Trust transparency. Trust in. Interim Report 03 months ended 31 March Union Assurance PLC Interim Report 03 months ended 31 March

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1 Trust in Trust transparency. in

2 Balance Sheet Unaudited Audited as at as at As at Assets Investments 13,417,634 12,817,417 Investments -unit linked 255, ,109 Quoted equities at market value 989, ,431 Intangible assets 49,500 49,500 Property, plant and equipment 1,117,733 1,108,723 Loans to life policyholders 239, ,618 Reinsurance receivable 656, ,009 Premiums receivable 988,643 1,237,594 Other assets 1,550,728 1,540,932 Other Assets-unit linked 1,943 11,157 Cash and cash equivalents 278, ,138 Total assets 19,546,218 18,902,628 Liabilities and equity Liabilities Insurance provision - life-conventional 12,406,366 11,769,308 Insurance provision - unit linked 256, ,835 Insurance provision - general 2,822,274 2,716,888 Reinsurance payable 458, ,764 Retirement benefit obligation 136, ,422 Other liabilities 830, ,429 Other Liabilities- unit linked 3,644 13,672 Current tax liabilities 94,439 81,558 Deferred tax liability 13,948 13,948 Bank overdraft 66,846 71,695 Total liabilities 17,088,676 16,269,519 Equity Stated capital 388, ,433 Capital Reserves 584, ,178 Revenue reserves 1,484,931 1,660,498 Total Equity 2,457,542 2,633,109 Total liabilities and equity 19,546,218 18,902,628 I certify that the above financial statements comply with the requirements of the Companies Act No. 7 of 2007 Indika Prematunga Chief Financial Officer The Board of Directors is responsible for the preparation and presentation of these financial statements Signed on behalf of the Board A D Gunewardene Chairman Colombo 12 May J.R.F.Peiris Director

3 Statement of Income For the 03 months ended 31 March Note Change % Revenue 4 2,212,073 1,747, Gross written premium 5 2,074,563 1,612, Less: premium ceded to reinsurers (317,729) (295,236) 8 Net written premium 1,756,834 1,316, Net change in reserve for unearned premium (63,662) (29,364) 117 Net earned premium 1,693,172 1,287, Benefits, losses and expenses Insurance claims and benefits (net) (683,390) (620,139) 10 Increase in provision for life business (728,961) (457,897) 59 Underwriting and net acquisition costs (including reinsurance) (259,126) (186,941) 39 Total benefits, losses and expenses (1,671,477) (1,264,977) 32 Net premium less benefits, losses and expenses 21,695 22,640 (4) Other revenue Income from investments 494, , Other income 24,230 12, Expenses Other operating, investment related and administrative expenses (439,218) (388,227) 13 Depreciation on property, plant and equipment (29,442) (23,865) 23 Profit before income tax 6 71,936 70,122 3 Income tax expense 7 (13,128) (18,993) (31) Profit after taxation 58,808 51, Basic earnings per share (Rs.)

4 Statement of changes in Equity Capital reserves For the 3 months ended Stated Revaluation Reserve on Retained 31 March 2011 capital reserve merger earnings Total Rs. 000 Balance as at 01 January , ,607 16,752 1,332,359 2,305,151 Final dividend (187,500) (187,500) Net profit for the period ,129 51,129 Unaudited balance as at 31st March , ,607 16,752 1,195,988 2,168,780 Tax effect of revaluation reversed in equity - 3, ,487 Transfer from revaluation reserve to retained earnings - (3,668) - 3,668 - Net profit for the period , ,842 Balance as at 31 December , ,426 16,752 1,660,498 2,633,109 Final dividend (234,375) (234,375) Net profit for the period ,808 58,808 Balance as at 31 March , ,426 16,752 1,484,931 2,457,542 4

