
SCR SCR SCR SCR
Sales and marketing expenses 2,258,787 2,038,201 1,999,659 1,713,077
Operating and administrative expenses 43,749,761 29,292,740 27,119,364 19,783,542
Intercompany recharge - - (9,594,191) (9,386,842)
(Impairment) / reversal of impairment on financial assets 1,341,248 2,866,274 1,341,248 2,866,274
47,349,796 34,197,215 20,866,080 14,976,051
(b) Directors' emoluments
2018
Fees Emoluments Total Total
SCR SCR SCR SCR
P Bastide 201,250 - 201,250 150,000
J C D'Offay - - - 100,000
L Nair 402,500 - 402,500 300,000
R Thorrington 201,250 - 201,250 150,000
I Barbe 201,250 - 201,250 150,000
L Rivalland 201,250 - 201,250 150,000
B Adonis 201,250 - 201,250 150,000
D Bradburn 201,250 - 201,250 50,000
J Morel - 1,448,057 1,448,057 1,566,534
M Sinovich - - - 2,377,056
G Capricieuse - 876,000 876,000 267,770 Tacey Furneau 696,000 696,000
1,610,000 3,020,057 4,630,057 5,411,360
30. Depreciation and amortisation charges
2019 2018 2019 2018
SCR SCR SCR SCR
Depreciation on equipment (note 5(a)) 4,213,309 2,556,373 3,656,645 2,142,754
Amortisation on intangible asset (note 7) 1,631,828 1,564,285 1,631,828 1,494,600
Amortisation of right of use asset (note 6) 7,211,852 - 7,138,384 -
13,056,989 4,120,658 12,426,857 3,637,354
THE GROUP THE COMPANY
2019
THE GROUP
THE GROUP THE COMPANY
THE COMPANYTHE GROUP
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 62
31. RELATED PARTY TRANSACTIONS
(a) Following are transactions and balances with the related parties:
2019 2018 2019 2018
SCR SCR SCR SCR
Transactions with: fellow
subsidiaries (Note 31(a)(e)
Recharges - - 9,594,191 9,386,842
Amount payable - - 35,729,340 17,346,108
Key management personnel
Sales of services 566,184 673,190 100,795 135,248
Loans and receivables 1,381,867 1,407,978 - -
Shareholders
Dividends 4,000,000 3,000,000 4,000,000 3,000,000
Directors
Remuneration 4,630,057 5,411,360 3,241,040 3,787,952
(b) Key management personnel compensation:
2019 2018
SCR SCR
Salaries and short-term employee benefits 5,707,419 7,909,562
Key management personnel consist of the chief executive officer, directors and other key personnel.
(c)
(d)
(e)
(f) There has been no guarantees provided or received for any related party receivable or payable.
32. SEGMENT INFORMATION
(a) Basis of segmentation
Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer, who is
responsible for allocating resources to the reportable segments and assesses their performance. The chief operating decision-
maker assesses the performance of the operating segments based on profit or loss.
The Group's reportable segments under IFRS 8 Operating Segment are based on insurance classes. The Group generates
revenue from provision of life and general insurance services, sales motor vehicle spare parts and letting out residential
apartments. The basis of segmentation is disclosed below:
THE GROUP THE COMPANY
THE GROUP
The sales, purchases, receivables and payables related to related parties are made on arms length basis and outstanding balances
for related party receivables and payables are unsecured and interest free.
For the year ended December 31, 2019, the Group and the Company has not recorded any impairment on receivables owed by
related parties (2018: nil) and this assessment is undertaken at the end of each financial year by examining the financial position of
the related party and the market in which the latter operates.
The Group include the parent entity i.e. SACOS Group Limited ("the Company") and its subsidiary for which it has 100% ownership
/ control in SACOS Life Assurance Company Limited;
Related party transactions of the Company relate to fellow subsidiaries as explained above.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 63
32. SEGMENT INFORMATION (CONTINUED)
(a) Basis of segmentation (Continued)
Insurance services:
General
Life
Investment property business
Revenue from this segment comprise income and gains from rental of investment properties business of the Group.
The Company customer portfolio base is widely spread and no customer accounts for more than 10% of the total revenue.
Inter-segment sales and expenses are eliminated in the below disclosure for operating segment.
(b) Operating segment for the Group
December 31, 2019
Life Casualty Property Total
SCR SCR SCR SCR
Income
Gross written premiums 70,926,001 33,285,658 136,390,957 240,602,616
Net earned premiums 67,896,374 11,777,675 87,395,569 167,069,618
Underwriting surplus 3,377,676 10,252,516 47,642,230 61,272,422
Rental income 22,039,863
Investment income 14,653,212
Operating Profit 97,965,496
Other income 3,050,951 Increase in fair value of investment properties 20,086,983 Gain/(loss) on disposal of investment property (5,005,102)
116,098,328
Expenses
Staff costs (29,511,406)
Marketing and administrative expenses (2,258,787)
Operating and administrative expenses (43,749,761)
Depreciation and amortization charges (13,056,987)
(Impairment) / reversal of impairment on financial assets (1,341,248)
Total Expenses (89,918,190)
Share of Profit in Associates 775,738
Profit before taxation 26,955,875
Taxation charge (1,965,076)
Profit for the year 24,990,799
This segment provides protection against liability claims of individuals / organizations for negligent acts / omissions property, risks such as fire, theft and some weather damage.
