Content. Annual Report Main business lines 5. Our mission, shared values and objectives 6. Quality Policy 7. Corporate Information 9-14

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2 Content Main business lines 5 Our mission, shared values and objectives 6 Quality Policy 7 Corporate Information 9-14 Directors Report Corporate Governance Report Secretary s Certificate 33 Independent Auditors Report to the Members Statements of Financial Position 37 Statements of Profit or Loss 38 Statements of Profit or loss and Other Comprehensive Income 39 Statements of Changes in Equity Statements of Cash Flows 42 3 Notes to the Financial Statements Statutory Disclosure 97-98

3 Main Business Line MAIN BUSINESS LINES Individual & Life Assurance Investment & Savings Child Education Loan Protection Serious Illness Cover Family Protection Scheme Life Schemes Funeral Plan General Insurance Motor: Private Car, Commercial Vehicles, Motorcycles Property: Home Insurance, Fire and Allied Perils, Business Interruption, All Risks, & others Engineering: Contractors All Risks, Contractor s Plant and Equipment, Electronic Equipment, & others Marine: Marine Cargo, Marine Hull Liability: Public Liability, Employer s Liability, Professional Indemnity, Directors and Officers Liability Pecuniary: Money, Fidelity Guarantee Accident & Health: Personal Accident, Medical Insurance Special risks: Kidnap and Ransom, Sabotage and Terrorism, & others Miscellaneous: Travel, Goods-in-transit Pensions Management of Pensions Schemes Personal Pensions Plans Financial Services Fund Management in a broad array of financial instruments Deposit Taking Registry and Fund Administration Leasing Unit Trust Management Management Services Trustee Services 5 Actuarial Services Actuarial Valuations Advice on investment strategy / funding policy / transfer values / winding up/distribution of surplus New product design and profit testing Disclosures under IAS 19 SICOM BUILDING 2 Loans Housing Multipurpose Fixed Deposit Loan Personal Educational Loan Commercial Loan M a i n B u s i n e s s L i n e

4 Core Values Annual Report 2013 Quality Policy QUALITY POLICY OUR MISSION Dedicated to providing the best in insurance and financial services, with focus on competitive quality products and excellent levels of customer care. Service Meeting Customer Expectations We are committed to service excellence through providing a professional and timely service to our customers while maintaining value-adding relationship with all stakeholders. Our ultimate goal is to meet customer expectations with a diligent and efficient service. 6 OUR SHARED VALUES Our customers: the focus of all our actions Our employees: the source of our success Our products and services: competitive and first-class security Commitment to innovation and teamwork Assisting the development of the community OUR OBJECTIVES Provide excellent customer service Maximise profits and returns to stakeholders Highly effective staff and agents Increase market share Respond to new customer needs Identify diversification opportunities People Development Continual Improvement Competitive Products and Services Compliance and Good Governance Quality Objectives Our people are our most valuable asset and we shall: provide them with appropriate training in line with organisational needs and objectives, aim at achieving employee satisfaction and encouraging their participation in decision making processes, and promote safe, sound and motivating work environment. We are committed towards developing and maintaining efficient and reliable processes. We undertake to continually improve/ innovate our products and services. We will design and deliver competitive products and services to suit the requirements of our customers as well as the market at large. We ensure compliance with relevant laws and regulations and are committed to good governance and effective practices. This Quality Policy will serve as basis for defining SICOM s Quality Objectives and we will ensure that it is reviewed on a regular basis. 7 Q u a l i t y P o l i c y

5 Corporate Information Board of Directors Lobine Khushal (Chairman) LLB (Hons) Mr Khushal Lobine read law at the University of Wolverhampton and at Cardiff Law School. He was called to the Bar of England and Wales and is also a member of the Honourable Society of the Lincoln s Inn. He is well versed in Alternative Disputes Resolution (ADR) and assists the process in resolving disputes through mutual facilitation and mediation. Mr Lobine is also the Chairman of the Wastewater Management Authority since He is a practising barrister and regularly advises local authorities, governmental institutions and parastatal bodies as well as private companies in the field of contract management, preparation and vetting of international bidding documents, Construction and Environmental Law and procurement procedures. He also provides legal advice and services in the field of Global Business, Law and Insurance Law. Appadoo Chandradev, FCCA, ACIB Mr Chandradev Appadoo has 27 years banking experience having worked at various divisions and levels at State Bank of Mauritius Ltd (SBM) including Retail, Corporate Banking, Finance, Legal, Compliance, Risk Management, Operations Management and Secretary. He is currently heading Finance, Value Based Performance Management, Facilities Management and Corporate Affairs of SBM. He is an executive director of SBM and a director of various subsidiaries of SBM and also non-executive director of SME Partnership Fund and NRF Equity Investment Ltd. Bissessur Hurrydeo, BA (Hons) Economics Mr Hurrydeo Bissessur is presently the Acting Managing Director of the Development Bank of Mauritius Ltd (DBM), which he joined in May He has served the Bank for more than 39 years and has acquired considerable experience through the various positions he has occupied. Mr Bissessur holds a BA (Hons) in Economics from the University of Delhi. He has represented the DBM on the Board of Directors of Companies assisted by the Bank and is presently a Director on the Board of SICOM Ltd, SICOM General Insurance Ltd, State Land Development Co Ltd, SME Partnership Fund Co Ltd and Irrigation Authority. 9 Bhoojedhur-Obeegadoo Karuna G (Mrs), BSc (Hons), FIA Mrs Karuna Bhoojedhur-Obeegadoo holds a BSc (Hons) in Actuarial Science from the London School of Economics and is a Fellow of the Institute of Actuaries, UK. She has worked with a major international reinsurance company in London before joining the State Insurance of Mauritius Ltd in 1984, where she was in charge of the Life, Pensions and Actuarial Departments of the. Mrs Bhoojedhur-Obeegadoo currently heads the SICOM of Companies and is a member of the Board of Directors of the Companies within the. She has also been a Director in several companies where SICOM is a shareholder. Gopee Geeanduth, Fellow of CIMA, Fellow of ICSA, MBA Since 2010, Mr Geeanduth Gopee has been the Director of the Office of Public Sector Governance (OPSG) at the Prime Minister s Office. The OPSG is mandated to promote in public sector organisations (Ministries, Departments, parastatals and local authorities) best practices of corporate governance, conduct investigations, implement reforms and act as management consultancy arm with emphasis on organisational and financial reviews. He was a Director of the Management Audit Bureau (MAB) at the Ministry of Finance and Economic Development from 2003 to C o r p o r a t e I n f o r m a t i o n I B o a r d o f D i r e c t o r s C o n t i n u e d

6 Corporate Information Board of Directors Annual Report 2013 Corporate Information Management Mallam-Hasham Muhammad Iqbal (appointed on 15 October 2012) Mr Muhammad Iqbal Mallam-Hasham is a Fellow of the prestigious Hubert H. Humphrey program and read International Economy at Boston University. He is also a Fellow of the Mauritius Institute of Directors. He holds post-graduate degrees in Management and Business from Institut d Administration des Enterprises, Université de Strasbourg. At present, he is the Managing Director of the State Investment Corporation Ltd and is a board member of a number of leading companies in Mauritius. He has wide ranging experience in the financial sector and has been banker, consultant in corporate management and Associate Professor at Universities. He was also a Member of Parliament. Mrs Dhaliah-Utchanah Boomah Devi, BSc (Hons), MSc, MBA, MBCS, F.MIOD is the alternate director to Mr Muhammad Iqbal Mallam- Hasham. Purryag Diness Mr Diness Purryag, Land Surveyor, is the General Manager of the Sugar Insurance Fund Board since June He was a member of the Value Assessment Tribunal from 1987 to Sewpaul Anil, ACII Mr Anil Sewpaul is an Associate of the Chartered Insurance Institute and a Chartered Insurer (UK). He started his career in 1971 with the Life Insurance Corporation of India where he worked approximately for five years. In 1976 he took the job of Underwriting Superintendent at the newly created company, Stella Insurance Ltd where he has been working in both the Life and General Insurance Departments. In 1981 he joined the team of the General Insurance Division of the State Insurance Corporation of Mauritius as a Technical Officer. He served the in different departments and occupied the post of Senior Technical Officer, Assistant Manager, Manager, and now Senior Manager of the SICOM. Recently he was Director in several Companies where SICOM is a shareholder. Yip Wang Wing Youk Siane, DEA, Maitrise Mr Patrick Y-S Yip Wang Wing is currently Acting Deputy Financial Secretary. Mr Yip has been working in the Ministry of Finance and Economic Development since 1986, where he has been closely associated with the preparation of the National Budget and fiscal and public policies. He holds a Maitrise in Econométrie and a Diplôme d Etudes Approfondies en Politique et Analyse Economique from the University of Dijon, France. Mr Yip is also on a number of public sector boards, including the Mauritius Revenue Authority and the State Investment Corporation Ltd. 10 where SICOM is a shareholder. he has the responsibility of the investments of the group and 11 Secretary Ramdewar N (Mrs) Bhoojedhur-Obeegadoo Karuna G (Mrs) BSc (Hons), FIA Managing Director, SICOM The profile of Mrs K Bhoojedhur-Obeegadoo is found on page 9. Sewpaul Anil ACII Senior Manager (Operations), SICOM The profile of Mr Anil Sewpaul is found on page 10. Ramdewar Nandita (Mrs) FCCA, MBA (Finance) Senior Manager (Corporate), SICOM Mrs Nandita Ramdewar is a fellow of the Association of Chartered Certified Accountants and holds a Master in Business Administration in Finance from Manchester Business School. She is currently the Senior Manager (Corporate) and is in charge of the Financial Services, Finance, HR, Legal and Corporate matters for the SICOM of Companies. She is also the Secretary of SICOM and SICOM General Insurance Ltd and is a member of the Board of some of the subsidiaries of the SICOM. She has also been a Director in several companies Chaperon J M C Gilles ACII Senior Manager (Support), SICOM Mr Gilles Chaperon joined SICOM in 1981 and served in the life and pensions departments at management level. He was appointed as Head of the Strategic Business Unit (Legal and Compliance) in He is presently in charge of the Strategic Business Unit (Support) and is also the Money Laundering Reporting Officer of the company. He has also been a Director in a company where SICOM is a shareholder. Mr Chaperon is an Associate of the Chartered Insurance Institute (UK) and a Chartered Insurer. Balgobin Vijay AIA, FIAI Senior Manager (Actuarial & Pensions), SICOM Mr Vijay Balgobin is an Associate of the Institute of Actuaries (UK) and a Fellow of the Institute of Actuaries (India) with specialisation in Pensions and Other Related Benefits. He joined the Actuarial department of SICOM in 1982 and has grown up with the organisation, occupying various positions in the organisation as Underwriting Superintendent, Actuarial Superintendent and was appointed Manager of the Actuarial Department in As from December 2007, he was appointed Senior Manager (Actuarial & Pensions). His present responsibility is to oversee all the actuarial functions in respect of our Pensions, Life Assurance and General Insurance Portfolio and the application of actuarial skills in the overall financial management of the. Gopy Dev K DEA, MSG Operations Executive-Investment (), SICOM Mr Dev K Gopy, Operations Executive Investment (), holds a D. E.A in Finance and a Maîtrise in Financial Management from L Institut D Administration Des Entreprises of the University of Montpellier II, France. He is also a qualified Stockbroker. Presently, subsidiaries of SICOM in the financial services sector. He is also a Director of the Stock Exchange of Mauritius Ltd, Central Depository & Settlement Co. Ltd and Cyber Properties Investments Ltd. Koomar Bodun FCII, MBA, Chartered Insurer Operations Executive-Life, SICOM Mr Bodun Koomar joined SICOM in 2002 with a 17 years background in Life and Pensions business acquired in a local composite insurance company where he was working at managerial level. He joined in as Assistant Manager (Life) and was promoted as Manager (Life) in Mr Koomar currently holds the post of Operations Executive - Life, and heads the Individual Life and Personal Pension businesses. He is also responsible for the Customer Relationship Management and Business Development strategies of the. He is a Chartered Insurer and Fellow of the Chartered Insurance Institute (UK) and holds a Masters in Business Administration of the Surrey University (UK). C o r p o r a t e I n f o r m a t i o n I M a n a g e m e n t C o n t i n u e d

7 Corporate Information Management Leung Lam Hing Suzanne H Y K (Mrs) ACII Operations Executive, SICOM General Insurance Ltd Mrs Suzanne Leung Lam Hing joined State Insurance Corporation of Mauritius in 1981 where she worked in the General Insurance Department. She was involved in both underwriting and claims functions. In 1996 she was appointed to the post of Assistant Manager in the Life Department and held this post until 2002, when she was nominated Manager (General Insurance). Following the setting up of SICOM General Insurance Ltd in July 2010, she continued with the responsibility of heading the General Insurance business of the SICOM group in her current position of Operations Executive. Mrs S Leung Lam Hing is an Associate of the Chartered Insurance Institute, UK and holds Chartered Insurer status. Mrs S Leung Lam Hing is a member of the Insurance Institute of Mauritius and has served as Council member of the Institute for many years. Appadoo Appanah Pritty (Mrs) MBA, FCCA Manager & Internal Auditor, SICOM Mrs Pritty Appadoo Appanah holds an MBA from the University of Surrey and is a Fellow of the Association of Chartered Certified Accountants. She joined the in January 2002 and is in charge of the Internal Audit Department, among others. She worked previously for another leading insurance group and before that she worked as external auditor in one of the leading audit firms. Baguant Chemanlall BSc (Hons), MBA Manager (IT), SICOM Mr Chemanlall Baguant graduated in Computer and Information Systems with Honours in 1992 from Victoria University of Manchester and holds a Masters in Business Administration (Finance) from the University of Mauritius. He has also successfully completed a Diploma in Actuarial Techniques through the Institute of Actuaries, United Kingdom. After five years of service in the IT sector, Mr Baguant joined the State Insurance of Mauritius Ltd as Information Systems Officer in In 2003, he was promoted as Manager (IT). Balgobin Parmanand, ACII Operations Manager, SICOM General Insurance Ltd Mr Parmanand Balgobin joined the State Insurance Corporation of Mauritius in May He qualified as an Associate of the Chartered Insurance Institute (UK) in 1987 and obtained Chartered Insurer status in He is a member of the Insurance Institute of Mauritius (IIM). He has 30 years work experience in General Insurance and has worked in all the various fields of insurance such as motor, nonmotor commercial and industrial sectors as well as reinsurance. He currently holds the post of Operations Manager in SICOM General Insurance Ltd. He has been involved in the Inter- Committee set up for the co-ordination and implementation of the Constat a L amiable project. Cheeneebash Lohit K L ACII, MBA Operations Manager (Life), SICOM Mr Lohit Kumar Cheeneebash joined the in 1991 and has a rich experience in the local Insurance market, acquired over the last 22 years. He has worked at different levels in the Life Department of the company and has been mainly responsible for setting up and administration of the Sales function. He is a Chartered Insurer of the Chartered Insurance Institute (UK) and holds a Masters in Business Administration (General) Lee Shing Po Theresa M (Mrs) Attorney at Law Manager (Legal), SICOM Mrs Lee Shing Po was admitted as Attorney-at-Law in Prior to joining the State Insurance of Mauritius Ltd in 2000, she had her private practice and worked at KPMG and the Attorney General s Office. She currently heads the Legal Department and acts as Secretary to SICOM Financial Services Ltd and SICOM Registry and Secretarial Services Ltd, two subsidiaries forming part of the SICOM. Ramruttun Heman K FCCA Manager (Finance), SICOM Mr Heman Kumar Ramruttun is a Fellow Member of the Association of Chartered Certified Accountants (UK). He has more than 19 years of experience in Accounting and Financial Management. Prior to joining the State Insurance of Mauritius Ltd as Accountant in 2001, he worked as Financial Controller at the National Transport Corporation. Rughoo Rajkamal B. A (Hons) Manager (Pensions), SICOM Mr Rajkamal Rughoo holds a B. A (Hons) degree in Mathematics. He joined the in 1988 and has served in different capacities in various Departments, namely the General Insurance, Actuarial, Life, Housing Loan, Customer Relations, General Administration and Pensions. He is the Manager of the Pensions Department and has 21 years experience in the administration of pension funds. Seeroo Vasoodevsing J AIA Manager (Actuarial), SICOM Mr Vasoodevsing J Seeroo is an Associate of Institute of Actuaries, UK. He joined the in 1989 and has worked at different levels in the Actuarial Department during his 24 years service. Currently, he holds the post of Manager Actuarial and he also oversees the day to day running of the Life business. C o r p o r a t e I n f o r m a t i o n I M a n a g e m e n t

8 Corporate Information CORPORATE INFORMATION Registered Office SICOM Building Sir Célicourt Antelme Street, Port Louis Telephone: (230) Fax: (230) Address: Website: Auditors BDO & Co Consulting Actuaries AON Hewitt Main Bankers State Bank of Mauritius Ltd Mauritius Commercial Bank Ltd Barclays Bank Mauritius Ltd Bramer Banking Corporation Ltd Hong Kong & Shanghai Banking Corporation Ltd SBI International (Mauritius) Ltd Mauritius Post & Cooperative Bank Ltd AfrAsia Bank Ltd 14