5 Cash Flow Statement For the 3 Months ended 31 March Cash flow from operating activities Premium received from customers 2,323,514 1,644,102 Reinsurance premium paid (209,696) (184,353) Claims paid (812,628) (623,324) Reinsurance receipts in respects of claims 91,631 46,856 Cash paid to and on behalf of employees (178,141) (160,772) Interest received 543, ,192 Dividends received - 60 Other operating cash payments (665,100) (490,924) Cash flow from operating activities (Note A) 1,092, ,839 Retiring gratuity paid (1,065) (8,299) Income tax and ESC paid (24,846) (12,802) Net cash from operating activities 1,066, ,738 Cash flow from investing activities Acquisition of liquid investments (other than cash equivalents) (1,083,047) (406,287) Acquisition of other investments (other than cash equivalents) (792,896) (1,156,757) Proceeds from Sale from liquid investments (other than cash equivalents) 534,295 98,175 Proceeds from Sale from other investments (other than cash equivalents) 405,614 1,035,059 Acquisition of property, plant and equipment (30,503) (18,308) Proceeds on sale of property, plant and equipment 3,865 4,353 Net cash from investing activities (962,672) 443,765 Net cash inflow before financing activities 104, ,972 Cash flow from financing activities Dividends paid (211,238) - Net cash from financing activities (211,238) - Increase in cash and cash equivalents (Note B) (106,971) 168,972 Notes to the cash flow statement A. Reconciliation of profit before taxation with cash from operating activities Profit before taxation 71,936 70,122 Depreciation on property, plant and equipment 29,442 23,865 Change in debtors 146,043 (78,455) Change in life insurance fund 734, ,897 Change in unearned premiums and deferred acquisition costs 61,809 23,045 Increase / (decrease) in claims provisions 40,286 44,187 Decrease in creditors (16,792) 47,086 Exchange (gain) / loss 207 (207) Gain on sale of property, plant and equipment (3,832) (4,353) Profit on sale of investments 24,613 46,497 Change in Provision for retiring gratuity 4,851 4,155 Cash from operating activities 1,092, ,839 B. Increase in cash and cash equivalents Cash at bank and in hand and cash equivalents 278, ,993 Bank overdraft (66,846) (66,102) Net cash at bank and in hand and c ash equivalents 211, ,891 Effect of exchange rate changes 207 (207) Net cash and cash equivalents for the current period 211, ,684 Net cash and cash equivalents for the previous year 318, ,712 Increase in cash and cash equivalents (106,971) 168,972 5

6 Notes to the Financial Statements 1. Accounting policies and methods of computation as stated in the annual report 2010 are followed in the preparation of these interim accounts. Further, provisions of the new Companies Act No. 7 of 2007 have been considered in preparing the interim financial statements of the Company. 2. Figures for the three months are provisional and subject to audit 3. Comparative information has not been restated. 4. Revenue Unaudited Unaudited For the 3 months ended 31st March General 846, ,958 Life 1,365,475 1,081,233 Total 2,212,073 1,747,191 General revenue consists of net earned premium and income from investments and other income. Life revenue consists of net written premium and income from investments and other income. 5. Gross written premium Unaudited Unaudited For the 3 months ended 31st March General 1,062, ,938 Life 1,011, ,279 Total 2,074,563 1,612, Profit before income tax Unaudited Unaudited For the 3 months ended 31st March General 71,936 70,122 Life - - Total 71,936 70,122 6

7 7. Income tax expense Unaudited Unaudited For the 3 months ended 31st March Income tax on current year profit 13,128 18,712 Social responsibility levy ,128 18,993 Under/(Over) provision in respect of previous year - - Total income tax expense for the period 13,128 18, No provision or appropriation has been made in respect of transfer to or from life fund. 9. Stated capital represented by shares in issue as given below: Unaudited Audited Number of shares as at Ordinary shares 37,500,000 37,500, Events after the Balance Sheet date The Board of Directors at a meeting held on 9th May 2011, recommended to the shareholders, the increase in the number of ordinary shares of the company in issue by way of a sub-division whereby the 37,500,000 ordinary shares currently in issue would be sub-divided into 2 ordinary shares each, thereby increasing the number of ordinary shares in issue to 75,000,000. An Extraordinary General Meeting of the shareholders has been convened for this purpose. 11. New standards and interpretations not yet adopted The Institute of Chartered Accountants of Sri Lanka (ICASL) has issued a new volume of Sri Lanka Accounting Standards 2011, applicable for financial periods beginning on or after 1 January These Standards have many changes and consequential changes from the adoption of SLAS 44 and 45. These new accounting standards are prefixed both SLFRS and LKAS which correspond to the relevant IFRS and IAS. The following accounting standards are newly adopted to the Sri Lankan financial framework and directly relate to the insurance industry. 1. SLFRS 1- First-time adoption of Sri Lanka Accounting Standards 2. SLFRS 4 - Insurance Contracts Accounting Standards which relates to financial instruments are presented below as a summary form; 7

