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Annual Report 2010
General Insurance . Life Insurance . Medical Insurance
Am
ana Takafu
l PLC A
nn
ual R
epo
rt 2010
Amana Takaful PLC (PQ 23)
98, Bauddhaloka Mawatha, Colombo 04,Sri Lanka.
www.takaful.lk
THE RIGHT WAYAt Amana Takaful, we believe there are many ways in which a company may grow. We know that we have grown in the RIGHT way. Redefining the way insurance is created and delivered to our customers, we ensure that the many fortunate can help the few unfortunate, while providing excellent services in insurance at the same time.
We know that the success of our business is not just about profitability and size. And we are proud that Amana Takaful stands for all that is valuable yet honorable in the insurance industry today.
Growing our business and getting things done, the Amana way. Because we know it’s the right way.
Financial Highlights 1
Chairman’s Statement 4
Chief Executive Officer‘s Review 6
Board of Directors 8
Management Team 11
Management Review and Analysis 13
Sustainability Report 20
Product Portfolio 26
Corporate Governance 28
Risk Management Commitee Report 32
Board Audit and Compliance
Committee Report 33
The Annual Report of the Board of
Directors on the Affairs of the Company 35
Directors’ Interest in Contracts with the
Company 38
Statement of Directors’ Responsiblities 41
Report of the Shari‘ah Advisory Council 42
Certificate of the Actuary 43
Financial Information
Independent Auditors’ Report 47
Balance Sheet 48
Income Statement 49
Statement of Changes in Equity 50
Cash Flow Statement 51
Segmental Analysis - Balance Sheet 53
Segmental Analysis - Statement of Income 55
Balance Sheet - Long Term Inurance
(Family Takaful) Fund - Supplemental 57
Notes to the Financial Statements 58
Group Value Added Statement 84
Share Information 85
Branch Network 86
Ten Year Summary 88
Glossary 90
Notice of Meeting 92
Form of Proxy Enclosed
Name of the Company : Amana Takaful PLC
Legal Status : Public quoted Company with Limited Liability Incorporated in Sri Lanka on 7th December1998 Reregistered under the Companies Act, No 07 of 2007 on 27th June 2007
Company Registration Number : PQ 23
Tax Payer Identification Number : 134007958(TIN)
Stock Exchange Listing : The Shares of the company are listed in the Second Board of the Colombo Stock Exchange, Sri Lanka during November 2006.
Stock Exchange code for Amana Takaful PLC shares is ‘ATL’
Directors : Tyeab Akbarally (Chairman) Osman Kassim Dato’ Mohd Fadzli Yusof Dr.A A M Haroon M H M Rafiq M. Ehsan Zaheed (CEO) M.O. Faizal Salieh Dr. T. Senthilverl A.S.M. Muzzammil (Appointed w.e.f. 29.4.2010) M.U.M. Ali Sabry(Appointed w.e.f. 26.5.2010) Shariah Advisory Council : Moulavi M M A Mubarak- Chairman Mufti M I M Rizvi Moulavi M. Fazil Farook Moulavi M Murshid-Secretary
Chief Executive Officer : M. Ehsan Zaheed
GM/CEO – Life : A. Reyaz Jeffrey
Registered Office : 98, Bauddhaloka Mawatha Colombo 4, Sri Lanka.