9 Directors Report Year Ended 30 June The Board of Directors of the State Insurance of Mauritius Ltd (SICOM) is pleased to present the twenty-fourth Annual Report together with the audited financial statements of the and of the for the year ended 30 June ECONOMIC REVIEW According to the International Monetary Fund (IMF, July 2013), the world economy grew by 3.1% in 2012 with advanced and emerging economies growing by 1.2% and 4.9% respectively. The global economy moved from a two-speed recovery, strong in emerging market and developing economies but weaker in advanced economies, to a three-speed recovery. While emerging market and developing economies continued to grow at the highest rate, the United States decoupled from the other advanced economies by showing a steady growth pattern, compared to the faltering recovery elsewhere. More specifically, the recession in the euro area was deeper than expected as low demand, depressed confidence and weak balance sheets interacted to worsen the effect on growth. The Japanese economy was another exception by growing in 2012 after receding in the previous year. During 2012, there was a notable slowdown in emerging markets and developing economies due to the sharp deceleration in demand from key advanced economies, domestic policy tightening and the end of investment booms in some of the major emerging market economies. However, even as estimates of potential growth have been marked down in the past few years for some of the large emerging markets; it has been steadily improving in many of the dynamic low-income countries. On the other hand, advanced economy policymakers successfully defused two of the biggest threats to the global recovery, a breakup of the euro area and a sharp fiscal contraction in the United States. Moreover, after many years of deflation and hardly any growth, Japan s new government announced new policy measures to boost growth in the short term. Global growth is projected to remain subdued at 3.1% in 2013 with lower growth rates expected in the United States on account of the coming in effect of automatic spending cuts in March 2013 and in the euro area which continues to struggle to recover. On the upside, growth in other advanced economies is expected to pick up, especially in Japan where confidence and private demand are anticipated to be positively impacted by the recently adopted accommodative policies. However, downside risks to global growth prospects still dominate and while old risks remain, new risks have emerged, including the possibility of a longer growth slowdown in emerging market economies, especially given risks of lower potential growth, slowing credit, and possibly tighter financial conditions. During the financial year ended 30 June 2013, global equity markets moved higher supported mostly by the third round of quantitative easing undertaken by the United States Federal Reserve. Advanced markets equities generally outperformed emerging markets equities. The MSCI World Index, FTSE 100, CAC 40 and Nikkei 225 picked up by 16.0%, 11.6%, 17.0% and 51.9% respectively during the financial year ended 30 June In contrast, the MSCI Emerging Markets rose by only 0.3% during the same period. According to the Central Statistics Office (CSO), the growth rate for the Mauritian economy for 2012 was 3.3%. Despite restrained activity in major export sectors and a loss of momentum in the last quarter of 2012, the domestic economy withstood the external headwinds relatively well last year. Data for the last quarter showed that some sectors continued to record strong growth while certain external-oriented sectors struggled amid the difficult international environment and the construction sector lost steam due to the completion of major projects. While the labour market displayed fairly stable conditions, consumption and investment growth in the country continued to be subdued. The investment rate in 2012 was 23.0% while the saving rate reached 15%. The headline inflation rate was 3.6% for the twelve months ended June 2013 compared to 5.1% for the previous corresponding period. During the financial year ended June 2013, the Bank Rate decreased by 65 basis points as a result of the financial system being flush with cash. During the same period, there was an appreciation in the USD and EUR, compared to MUR while the GBP and AUD depreciated versus the local currency. After declining in the previous financial year, the SEMDEX rose by 7.8% during the financial year ended 30 June The ongoing recession in Europe remains a hurdle for our key industries notably tourism and the export oriented companies. The CSO has twice lowered its 2013 real gross domestic product growth estimate which currently stands at 3.3%, same as in CORPORATE OVERVIEW For the year under review, the has realised a pre-tax profit of Rs million compared to Rs million achieved last year while the has seen its pre-tax profit going up from Rs million in 2012 to Rs million. It is worth mentioning the good performance achieved by all the subsidiary companies which have contributed to the increase in the profitability and net worth of the in spite of a very competitive environment. This commendable result is mainly due to the overall good performance of the business units, an increase in the investment income including a revaluation gain on investment property and a general containment of costs at all levels. Critical processes will be reviewed while KPIs at and level will continue to be monitored regularly in order to maintain the trend. The SICOM has been actively engaged in major projects during the year through carefully thought out diversification and consolidation strategies. The three- year Strategy Plan has been worked out, against a backdrop of acute competition in the local financial services market and persistent high volatility. Indeed, the re-branding for all the companies within the, the completion of the new SICOM Building Project adjacent to SICOM s existing Building in Port Louis, the acquisition of a new high-rise modern Building in Ebene, the setting up of a SICOM Foundation and a Comite D Entreprise form part of the s quest to seek for new avenues for improvement, whilst relentlessly pursuing new channels of marketing and product development to increase its market share and profitability. In this context, new regional expansion projects are also being explored. 17 D i r e c t o r s R e p o r t I C o r p o r a t e O v e r v i e w

10 Directors Report Year Ended 30 June 2013 KEY FINANCIAL CHARTS REVIEW OF OPERATIONS Life and Actuarial Services ,400 2,000 1,600 - Assets (Rs billion) Net Asset value Total Assets Assets (Rs billion) Net Asset value Total Assets 1,200 This year, we have witnessed the introduction of a new single 18 1,200 recently introduced a totally new product with guaranteed Defined Contribution Scheme for employees of the public sector and Turnover (Rs m) Profit (Rs m) 2,000 1, Turnover (Rs m) Profit (Rs m) Long Term Business Review In an environment where savings rate has decreased from 21.5% in 2007 to 15% in 2012 and where the prolonged global economic uncertainties and the deepening of the Euro-zone crisis pose an increasing threat to the resilience of the Mauritian economy, we ended the year with a 2.53% drop in our Gross premium income to reach Rs 1.54 billion as at 30 June 2013 (Rs 1.58 billion - 30 June 2012). Interestingly though, despite the slight drop in Life premium income, contribution received for Personal Pension Plan as at 30 June 2013 witnessed a growth of 33% to reach Rs 65.5 million (Rs 49.3 million 30 June 2012). The also sustained death and disability claims to the tune of Rs 47.8 million representing an increase of 1.7% over last year s figures. On the other hand, total bonus paid out to our with-profit policyholders as at 30 June 2013 increased by 4.59% to reach Rs million (Rs million - 30 June 2012) while maturity and survival benefits to our policyholders increased by 12% to reach Rs million (Rs million 30 June 2012). In its quest to maintain its position as a market leader and safeguard the soundness of its Life Fund, the has benefits and review its existing range of products and offers. Processes were reviewed to improve efficiency and effectiveness of operations. The has also engaged in a review of its existing life business application to better respond to the evolving business needs. Last but not least, the distribution network is being restructured and reinforced with the continued commitment and support of our sales force. As at 30 June 2013, we had 304 Life schemes with membership of about 56,000 and our Funeral Scheme covered about 1,678 pensioners. Annual premium for Life business has maintained its continuous growth with a 3% increase for the financial year and we had 14 new group schemes. We are also pleased to report the completion of the computerisation project and this will provide considerable support to cope with the business expansion. There have been 20 pension funding valuations and 88 pension disclosures under IAS 19 carried out over the year in respect of the pension funds managed by SICOM. In addition, we have advised on pension issues relating to mergers of organisations, early retirement schemes, winding up and salary review impact. Considerable actuarial input is also being provided for the computerisation project of the Pension Business. In terms of actuarial special projects we have completed together with our actuarial consultant - AON Hewitt - the Individual Life Withdrawal Investigation and the Individual Life Reinsurance Review. Pension Funds Portfolio also the proclamation of the Private Pension Schemes Act In view of above and with the transfer of the Local Authorities Pension Funds under our administration, restructuring exercises, mergers and voluntary retirement schemes in government owned and parastatal bodies, we have attended to significant issues for the respective processes and implementations required. We ended the year with 204 statutory and private Pension Funds with a total membership of 36,512 and 7,281 pensioners on our payroll earning total monthly pensions of Rs 87,952,412. Total Assets under management amounted to Rs 22.2 billion Profit Before Tax Profit After Tax Profit Before Tax Profit After Tax D i r e c t o r s R e p o r t I R e v i e w o f O p e r a t i o n s C o n t i n u e d

11 Directors Report Year Ended 30 June 2013 Investment Although financial markets remained volatile and interest rates in general trended lower, the total assets managed by the SICOM increased from Rs 34.9 billion last year to reach Rs 39.6 billion as at 30 June At level, the total assets managed increased from Rs 30.6 billion last year to stand at Rs 35 billion as at 30 June In spite of the challenging economic backdrop, the funds managed by the company posted improved performances compared to last year. Local Equity 16.4% Investment Allocation Going forward, we expect global capital markets to remain sensitive to policy measures adopted by central banks, while volatility should be a constant feature in the months ahead. We shall therefore continue to invest in a conservative manner by identifying markets and securities with attractive valuations. Loans Deposit 19.3% Investment Allocation Property 1.7% MDLS Treasury Notes 0.2% Bonds Loans 7.2% Subs. & Overseas The financial year 2012/2013 has been a good year for SICOM as regards its loans business. A positive growth of around five percent was recorded in the total amount of loans approved under our various loan schemes. For the period under review, the total amount of loans approved under our Housing, Multi- Purpose and Personal Loan Schemes, was Rs million as compared to Rs million for the same period last year. Our balance of loans portfolio as at 30 June 2013 under our above loan schemes has also increased to stand at Rs 2.24 billion. Subsidiary Companies Operational results of SICOM General Insurance Ltd for the year under review have been satisfactory in the context of a business environment which remained extremely competitive. A Gross Premium of Rs 608 million was achieved overall, with most classes of insurance being within or exceeding premium forecasts. Our net retention grew by 2.3% to attain Rs million as a result of an improved retention level under our reinsurance arrangements. The underwriting surplus has attained an amount of Rs 156 million this year notwithstanding the flood losses of 30 March 2013 and the major road accident of Soreze. Overall, all classes of insurance have shown underwriting profits, with the Motor class remaining the major source of profitability. Overall, the has recorded a satisfactory pre-tax profit of Rs 87.9 million compared to Rs 90.2 million last year. The total assets of the excluding reinsurance assets has increased from Rs million for the year ended 30 June 2012 to Rs 1,017.7 million for the year ended 30 June As a means to better service customers, a sms service was launched during the year, whereby motor policyholders are reminded of renewal of their insurance and road tax. The use of technology was further exploited with the implementation of a document management system resulting in information and status of transactions becoming readily available for communication to the client. Further value-adding technological projects are expected to be implemented during the next financial year. 2.1% 30.0% 23.1% 20 achievement of our organisational goals. 21 Although market conditions remained difficult, the total deposits of SICOM Financial Services Ltd went up for the financial year ended 30 June 2013 to stand at Rs 3.2 billion. There was a marked improvement in the lease disbursement for the year under review in line with the s strategy to focus on its leasing business. In fact, the amount of lease disbursed increased from Rs 88.8 million to Rs million. The total investment in finance lease increased by 50.2% to reach Rs million for the year ended 30 June Profit before tax stood at Rs 38.4 million for the financial year ended 30 June 2013 as compared to Rs 42.7 million last year on the back of the drop in interest rates and the review in the interest rate on the loan to the holding company in line with market conditions. SICOM Financial Services Ltd also manages two Unit Trusts, namely SICOM General Fund and SICOM Overseas Diversified Fund, which posted positive performances for the financial year ended 30 June SICOM Registry & Secretarial Services Ltd acts as the Registry and Administrator of SICOM General Fund and SICOM Overseas Diversified Fund. The pre-tax profit for the year ended 30 June 2013 amounted to Rs 0.8 million which is a growth of 12.1% as compared to last year. SICOM Management Ltd posted an increase in profit before tax of 10.1% for the financial year ended 30 June Indeed, the profit before tax increased from USD 1.7 million last year to USD 1.9 million for the financial year under review. Finally, SICOM Global Fund Ltd, a Collective Investment Scheme managed by SICOM Management Ltd, showed a growth of 13.7% in its investments for the financial year ended 30 June Human Resource Development Having a dedicated and talented workforce is critical to our longterm business sustainability and by attracting, developing and retaining talented and diverse individuals, we benefit from the breadth of ideas and experience they bring onboard with them. At the SICOM, we believe that the loyalty and contribution of each and every staff is one of the main pillars that help the opportunity to build a winning organisation. Our main HR objectives, priorities and challenges have remained the on-going development of our people so as to enable them to face both present and future challenges. During the Year 2013, the SICOM has reinforced its commitment to excellence through the development, delivery and administration of training and development opportunities; tailored where appropriate, for its personnel whilst also striving to create a working environment that allows each one to contribute to his/her fullest potential to Given that the SICOM operates in fast changing business landscapes and increasingly competitive markets with ever more challenges, the focus for the next financial year will be on higher productivity, quality, innovation and satisfaction of our employees. Corporate Social Responsibility Activities The CSR funds of the amounted in total to Rs 12.2 million for the year. A substantial part of this amount, namely Rs 5.8 million, was devoted to alleviate the plight of the victims of the heavy floods that hit the country in the first quarter of the year and which prompted a national movement of solidarity. The remaining funds were utilised to finance projects pertaining to the education of vulnerable children, health and sports in line with the 's CSR guidelines. This year also witnessed a major development in the field of the 's CSR with the setting up of the SICOM Foundation. The creation of a CSR Foundation highlights the importance that the attributes to its Corporate Social Responsibility. It will enable the to operate in a more dedicated and effective manner. D i r e c t o r s R e p o r t I R e v i e w o f O p e r a t i o n s

12 Corporate Governance Report Year Ended 30 June STATEMENT OF COMPLIANCE (Section 75(3) of the Financial Reporting Act) (i) We, the Directors of State Insurance of Mauritius Ltd, confirm that to the best of our knowledge the has complied with its obligations and requirements under the Code of Corporate Governance. Lobine K Chairperson Bhoojedhur-Obeegadoo K G (Mrs) Director Date: 20 September 2013 (ii) Corporate governance is the framework by which institutions are directed and controlled, that is, it takes into consideration relationships between a company and its different stakeholders. The objective of good corporate governance is to ensure the safety and soundness as well as to enhance the shareholder value of a company. 23 C o r p o r a t e G o v e r n a n c e R e p o r t I S t a t e m e n t o f C o m p l i a n c e

13 Corporate Governance Report Year Ended 30 June ULTIMATE HOLDING COMPANY 3. MAJOR SHAREHOLDERS (b) Role of the Board Development Bank of Mauritius Ltd (23%) Sugar Insurance Fund Board (20%) GROUP STRUCTURE SBM (NBFC) Investments Limited (20%) State Investment Corporation Ltd (12.5%) Port Louis Fund Ltd (12.5%) National Investment Trust Ltd (12%) As at 30 June 2013 the following Shareholders held more than 5% of the ordinary share capital of the : % Holding Development Bank of Mauritius Ltd 23.0 Sugar Insurance Fund Board 20.0 SBM (NBFC) Investments Limited 20.0 State Investment Corporation Ltd 12.5 Port Louis Fund 12.5 National Investment Trust Ltd 12.0 Law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the and of the profit of the for that period. In preparing those financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the will continue in business. 24 SICOM Financial Services Ltd (Deposit taking, Leasing, Investment Management) (99%) STATE INSURANCE COMPANY OF MAURITIUS LTD (Insurance, Pension, Investment Management, Trustee Services, Actuarial Services) SICOM General Insurance Ltd (General Insurance Business) (100%) SICOM Global Fund Limited (Global Business Activity) (100%) SICOM Management Limited (Global Business Activity) (100%) SICOM Registry & Secretarial Services Ltd (Registrar and Transfer Agent) (100%) 4. DIVIDEND POLICY The s objective is to provide value to its shareholders through an optimum return on equity. Dividends are proposed and paid after taking into consideration the profit after taxation, projects, technical provisions and appropriations to statutory and other reserves for ongoing operational activities. Dividends are only authorised and paid out if the shall, upon the distribution being made, satisfy the Solvency Test. The current policy of dividend distribution is a minimum of 25% of the profit after tax of the. During the year under review, the Board paid a dividend of Rs (2012: Rs ) per share. 5. THE BOARD OF DIRECTORS (a) Composition Directors profile appear on pages 9 to 10. (c) The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the and to enable them to ensure that the financial statements comply with the Mauritius Companies Act They are also responsible for safeguarding the assets of the and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Board of Directors of SICOM has the overall responsibility for ensuring that the complies with the standards of good corporate governance. The Board of Directors met eight times during the year. Election of Directors The Directors of the are elected every year at the Annual Meeting of Shareholders. 25 SICOM General Fund (Unit Trust) SICOM Overseas Diversified Fund (Unit Trust) The Non-Executive Directors come from diverse business backgrounds and possess necessary knowledge, skills, objectivity, integrity, experience and commitment to make sound judgements on various key issues relevant to the business of the independent of management. All Directors receive timely information so that they are equipped to play fully their roles in Board meetings. All Board Members have access to the Secretary for any further information they require. Independent professional advice would be available to Directors in appropriate circumstances, at the s expense. SICOM Financial Services Ltd manages SICOM General Fund and SICOM Overseas Diversified Fund. C o r p o r a t e G o v e r n a n c e R e p o r t I T h e B o a r d o f D i r e c t o r s C o n t i n u e d

14 Corporate Governance Report Year Ended 30 June (d) Common Directors at June 30, 2013 State SICOM SICOM SICOM SICOM SICOM Development SBM State Port Number Insurance General Financial Management Registry Global Bank of Investment Investment Louis of director - of Insurance Services Limited and fund Mauritius Ltd Corporation Fund ship in Mauritius Ltd Ltd Secretarial Ltd Ltd Ltd listed Ltd Services company Ltd Mr K Lobine - Mr C Appadoo 1 Mrs K G - Bhoojedhur- Obeegadoo Mr H Bissessur - Mrs B D Dhaliah- - Utchanah(Alternate Director) Mr G Gopee - Mr M I Mallam- 3 Hassam Mr D Purryag - Mr A Sewpaul - Mr Y S Yip Wang - Wing Mr R Chellapermal - Mr D K Dabee - Mrs N Ramdewar - Mr S K Gujadhur - (e) Assessment of Directors The evaluation of the Board and of its Committees is in process. The directors forming part of the board, especially those who are members of the Board Committees, have been appointed in the light of their wide range of skills and competence acquired through several years of working experience and professional background. 6. DIRECTORS S INTEREST IN SHARES The directors do not hold any share in the. 7 BOARD COMMITTEES In compliance with the principles of good governance, the Board of Directors has set up four Board Committees, namely: Investment Committee Corporate Governance Committee Staff Committee Risk and Audit Committee Investment Committee The Investment Committee consists of Mr K Lobine (Chairman), Mrs K G Bhoojedhur-Obeegadoo, Mr G Gopee and Mr M I Mallam- Hassam. The Investment Committee of SICOM lays down and reviews on a regular basis the investment strategy of the different funds under our management, that is, the Committee has the objective of selecting investments and investment products to yield superior returns within a preset risk management structure. It also takes key investment decisions and ensures that investments are in all respect reasonable and proper. Moreover, the Committee monitors and reviews the performance of our different portfolios. During the year, the Investment Committee met four times. Corporate Governance Committee The Corporate Governance Committee consists of Mr K Lobine (Chairman), Mrs K G Bhoojedhur-Obeegadoo, Mr G Gopee, and Mr C Appadoo. The Corporate Governance Committee operates under an approved mandate, which includes the nomination of Directors, determination of the s general policy on Directors fees, executive and senior management remuneration and consideration of other important staffrelated matters. During the year, the Corporate Governance Committee met on six occasions. Staff Committee The members of the Staff Committee are Mr K Lobine (Chairman), Mrs K G Bhoojedhur-Obeegadoo, Mr G Gopee, and Mr C Appadoo. This Committee has the following responsibilities: Review and adoption of HR strategies, policies and procedures in line with local legislation and regulations and benchmarked to best practices. Review of the recruitment, selection, confirmation and promotion process and approval of related staff cases. Identification of new posts and setting of the profiles. Consideration of the review of Salary and Benefits of Employees. Review of the Performance Management System and Performance-related reward system. Consideration of staff welfare initiatives. Consideration of any other Staff-related issue. During the year, the Staff Committee met on seven occasions. Risk and Audit Committee The Risk and Audit Committee consists of three nonexecutive Directors, namely, Messrs G Gopee (Chairman), D Purryag and C Appadoo. The Risk and Audit Committee operates under a formally approved Charter, which clearly spells out the roles and responsibilities of the Committee members. Its main tasks are to maintain and, where necessary, review the effectiveness of internal controls in the in the light of the findings of the external and internal auditors and review the financial statements. During the year, the Risk and Audit Committee met on three occasions. 27 C o r p o r a t e G o v e r n a n c e R e p o r t I B o a r d C o m m i t t e e s C o n t i n u e d