8 Notes to the Financial Statements contd. 1. Sri Lanka Accounting Standard 32 - Financial Instruments: Presentation (LKAS 32) 2. Sri Lanka Accounting Standard 39 - Financial Instruments: Recognition and Measurement (LKAS 39) 3. Sri Lanka Accounting Standard 6 - Financial Instruments: Disclosures (SLFRS 7) 12. The nature of the related party transactions in the current period is similar to those reported in the Audited Financial Statements In the opinion of Directors and in consultation with the company lawyers litigation currently pending against the company will not have any material impact on the reported results or future operations of the company. All pending litigation for claims have been evaluated and adequate provisions have been made in the financial statements. 14. Share Information Rs. Rs. Rs. Net assets per share Market price per share Highest price per share for the period Lowest price per share for the period

9 15. Twenty Largest Shareholders 31st March 2011 Name of Shareholder No. of Shares % 1 John Keells Holdings PLC 31,847, Whittall Boustead Limited 2,776, Mackinnons & Keells Financialservices Limited 1,246, Waldock Mackenzie Ltd/Hi-Line Trading (Pvt) Ltd 164, Waldock Mackenzie Ltd/S.N.P.Palihena and Mrs. Waldock Mackenzie Ltd/S.N.P.Palihena and Mrs. A.S.Palihena 150, R. Senathirajah 47, J.D. Bandaranayake 32, A.A. Mashoor 30, H.A.D. Ratnapala 28, J.W. Nanayakkara 28, R.Z. Wikramanayake 24, N.I. Wikramanayake 23, G.M. Abdulhussein 20, T.G. Perera 19, H.A. Rehmanjee 18, L. Amaradasa 16, S. Nishyanthan 15, M.R. Wijetunga 14, A.C. Visvalingam 13, C.A. Mack 12, ,530, Others 969, Total 37,500, Directors Shareholdings No. of Shares No. of Shares Mr.A.D. Gunewardene 3,746 3,746 Mr.J.R.F. Peiris Nil Nil Mr.K. N. J. Balendra Nil Nil Mr.A. K. Gunaratne 1,600 1,600 Mr.A. S. De Zoysa Nil Nil Mr.G. F. C. De Saram Nil Nil 9

10 Notes to the Financial Statements contd. 17 Share holding-chief Executive Officer No. of Shares No. of Shares Mr. Dirk Pereira Nil Nil 18. Public Shareholding No. of Shares % of Shares No. of Shares % of Shares Public shareholding 1,624, % 7,228,

11 Supplementary Information - Balance sheet of the life insurance fund Unaudited Audited As at Assets Investments 10,011,926 9,840,485 Investments -unit linked 255, ,109 Quoted equities at market value 970, ,291 Property, plant and equipment 920, ,001 Loans to life policyholders 239, ,618 Reinsurance receivable 45,661 49,785 Other assets 754, ,270 Other assets-unit linked 1,943 11,157 Cash and cash equivalents 164, ,127 Total assets 13,365,578 12,987,842 Reserves Reserve on Cornhill merger 16,752 16,752 Revaluation Reserve 91,566 91, , ,318 Liabilities Insurance provision-life-conventional 12,406,365 11,769,308 Insurance provision - unit linked 256, ,834 Reinsurance creditors 69,425 42,681 Provision for retirement benefits 84,827 81,949 Other liabilities 413, ,969 Other liabilities- unit linked 3,644 13,672 Bank overdraft 23,092 29,109 Total liabilities 13,257,260 12,879,523 Total liabilities and reserves 13,365,578 12,987,842 Insurance Provision - life As at Insurance Provision - life 12,219,454 11,579,107 Unclaimed benefits 186, ,201 Total 12,406,365 11,769,308 11

12 Union Assurance Centre 20 St. Michael s Road Colombo 3 Sri Lanka. 12