Revenue in the above segment is derived primarily from insurance premiums, investment income and realized gain on financial assets.
The Company
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 64
32. SEGMENT INFORMATION (CONTINUED)
(b) Operating segment for the Group (Continued)
December 31, 2019 (Continued)
Life Casualty Property Total
SCR SCR SCR SCR
Segment assets 518,784,127 33,564,154 312,727,093 865,075,373
Effect of Consolidation (83,729,340)
Segment liabilities 470,784,127 42,721,318 172,332,768 685,838,213
Effect of Consolidation (35,729,340)
Equity holders' interest 131,237,160
Capital expenditure: 6,763,468
Depreciation and Amortisation 13,056,987
December 31, 2018Life Casualty Property Total
SCR SCR SCR SCR
Income
Gross written premiums 64,503,589 27,330,408 135,221,672 227,055,669
Net earned premiums 58,963,446 3,634,729 103,124,485 165,722,660
Underwriting surplus 8,624,942 (574,220) 50,423,101 58,473,823
Rental income 24,254,639
Investment income 11,264,011
Operating Profit 93,992,473
Other income 4,060,863
Gain/(loss) on disposal of investment property (2,000,000)
96,053,336 ExpensesStaff costs (32,874,590)
Marketing and administrative expenses (2,038,201)
Operating and administrative expenses (29,292,740)
Depreciation and amortization charges (4,120,658)
(Impairment) / reversal of impairment on financial assets (2,866,274)
Total Expenses (71,192,463)
Share of Profit in Associates 880,184
Profit before taxation 25,741,058
Taxation charge -
Profit for the year 25,741,058
The Company
The Company
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 65
32. SEGMENT INFORMATION (CONTINUED)
(b) Operating segment for the Group (Continued)
December 31, 2018 (Continued)
Life Casualty Property Total
SCR SCR SCR SCR
Segment assets 501,339,667 10,853,950 316,632,969 828,826,586
Effect of Consolidation (65,346,108)
Segment liabilities 466,937,757 17,165,196 184,531,255 668,634,208
Effect of Consolidation (17,346,108)
Equity holders' interest 112,192,381
Capital expenditure: 30,130,810
Depreciation and Amortisation 4,120,658
33. SHAREHOLDERS SHARE OF LIFE SURPLUS
In accordance with the accounting policy in Note 2, the independent actuaries have assessed the amount of the Discretionary Participating Feature (DPF) eligible surplus/deficit to be transferred to Life
Assurance Fund from statement of profit or loss and other comprehensive income. As the life business made a surplus during the year, the surplus amount has been recognized in statement of Life
Assurance Fund. Assets in the Life Fund meets the Insurance Acts Minimum Solvency Requirement and this covers the Solvency Margin as well as 1/9th of the Cost of Bonus that can be transferred to
shareholders under the With Profit Fund and 100% of surplus under the Without profit fund. In addition to the Solvency margin, the bonus stabilization reserve in 2019 stood at SCR 8.9m providing
additional retained surplus in the Life Fund.
The Company
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2019 66
34. EARNINGS / (LOSS) PER SHARE
The following reflects the income and share data used in the computations:
2019 2018 2019 2018
SCR SCR SCR SCR
(Loss) / profit attributable to equity holders of the parent 6,784,875 5,217,839 6,784,875 5,217,839
Weighted average number of ordinary shares ranking for dividend 2,000,000 2,000,000 2,000,000 2,000,000
3.39 2.61 3.39 2.61
35. DIVIDEND PAID
2019 2018
SCR SCR
4,000,000 3,000,000
Dividend Guideline
36. CAPITAL COMMITMENTS
There are no capital commitments as at 31 December 2019 (31 December 2018: nil).
37. CONTINGENT LIABILITIES AND ASSETS
There are no contingent liabilities and assets as at 31 December 2019 (31 December 2018: nil).
38. EVENT AFTER THE REPORTING PERIOD
COVID 19
39. COMPARATIVE FIGURES
The Coronavirus outbreak in early 2020 which originated from China, is now classified by the WHO as a pandemic, as it has migrated all over
the World within few weeks and now Europe is being called the epicenter of the deadly virus. Due to restriction of movement of people and
lock down in several countries worldwide, many businesses have reduced or suspended operations.