15 Corporate Governance Report Year Ended 30 June 2013 Board and Committees Attendance Corporate Risk and Investment Governance Staff Audit Board Composition Classification Board Committee Committee Committee Committee Number of Meetings held during the year Directors: Mr K Lobine Independent 8 of 8 4 of 4 6 of 6 7 of 7 (Chairman) Mr C Appadoo Non-Executive 8 of 8 5 of 6 6 of 7 3 of 3 Director Mrs K G Bhoojedhur-Obeegadoo Executive 8 of 8 4 of 4 6 of 6 7 of 7 Director Mr H Bissessur Non-Executive 4 of 8 Director Directors Remuneration During the year, the Executive Directors and Non- Executive Directors received emoluments amounting to Rs 18,396,429 (2012: Rs 16,819,008) and Rs 6,302,495 (2012: Rs 5,004,753) respectively. The Directors fees and remuneration have not been disclosed on an individual basis due to commercial sensitivity. Shareholder Diary Financial Year Financial year-end : 30 June 2013 Audited Financial Statements for the : Within three months year ended 30 June 2013 from end of June 2013 Statutory Return to Financial Services Commission : September 2013 Annual Meeting : September 2013 Dividend payment : October Mr G Gopee Independent 8 of 8 4 of 4 5 of 6 6 of 7 3 of 3 Mr D Purryag Non-Executive 7 of 8 3 of 3 Director Mr A Sewpaul Executive 8 of 8 Director Mr MI Mallam Hassam Non-Executive 3 of 8 2 of 4 (Appointed on 15 October 2012) Director Mrs B D Dhaliah-Utchanah Non-Executive 1 of 8 (Alternate Director Director as from 15 October 2012) Mr Y S Yip Wang Wing Independent 8 of 8 One of the Executive Directors has a service contract with the without expiry date. The other Executive Director has a service contract expiring in March REMUNERATION POLICY The recognises that the achievement of its mission depends on the quality and commitment of its staff. To achieve its mission and strategic objectives the has adopted a suitable remuneration policy which will ensure that all employees are remunerated fairly and are treated consistently throughout the organisation. At the same time, the adopts proactive remuneration strategies aimed specifically to attract, retain, motivate and compensate by providing a competitive salary package and related benefits. The objectives of our Remuneration Policy are to ensure that our remuneration system: Rewards individuals for their contribution in the achievement of the s objectives and induces high level of performance; Rewards exceptional performance by individuals through the performance management system; Allows the organization to compete effectively in the Labour Market and to recruit and retain higher caliber staff; Achieves fairness and equity in remuneration and reward. 9. SENIOR MANAGEMENT PROFILE The profiles of the senior management team appear on pages 11 to RELATED PARTY TRANSACTIONS The related party transactions are disclosed in Note 37 to the Financial Statements. 11. CONSTITUTION The Constitution of the does not provide any ownership restriction or pre-emption rights except for what is provided by the Mauritius Companies Act SHAREHOLDERS AGREEMENTS/THIRD PARTY MANAGEMENT AGREEMENTS There were no such agreements during the year under review. 29 The Policy also reflects the s objectives for good corporate governance as well as sustained and long-term value creation for shareholders. C o r p o r a t e G o v e r n a n c e R e p o r t C o n t i n u e d

16 Corporate Governance Report Year Ended 30 June INTERNAL AUDIT 14. RISK MANAGEMENT 19. EMPLOYEE SHARE OPTION PLAN 20. DONATIONS 30 The Internal Audit function has the overall responsibility of providing independent, objective assurance and consulting activity designed to add value and improve the SICOM s operations. The scope of work of the Internal Audit function is to enable the to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of its risk management, control, information systems and governance processes. It encompasses mainly the following functions which are namely to review the effectiveness and adequacy of internal control within the, to assess the systems relating to all activities of the and to make appropriate recommendations and monitor their implementation to the Risk & Audit Committee and Management pursuant to the findings in the course of review and assessment exercises. A risk-based approach to auditing is adopted and it enables resources to be focused towards high-risk areas. The Internal Auditor has a direct reporting line to the Risk and Audit Committee and maintains an open communication channel with Management. She has unrestricted access to the records, management or employees of the. Quality Assurance SICOM underwent successfully its surveillance audit in June 2013 against the ISO 9001 Standard, excluding the SICOM General Insurance Ltd and SICOM Registry and Secretarial Services Ltd, which are not ISO certified. The Quality Management System in place in SICOM is continually being improved, through its dedicated and motivated workforce, with main focus on our clients, our people and other stakeholders. Our motivated workforce and Management consistently work towards ensuring that the Quality Objectives of the are met with the prime objective of maximizing our shareholder s value. The Quality Policy of the is set out on page 7. The main focus of SICOM s risk management framework is to establish a culture of risk management throughout the to handle the risks associated with growth and a rapidly changing business environment. The SICOM s risk management philosophy embraces the overall systematic approach to analysing risk and implementing risk controls. The objective of the current risk management framework is to identify, analyse and take the appropriate steps to reduce or eliminate the exposures to loss faced by the, including, but not limited to, reputation risk, technology risk, compliance risk, operational risk, business continuity and physical risk which could influence the achievement of the s objectives. The financial risks of the are listed in Note 4 to the financial statement. 15. SOCIAL RESPONSIBILITY The is fully conscious of its role as a social partner in the Community. During the year under review, the has actively participated in various activities, including safety, health, education and environmental and has sponsored several events. 16. HEALTH AND SAFETY POLICY Our policy is to provide and maintain safe and healthy working conditions, equipment and systems of work for all our employees, and to provide such information, training and supervision as they need for this purpose. 17. CODE OF CONDUCT The is committed to ethical practices in the conduct of its business and its Code of Conduct sets out standards of business behaviour for its employees. The does not have any share option plan for its employees. 21. STATEMENT OF DIRECTORS S RESPONSIBILITIES The donations of the and of the are listed under Statutory Disclosures. The and the did not make any political donation during the year. Directors acknowledge their responsibilities for: (i) adequate accounting records and maintenance of effective internal control systems, (ii) the preparation of financial statements which fairly present the state of affairs of the as at the end of the financial year and the results of its operations and cash flows for that period and which comply with International Financial Reporting Standards (IFRS), (iii) the selection of appropriate accounting policies supported by reasonable and prudent judgements. The external auditors are responsible for reporting on whether the financial statements are fairly presented. The directors report that: (i) adequate accounting records and an effective system of internal controls and risk management have been maintained, (ii) appropriate accounting policies supported by reasonable and prudent judgements and estimates have been used consistently, (iii) the Code of Corporate Governance has been adhered to. Reasons have been provided where there has not been compliance, (iv) international Financial Reporting Standards have been adhered to. Any departure in the interest in fair presentation has been disclosed, explained and quantified. Signed on behalf of the Board of Directors: Chairman Date: 20 September 2013 Director SHARE PRICE INFORMATION As the is not listed, share price information is not available. C o r p o r a t e G o v e r n a n c e R e p o r t C o n t i n u e d

17 Corporate Governance Report Year Ended 30 June 2013 Annual Report 2013 Secretary s Certificate Year Ended 30 June 2013 ACKNOWLEDGEMENT The Board of Directors would like to welcome Mr M I Mallam Hasham who recently joined the Board of State Insurance of Mauritius Ltd. I certify to the best of my knowledge and belief that for the year ended 30 June 2013, the has filed with the Registrar of Companies, all such returns as are required of the under the Mauritius Companies Act The Board of Directors expresses its deep appreciation of the support given to all the stakeholders of the SICOM by the Government of Mauritius, the Financial Services Commission, the Bank of Mauritius, Reinsurers, Reinsurance Brokers, Investment Managers, Bankers, Assurance Salesmen and Stockbrokers. The Board of Directors is also thankful to its customers and shareholders for their loyalty and trust and would like to thank Management and staff for their dedicated effort and commitment to the. For and on behalf of the Board of Directors 32 Chairman Date: 20 September 2013 Director N Ramdewar (Mrs) Secretary State Insurance of Mauritius Ltd Port Louis 33 Date: 20 September 2013 C o r p o r a t e G o v e r n a n c e R e p o r t I S e c r e t a r y s C e r t i f i c a t e

18 Independent Auditor s Report To The Members This report is made solely to the members of State Insurance of Mauritius Ltd (the ), as a body, in accordance with Section 205 of the Companies Act Our audit work has been undertaken so that we might state to the 's members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the and the 's members as a body, for our audit work, for this report, or for the opinions we have formed. Report on the Financial Statements We have audited the financial statements of State Insurance of Mauritius Ltd and its subsidiaries () and the 's separate financial statements on pages 37 to 96 which comprise the statements of financial position at 30 June 2013 and the statements of profit or loss, statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Directors Responsibility for the Financial Statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. 35 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements on pages 37 to 96 give a true and fair view of the financial position of the and of the at 30 June 2013, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act I n d e p e n d e n t A u d i t o r s R e p o r t T o T h e M e m b e r s C o n t i n u e d

19 Independent Auditor s Report To The Members Annual Report 2013 Statements of Financial Position At 30 June 2013 Report on Other Legal and Regulatory Requirements Companies Act 2001 We have no relationship with, or interests in, the, other than in our capacity as auditors, tax and business advisers and dealings in the ordinary course of business. We have obtained all information and explanations we have required. In our opinion, proper accounting records have been kept by the as far as it appears from our examination of those records. Financial Reporting Act 2004 The Directors are responsible for preparing the Corporate Governance Report. Our responsibility is to report on the extent of compliance with the Code of Corporate Governance as disclosed in the annual report and on whether the disclosures are consistent with the requirements of the Code. In our opinion, the disclosures in the annual report are consistent with the requirements of the Code. Notes NON-CURRENT ASSETS Property, plant and equipment 6 239, , , ,566 Intangible assets 7 26,929 31,972 13,534 15,049 Statutory deposits 8 17,060 21,415 9,700 14,055 Investments in subsidiaries , ,128 Other financial assets 10 6,586,148 6,141,989 6,525,873 6,130,759 Investment properties , , , ,000 Fixed deposits 12 3,668,855 3,436,189 1,792,212 1,646,568 Finance lease receivables ,696 34, Mortgage and other loans 14 1,349,115 1,154,184 1,332,189 1,143,734 Retirement benefit assets 15 1,797 9,984 5,184 13,314 Deferred tax assets 26 1,881 1, ,489,429 11,395,564 10,932,444 10,077,173 CURRENT ASSETS Other financial assets , , , ,933 Finance lease receivables 13 50,686 88, Mortgage and other loans 14 87, ,422 84, ,422 Trade and other receivables , , , ,937 Short-term deposits 17 2,459,525 2,364, , ,803 Reinsurance assets , , Bank and cash balances 360, , , ,891 4,923,969 4,544,655 1,901,030 1,592,986 Insurance Act 2005 The financial statements have been prepared in the manner and meet the requirements specified by the Financial Services Commission. CURRENT LIABILITIES Borrowings 19 12,760 9,300 46,913 36,031 Trade and other payables , , , ,712 Current tax liabilities 21(a) 26,891 33,468 21,005 17,952 Bank overdraft 174, ,523 - Deposits 22 1,394,064 1,287, ,194,385 1,804, , , Other matter The financial statements of State Insurance of Mauritius Ltd for the year ended 30 June 2012 were audited by another auditor who expressed an unmodified opinion on those financial statements on 4 September NET CURRENT ASSETS 2,729,584 2,740,617 1,355,645 1,330,291 15,219,013 14,136,181 12,288,089 11,407,464 CAPITAL AND RESERVES Stated capital 23 70,000 70,000 70,000 70,000 Reserves 24 4,122,533 3,666,387 3,424,529 3,029,671 Equity attributable to equity holders of the parent 4,192,533 3,736,387 3,494,529 3,099,671 Non-controlling interests 4,564 4, TOTAL EQUITY 4,197,097 3,740,869 3,494,529 3,099, BDO & Co Chartered Accountants TECHNICAL PROVISIONS Long term insurance funds 25 8,339,023 7,828,909 8,339,023 7,828,909 Gross outstanding claims , , Gross unearned premiums , , ,111,324 8,392,302 8,339,023 7,828,909 Port Louis, Mauritius. Date: 20 September 2013 Per Georges Chung Ming Kan F. C.C. A Licensed by FRC NON-CURRENT LIABILITIES Borrowings 19 22,540 13, , ,622 Trade and other payables 20 42,323 65, Long term deposits 22 1,829,712 1,910, Deferred tax liabilities 26 16,017 13,392 14,281 11,262 1,910,592 2,003, , ,884 These financial statements have been approved for issue by the Board of Directors on 20 September ,219,013 14,136,181 12,288,089 11,407,464 Lobine K Chairman Bhoojedhur-Obeegadoo K G (Mrs) Director The notes on pages 43 to 96 form an integral part of these financial statements. Auditors' report on pages 35 and 36. S t a t e m e n t s o f F i n a n c i a l P o s i t i o n

20 Statements of Profit or Loss Annual Report 2013 Statements of Profit or Loss and Other Comprehensive Income Notes Notes GROSS REVENUE - Short Term Business 27 1,399,550 1,380, , ,286 Profit for the year 493, , , ,742 Underwriting surplus , , Investment and other income , , , ,035 Share of surplus transferred from Life Assurance Fund 30 15,985 17,665 15,985 17, , , , ,700 Administrative and other expenses 31 (281,642) (246,231) (160,165) (125,773) Results of operating activities 561, , , ,927 Finance costs 32 (2,387) (2,484) (51,311) (61,003) PROFIT BEFORE TAXATION 559, , , ,924 Taxation 21(b) (65,435) (65,347) (46,098) (40,182) Other comprehensive income: Items that will not be reclassified to profit or loss: Fair value gain on property, plant and equipment 6-21,399-21,399 Deferred tax on fair value on property, plant and equipment 26(b) - (531) - (531) - 20,868-20,868 Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations 1,344 32, Transfer on disposal of available-for-sale investments (10,388) (3,701) (8,608) (1,849) Net fair value gains/(losses) on available-for-sale investments and foreclosed properties 53,347 (21,326) 38,989 (21,798) 44,303 7,343 30,381 (23,647) PROFIT FOR THE YEAR 493, , , ,742 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 537, , , , Profit for the year attributable to:- Owners of the parent 493, , , ,742 Non-controlling interests , , , ,742 Total comprehensive income for the year attributable to:- Owners of the parent 537, , , ,963 Non-controlling interests , , , , The notes on pages 43 to 96 form an integral part of these financial statements. Auditors' report on pages 35 and 36. The notes on pages 43 to 96 form an integral part of these financial statements. Auditors' report on pages 35 and 36. S t a t e m e n t s o f P r o f i t o r L o s s a n d O t h e r C o m p r e h e n s i v e I n c o m e

21 Statements of Changes in Equity 40 Attributable Properties Investments to Equity Non- Stated Retained Revaluation Revaluation Other Translation Holders Controlling Notes Capital Earnings Reserve Reserve Reserve Reserve of Parent Interests Total Rs'000 GROUP Balance at 1 July ,000 3,408, ,394 87,108 26,831 20,846 3,736,387 4,482 3,740,869 Profit for the year - 493, , ,607 Other comprehensive income ,959-1,344 44,303-44,303 Total comprehensive income for the year - 493,278-42,959-1, , ,910 Transfer from/(to) reserve 24(e) - (4,926) - - 4, Dividend paid 35 - (81,435) (81,435) (247) (81,682) Balance at 30 June ,000 3,815, , ,067 31,757 22,190 4,192,533 4,564 4,197,097 Balance at 1 July ,000 3,041, , ,135 21,268 (11,524) 3,335,769 4,211 3,339,980 Profit for the year - 408, , ,018 Other comprehensive income ,868 (25,027) - 32,370 28,211-28,211 Total comprehensive income for the year - 408,657 20,868 (25,027) - 32, , ,229 Adjustment - (142) Transfer from/(to) reserve 24(e) - (5,421) - - 5, Dividend paid 35 - (36,250) (36,250) (90) (36,340) Balance at 30 June ,000 3,408, ,394 87,108 26,831 20,846 3,736,387 4,482 3,740,869 The notes on pages 43 to 96 form an integral part of these financial statements. Auditors' report on pages 35 and 36. Properties Investments Stated Retained Revaluation Revaluation Note Capital Earnings Reserve Reserve Total Rs'000 COMPANY Balance at 1 July ,000 2,746, , ,369 3,099,671 Profit for the year - 445, ,912 Other comprehensive income ,381 30,381 Total comprehensive income for the year - 445,912-30, ,293 Dividend paid 35 - (81,435) - - (81,435) Balance at 30 June ,000 3,111, , ,750 3,494,529 Balance at 1 July ,000 2,457, , ,016 2,812,958 Profit for the year - 325, ,742 Other comprehensive income ,868 (23,647) (2,779) Total comprehensive income for the year - 325,742 20,868 (23,647) 322,963 Dividend paid 35 - (36,250) - - (36,250) Balance at 30 June ,000 2,746, , ,369 3,099,671 The notes on pages 43 to 96 form an integral part of these financial statements. Auditors' report on pages 35 and S t a t e m e n t s o f C h a n g e s i n E q u i t y