Subsidiary : AMANA GLOBAL LTD 102 1/3, BAUDDHALOKA MAWATHA, COLOMBO 4Auditors : Ernst & Young Chartered Accountants
Consultant Actuaries : Actuarial Partners Consulting Sdn Bhd (formerly known as Mercer Zainal Consulting Sdn. Bhd) Suite 17.02 Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia
Reinsurance Panel : Best Re Labuan Reinsurance (L) Ltd. Malaysian Reinsurance Berhad Asian Reinsurance Corporation Kuwait Re
Secretaries : Managers & Secretaries (Pvt.) Ltd. Principal Bankers : PAN ASIA BANK/ NDB BANK/BOC COMMERCIAL BANK/ PUBLIC BANK/ NATIONS TRUST
Corporate Information
Contents
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AMANA TAKAFUL PLC Annual Report 2010 1
Financial Highlights
2010 2009 Change Rs. Mn. Rs. Mn. (%)
Revenue 1,016 865 17.42
Total Gross Written Premium 1,173 1,161 1.07
Net Profit/(Loss) before Tax (35) (52) (31.98)
Net Profit/(Loss) after Tax (35) (52) (31.98)
Earnings/(Loss) per share (Rs.) (0.07) (0.10) (30.00)
General Takaful Gross Written Premium 933 954 (2.16)
Net Earned Premium 714 614 16.20
Life Takaful Gross Written Premium 240 207 15.96
Net Earned Premium 232 203 14.30
Life Fund 413 335 23.26
Total Assets 1,499 1,227 22.16
Net Assets Value per Share (Rs.) 0.34 0.38 (9.89)
Return on Equity -21.02% -27.57% (23.76)
No. of Employees 355 360 (1.39)
No. of Branches / Distribution Centres 17 16 6.25
200
400
600
800
1,000
06 07 08 09 10
General Takaful Contributions
Rs. Mn
2,000
4,000
6,000
8,000
1,0000
06 07 08 09 10
Family Takaful(Life) Certificates Numbers
100
200
300
400
500
06 07 08 09 10
General Takaful Net Claims Incurred
Rs. Mn
50
100
150
200
250
06 07 08 09 10
Family Takaful(Life) Contributions
Rs. Mn
| AMANA TAKAFUL PLC Annual Report 20102
THE WAY IT GROWSLEADERSHIP
MANAGEMENT INFORMATION
AMANA TAKAFUL PLC Annual Report 2010 3
THE RIGHT WAY
| AMANA TAKAFUL PLC Annual Report 20104
Chairman’s Statement
THE WAY IT GROWS...
“We see a development in the regulatory framework with changes announced to the RII Act, with amendments to Investment Guidelines and Solvency rules which are a welcome change for the insurance industry and especially for Amana Takaful.
Dear Shareholder,
The year 2010 was filled with mixed results as we saw healthy
growth locally while the Maldives operation dipped in terms
of the top line due to competition and our resolve (to ensure
prudent under-writing) not to under-write risks at low rates.
Outflow was also seen on the increase in claims due to
adverse weather patterns in Sri Lanka and higher number of
motor claims. However, on a more productive note strategies
adopted in line with our 3 year plan for cost efficiency and
resource optimisation in the short and long term are delivering
results.
It is in this backdrop that I, on behalf of the Board of Directors,
welcome you to the Annual General Meeting of Amana
Takaful PLC and present to you the Annual Report and
Financial Statements for the year ended December 31st 2010.
Economic Background
The Post-war consolidation and rebuilding process has brought
out a positive outlook for the country as it stands poised to
reap the full potential of the peace dividends expected. Many
promising reforms and development initiatives have brought
light to urban and rural economies that will support future
progress in the long term. In addition to this as seen during
the past year and expected in the years to come the service
and industrial sector including exports are expected to grow
steadily.
As the world recovers from the financial crisis more prospects
await Sri Lanka to benefit from both locally and internationally.
In this back drop the rising interest and focus on Sri Lanka as
an investment hot spot gives more impetus to this thinking. As
such the negativity in terms of a cautioned approach held by
the business community is diminishing and investment options
and business development in addition to Foreign Direct
Investment being sought. This sentiment will augur well for
the insurance industry as a whole.
The Insurance Industry
The insurance industry is entering more competitive grounds
as more players enter the market. The market has and will
continue to be haunted by the lack of a floor rate in premiums
while the risks underwritten increases with time.
The decline in interest rates would have a negative impact
on the performance in terms of investment returns as most
insurance companies depend on such returns to make profits.
This has contributed among other factors to the higher equity
market performance which is set to grow in the long term, as
analysts predict. Linked to this phenomenon there will be more
investment activities which will in turn create opportunities for
the insurance industry as well.
We see a development in the regulatory framework with
changes announced to the RII Act, with amendments to
Investment Guidelines and Solvency rules which are a welcome
change for the insurance industry and especially for Amana
Takaful.
Growing momentum for Islamic Finance in Sri Lanka
The growing attention on Islamic Finance in Sri Lanka is
encouraging to us, as the only Takaful provider in the country.
The year 2010 saw many conventional financial institutions
entering Islamic Finance and most importantly the year 2011
was welcomed by the news of Amana Investments Limited
being awarded license to operate as a commercial bank. We
intend to make most of the developments in this regard as the
pioneer of the concept.
Financial Results
The Company’s revenue increased from Rs. 1.16 Bn to Rs.
1.17 Bn recording a growth of 1.1%. The General Division in
Sri Lanka grew by Rs. 81.3 Mn locally recording a growth of
14.1% while the Life business grew by Rs. 33.1 Mn recording
a growth of 16%.