The lockdowns instituted in several countries bring potentially significant disruption to business operations around the globe. A wide range of
businesses are being affected including travel and tourism, manufacturing, construction and the retail sector. Looking more widely. There is an
increase in economic uncertainty which may lead to volatility in international markets including exchange rates.
The requirement, in accordance with IAS 10 "Events after the Reporting Period ", is to account for the significant changes in business and
economic conditions as non-adjusting events because the significant development and spread of the Coronavirus did not take place until
January 2020.
Seychelles being a highly demanded tourist destination, the impact on the economy is yet to be assessed. With the current situation we are
foreseeing discontinuation of many businesses which might affect Premium Income for the Financial Year 2020 and moreover if there is a high
death rate our Life Segment might see an increase in Death Claim. Furthermore due to the volatility in international markets, this will create a
negative impact on Investments.
Except for what was disclosed & adjusted to the Financial Statements, there were no other events after the reporting date.
THE GROUP AND THE COMPANY
Authorized dividend in 2019 and paid in 2019 @ SCR 2.00 per share;
(2018: SCR 1.50 per share).
The Company intends to maintain attractive dividend payments to shareholders through dividend cover times ratio targeting by considering the
performance (profit after taxation) for the year.
Group performance is significantly enhanced by good insurance premium income and low claims.
Our numerous and diverse shareholders have an important role to play in this space.
At the same time there is a need to balance the desire for distributions with prudential capital management, business development including
strategic investment and operational liquidity requirements.
To ensure compliance with the law of the Seychelles, when first assessing the potential dividend declaration, the requirements of the
Companies Act and Insurance Act need to take precedence.
The Company thus follows an adaptable, shareholder and business holistic dividend strategy as is appropriate to a given year, the position of
the Company now and in the foreseeable future.
After considering the position and performance of the Company, the Board of Directors is responsible for making a dividend recommendation
for approval of the dividend at the annual shareholders’ meeting.
THE GROUP THE COMPANY
(Loss) / earnings per share - Basic and diluted
Certain reclassifications are made between accounting elements of the prior period consolidated financial statements for the purpose of better
presentation to confirm with current years' presentation.
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 68
40. FIVE YEAR FINANCIAL SUMMARY
(a) THE GROUP 2019 2018 2017 2016 2015
(Restated*)
SCR SCR SCR SCR SCR
Profit before tax 26,955,877 25,741,057 10,165,808 (62,224,229) 31,131,000
Tax charge (1,965,076) (9,536,035) (824,036) (2,231,555) (5,099,305)
Profit for the year 24,990,800 16,205,022 9,341,772 (8,455,784) 26,031,695
Other comprehensive income / (loss) - - - (555,005) -
Total comprehensive income / (loss) for the year 24,990,800 16,205,022 9,341,772 (9,010,789) 14,971,461
Retained earnings brought forward 39,797,071 37,263,750 56,256,546 82,267,335 74,693,000
Prior period adjustment -
Life Surplus Consolidated to Life Surplus (18,205,925) (10,987,182) (14,507,544) - -
Share of surplus to shareholders 10,030,069 315,481 172,977 - -
Share of profit attributed to shareholders fund 3,568,021 - - - -
Dividends (4,000,000) (3,000,000) (14,000,000) (17,000,000) (14,000,000)
Retained earnings carried forward 56,180,031 39,797,071 37,263,750 56,256,546 82,267,335
EQUITY
Share capital 70,000,000 70,000,000 70,000,000 70,000,000 70,000,000
Capital contribution 5,057,131 2,395,310 2,395,310 - -
Retained earnings 56,180,031 39,797,071 37,263,750 56,256,541 82,267,029
Total equity 131,237,162 112,192,381 109,659,060 126,256,541 152,267,029
SACOS GROUP LIMITED
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2019 69
40. FIVE YEAR FINANCIAL SUMMARY (CONTINUED)
(b) THE COMPANY
2019 2018 2017 2016 2015
(Restated*)
SCR SCR SCR SCR SCR
Profit before tax 8,749,952 14,029,398 (4,341,737) 13,258,550 20,851,985
Tax charge (1,965,076) (8,811,559) (824,036) (2,231,255) (7,326,599)
Profit for the year 6,784,875 5,217,839 (5,165,773) 11,027,295 13,525,386
Retained earnings brought forward 53,395,159 51,177,321 70,170,117 76,315,792 80,308,301
Share of profit attributed to shareholders fund - - 172,977 - -
Dividends (4,000,000) (3,000,000) (14,000,000) (17,000,000) (17,000,000)
Retained earnings carried forward 56,180,031 53,395,159 51,177,321 70,343,087 76,833,687
EQUITY
Share capital 70,000,000 70,000,000 67,000,000 67,000,000 67,000,000
Revaluation Reserve 5,057,131 2,395,310 2,395,310 - -
Retained earnings 56,180,031 53,395,159 51,177,321 70,343,087 76,833,687
Total equity 131,237,162 125,790,469 120,572,631 137,343,087 143,833,687
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