22 Statement of Cash Flows Annual Report CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 559, , , ,924 Adjustments for: Exchange differences 4,900 66, Depreciation on property, plant and equipment 21,118 17,211 16,840 14,704 Amortisation of intangible assets 3,982 4,772 2,271 4,129 Surplus on revaluation of investment property (31,464) (2,104) (31,464) (2,104) Retirement benefit expenses 21,843 17,899 18,488 15,397 Loss on disposal of property, plant and equipment Loss on non current asset held for sale - 2, Profit on disposal of investment in securities - General Fund (10,549) (6,005) (7,544) (3,500) - Life Assurance Fund (31,982) (30,209) (10,909) (11,843) Loss/(gain) on disposal of foreclosed property 801 (582) 801 (582) Impairment Loss on non current asset held for sale - (2,389) - - Provision for credit losses Investment income (431,076) (464,769) (289,363) (246,993) Interest payable 222, ,126 51,311 61,003 Management fees Net surplus/(deficit) - Life Assurance Fund 217, , , ,641 - Medisave Fund 5 (26) 5 (26) - Personal Pension Plan Fund 76,467 62,351 76,467 62,351 - Insured Pension Scheme Fund 5,731 3,983 5,731 3,983 OPERATING CASH FLOWS BEFORE WORKING CAPITAL CHANGES 630, , , ,233 (Increase)/decrease in trade and other receivables (220,682) 242,212 (95,774) (1,339) (Increase)/decrease in reinsurance assets (177,265) 9, Increase/(decrease) in trade and other payables 26,973 (81,106) 105,272 25,922 Increase/(decrease) in insurance liabilities 208,908 (37,769) - - CASH GENERATED FROM OPERATIONS 468, , , ,816 Interest paid (283,680) (381,245) (51,350) (61,335) Interest and dividend received 444, , , ,552 Income tax paid (99,482) (93,833) (69,568) (70,177) Contribution paid (13,656) (13,110) (10,358) (10,197) NET CASH GENERATED FROM OPERATING ACTIVITIES 516,197 1,050, , ,659 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (12,739) (32,398) (11,163) (20,101) Purchase of intangible asset (1,755) (21,386) (756) (4,423) Proceeds from sale of property, plant and equipment 3,543 1,805 3,543 1,805 Proceeds from sale on non current asset held for sale 230 1, Net investments (105,676) 105,720 (224,214) (184,851) Net movement in investment property (118,387) (182,234) (118,387) (182,234) Net movement in fixed deposits (232,666) (1,195,653) (145,644) (533,684) Net loans (118,527) (80,018) (109,967) (69,568) NET CASH USED IN INVESTING ACTIVITIES (585,977) (1,402,514) (606,588) (993,056) CASH FLOWS FROM FINANCING ACTIVITIES Loan received 23,050-23,050 - Loan repaid (10,600) (11,500) (39,534) (35,261) Dividend paid (81,435) (36,250) (81,435) (36,250) Deposit takings 25, , NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES (43,602) 103,596 (97,919) (71,511) Net (decrease) in cash and cash equivalents (113,382) (247,942) (67,825) (354,908) CASH AND CASH EQUIVALENTS AT 1 JULY 2,759,251 3,007, ,694 1,012,602 CASH AND CASH EQUIVALENTS AT 30 JUNE 2,645,869 2,759, , ,694 CASH AND CASH EQUIVALENTS Bank and cash balances 360, , , ,891 Bank overdraft (174,002) - (163,523) - Short term deposits 2,459,525 2,364, , ,803 2,645,869 2,759, , ,694 The notes on pages 43 to 96 form an integral part of these financial statements. Auditors' report on pages 35 and GENERAL INFORMATION State Insurance of Mauritius Ltd (the ) is a public company incorporated in Mauritius. Its registered office is situated at Sir Célicourt Antelme Street, Port-Louis, Mauritius. The is mainly engaged in long term insurance business whilst its subsidiaries carry out general insurance business, depository, and investment and management activities. For the purpose of these financial statements, State Insurance of Mauritius Ltd and its subsidiaries are collectively referred as the. These financial statements will be submitted for consideration and approval at the forthcoming Annual Meeting of Shareholders of the. 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Basis of preparation The financial statements of State Insurance of Mauritius Ltd comply with the Companies Act 2001 and have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial statements are prepared under the historical cost convention, except that: (i) buildings are carried out at revalued amounts; (ii) investments properties are stated at fair value; (iii) available-for-sale financial assets and relevant financial assets and financial liabilities are stated at their fair value; and (iv) held-to-maturity securities and relevant financial assets and financial liabilities are carried at amortised cost. Standards, Amendments to published Standards and Interpretations effective in the reporting period Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12), introduces a presumption that investment properties that are measured using the fair value model in accordance with IAS 40 Investment Property are recovered entirely through sale for the purposes of measuring deferred taxes. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. This amendment is unlikely to have an impact on the s financial statements as the manner of recovery has not changed. Amendment to IAS 1, Financial statement presentation regarding other comprehensive income. The main change resulting from these amendments is a requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). Standards, Amendments to published Standards and Interpretations issued but not yet effective Certain standards, amendments to published standards and interpretations have been issued that are mandatory for accounting periods beginning on or after 1 January 2013 or later periods, but which the has not early adopted. At the reporting date of these financial statements, the following were in issue but not yet effective: IFRS 9 Financial Instruments IAS 27 Separate Financial Statements IAS 28 Investments in Associates and Joint Ventures IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement IAS 19 Employee Benefits (Revised 2011) IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine Disclosures Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) Amendment to IFRS 1 (Government Loans) Annual Improvements to IFRSs Cycle Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) IFRIC 21: Levies Recoverable Amount Disclosures for Non- financial Assets (Amendments to IAS 36) Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) Where relevant, the is still evaluating the effect of these Standards, amendments to published Standards and Interpretations issued but not yet effective, on the presentation of its financial statements. 43 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I S i g n i f i c a n t A c c o u n t i n g P o l i c i e s C o n t i n u e d

23 Investments in subsidiaries Separate financial statements Investments in subsidiaries are carried at cost. The carrying amount is reduced if there is any impairment in the value of investments. Consolidated financial statements The consolidated financial statements incorporate the financial statements of the and entities controlled by the (its subsidiaries). Control is achieved where the has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statements of profit or loss and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Consolidated financial statements (cont d) Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Non-controlling interests in subsidiaries are identified separately from the s equity therein. The interest of noncontrolling shareholders may be initially measured either at fair value or at the non-controlling interests proportionate share of the fair value of the acquiree s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of noncontrolling interests is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in the s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the. When the loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i. e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity. 2.2 Property, plant and equipment Buildings held for use in the production or supply of goods or services or for administrative purposes, are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the end of the reporting period. Any revaluation increase is recognised in other comprehensive income, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to the profit or loss to the extent of the decrease previously expensed. A decrease in carrying amount arising on revaluation is charged to profit or loss to the extent that it exceeds the balance, if any, held in properties revaluation reserve relating to a previous revaluation of that asset. Depreciation on revalued buildings is recognised in profit or loss. On the subsequent disposal or retirement of a revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained earnings. Properties in the course of construction for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. With the exception of buildings, other assets are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets' carrying amount or recognised as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the and the cost of the item can be measured reliably. Depreciation is calculated to write off the cost or revalued amount of the assets on a straight line basis over their estimated useful lives as follows: - Buildings on leasehold land - 1% - 10% Improvement to building on leasehold land - 10% Furniture and fittings - 10% Office equipment - 10% Computer equipment % - 25% Motor vehicles - 20% - 25% Assets costing less than Rs. 5,000 are depreciated at 100% in the year of acquisition. The assets residual values, useful lives and depreciation method are reviewed and adjusted prospectively if appropriate at the end of each reporting period. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. 2.3 Revenue recognition Premium written on General Insurance Business is accounted for when the policies incept while premium on Life Business is accounted for on the accrual basis except for individual life where premium is recorded in the accounting period when the premium is received. Provision for unearned premium has been made in respect of the General Insurance Business and Temporary Assurance Business and represent the proportion of premium written in the year which relate to the unexpired terms of policies in force at the reporting date, calculated on the basis of the 365th method. Investment and other income comprises of dividend, interest and rent receivable for the year. Dividend is accounted for when declared. Interest and rental income are recognised on an accrual basis. Management fees and commissions are accounted on an accrual basis. 2.4 Foreign currencies (a) (b) The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the group financial statements, the results and financial position of each entity are expressed in Mauritian rupees, which is the functional currency of the company, and the presentation currency for the group financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entity s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in such currencies are retranslated at the rates prevailing at that date. Profits and losses arising on exchange are included in the profit or loss for the year. For the purpose of presenting consolidated financial statements, the assets and liabilities of subsidiaries denominated in foreign currencies are translated into Mauritian rupees at closing rate of exchange. Income and expense items are translated at the average rates of exchange for the year. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity. 45 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I S i g n i f i c a n t A c c o u n t i n g P o l i c i e s C o n t i n u e d

24 Financial assets Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs. Financial assets are classified into the following specified categories: held-to-maturity investments, available-forsale (AFS) financial assets and Loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Except where stated separately, the carrying amounts of the s financial assets approximate their fair values. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments. Held-to-maturity investments Debentures with fixed or determinable payments and fixed maturity dates that the has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are carried at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis. Available-For-Sale financial assets Quoted AFS Financial assets Listed and quoted securities and units are classified as being AFS and are stated at fair value. Gains and losses arising from changes in fair value are recognised in other comprehensive income, and accumulated in the investment revaluation reserve until the security is disposed of or is determined to be impaired at which time the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. Impairment losses recognised in profit or loss for securities classified as available-for-sale are not subsequently reversed through profit or loss. Unquoted available for sale investments Unquoted available-for-sale investments for which reliable fair values cannot be obtained are stated at cost. Investments of the company in unquoted available-for-sale investments are generally in the form of ordinary shares. The fair value of these financial instruments cannot be measured reliably as there is no specific market for the exchange/sale of these instruments. Other unquoted available-for-sale investments are generally in the form of redeemable preference shares. These are stated at fair value derived from the net asset value of SICOM Global Fund Limited. The net asset value is derived from the fair values of the underlying investments traded in the active market by SICOM Global Fund Limited. Hypothetically, if the financial instruments would have to be disposed then a willing buyer would have to be found to purchase the financial instruments through an appropriate investment disposal mechanism. Available-for-sale financial assets are included in noncurrent assets unless management intends to dispose of the investments within twelve months of the end of the reporting period. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the provides money or services directly to a debtor with no intention of trading the receivable. They are recognised initially at fair value plus any directly attributable transaction costs. Subsequently to initial recognition, loans and receivables are measured at amortised costs using the effective interest method, less any impairment. They are included in current assets when maturity is within twelve months after the end of the reporting period or non-current assets for maturities greater than twelve months. Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of provision is recognised in the life assurance fund/profit or loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. 2.6 Financial liabilities and equity instruments issued by the (a) (b) (c) Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the and are recorded at the proceeds received, net of direct issue costs. Financial liabilities Financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs. Subsequently they are measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. d) Derecognition of financial liabilities The derecognise financial liabilities when, and only when, the s obligations are discharged, cancelled or they expire. 2.7 Taxation (a) (b) Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of profit or loss because it excludes items of income or expense that are taxable or deductible in other years but it further excludes items that are never taxable or deductible. The group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax Deferred taxation is provided in full using the liability method. Deferred tax liabilities are recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates that have been enacted or substantively enacted at the end of the reporting date and are expected to apply in the period when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is possible that taxable profit will be available against which the deductible temporary differences can be utilised. The principal temporary difference arises from depreciation on property, plant and equipment, retirement benefit assets, property revaluation reserve, fair value gain of investment property and subsidiary s accumulated tax losses. 47 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I S i g n i f i c a n t A c c o u n t i n g P o l i c i e s C o n t i n u e d

25 Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short terms deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of change in value. 2.9 Retirement benefit obligations (i) (ii) Defined Contribution Plan Contributions made under defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to retirement benefits. Defined Benefit Plan For defined benefit retirement plans, the cost of providing benefits is determined using the projected Unit Credit Method, with actuarial valuations being carried out at each reporting date. Actuarial gains and losses that exceed 10 per cent of the greater of the present value of the s defined obligation and the fair value of plan assets at the end of the prior year are amortised over the expected average remaining working lives of the participating employees. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. All actuarial gains and losses are recognised in profit or loss. The retirement benefit obligation recognised in the statement of financial position represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to unrecognised actuarial losses and past service cost, plus the present value of available refunds and reductions in future contributions to the plan. (iii) State plan and Defined Contribution Plan Contributions to the National Pension Scheme and defined contribution pension plan are expensed to the profit or loss in the period in which they fall due Provisions Provisions are recognised when the has a present obligation as a result of a past event, and it is probable that the will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the Directors best estimate of the expenditure required to settle the obligation at the end of the reporting period. Provisions are reviewed at end of reporting period and adjusted to reflect the current best estimate Impairment of financial assets Financial assets are assessed for indicators of impairment at end of reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For shares classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all other financial assets, including redeemable notes classified as AFS and finance lease receivables, objective evidence of impairment could include: Significant financial difficulty of the issuer or counter party; or Default or delinquency in interest or principal payments; or Becoming probable that the borrower will enter bankruptcy or financial re-organisation. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment is 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 financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables and mortgage loans where the carrying amount is reduced through the use of an allowance account. When a trade receivable and mortgage loan is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income Leasing The as lessee Operating lease payments are recognised as an expense on a straight line basis over the lease term. The as lessor - Finance lease Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Finance lease income is allocated to the accounting period so as to reflect a constant periodic rate of return on the s net investment outstanding in respect of the leases. - Operating lease Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the lease asset and recognised on a straight line basis over the lease term Investment properties Properties held to earn rentals and/or for capital appreciation and not occupied by the are stated at their fair value at the end of the reporting period, representing open-market value determined by external valuers. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise. No depreciation is charged on investment properties. Property that is under construction or development to earn rentals or for capital appreciation or both is accounted as investment property and is measured at cost Foreclosed properties Foreclosed properties represent seized assets acquired through auction at the Master s Bar as a result of default by clients. Foreclosed properties are accounted at their market value less any impairment. Any realised gains or losses of foreclosed properties are taken in profit or loss. No depreciation is charged on foreclosed properties Intangible assets Computer software Computer software that is not considered to form an integral part of any hardware equipment is recorded as intangible assets. The software is capitalised at cost and amortised over its estimated useful lives of 2 to 17 years Insurance contracts (i) Insurance contracts classification Insurance contracts are those contracts that transfer significant insurance risk at the inception of the contract. Such contracts remain insurance contracts until all rights and obligations are extinguished or expired. Insurance risk is transferred when the agrees to compensate a policyholder if a specified uncertain event adversely affects the policyholder. The significance of insurance risk is dependent on both the probability of an insured event and the magnitude of its potential effect. Investment contracts are those contracts that transfer financial risk with no significant insurance risk. Some insurance contracts contain a Discretionary Participating Feature (DPF). This feature entitles the holder to receive, as a supplement to guaranteed benefits, additional benefits or bonuses. 49 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I S i g n i f i c a n t A c c o u n t i n g P o l i c i e s C o n t i n u e d

26 50 (a) (b) (c) (d) The considers that virtually all its short term and long term products are insurance contracts. Insurance contracts issued by the are classified within the following main categories: Short term insurance contracts Short term insurance contracts are in respect of the following classes of business: motor, accident & health, engineering, liability, property, transportation, guarantee and miscellaneous. These contracts provide compensation following damage to or loss of property, goods, equipment, losses and expenses incurred, sickness and loss of earnings resulting from the occurrence of the events insured against. Long-term insurance contracts with fixed and guaranteed terms These contracts insure events associated with human life (i. e. death or survival) over a long duration. A liability for contractual benefits that are expected to be incurred in future is recorded once the first premium under such a contract has been recognised. The liability is based on assumptions as to mortality, persistency, maintenance expenses and investment income that are established at each valuation date based on an analysis of recent experience modified by expectation of future trends. The best estimate assumptions are adjusted to include a margin for prudence. Long-term insurance contracts without fixed terms and with DPF These contracts contain a DPF which entitles the contract holder in supplement to a guaranteed amount, a contractual right to receive additional profit or bonuses. The size of the profit or bonuses as well as the timing of the payments is however at the discretion of the. The has an obligation to eventually pay to contract holder up to 90% of the DPF eligible surplus (i. e., all interest and realised gains and losses arising from the assets backing these contracts). Any portion of the DPF eligible surplus that is not declared as a profit or bonus is retained as a liability under the Life Assurance Fund, until declared and credited to contract holders in future periods. Unit-linked insurance contracts These contracts include an embedded derivative which links payments to contract holders to amounts invested in unitised funds. The liability in respect of unit linked contracts is equal to the sum of the current unit values and a reserve calculated as the present value of the expected future claims and expenses less the present value of expected future charges and release of unit reserves. The resultant liability is subject to a minimum of the current surrender value on a per policy basis. Assumptions as to future expenses, (ii) investment returns, mortality, morbidity, and persistency are best estimate in nature and are based on the results of recent analyses of the s operating experience. Reinsurance contracts Reinsurance contracts entered into by the are either of proportional or non-proportional type. Under a proportional treaty, the premiums and claims are apportioned between the and the reinsurer in agreed proportions. Proportional reinsurance may be either in the form of a quota share whereby the proportion of each risk reinsured is fixed, or in the form of surplus whereby the can retain a part of a risk within a fixed limit, and the reinsurer accepts part of the risk as a multiple of the s retention. Under the non-proportional type of reinsurance, the uses the Excess of Loss treaty whereby in consideration for a premium, the reinsurer agrees to pay claims in excess of a specified amount (the retention), up to a specified maximum amount. The reinsures either on a treaty basis, with all risks falling within the treaty terms, conditions and limits being reinsured automatically, or on a facultative basis. Under facultative reinsurance, risks are offered to the reinsurer or an individual basis and can be accepted or rejected by the reinsurer. Short-term balances due from reinsurers are classified within trade and other receivables and amounts that are dependent on the expected claims and benefits arising under the related reinsurance contracts are classified under reinsurance assets. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provisions or settled claims associated with the reinsured policies and in accordance with the relevant reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an expense when due. Any gains and losses on buying reinsurance contracts are recognised immediately in the life assurance fund/profit or loss and are not subject to amortisation. Premiums ceded and claims reimbursed are presented on a gross basis in the life assurance fund/ profit or loss and the statement of financial position as appropriate. Impairment of reinsurance assets If reinsurance asset is impaired, the reduces the carrying amount accordingly and recognises that impairment loss in the 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 the reinsurance asset, that the may not receive all amounts due to it under the terms of the contract and the event has a reliably measurable impact on the amounts that the will receive from the reinsurer. (iii) Claims expenses and outstanding claims provisions short term insurance Claims incurred Claims incurred comprise claims and claims handling costs paid in the year and changes in the provision of outstanding claims including provision for claims incurred but not reported (IBNR) and related expenses together with any adjustments to claims of prior years. Claims handling costs include internal and external costs incurred in connection with the negotiation and settlement of claims. Internal costs include all direct external expenses of the claims department. Outstanding claims provision Outstanding claims provision represents the estimated ultimate cost of settling all claims arising from events which have occurred up to the end of the reporting period, including provision for claims incurred but not reported (IBNR). It includes related expenses and a deduction for the expected value of salvage and subrogation. The does not discount its liabilities for unpaid claims. Significant delays can be expected in the notification and settlement of certain claims, the ultimate cost of which cannot therefore be known with certainty at the end of the reporting period. The takes all reasonable steps to ensure that it has appropriate information regarding its claims exposure and that the provision is determined using best estimates of claims development patterns, forecast inflation and settlement of claims. However, given the uncertainty in establishing claims provision, it is likely that the outcome will prove to be different from the original liability established. Differences between the estimated cost and subsequent settlement of claims are recognised in profit or loss in the year in which they are settled or in which the provisions for claims outstanding are re-estimated. Salvage and subrogation reimbursements Salvage is the equitable right of the to the residual value of property for which it has paid a total loss. When the compensates an insured due to a loss caused by a third party, it is subrogated to the right of the insured to be compensated by that third party. Estimates of salvage and subrogation are taken into consideration while calculating provisions for outstanding claims. The salvage property and subrogation reimbursements are recognised in other assets when the liabilities are settled. Allowance for salvage is the amount that can reasonably be recovered from the disposal of property whereas the subrogation allowance is the assessment of the amount that can be recovered from the action against the liable third party. (iv) Liability adequacy test Short-term insurance At the end of the reporting period, a liability adequacy test is performed to ensure the adequacy of the contract liabilities. In performing the test, current best estimates of future contractual cash flows (including claims handling and administration expenses) and expected investment returns on assets backing such liabilities, are used. Any deficiency is immediately charged to profit or loss and a provision is established for losses arising from liability adequacy test (the unexpired risk provision). Long-term insurance The s Actuary reviews the adequacy of insurance liabilities for long term contracts on an annual basis and ensures that provisions made by the are adequate. Any deficiency is recognised in the Life Assurance Fund Dividend distribution Dividend distribution to the 's shareholders is recognised as a liability in the 's financial statements in the period in which the dividends are declared Related parties Parties are considered to be related if one party has control, joint control or exercises significant influence over the other party or is a member of the key management personnel of the other party. 51 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I S i g n i f i c a n t A c c o u n t i n g P o l i c i e s C o n t i n u e d

27 Comparative figures Comparative figures have been regrouped or restated, where necessary, to conform to the current year s presentation. 3. MANAGEMENT OF INSURANCE RISKS The s activities exposes it to a variety of insurance risks. A description of the significant risk factors is given below together with the risk management policies applicable. 3.1 Insurance risk Insurance risk is transferred when an insurer 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, the risk is random and therefore unpredictable. The main risk that the faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This may occur if the frequency or severity of claims and benefits are greater than estimated. Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected outcome will be. 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 has developed its insurance underwriting strategy so as to diversify the type of insurance risks accepted and within each of these categories to achieve a sufficiently large population of risks to reduce the variability of the expected outcome. Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount of risk, accumulation of risk and type of industry covered Insurance liabilities (a) Short-term insurance The frequency and severity of claims can be affected by several factors. The most significant claims result from accident, liability claims awarded by the Court, fire and allied perils and their consequences. Inflation is also a significant factor due to the long period typically required to settle some claims. (b) The s underwriting strategy attempts to ensure that the underwritten risks are well diversified in type, amount of risk and industry. The has underwriting limits by type of risks and by industry. Performance of individual insurance policies is reviewed by management and the reserves the right not to renew individual policies. It can impose deductibles and has the right to reject the payment of a fraudulent claim. Where relevant, the may pursue third parties for payment of some or all liabilities (subrogation). Claims development and provisioning levels are closely monitored. The reinsurance arrangements of the include proportional, excess of loss and catastrophe coverage and as such, the maximum loss that the may suffer in any one year is predetermined. Long-term insurance For long-term insurance contracts, where the insured event is death, the most significant factors that could impact on insurance claims are diseases like heart problems, diabetes, high blood pressures or changes in lifestyle, resulting in higher and earlier claims being submitted to the. 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. The liabilities in terms of insurance contracts are based on recommendations of the s Actuary. 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 DPF, the participating nature of these contracts results in a significant portion of the insurance risk being shared with the insured party. The 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, the balances death risk and survival risk across its portfolio. Medical selection is also included in the s underwriting procedures with premiums varied to reflect the health condition and family medical history of the applicants. The has defined retention limits on all lives insured and reinsures the excess of the insured benefit over its retention limit Concentration of insurance risk (a) (b) Short-term insurance The following table discloses the concentration of outstanding claims by class of business, gross and net of reinsurance. The manages its risks through their underwriting strategy, adequate reinsurance arrangements and proactive claims handling. Long-term Insurance Outstanding Claims Gross Net Gross Net Class of Business Rs 000 Rs 000 Rs 000 Rs 000 Motor 215,626 81, ,083 58,002 Property 110,687 1,008 13,367 (119) Transport 76, , Engineering 15,923 3,902 12,207 2,226 Accident & Health 32,481 6,850 26,521 5,603 Liability 25,527 10,385 24,003 10,327 Miscellaneous 4, , Incurred but not Reported (IBNR) 23,889 23,889 23,001 23, , , ,125 99,869 The table below presents the concentration of insured benefits across bands of insured benefits per individual life assured. Total Benefits Insured Benefits assured per life Before Reinsurance After Reinsurance assured as at 30 June 2013 (Retained) Rs 000 Rs 000 % Rs 000 % ,437 4% 730,357 6% ,786,552 16% 2,425,277 21% ,386,176 14% 1,989,151 17% ,797,287 10% 1,106,237 9% ,738,386 56% 5,466,936 47% TOTAL 17,439, % 11,717, % The following table for annuity insurance contracts illustrates the concentration of risk based on bands that group these contracts in relation to the amount payable per annum as if the annuity were in payment as at 30 June The do not hold any reinsurance contracts against the liabilities carried for these contracts. 53 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I M a n a g e m e n t o f I n s u r a n c e R i s k s C o n t i n u e d

28 Annuity payable per annum per life Total annuities payable per assured as at 30 June 2013 annum Rs 000 Rs 000 % % , % , % , % , % More than , % Total 154, % With regards to Assurances the Total Sum Assured is Rs 15,249,337,594 and the Sum Assured retained is Rs 7,465,464, Claims development table The development of insurance liabilities provides a measure of the s ability to estimate the ultimate value of claims. The table below illustrates how the estimates of total claims outstanding for each year have changed at successive year-ends and reconciles the cumulative claims to the amount appearing in the statement of financial position. Accident Period Prior Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 At end of loss year 28,161 29,401 35,302 40,626 62,326 72,852 90, , , ,078 90, , ,106 1,103, Sources of uncertainty (b) Long- term insurance One year later 2,315 7,921 6,220 7,150 13,360 12,136 18,700 27,013 31,723 13,814 8,198 26, , (a) Short - term insurance Most claims on short term insurance contracts are payable on a claims-occurrence basis. Under claims occurrence basis, the are liable for insured events that occur during the term of the contract, even if the loss is discovered after the end of the contract term. As a result, liability claims may be settled over a long period of time and a larger element of the claims provision relates to incurred but not reported claims (IBNR). The estimated costs of claims include direct expenses to be incurred in settling claims, net of subrogation and salvage recoveries. The ensure that claims provisions are determined using the best information available of claims settlement patterns, court awards and forecast inflation. Estimation techniques also involve obtaining corroborative evidence from as wide a range of sources as possible and combining these to form the best overall estimates. However, given the uncertainty in determining claims provisions, it is likely that the final claim settlement will differ from the original liability estimate. 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 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 the s experience. The 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 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 whereby he/she may decide to amend terms or terminate the contract or exercise a guaranteed annuity option. Two years later ,102 (287) (139) (787) (2,225) 584 (60) 4,224 5,306 Three years later (107) (696) (1,660) 2,026 7,360 9,272 Four years later (125) 221 1,100 (196) (417) 1, (1,420) 1,745 2,841 Five years later (118) 576 1, , ,842 Six years later ,233 1, (361) 5,915 Seven years later ,894 1,723 (9) 1,131 6,292 Eight years later ,186 (130) 567 3,114 Nine years later 964 (69) 28, ,137 Ten years later ,916 2,141 Eleven years later 57 (7) 50 Twelve years later Total Claims paid 33,520 40,327 82,137 54,081 75,853 88, , , , , , , ,106 1,348,972 Outstanding 55 The has a predetermined retention limit on any single life insured and the reinsures the excess of the insured benefit above the retention limit. reported (1,608) (153) (180) (56) 1,382 4, ,366 8,122 9,866 26,114 30,394 24, ,541 IBNR Reserve (276) (413) 4,400 6,271 6, (1,275) (1,353) (8,178) 17,950 23,889 Net liability (1,608) (153) (180) 93 1,106 4,069 4,732 6,529 7,479 8,623 8,591 24,761 22,216 42, ,430 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I M a n a g e m e n t o f I n s u r a n c e R i s k s

29 56 4. FINANCIAL RISKS FACTORS The is exposed to financial risks through their financial assets, financial liabilities, reinsurance assets and insurance liabilities. In particular, the key financial risk is that proceeds from financial assets are not sufficient to fund the obligations arising from insurance contracts. The main risks to which the is exposed are as follows: 4.1 Foreign currency risk The s financial instruments which are exposed to foreign currency risks consist mainly of deposits and overseas investment. Management monitors the s currency position on a regular basis. The carrying amount of the s financial assets and liabilities at the reporting date are as follows: Financial assets MUR 14,338,394 13,108,553 9,783,186 8,934,054 USD 1,810,813 1,873,053 1,687,751 1,534,845 GBP 322, , EUR 108,315 20, ,579,637 15,255,061 11,470,937 10,468,899 Financial liabilities 4.2 Credit risk The provides secured advances to clients and there is credit risk that a counter party will default on its contractual obligations resulting in financial loss to the. The s policy is to deal with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Appraisals are systematically carried out for any application and we also have a credit committee which continuously monitors and controls the s exposure to credit risk. There is concentration of credit risk given that State Bank of Mauritius Ltd and the Development Bank of Mauritius Ltd represent more than 10% of its revenue. Given that State Bank of Mauritius Ltd and Development Bank of Mauritius Ltd are related parties of the company, the directors of the believe that the probability of default is remote and therefore credit risk is limited. The carrying amount of mortgage loans recorded in the financial statements, which is net of impairment losses, represents the s maximum exposure to credit risk without taking account of the value of any collateral obtained. When financial assets are impaired by credit losses, the records the impairment in a separate account rather than directly reducing the carrying amount of the assets. Mortgage loans advanced by the are financial assets resulting from commitment of the borrower to repay the amount borrowed on a specific date or dates, or on demand usually with interest. IAS 39 prescribes that an asset is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of event that occurred after the initial recognition of the asset and that loss event has impacted on the estimated future cash flows of the asset. In the recovery process, objective evidence of impairment is recognised at the stage of seizure and sale where the borrower is assumed to have significant financial difficulty to settle his debts. Since there is objective evidence of impairment at the seizure and sale stages, 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 an allowance account and the amount of the loss is recognised in profit or loss. 4.3 Interest rate risk The is exposed to interest rate fluctuations on the international and domestic markets. The monitors closely interest rate trends and related impact on investment income for performance evaluation and better management. 57 MUR 4,567,745 4,081, , ,365 Consequently the is exposed to risks that the exchange rate relative to these currencies may change in a manner which has an effect on the reported value of that portion of the group s assets which is denominated in currencies other than the Mauritian Rupee. The following table details the sensitivity to a 5% and 10% increase/decrease of the Rupee against the USD, GBP and EUR. Increase/decrease of 5% in exchange rate Increase/decrease in net asset 112, ,325 84,388 76,742 Increase/decrease of 10% in exchange rate Increase/decrease in net asset 224, , , ,484 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I F i n a n c i a l R i s k s F a c t o r s C o n t i n u e d

30 The interest rate profile was: Financial assets % % % % Treasury Notes Mauritius Government Securities Bonds Mortgage & other loans Net Investment in finance leases Term deposits (excluding foreign currency deposits) Foreign currency term deposits % % % % USD The following table details the s sensitivity to a 50 basis points and 100 basis points increase/decrease of the rate of interest on mortgage loans which are subject to floating rate of interest. & & Increase/decrease of 50 basis points Increase/decrease in net assets 6,240 6,778 Increase/decrease in income 6,240 6,778 Increase/decrease of 100 basis points Increase/decrease in net assets 12,480 13,556 Increase/decrease in income 12,480 13, Liquidity risk 58 Foreign currency call deposits USD GBP EUR Local Call deposits Financial liabilities At amortised cost Deposit Borrowings The following table details the sensitivity to a 5% and 10% increase/decrease of the rate of interest of financial assets: Increase/decrease of 5% in interest rate Increase/decrease in net assets 1, , Increase/decrease in income 1, , Increase/decrease of 10% in interest rate Increase/decrease in net assets 3, , Increase/decrease in income 3, , The increase or decrease in the interest rate sensitivity is due to fluctuations in the interest rates of foreign currency and local currency call deposits and floating rate fixed deposits at 30 June 2013 as compared to 30 June The interest rate sensitivity analysis excludes Government securities, foreign currency term deposits and local currency fixed deposits which have fixed interest rates and thus will not be affected by fluctuations in the level of interest rates. The is exposed to daily payments of benefits to clients and to repayment of financial liabilities. The s liquidity position is monitored on a regular basis. The manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and matching profiles of financial assets. The table below summarises the trading liabilities at fair values, categorised by the earlier of contractual re-pricing or maturity dates. At 30 June 2013 No 1 to 3 3 months 1 to 5 maturity months to 1 year years >5 years dates Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Financial liabilities Borrowings 4,000 8,760 22, ,300 Insurance liabilities , ,676 Other financial liabilities 850,126 1,264,131 1,872,035-40,477 4,026,769 Total liabilities 854,126 1,272,891 1,894, ,153 4,567,745 At 30 June 2013 No 1 to 3 3 months 1 to 5 maturity months to 1 year years >5 years dates Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Financial liabilities Borrowings 12,253 34, , , ,169 Other financial liabilities 429,107 10, , ,467 Total liabilities 441,360 45, , ,916 37, , N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I F i n a n c i a l R i s k s F a c t o r s C o n t i n u e d

31 At 30 June 2012 No 1 to 3 3 months 1 to 5 maturity months to 1 year years >5 years dates Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Financial liabilities Borrowings 4,000 5,300 13, ,850 Insurance liabilities , ,125 Other financial liabilities 491,737 1,219,413 1,976,068-50,120 3,737,338 Total liabilities 495,737 1,224,713 1,989, ,245 4,081, Reinsurers default The is exposed to the possibility of default by its reinsurers for their share of insurance liabilities and refunds in respect of claims already paid. Management monitors the financial strength of its reinsurers. 4.7 Capital Risk Management The manages its capital to ensure that entities in the group will be able to continue as a going concern and also comply with applicable laws and regulations. The is required to maintain a minimum capital requirement under the Insurance Act 2005 and rules made by the Financial Services Commission. At 30 June 2012 No 1 to 3 3 months 1 to 5 maturity months to 1 year years >5 years dates Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Financial liabilities Borrowings 10,391 25, , , ,653 Other financial liabilities 158,551 8, , ,712 Total liabilities 168,942 33, , ,271 42, ,365 Under the Insurance (General Insurance Business Solvency) Rules 2007, the minimum capital requirement for general business is the sum of capital required for the statement of financial position as per Rule 6, capital required for investment above concentration limit as per Rule 7, capital required for policy liabilities as per Rule 8, capital required for catastrophes as per Rule 9 and capital required for reinsurance ceded under Rule 10. Under the Insurance (Long-Term Insurance Business Solvency) Rules 2007, the minimum capital requirement for long-term business is determined by the actuary, which is the higher of: (a) a stress test requirement determined in accordance with guidelines issued by the Financial Services Commission to ensure that the company remains solvent; or (b) the higher of: (i) an amount of Rs 25 million; or (ii) an amount representing 13 weeks operating financial services, with operating expenses as defined and reported in the annual statutory return submitted to the Financial Services Commission Market price risk The has invested in securities quoted on the Stock Exchange of Mauritius, in overseas securities and securities classified under Level 2 as described in note 4.9 below which may be subject to a risk of loss of capital. These investments are susceptible to market price risk arising from uncertainties about future prices of the financial instruments. This risk is moderated, inter alia, through a careful selection of securities, investment diversification and by having investment limits. For the year ended 30 June 2013, the and have satisfied the minimum capital requirement. The subsidiary (SICOM Financial Services Ltd) is required to maintain a minimum capital requirement under the Banking Act The capital structure of the subsidiary consists of issued share capital, reserves and retained earnings. The subsidiary has to comply with the Banking Act 2004 in respect of both its share capital and reserves. 61 The maximum risk resulting from securities investments is determined by the fair value of the financial instruments. The s overall market positions are monitored on a regular basis. The following table details the sensitivity to a 5% and 10% increase/decrease in the prices of securities investments. Increase/decrease of 5% in prices of securities Increase/decrease in net assets/income 131, , , ,136 Increase/decrease of 10% in prices of securities Increase/decrease in net assets/income 263, , , , Categories of financial instruments: Financial assets Held-to-maturity 10,685,526 9,845,151 6,442,037 5,598,847 Loans and receivables 2,569,029 2,584,597 1,950,021 2,071,665 Available-for-sale financial assets and foreclosed properties 2,808,544 2,486,040 3,078,879 2,798,387 Reinsurance assets 516, , ,579,637 15,255,061 11,470,937 10,468,899 Financial liabilities At amortised cost 4,062,069 3,760, , ,365 Insurance contract liabilities 505, , ,567,745 4,081, , ,365 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I F i n a n c i a l R i s k s F a c t o r s C o n t i n u e d

32 4.9 Fair value measurements recognised in the statement of financial position The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into levels 1 to 3 based on the degree to which the fair value is observable. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs) 2013 Level 1 Level 2 Level 3 Total Rs 000 Rs 000 Rs 000 Rs 000 Available-for-sale financial assets 2,399, ,014 65,166 2,808,544 Available-for sale financial assets 1,214,086 1,799,627 65,166 3,078, CRITICAL ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS IN APPLYING ACCOUNTING ESTIMATES Estimates, judgements and assumptions are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 5.1 Critical accounting estimates and assumptions The 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. 5.2 Insurance contracts which the is exposed to risk. Estimates are based on standard industry mortality tables that reflect recent historical mortality experience, adjusted where appropriate, to reflect the country s and s own experience. For long-term insurance contracts with fixed and guaranteed terms and with DPF, estimates of future deaths, voluntary terminations, investment returns and administration expenses are made at each valuation date and form the assumptions used for calculating the liabilities. A margin for risk and uncertainty is added to these assumptions. Assumptions are reconsidered each year based on the most recent operating experience and estimate of future experience and are used to recalculate the liabilities. Sensitivity analysis The following table presents the sensitivity of the value of insurance liabilities disclosed, to movements in assumptions used in the estimation of insurance liabilities Level 1 Level 2 Level 3 Total Rs 000 Rs 000 Rs 000 Rs 000 Available-for-sale financial assets 2,087, ,721 75,659 2,486,040 Available-for sale financial assets 1,082,054 1,640,674 75,659 2,798,387 The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the for similar financial instruments Reconciliation of level 3 fair value measurements of financial assets & & Unquoted Unquoted equities equities At 1 July 75,659 83,873 Issues 350 8,875 Settlements (11,044) (14,995) Fair value adjustments 201 (2,094) At 30 June 65,166 75,659 The table above only includes financial assets. There were no transfers between level 1 and 2 The uncertainty inherent in the financial statements of the arises in respect of insurance liabilities, which include liabilities for unearned premiums, outstanding claims provision (including IBNR) and Life Assurance Fund. In addition to the inherent uncertainty when estimating liabilities, there is also uncertainty as regards to the eventual outcome of claims. As a result, the applies estimation techniques to determine the appropriate provisions. (a) Short- term insurance (i) Claims provision Outstanding claims provision is determined based upon knowledge of events, terms and conditions of relevant policies, on interpretation of circumstances as well as previous claims experience. Similar cases, historical claims payment trends, judicial decisions and economic conditions are also relevant and are taken into consideration. (ii) Sensitivity analysis The adopted actuarial techniques to estimate the required levels of provisions, taking into account the characteristics of the business class and risks involved. (b) Long-term insurance Estimates of future benefit payments under long-term insurance contracts are provided for based on estimates made by the s Actuary. Estimates are made as to the expected number of deaths for each of the years in The table below indicates the level of the respective variable that will trigger an adjustment and then indicates the liability adjustment required as a result of a further deterioration in the variable. Life - GPV Sensitivities test Liability Difference Variables Rs'000 % Actual reserve 8,202,442 Interest rate less 1% 8,620, Mortality plus 10% 8,282, Lapse plus 10% 8,214, Expenses plus 10% 8,235, Inflation plus 1% 8,217, Held-to-maturity investments The applies International Accounting Standard (IAS) 39 - Recognition and Measurement on classifying nonderivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. This classification requires significant judgement. In making this judgement, the evaluates its intention and ability to hold such investments to maturity. If the fails to keep these investments to maturity other than for specific circumstances explained in IAS 39, it will be required to reclassify the whole class as available-for-sale. The investments would therefore be measured at fair value not amortised cost. 63 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I C r i t i c a l A c c o u n t i n g E s t i m a t e s, J u d g e m e n t s a n d A s s u m p t i o n s i n A p p l y i n g A c c o u n t i n g E s t i m a t e s C o n t i n u e d

33 Impairment of available-for-sale financial assets The follows the guidance of IAS 39 on determining when an investment is other-than-temporarily impaired. This determination requires significant judgement. In making this judgement, the evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost, and the financial health of and near-term business outlook for the investee. 5.5 Revaluation of property, plant and equipment and investment property The carries certain of its investment properties at fair value, with changes in fair value being recognised in profit or loss. In addition, it measures buildings on leasehold land at revalued amount with changes in fair value being recognised in other comprehensive income. For the investment property, the valuer used a valuation technique based on a discounted cash flow model and market value comparison. The determined fair value of the investment property is most sensitive to the estimated yield as well as the long term vacancy rate. The key assumptions used to determine the fair value of the investment properties, are further explained in Note Pension benefits The present value of the pension obligations depend 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/(income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. The 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 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 obligation. Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in Note PROPERTY, PLANT AND EQUIPMENT Improvement to Buildings Building Buildings on on Under Leasehold Leasehold Furniture Office Computer Motor Construction Land Land & Fittings Equipment Equipment Vehicles Total COST OR VALUATION At 1 July , ,808-45,186 33,170 27,678 31, ,636 Transfer to investment properties (note 11) (90,662) (90,662) Additions - 8,267 3,612 1,367 1,016 7,954 3,410 25,626 Revaluation - 2, ,925 Additions: Rented under operating lease ,772 6,772 Disposals/scrapped (258) (216) (3,690) (6,540) (10,704) At 30 June ,000 3,612 46,295 33,970 31,942 34, ,593 Additions , ,173 3,872 11,523 Additions: Rented under operating lease ,216 1,216 Transfer from intangible assets (note 7) ,912-2,912 Disposals/scrapped (3,016) (12,719) (15,735) At 30 June ,094 3,612 48,202 34,447 37,011 27, ,509 DEPRECIATION At 1 July ,654-31,999 26,939 16,109 12, ,833 Charge for the year Life fund ,061 1,233 3,630 General fund - 3, , ,440 2,064 11,526 Revaluation adjustment - (18,474) (18,474) Rented under operating lease ,055 2,055 Disposals/scrapped (121) (169) (3,690) (4,770) (8,750) At 30 June ,934 27,982 15,920 12,714 91,820 Charge for the year Life fund , ,652 General fund - 6, , ,964 1,689 15,566 Rented under operating lease ,900 2,900 Transfer from intangible assets (note 7) Disposals/scrapped (3,016) (8,603) (11,619) At 30 June , ,102 29,228 17,979 9, ,412 CARRYING AMOUNT At 30 June ,723 2,981 10,100 5,219 19,032 18, ,097 At 30 June ,000 3,342 11,361 5,988 16,022 22, , N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I P r o p e r t y, P l a n t a n d E q u i p m e n t C o n t i n u e d

34 66 Property, plant and equipment include motor vehicles under operating lease that are expected to generate a yield of 8.9% (30 June 2012: 8.9%) on an ongoing basis. The motor vehicles held have committed lessees for the next three years. At the end of the reporting date, the has contracted with lessees the following future rentals: Motor Vehicles Within one year 3,130 3,550 In the second to the third year 1,006 1,117 4,136 4,667 Operating lease contracts contain market review clauses. The lease terms are for a period of three years with an option for buy-back. The buildings were revalued in June 2012 by Mr G Saddul BSc, FRICS, Chartered Valuer, at Rs 190 million based on the open market value. The surplus on revaluation has been credited to revaluation reserve and adjusted for deferred taxation. Had the buildings been accounted at historical cost less accumulated depreciation, the carrying amount would have been Rs 79.4 million (June Rs 82.4 million). Building Buildings on Under Leasehold Furniture Office Computer Motor Construction Land & Fittings Equipment Equipment Vehicles Total Rs'000 COST OR VALUATION At 1 July , ,808 45,165 33,157 27,281 24, ,675 Transfer to investment properties (note 11) (90,662) (90,662) Additions - 8,267 1, ,598 3,410 20,101 Revaluation - 2, ,925 Disposals/scrapped - - (258) (216) (3,690) (6,540) (10,704) At 30 June ,000 46,051 33,623 30,189 21, ,335 Additions , ,901 3,872 11,163 Disposals/scrapped (3,016) (12,719) (15,735) At 30 June ,094 47,885 34,085 32,074 12, ,763 DEPRECIATION At 1 July ,654 31,998 26,938 16,097 11, ,289 Charge for the year Life Fund ,061 1,233 3,630 General Fund - 3,820 2, ,298 2,064 11,074 Revaluation - (18,474) (18,474) Disposals/scrapped - - (121) (169) (3,690) (4,770) (8,750) At 30 June ,914 27,960 15,766 10,129 88,769 Charge for the year Life Fund , ,652 General Fund - 6,371 2, ,026 1,689 14,188 Disposals/scrapped (3,016) (8,603) (11,619) At 30 June ,371 38,044 29,165 16,794 3,616 93, INTANGIBLE ASSETS - COMPUTER SOFTWARE COST At 1 July 56,700 35,857 38,998 35,118 Additions 1,755 21, ,423 Disposals/scrapped (1,472) (543) (1,472) (543) Transfer to property, plant and equipment (note 6) (2,912) At 30 June 54,071 56,700 38,282 38,998 AMORTISATION At 1 July 24,728 20,499 23,949 20,363 Charge for the year Life Fund General Fund 3,704 3,868 1,993 3,225 Disposals/scrapped (1,475) (543) (1,472) (543) Transfer to property, plant and equipment (note 6) (93) At 30 June 27,142 24,728 24,748 23,949 CARRYING AMOUNT 26,929 31,972 13,534 15, STATUTORY DEPOSITS In compliance with the Insurance Act 2005, statutory deposits represent investments in Mauritius Government Securities and earn interest at 7.5% -10% (2012: 7.5% -10%) per annum and have remaining maturity dates varying 3 months to 3 years. 9. INVESTMENTS IN SUBSIDIARIES (a) Unquoted investment at cost At 1 July and 30 June 224, ,503 Subordinated loan (note (c)) 341, ,625 At 30 June 566, , CARRYING AMOUNT At 30 June ,723 9,841 4,920 15,280 9, ,773 At 30 June ,000 11,137 5,663 14,423 11, ,566 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I I n v e s t m e n t s i n S u b s i d i a r i e s C o n t i n u e d

35 (b) Details of investments: Country of % % Classes of incorporation Holding Holding Name of subsidiaries Principal activity Shares & operation SICOM Financial Services Ltd Depository, investment business Ordinary Mauritius and leasing activities SICOM Management Limited Investment and management Ordinary Mauritius SICOM Global Fund Limited Investment in overseas securities Management Mauritius OTHER FINANCIAL ASSETS Non-current (a) Investment in securities 6,570,812 6,122,697 6,510,537 6,111,467 (b) Foreclosed properties 15,336 19,292 15,336 19,292 6,586,148 6,141,989 6,525,873 6,130,759 Current Investment in securities 812, , , ,933 7,398,360 6,902,467 7,172,438 6,620,692 SICOM Registry & Secretarial Registrar and transfer agent Ordinary Mauritius Services Ltd SICOM General Insurance Ltd General insurance business Ordinary Mauritius Analysed as follows: (i) GROUP Loans and Held-to- Available- Non-current receivables maturity for-sale Total (a) Investment in securities 68 (c) Subordinated loan Pursuant to the Insurance Act 2005 which provides that an insurance company cannot transact both Long Term and General Insurance Businesses, SICOM has incorporated a new, SICOM General Insurance Ltd, to transact General Insurance Business only as from 1st July All the assets and liabilities of the General Insurance Business were transferred to the new company on 1st July 2010 and the accumulated reserves were converted into share capital and the remaining as subordinated loan which is unsecured, interest free with no fixed repayments terms and will not be recalled in the foreseeable future. At 1 July ,264 3,623,685 2,466,748 6,122,697 Additions - 895, ,147 1,195,080 Disposals/maturity - - (262,118) (262,118) Transfer to current assets (30,877) (756,698) - (787,575) Interest/gain receivable adjustment (1,387) 14,684-13,297 Increase in fair value - Long term insurance funds , ,084 - Shareholders' fund ,347 53,347 At 30 June ,777,604 2,793,208 6,570,812 At 1 July ,845 3,340,414 2,500,492 6,208,751 Additions - 671, , ,829 Disposals/maturity - - (56,067) (56,067) Transfer to current assets (324,007) (416,875) - (740,882) Interest/gain receivable adjustment (11,574) 29,114-17,540 Decrease in fair value - Long term insurance funds - - (122,275) (122,275) - Shareholders' fund - - (18,199) (18,199) At 30 June ,264 3,623,685 2,466,748 6,122, (b) Foreclosed properties At 1 July 19,292 21,606 Additions 350 1,275 Disposals (4,657) (1,495) Increase/(decrease) in fair value - Long term insurance funds 351 1,033 - Shareholders' fund - (3,127) At 30 June 15,336 19,292 Foreclosed properties are stated at fair value less any impairment. The fair value of the foreclosed properties has been arrived on the basis of valuations carried during the year by Mr G Saddul, BSc, FRICS, Chartered Valuer, on the open market value basis. N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I O t h e r F i n a n c i a l A s s e t s C o n t i n u e d

36 Current Loans and Held-toreceivables maturity Total Investment in securities Rs'000 and (b) Foreclosed properties At 1 July , , ,478 Disposals/maturity (320,515) (407,417) (727,932) Transfer from non-current assets 30, , ,575 Interest/gain receivable adjustment (17,434) 9,525 (7,909) At 30 June , , ,212 At 1 July , ,382 1,001,853 Disposals maturity (359,975) (636,361) (996,336) Transfer from non-current assets 324, , ,882 Interest/gain receivable adjustment 8,239 5,840 14,079 At 30 June , , ,478 At 1 July 19,292 21,606 Additions 350 1,275 Disposals (4,657) (1,495) Increase/(decrease) in fair value - Long term insurance funds 351 1,033 - Shareholders' fund - (3,127) At 30 June 15,336 19,292 Current Loans and Held-toreceivables maturity Total Investment in securities Rs' (ii) COMPANY Loans and Held-to- Available- Non-current receivables maturity for-sale Total (a) Investment in securities At 1 July ,265 3,300,107 2,779,095 6,111,467 Additions - 728,667 58, ,443 Disposals/maturity - - (72,740) (72,740) Transfer to current assets (30,877) (591,854) - (622,731) Interest/gain receivable adjustment (1,388) 10,074-8,686 Increase in fair value - Long term insurance funds , ,423 - Shareholders' fund ,989 38,989 At 30 June ,446,994 3,063,543 6,510,537 At 1 July ,438 2,873,904 2,776,210 5,958,552 Additions - 607, , ,779 Disposals/maturity - - (29,208) (29,208) Transfer to current assets (264,800) (208,080) - (472,880) Interest/gain receivable adjustment (11,373) 27,063-15,690 Decrease in fair value - Long term insurance funds - - (72,795) (72,795) - Shareholders' fund - - (18,671) (18,671) At 30 June ,265 3,300,107 2,779,095 6,111,467 At 1 July , , ,933 Disposals/maturity (264,702) (208,081) (472,783) Transfer from non-current assets 30, , ,731 Interest/gain receivable adjustment (13,068) 19,752 6,684 At 30 June , , ,565 At 1 July , , ,027 Disposals/maturity (254,782) (247,642) (502,424) Transfer from non-current assets 264, , ,880 Interest/gain receivable adjustment 7,874 4,576 12,450 At 30 June , , ,933 and Loans and receivables comprise of Treasury Notes with interest of 6.00% % for the and 6.00% for the (2012: 5.50% % for the and 5.75% % for the ) per annum and maturity dates varying between (2012: ). Held-to-maturity investments comprise of Mauritius Government Securities, Government of Mauritius Bonds, with interest rates ranging from 6.08%-11.75% for the and the (2012: 7.00% % for the and 6.75%-11.75% for the ) per annum and maturity dates varying between (2012: ). Available-for-sale securities for comprise of listed and quoted securities of Rs 1,214,087,000 (2012: Rs 1,082,055,000) and unquoted securities Rs 1,849,456,000 (2012: Rs 1,697,040,000). Available-for-sale securities for comprise of listed and quoted securities of Rs 2,399,363,000 (2012: Rs 2,087,661,000) and unquoted securities Rs 393,845,000 (2012: Rs 379,087,000). 71 The fair value of quoted securities is based on the Stock Exchange and brokers' statement prices at close of business at reporting date. Unquoted available-for-sale securities, for which reliable fair values cannot be obtained, have been stated at cost and it is of the opinion that these investments have not been impaired. None of the financial assets are either past due or impaired. N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I O t h e r F i n a n c i a l A s s e t s

37 INVESTMENT PROPERTIES Land and Work-in building progress Total Total and At 1 July 315, ,000 40,000 Transfer from property, plant and equipment (note 6) ,662 Additions 78,536 39, , ,234 Fair value gain (note 29) 31,464-31,464 2,104 At 30 June 425,000 39, , ,000 The investment properties are held for capital appreciation and have generated no rental income for the year (2012: Nil). The direct operating expenses incurred during the year amounted to Rs 193,300 (2012: Nil). Land and building are held under freehold interest. The fair value of land and building has been arrived on the basis of valuations carried during the year by Mr G Saddul Bsc, FRICS, Chartered valuer, on the open market value basis. 12. FIXED DEPOSITS Maturing - in the second year 906, , , ,808 - in the third year 813, , , ,477 - in the fourth year 1,002, , , ,016 - in the fifth year 272, , , ,866 - after five years 220, , , ,500 3,216,598 3,102,895 1,525,717 1,461,667 Interest due 452, , , ,901 3,668,855 3,436,189 1,792,212 1,646,568 The deposits earn interest at rates varying between 5.00% to 11.60% (2012: 4.50% %) for the and 5.45% % (2012: 7.00% %) for the per annum. (a) (b) (c) (d) Gross and net investment in finance leases - within one year 63,114 45,451 - in the second to fifth years inclusive 144, ,716 - more than five years 6,568 3, , ,103 Unearned finance income (27,680) (25,887) 186, ,216 Provision for credit losses (2,232) (1,454) 184, ,762 Movement during the year:- At 1 July 124,216 71,041 Leases granted during the year 108,102 81,121 Capital repayment during the year (45,704) (27,946) At 30 June 186, ,216 Before granting lease to clients, the has an appraisal process to assess the potential client's credit quality and reliability. Upon satisfactory appraisal and submission of all necessary documents, the lease is granted. Remaining term to maturity Within 3 months 18,838 11,249 Over 3 to 12 months 32,462 23,635 Over 1 to 5 years 129,052 85,580 More than 5 years 6,262 3, , ,216 The considers that the carrying amount of the finance lease approximates their fair value. Credit concentration of risk by industry sectors FINANCE LEASE RECEIVABLES The enters into finance lease arrangements for inter-alia motor vehicles and equipment for an average term of 3 to 7 years. Finance leases are secured by the assets under lease. Net investment in finance leases Analysed as:- - Non-current finance lease receivables 133,696 34,538 - Current finance lease receivables 50,686 88, , ,762 Total credit facilities extended by the classified by industry sectors: Agriculture and Fishing Manufacturing Transport 17,290 14,334 Construction 5,040 7,451 Personal 140,954 91,536 Financial and business services 6,283 3,032 Global Business Licence Holders 1,683 1,944 Others 13,712 4, , ,216 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I F i n a n c e L e a s e R e c e i v a b l e s C o n t i n u e d

38 (e) Provision for credit losses At 1 July 1, Movement during the year Portfolio provision 1,859 1,237 Specific provision - Capital At 30 June 2,232 1,454 (i) The above portfolio provision is estimated at 1% of the total outstanding lease amount net of specific provision as at 30 June The above provision for credit losses include impaired finance lease, which are past due at the end of the reporting date. (ii) (f) The specific provision is made in respect of non-performing leases. Interest rate profile The interest rate inherent in the finance leases is fixed at the contract date for the entire lease term. The average effective interest rate contracted is 9.83% (2012: 9.83%) per annum with interest ranging from 7.0% to 13.0% (2012: 8.5% to 13.0%). Unguaranteed residual values of assets leased under finance leases at reporting date are estimated at Rs 3,038,034 (2012: Rs 2,101,474). The following table provides information regarding the carrying value of mortage and other loans that have been impaired and the ageing of mortage and other loans that are past due but not impaired. Neither past Carrying due nor Past due but not impaired amount at impaired 1m -3m 3m - 1yr >1Yr Impaired year end 30 June 2013 Housing, Commercial & Multipurpose 1,099,142 5,716 6,602 23,978 5,036 1,140,474 Organisations 87, ,994 Others 190,819 3,677 4,705 8, ,665 1,377,955 9,393 11,307 32,442 5,036 1,436, June 2012 Housing, Commercial & Multipurpose 968,826 6,180 6,726 24,805 5,085 1,011,622 Organisations 89, ,431 Others 198,833 3,948 3,581 10, ,553 1,257,090 10,128 10,307 34,996 5,085 1,317, MORTGAGE AND OTHER LOANS Housing, Commercial & Multipurpose 1,145,510 1,016,707 1,145,510 1,016,707 Provision for impairment losses (5,036) (5,085) (5,036) (5,085) 1,140,474 1,011,622 1,140,474 1,011,622 Organisations 87,994 89,431 77,994 79,431 Others 207, , , ,103 1,436,133 1,317,606 1,417,123 1,307,156 Analysed as:- Current 87, ,422 84, ,422 Non-current 1,349,115 1,154,184 1,332,189 1,143,734 1,436,133 1,317,606 1,417,123 1,307, June 2013 Housing, Commercial & Multipurpose 1,099,142 5,716 6,602 23,978 5,036 1,140,474 Organisations 77, ,994 Others 181,809 3,677 4,705 8, ,655 1,358,945 9,393 11,307 32,442 5,036 1,417, June 2012 Housing, Commercial & Multipurpose 968,826 6,180 6,726 24,805 5,085 1,011,622 Organisations 79, ,431 Others 198,383 3,948 3,581 10, ,103 1,246,640 10,128 10,307 34,996 5,085 1,307,156 The loans are secured and bear interest at rates varying between 3%-14% (2012: 3% - 14%) per annum and have repayment terms varying between one year to thirty years. 75 Reconciliation of changes in the impairment account resulting from credit losses during the year is as follows:- and At 1 July 7,968 10,709 Movement during the year 128 (2,741) At 30 June 8,096 7,968 The above loans also include unsecured loans of Rs 76,500,000 for the (2012: Rs 76,500,000) and Rs 66,500,000 for the (2012: Rs 66,500,000) which bear interest rates of 10% per annum. Undrawn commitments in respect of mortgage loans for the year under review amounts to Rs 75.7 million (2012: Rs million). Analysed as:- Capital 5,036 5,085 Interest (Note 16) 3,060 2,883 8,096 7,968 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I M o r t g a g e a n d O t h e r L o a n s

39 15. RETIREMENT BENEFIT ASSETS (a) Defined Benefit Plan The Pension Plan is a final salary defined benefit plan for employees. The assets of the plan are invested in funds managed by State Insurance of Mauritius Ltd. Amounts recognised in the statements of financial position Present value of funded obligations 488, , , ,499 Fair value of plan assets (368,690) (318,246) (280,402) (245,739) 120,228 68, ,300 62,760 Unrecognised actuarial losses (122,025) (78,594) (113,484) (76,074) Asset in the statement of financial position (1,797) (9,984) (5,184) (13,314) The major categories of plan assets, and the expected rate of return at the reporting date for each category, is as follows: and % % Distribution of plan assets at end of year Loans, Government securities and cash 64.0% 63.0% Local equities & debenture stocks 22.0% 23.0% Overseas bonds and equities 13.0% 13.0% Property 1.0% 1.0% Total 100.0% 100.0% The overall expected rate of return on plan assets is determined by reference to market yields on bonds and expected yields differences on other types of assets held based on historical return trends. The actual return on plan assets for the was Rs 31,334,000 (2012: Rs 4,090,000) and for the was Rs 40,690,000 (2012: Rs 5,179,000). 76 Reconciliation of the present value of defined benefit obligation Present value of obligation at start of year 386, , , ,700 Current service cost 13,471 11,248 10,520 9,128 Employee contribution 8,208 8,295 6,452 6,550 Interest cost 38,094 35,033 30,192 28,160 Benefits paid (12,110) (7,539) (13,481) (14,546) Actuarial losses/(gains) 54,399 (14,193) 46,520 (9,493) Present value of obligation at end of year 488, , , ,499 The breakdown of the assets above corresponds to the actual allocation of the monies managed by State Insurance of Mauritius Ltd. The history of experience adjustments is as follows: Rs'000 Present value of defined benefit obligation (488,918) (386,856) (354,012) (249,015) (189,277) Fair value of plan assets 368, , , , ,423 (Deficit)/surplus (120,228) (68,610) (54,811) 3,705 29, Reconciliation of fair value of plan assets Fair value of plan assets at start of year 318, , , ,448 Expected return on plan assets 32,300 30,597 24,736 24,052 Employer contributions 13,656 13,110 10,358 10,197 Employee contributions 8,208 8,295 6,452 6,550 Benefits paid (12,110) (7,539) (13,481) (14,546) Actuarial gains/(losses) 8,390 (25,418) 6,598 (19,962) Fair value of plan assets at end of year 368, , , ,739 Experience losses/(gain) on plan liabilities 54,399 (14,193) 40,403 (69) (10,919) Experience gains/(losses) on plan assets 8,390 (25,418) (709) 5,568 (39,133) Rs'000 Present value of defined benefit obligation (388,702) (308,499) (288,700) (249,015) (189,277) Fair value of plan assets 280, , , , ,423 (Deficit)/surplus (108,300) (62,760) (49,252) 3,705 29,146 Experience gain/(losses) on plan liabilities 46,520 (9,493) (38,661) (69) (10,919) Experience gains/(losses) on plan assets 6,598 (19,962) (757) 5,568 (39,133) Expected contributions to post-employment benefit plans for the year ended June 30, 2014 are Rs 14,394,523 for the and Rs 11,018,502 for the. N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I R e t i r e m e n t B e n e f i t A s s e t s C o n t i n u e d

40 78 (b) Amounts recognised in the statements of profit or loss: Current service cost 13,471 11,248 10,520 9,128 Interest cost 38,094 35,033 30,192 28,160 Expected return on plan assets (32,300) (30,597) (24,736) (24,052) Actuarial losses recognised 2,578 2,215 2,512 2,,161 21,843 17,899 18,488 15,397 Allocation of support costs Transfer to Life Assurance Fund 6,091 6,118 6,091 6,118 Transfer to Sicom General Insurance Ltd 4,425 3,619 1,523 1,330 Shareholders Fund (note 31(a)) 11,327 8,162 10,874 7,949 21,843 17,899 18,488 15,397 Movements in the statement of financial position: At 1 July (9,984) (14,773) (13,314) (18,514) Total expenses as above 21,843 17,899 18,488 15,397 Contributions paid (13,656) (13,110) (10,358) (10,197) At 30 June (1,797) (9,984) (5,184) (13,314) and % % Principal actuarial assumptions used: Discount rate 8.00% 10.00% Expected rate of return on plan assets 8.00% 10.00% Future salary increases 6.00% 8.00% Future pension increases 4.00% 4.00% Defined contribution plan National pension scheme contributions charged for employees on a contractual basis TRADE AND OTHER RECEIVABLES Premium 157, , Provision for impairment losses (23,133) (23,023) , , Other premium 2,161 6,616 2,161 6,616 Amounts due from reinsurers 134,279 73,148 70,044 46,895 Other receivables and prepayments 369, , , ,309 Provision for impairment losses (Note 14) (3,060) (2,883) (3,060) (2,883) 366, , , , , , , ,937 As of June 30, 2013, premiums of Rs 23,133,000 (2012: Rs. 23,023,000) were impaired for the. The amount of the provision was Rs 23,133,000 as of June 30, 2013 (2012: Rs.23,023,000). The individually impaired receivables mainly relate to policyholders who are in unexpectedly difficult economic situations. It was assessed that a portion of the premiums is expected to be recovered. The ageing analysis of these premiums is as follows: Over 1 year 23,133 23,023 Reconciliation of changes in the impairment account resulting from unpaid premium during the year is as follows: Balance at beginning 23,023 22,931 Movement during the year Balance at end 23,133 23,023 Analysis of the age of premiums that are past due but not impaired > 2 months < 3 months 8,493 4,310 > 3 months < 6 months 15,327 8,207 > 6 months < 1 year 3,126 3,716 > 1 year ,931 16, The credit period on premium receivable is determined with regards to the status of clients and amount of premium involved monthly. Allowance for doubtful debts is normally determined by the as premium due for more than one year. No interest is charged on the premium. Premiums disclosed above include amounts (see above for aged analysis) that are past due at the reporting date for which the has not recognised an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still considered recoverable. N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I T r a d e a n d O t h e r R e c e i v a b l e s C o n t i n u e d

41 Before accepting any new customer, the technical department assesses the credit quality of the customer and defines the terms and credit limits accordingly. In determining the recoverability of a trade receivable, the considers any change in the credit quality of the trade receivable from the date the credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, it is believed that there is no further credit provision required in excess of the allowance for doubtful debts. The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the to the counterparty. and Other premium < 1 year 1,503 6,260 > 1 year ,161 6, INSURANCE LIABILITIES AND REINSURANCE ASSETS (a) Short term insurance Claims reported 481, ,124 Claims incurred but not reported (IBNR) 23,889 23,001 Outstanding claims 505, ,125 Unearned premiums 266, ,268 Total gross insurance liabilities 772, ,393 Recoverable from reinsurers Claims reported 377, ,256 Unearned premiums 139, ,017 Total reinsurers' share of insurance liabilities 516, ,273 Net Claims reported 104,541 76,868 Claims incurred but not reported (IBNR) 23,889 23, ,430 99,869 Unearned premiums 127, ,251 Total net insurance liabilities 255, , SHORT-TERM DEPOSITS Short-term deposits comprise of fixed deposits and overseas call deposits with banks with interest rates ranging from 0.00% % (2012: 0.10% %) per annum. The fixed deposits have maturity dates varying from The foreign currency deposits are held in a basket of major currencies traded. (b) The movement in insurance liabilities and reinsurance assets is as follows: Gross Reinsurance Net Gross Reinsurance Net At 1 July Notified claims 298,124 (221,256) 76, ,980 (188,752) 91,228 Increase/(decrease) in liabilities 464,619 (306,619) 158, ,208 (130,810) 161,398 Cash paid for claims settled in the year (note 28) (280,956) 150,629 (130,327) (274,064) 98,306 (175,758) 481,787 (377,246) 104, ,124 (221,256) 76,868 Claims incurred but not reported (IBNR) 23,889-23,889 23,001-23,001 At 30 June 505,676 (377,246) 128, ,125 (221,256) 99, Movement in claims outstanding and IBNR 28,561 (27,763) (c) The movement in unearned premiums is as follows: Gross Reinsurance Net Gross Reinsurance Net At 1 July 242,268 (118,017) 124, ,605 (159,970) 123,635 Increase/(decrease) during the year 24,357 (21,275) 3,082 (41,337) 41, At 30 June 266,625 (139,292) 127, ,268 (118,017) 124,251 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I I n s u r a n c e L i a b i l i t i e s a n d R e i n s u r a n c e A s s e t s

42 BORROWINGS 4.90% % (2012: 9.00%) unsecured loan Repayable by instalments - within one year 12,760 9,300 12,760 9,300 - in the second year 8,210 8,150 8,210 8,150 - in the third year 6,410 3,600 6,410 3,600 - in the fourth year 4,610 1,800 4,610 1,800 - in the fifth year 3,310-3,310 - Total 35,300 22,850 35,300 22, % (2012: 10.25% %) unsecured loan (Subsidiary) Repayable by instalments - within one year ,153 26,731 - in the second year ,357 30,073 - in the third year ,861 33,834 - in the fourth year ,695 38,066 - in the fifth year ,887 42,828 - after five years , ,271 Tota , ,803 Analysed as follows: Current 12,760 9,300 46,913 36,031 Non-current 22,540 13, , ,622 35,300 22, , ,653 The carrying amounts of the 's and the 's borrowings are denominated in Mauritian rupee and are not materially different from the fair value. 21. TAXATION Income Tax (a) (b) (i) (ii) Income tax is calculated at the rate of 15% ( %) on the profit for the year as adjusted for income tax purposes. Statement of financial position Current tax liabilities - General Fund 19,360 27,020 13,474 11,504 - Life Fund 7,888 6,337 7,888 6,337 - Insured Pension Fund (113) 40 (113) 40 - Personal Pension Plan (244) 71 (244) 71 26,891 33,468 21,005 17,952 Statement of profit or loss General Fund - Current tax expense 63,469 63,716 43,133 39,599 - (Over)/under provision in respect of previous year (106) 815 (54) 1,419 63,363 64,531 43,079 41,018 - Deferred tax charge/(credit) (note 26(b)) 2, ,019 (836) 65,435 65,347 46,098 40,182 Life Fund - Current tax expense 29,813 29,243 29,813 29,243 - Movement in deferred tax asset Over provision in respect of previous year (10) (689) (10) (689) 29,995 28,698 29,803 28, TRADE AND OTHER PAYABLES Rs'000 Rs Interest payable on deposits 139, , Amount due to reinsurers 321, , ,910 73,969 Other payables and accruals 168, , , , , , , ,712 Analysed as follows: Current 586, , , ,712 Non-current 42,323 65, , , , ,712 The above amounts are interest free and unsecured. The carrying amount of accounts of trade and other payables approximates their fair value. (iii) (iv) Insured Pension Fund - Current tax expense (84) 40 (84) 40 - Over provision in respect of previous year - (3) - (3) (84) 37 (84) 37 Personal Pension Plan - Current tax expense (185) 71 (185) 71 - Under/(over) provision in respect of previous year 8 (7) 8 (7) (177) 64 (177) 64 Total Long Term Insurance Funds (note 33) 29,734 28,799 29,542 28,655 Tax expense At 1 July 33,468 34,098 17,952 18,454 Tax charge for the year 92,905 93,203 72,621 69,675 Tax paid during the year (99,482) (93,833) (69,568) (70,177) At 30 June 26,891 33,468 21,005 17,952 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I T a x a t i o n C o n t i n u e d

43 84 (c) Tax Reconciliation Profit before taxation 559, , , ,924 Applicable Tax Rate(%) Tax effect of: - Exempt income and other relief (6.44) (3.91) (6.89) (4.68) - Expenses not deductible for tax purposes Expenses entitled to 200% deduction (0.03) (0.04) (0.04) (0.06) - Investment tax credit (1.12) (1.20) Movement in unexpired risks Assets not eligible for capital allowances (Over)/provision in previous year (0.03) 0.17 (0.01) TDS deduction Support costs to SICOM General Insurance Ltd (0.03) - (0.03) Life Fund's tax liability Insured Pension Fund (0.02) 0.01 (0.02) Personal Pension Plan (0.03) 0.01 (0.04) Revaluation investment property Foreign tax credit Exchange difference Effective Tax Rate DEPOSITS Time deposits with remaining terms to maturity : - Within one year 1,394,064 1,287,700 - In the second to fifth years inclusive 1,829,712 1,910,693 3,223,776 3,198,393 The deposits bear interest ranging from 2.90% to 11.75% (2012 : 2.90% to 14.50%) per annum. 23. STATED CAPITAL and Share capital 25,000 25,000 Share premium 45,000 45,000 70,000 70,000 The share capital comprises of: - Number Share Share 250,000 ordinary shares of Rs 100 each of shares capital premium 000 Balance at 30 June 2012 and 30 June ,000 45,000 The total authorised number of ordinary share is 300,000 (2012: 300,000) with a par value of Rs 100 each. All issued shares are fully paid. The has one class of ordinary share capital of Rs 100 each which carry a right to vote and a right to dividend. 24. RESERVES (a) (b) Retained earnings 3,815,125 3,408,208 3,111,385 2,746,908 Properties revaluation reserve 123, , , ,394 Investments revaluation reserve 130,067 87, , ,369 Translation reserve 22,190 20, Other reserves 31,757 26, ,122,533 3,666,387 3,424,529 3,029,671 RETAINED EARNINGS Balance at 1 July 3,408,208 3,041,364 2,746,908 2,457,416 Less: adjustment - (142) - - Profit attributable to equity holders of the parent 493, , , ,742 Payments of dividends (81,435) (36,250) (81,435) (36,250) Transfer to other reserves (4,926) (5,421) - - Balance at 30 June 3,815,125 3,408,208 3,111,385 2,746,908 PROPERTIES REVALUATION RESERVE The properties revaluation reserve arises on the revaluation of buildings (Note 6). and Balance at 1 July 123, ,526 Movement during the year - 21,399 Deferred tax (note 26(b)) - (531) Balance at 30 June 123, , N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I R e s e r v e s C o n t i n u e d

44 (c) INVESTMENTS REVALUATION RESERVE Balance at 1 July 87, , , ,016 Net gains/(losses) arising on revaluation of available-for-sale financial assets and foreclosed properties 53,347 (21,326) 38,989 (21,798) Transfer on disposal of available-for-sale financial assets (10,388) (3,701) (8,608) (1,849) Balance at 30 June 130,067 87, , ,369 The investment revaluation reserve represents accumulated gains and losses arising on the revaluation of available-for-sale financial assets that have been recognised in other comprehensive income, net of amounts reclassified to profit or loss when those assets have been disposed of. 26. DEFERRED TAXATION (a) Deferred income taxes are calculated on all temporary differences under the liability method at the rate of 15% (2012: 15%). There is a legally enforceable right to offset current tax assets against current tax liabilities and deferred income tax assets and liabilities when the deferred income taxes relate to the same fiscal authority on the same entity. The following amounts are shown in the statements of financial position. Deferred tax assets 1,881 1, Deferred tax liabilities (16,017) (13,392) 14,281 (11,262) (14,136) (11,872) 14,281 (11,262) 86 (d) (e) TRANSLATION RESERVE Balance at 1 July 20,846 (11,524) Movement during the year 1,344 32,370 Balance at 30 June 22,190 20,846 Exchange differences relating to the translation of the net assets of the 's foreign operations from their functional currencies (USD) to the 's presentation currency (MUR) are recognised directly in other comprehensive income and accumulated in the foreign translation reserve. OTHER RESERVE Other reserve consists of a transfer from the net profit after tax of SICOM Financials Services Ltd as per Section 21 of the Banking Act LONG TERM INSURANCE FUNDS Long Term Insurance Funds (Note 33) 8,339,023 7,828,909 8,339,023 7,828,909 (b) At the end of the reporting period, the had unused tax losses of Rs 44,793,667 (2012: Rs 50,666,667) available for offset against future profit. A deferred tax asset has been recognised in respect of such losses. The tax losses expire on a rolling basis over 5 years. The movement on the deferred income tax account is as follows: At 1 July 11,872 10,381 11,262 11,567 Charged/(credited) to profit or loss 2, ,019 (836) Charged to Life Fund Charged to other comprehensive income ,136 11,872 14,281 11,262 (c) The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same fiscal authority on the same entity, is as follows: (i) Deferred tax assets Retirement benefit asset Tax losses Total Rs'000 At 1 July ,884 1,884 Credited to profit or loss - (364) (364) At 30 June ,520 1,520 Credited/(charged) to profit or loss 537 (176) 361 At 30 June ,344 1, N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I D e f e r r e d T a x a t i o n C o n t i n u e d

45 88 (ii) Deferred tax liabilities Accelerated Retirement Revaluation of tax benefit Revaluation Impairment investment depreciation assets of building of assets property Total At 1 July ,197 3,389 2, ,265 Charged/(credited) to profit or loss 1,612 (1,064) ,127 At 30 June ,809 2,325 3, ,392 (Credited)/charged to profit or loss (504) (1,787) - (119) 5,035 2,625 At 30 June , ,210 (71) 5,035 16,017 Accelerated Retirement Revaluation of tax benefit Revaluation investment depreciation assets of building property Total Rs'000 At 1 July ,110 2,778 2,679-11,567 Credited profit or loss (56) (780) - - (836) Charged to other comprehensive income At 30 June ,054 1,998 3,210-11,262 Credited/(charged) to profit or loss (796) (1,220) - 5,035 3,019 At 30 June , ,210 5,035 14, GROSS REVENUE Short Term Business Gross insurance premiums 632, , Less: Unearned premium (24,357) 41, , , Gross commission income 16,741 17, Management fees (Note 29) 346, , , ,293 Investment income 428, , , ,993 1,399,550 1,380, , ,286 Long Term Business Gross insurance premiums/contributions 1,607,909 1,632,952 1,607,909 1,632,952 Gross commission income 31,385 16,522 31,385 16,522 Investment income 468, , , ,006 2,107,850 2,076,693 2,095,741 2,068, GENERAL BUSINESS REVENUE ACCOUNT Gross insurance premiums 632, ,598 Premium ceded to reinsurers (331,152) (270,604) Movement in unearned premium (note 18(c)) (3,082) (616) Net earned premiums 298, ,378 Gross claims paid (note 18(b)) 280, ,064 Claims settled from reinsurers (note 18(b)) (150,629) (98,306) Movement in outstanding claims (note 18(b)) 28,561 (27,763) Net claims incurred 158, ,995 Commissions receivable from reinsurers 48,125 40,971 Commissions paid to agents and brokerage fees (31,384) (23,208) 16,741 17,763 Underwriting surplus 156, , INVESTMENT AND OTHER INCOME Management fees 346, , , ,293 Gain on revaluation of investment properties (note 11) 31,464 2,104 31,464 2,104 Gain on sale of investments 10,549 6,005 7,544 3,500 Investment income 208, , , ,993 Mortgage and other loans 39,295 44,922 37,846 43,952 Loans and receivables 3,647 20,726 2,177 6,742 Held-to-maturity 112, ,033 66,976 61,842 Available-for-sale 16,449 12,387 15,098 11,777 Deposits 252, ,086 34,811 32,059 Interest payable to depositors (219,840) (258,642) - - Rental income 4,764 6,589 12,977 14,803 Dividend from subsidiaries ,478 75,818 Exchange gain 3,220 5,065 2, Other income 70,908 30,567 46,015 11, , , , , SHARE OF SURPLUS TRANSFERRED FROM LIFE ASSURANCE FUND 89 Total Gross Revenue 3,507,400 3,457,561 2,695,651 2,585,766 Following an actuarial valuation of the Life Assurance Fund carried out by AON Hewitt as at 30 June 2013, a surplus of Rs 15,985,000 ( 2012: Rs 17,665,000) has been transferred to the Shareholders Fund during the year. N o t e s T o T h e F i n a n c i a l S t a t e m e n t s C o n t i n u e d

46 ADMINISTRATIVE AND OTHER EXPENSES Employee benefit expense (note (a) below) 187, , ,340 92,915 Depreciation 18,466 13,581 14,188 11,074 Loss on disposal of property, plant and equipment 905 2, Amortisation 3,704 3,868 1,993 3,225 Less : Support costs (note (b) below) - - (5,034) (5,342) 23,075 20,441 11,721 9,106 Others 71,003 56,145 34,104 23, , , , ,773 (a) Employee benefit expense Wages and salaries, including termination benefits 175, , ,973 84,519 Social security costs Pension cost defined benefit plan (note 15(a)) 11,327 8,162 10,874 7, , , ,340 92,915 (b) These are services provided by State Insurance of Mauritius Ltd and allocated to SICOM General Insurance Ltd. 32. FINANCE COSTS Interest payable on loans from subsidiary ,924 58,519 Interest payable on other loans 2,387 2,484 2,387 2,484 2,387 2,484 51,311 61, LIFE ASSURANCE FUND Non- Non- Linked Linked Total Linked Linked Total GROUP INCOME Gross premium 1,514,917 92,992 1,607,909 1,554,680 78,272 1,632,952 Less: Reinsurances (150,029) (3,716) (153,745) (99,260) (1,908) (101,168) Net premium 1,364,888 89,276 1,454,164 1,455,420 76,364 1,531,784 Commission receivable for reinsurance 31,385-31,385 16,522-16,522 Investment and other income 432,076 36, , ,779 31, ,550 Gain on sale of investments 31, ,982 29, ,209 1,860, ,872 1,986,087 1,897, ,870 2,006,065 EXPENDITURE Bonus 455, , , ,510 Commission payable to agents and brokers 86,695 4,330 91,025 83,704 3,771 87,475 Cash benefits 15,730 1,669 17,399 14,715 2,698 17,413 Family income benefits Maturity claims 582,114 4, , ,841 1, ,554 Medical expenses 2, ,740 1, ,308 Provision for loan losses (780) (3) (783) Surrenders 38,771 13,951 52,722 41,480 8,398 49,878 Survival benefits 284, , , ,066 Other costs 5,520 3,684 9,204 4,477 3,194 7,671 Gross death and disablement claims 73,157 1,273 74,430 74, ,378 Claims recovered from reinsurers (26,555) - (26,555) (28,277) - (28,277) Net claims 46,602 1,273 47,875 46, ,101 Management and other expenses 120,369 3, , ,930 2, ,428 1,637,255 32,991 1,670,246 1,521,825 23,090 1,544,915 SURPLUS BEFORE TAXATION 222,960 92, , ,370 85, ,150 TAXATION Note 21 (27,652) (2,082) (29,734) (26,606) (2,193) (28,799) SURPLUS AFTER TAXATION 195,308 90, , ,764 83, ,351 FUND AT 1 JULY 7,330, ,365 7,828,909 7,083, ,902 7,501,377 INCREASE/(DECREASE) IN FAIR VALUE OF AVAILABLE-FOR-SALE SECURITIES 234,316 2, ,435 (117,992) (3,248) (121,240) TRANSLATION RESERVE 3, ,557 33, ,086 SHARE OF SURPLUS TO SHAREHOLDERS (15,985) - (15,985) (17,665) - (17,665) TRANSFER TO LINKED FUND (1,470) 1, FUND AT 30 JUNE 7,746, ,766 8,339,023 7,330, ,365 7,828, Linked long term insurance business is the business of effecting and carrying out contracts of insurance under which the benefits are wholly or partly to be determined by reference to the value of, or the income from, property of any description, or by reference to fluctuations in, or in an index of, the value of property of any description. Non linked business is the business of undertaking liability under contracts upon human life or contracts to pay annuities on human life and also includes permanent health insurance business. N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I L i f e A s s u r a n c e F u n d C o n t i n u e d

47 92 Non- Non- Linked Linked Total Linked Linked Total COMPANY INCOME Gross premium 1,514,917 92,992 1,607,909 1,554,680 78,272 1,632,952 Less: Reinsurances (150,029) (3,716) (153,745) (99,260) (1,908) (101,168) Net premium 1,364,888 89,276 1,454,164 1,455,420 76,364 1,531,784 Commission 31,385-31,385 16,522-16,522 Investment and other income 419,813 36, , ,856 31, ,594 Gain on sale of investments 10, ,909 11, ,843 1,826, ,751 1,952,707 1,869, ,770 1,978,743 EXPENDITURE Bonus 455, , , ,510 Commission 86,695 4,330 91,025 83,704 3,771 87,475 Cash benefits 15,730 1,669 17,399 14,715 2,698 17,413 Family income benefits Maturity claims 582,114 4, , ,841 1, ,554 Medical expenses 2, ,740 1, ,308 Provision for loan losses (780) (3) (783) Surrenders 38,771 13,951 52,722 41,480 8,398 49,878 Survival Benefits 284, , , ,066 Other costs 5,520 3,684 9,204 4,477 3,194 7,671 Gross death and disablement claims 73,157 1,273 74,430 74, ,378 Claims recovered from reinsurers (26,555) - (26,555) (28,277) - (28,277) Net claims 46,602 1,273 47,875 46, ,101 Management and other expenses 107,012 3, , ,187 2, ,642 1,623,898 32,942 1,656,840 1,510,082 23,047 1,533,129 SURPLUS BEFORE TAXATION 203,058 92, , ,891 85, ,614 TAXATION Note 21 (27,461) (2,081) (29,542) (26,463) (2,192) (28,655) SURPLUS AFTER TAXATION 175,597 90, , ,428 83, ,959 FUND AT 1 JULY 7,330, ,365 7,828,909 7,083, ,902 7,501,377 SECURITIES 257,571 2, ,774 (68,694) (3,068) (71,762) SHARE OF SURPLUS TO SHAREHOLDERS (15,985) - (15,985) (17,665) - (17,665) TRANSFER TO LINKED FUND (1,470) 1, FUND AT 30 JUNE 7,746, ,766 8,339,023 7,330, ,365 7,828,909 Linked long term insurance business is the business of effecting and carrying out contracts of insurance under which the benefits are wholly or partly to be determined of by reference to the value of, or the income from, property of any description, or by reference to fluctuations in, or in an index of, the value of property of any description. Non linked business is the business of undertaking liability under contracts upon human life or contracts to pay annuities on human life and also includes permanent health insurance business. The assets of the Life Assurance Fund are analysed as follows: NON-CURRENT ASSETS Statutory deposits 9,700 14,055 Other financial assets 5,286,695 4,938,672 Fixed deposits 1,464,789 1,311,027 Mortgage and other loans 840, ,808 7,601,460 6,953,562 CURRENT ASSETS Other financial assets 578, ,201 Mortgage and other loans 66,368 73,185 Trade and other receivables 197, ,903 Short-term deposits 315, ,632 Bank and cash balances 34, ,101 1,192,455 1,053,022 CURRENT LIABILITIES Trade and other payables 286, ,227 Taxation 7,531 6,448 Bank overdraft 160, , ,675 NET CURRENT ASSETS 737, ,347 8,339,023 7,828,909 TECHNICAL PROVISIONS Long term insurance funds 8,339,023 7,828, MANAGED FUNDS The & accounts exclude the net assets of the Managed Pension Fund amounting to Rs 22.2 billion (June Rs 18.9 billion) and Managed Medical amounting to Rs 2.5 million (June Rs 2.6 million) as these assets backing these funds do not belong to the. 35. DIVIDEND PAID Final ordinary dividend 81,435 36,250 The Board of Directors of the has, by resolution dated 4 September 2012, recommended and authorised payment of a dividend of Rs per share (2012: Rs per share). 93 N o t e s T o T h e F i n a n c i a l S t a t e m e n t s C o n t i n u e d

48 COMMITMENTS (a) (i) (b) Capital Commitments Capital expenditure contracted for at reporting date, but not yet provided for is as follows: Property, plant and equipment 7,164 16,499 7,142 15,500 Future finance leases 33, Investment properties (note (i)) 588, , ,896 16, ,805 15,500 On 9 September 2012, the signed a notarial deed for the purchase of a building under leasehold land in its state of future completion ("Vente en état futur d'achèvement" (VEFA)) for an amount of Rs 591,620,860 (excluding VAT). It is expected that the building will be completed and delivered by September Operating lease commitments and Minimum lease payments under operating lease recognised as an expense in the year At reporting date, the and have outstanding commitments under non-cancellable operating leases, which fall due as follows: and - Within 1 year In the second to fifth years inclusive 1,800 2,700 2,700 3,600 Operating lease payments represent rentals payable by the for its leasehold land (lease terms of ten years with fixed rentals). The operating lease contract contains market renewal clauses in the event that the exercises its option to renew. The does not have an option to purchase the leased asset at the expiry of the lease period. 37. RELATED PARTY TRANSACTIONS (a) (b) Transactions with related parties (i) Shareholders (a) Sales of services 44,695 53,328 42,308 47,077 (b) Deposits renewed/taken 316, , , ,000 (c) Matured securities 228, ,690-6,690 (d) Interest/dividend receivable 52,049 36,958 43,444 26,939 (ii) Subsidiary (a) Loans refunded to fellow subsidiary ,934 23,761 (b) Interest paid ,923 58,519 (c) Sales of services ,877 72,217 (d) Dividend receivable from Subsidiaries ,478 75,818 (e) Receivables from SICOM Unit trusts 4,719 3,323 1, (f) Premium payable to fellow subsidiary - - 2,811 2,287 (iii) Key management personnel (including directors) (a) Loans disbursed 18,118 7,526 16,668 7,526 (b) Loans refunded 11,918 9,809 10,723 8,047 (c) Interest receivable 2,091 1,895 1,874 1,592 (d) Premium receivable 14,918 7,109 12,628 5,674 (e) Compensation: -Salaries and other short term benefits 77,668 71,416 65,362 59,468 -Post-employment benefits 6,852 5,658 6,332 5,273 Outstanding balances with related parties (i) Shareholders (a) Deposits 266, , , ,400 (b) Bank balances (98,362) 314,645 (137,201) 185,217 (c) Interest/dividend due 23,744 31,695 23,297 28,262 (d) Premium due The deposits are for a duration of 1-6 months and with rate of interest ranging from 5.70% to 8.75% per annum. Bank balances are in respect of current and call deposits with rate of interest 1% to 3.25% per annum. (ii) Subsidiary (a) Loans from fellow subsidiary , ,803 (b) Subordinated loan to fellow subsidiary , ,625 (c) Amount due from fellow subsidiaries - - 8,027 8,305 (d) Dividend due from fellow subsidiaries ,478 75,670 (e) Equity in SICOM Unit trusts 79,356 73,120 53,615 49, The unsecured loans bear interest at rates in the range of 9% with monthly capital repayments. N o t e s T o T h e F i n a n c i a l S t a t e m e n t s I R e l a t e d P a r t y T r a n s a c t i o n s C o n t i n u e d

49 Annual Report 2013 Statutory Disclosures Year Ended 30 June 2013 (pursuant to Section 221 of the Companies Act 2001) (iii) Key management personnel (including Directors) (a) Loans 39,528 35,032 35,658 30,488 (b) Premium due Principal Activities The is mainly engaged in long term insurance business and pensions whilst its subsidiaries carry out general insurance, depository, investment and management activities. Directors The Directors of State Insurance of Mauritius Ltd and its subsidiaries as at 30th June 2013 are as follows: The loans to key management personnel (including Directors) are secured by way of a fixed charge or a mortgage on an immovable property with rate of interest ranging from 3% to 12%. State Insurance of Mauritius Ltd Lobine K (Chairman) Appadoo C Bhoojedhur-Obeegadoo K G (Mrs) Bissessur H Dhaliah-Utchanah B D (Mrs) Alternate Director Gopee G Mallam-Hasham M I (Appointed on 15 October 2012) Purryag D Sewpaul A Yip Wang Wing Y S SICOM Financial Services Ltd Gujadhur S K (Chairman) Bhoojedhur-Obeegadoo K G (Mrs) Chellapermal R Dabee D K Gopee G (resigned on 06 November 2012) Lobine K Ramdewar N (Mrs) SICOM General Insurance Ltd SICOM Registry & Secretarial Services Ltd 96 Lobine K (Chairman) Lobine K (Chairman) 97 Appadoo C Bhoojedhur-Obeegadoo K G (Mrs) Bissessur H Dhaliah-Utchanah B D (Mrs) Alternate Director Gopee G Mallam-Hasham M I (Appointed on 15 October 2012) Purryag D Sewpaul A Yip Wang Wing Y S Bhoojedhur-Obeegadoo K G (Mrs) Ramdewar N (Mrs) SICOM Global Fund Ltd SICOM Management Ltd Lobine K (Chairman) Lobine K (Chairman) Bhoojedhur-Obeegadoo K G (Mrs) Gopee G Ramdewar N (Mrs) Bhoojedhur-Obeegadoo K G (Mrs) Gopee G Ramdewar N (Mrs) S t a t u t o r y D i s c l o s u r e s C o n t i n u e d

50 Statutory Disclosures Year Ended 30 June 2013 (pursuant to Section 221 of the Companies Act 2001) Directors Service Contracts One of the Executive Directors has a service contract with the without expiry date. The other Executive Director has a service contract expiring in March Directors Emoluments The remuneration and benefits of Directors are set out in the table below: The Subsidiaries Full-Time 17,575 14, ,043 Part-Time 3,241 2,660 3,062 2,345 Audit Fees The fees paid to the auditors, for audit and other services were: The Subsidiaries Audit fees paid to: - BDO & Co 771-1, Other firms ,162 Fees paid for other services: - BDO & Co Other firms Donations The Subsidiaries Donations For and on behalf of the Board of Directors Chairman Director Date: 20 September 2013

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