AMANA TAKAFUL PLC Annual Report 2010 5
Amana Takaful ended the year 2010 with a loss of Rs. 49.5
Mn compared to the loss of Rs. 50.7 Mn in the previous year.
The continued loss was due to higher claims and the drop in
production from Maldives due to the reasons explained above.
Our subsidiary Amana Global Limited generated a profit of
Rs. 13.5 Mn for the year ended 31st December 2010. The
consolidated loss for the year was Rs. 35.37 Mn compared to
Rs. 52 Mn in the previous year while the Company made a
loss of Rs. 49.56 Mn compared to the loss of Rs. 50.77 Mn in
2009.
The major concern in my report last year was the limited
options for Shari’ah compliant investments in Sri Lanka.
To overcome this challenge, we embarked on a strategy to
increase our interest in the Colombo stock market through
a professional and one of the leading investment managers
in the country. This has paid results by giving us a growth of
189.4% on the income from investments in equity from Rs.
7 Mn in 2009 to Rs. 20.3 Mn in 2010, which are purely from
white listed companies.
Commitment to the Society
Being socially responsible is enshrined in the concept of Takaful
and this year saw the formalization of these efforts as “Amana
Takaful Cares”. Under this program assistance was provided
to the National Hospital of Sri Lanka, the Maharagama Cancer
Hospital, Lady Ridgeway Children’s Hospital, donation of books
to school libraries and assistance for AIDS awareness amongst
others.
The year 2011 will also see many more structured programs in
the area of education and child welfare.
Outlook 2011 and Beyond
As discussed before, the economic outlook for the country
looks promising albeit any major turnarounds. Amana Takaful
intends to equip itself in terms of resources in capitalizing
on the emerging opportunities by investing in its people and
reach for the year 2011. As a continuing process we intend to
look at efficient work ethic and also cost reduction measures
as a regular measure.
The company will be looking at the development of staff as a
strategy towards maximising turnover and sustainability. It will
also continue to exploit all avenues of cross selling and develop
new methods of distribution and product development.
Appreciation
I would like to thank my fellow Directors for their invaluable
contribution to Board deliberations. On behalf of the Board
of Directors, I would also like to thank our staff, management
and agents for their dedication, commitment and loyalty,
and our customers and business partners for their continued
support.
I must also show my appreciation to you, our shareholders, for
the confidence you placed in this new concept we introduced
into the insurance industry of Sri Lanka.
Now, we begin the next phase of our journey.
Tyeab AkbarallyChairman
31st March 2011
| AMANA TAKAFUL PLC Annual Report 20106
Chief Executive Officer’s Review
THE WAY IT GROWS...
Remaining Focused
2010 Marks the second year of our three year plan to improve the financial results of Amana Takaful PLC. Staying focused on this plan has delivered solid improvement in operational performance across most of Amana Takaful PLC. However, adverse events, led to financial results below the expectations we held at the outset of the year. We are determined to continue on our course of improvement.
Two years ago, Amana Takaful PLC embarked on a refined corporate strategy designed to refocus, simplify and strengthen our business. Since then, we have worked hard and made significant progress against our priorities. What is most pleasing about the 2010 financial year is the clear and ongoing improvement in the underlying operational performance of businesses in our home market of Sri Lanka, which contributes nearly 78.1% of revenue.
During the second half of the year, however, the Company experienced events which adversely impacted our financial performance, leading to a full year result which was below the expectations we held at the outset of the year. I remain confident that our unrelenting focus on our refined strategy will continue to deliver further operational and financial improvements.
Gross Written Premium increased by 1.1% from Rs. 1,160 Mn to Rs. 1,173 Mn At the same time, claims expense for the Company increased by 8.6% from Rs. 476.3 Mn to Rs. 517.5 Mn. From a General insurance claims perspective, we were impacted by a number of large weather-related losses through the year. The net claims of the General segment for 2010 increased by 10% from the previous year, which was Rs. 40.3 Mn. This level increase of claims was experienced while rates have remained the same for all classes of business.
A particular focus has been the building of a first class sales capability. The leadership of this team is now in place and further changes to the way business is managed will be made in 2011.
In December 2010 the Company received ISO 9001:2008 certification of our General and Family takaful units. The Company’s ISO certification initiative was undertaken in 2010 as part of our commitment to our customers and community leadership in providing high standards of service.
Performance In 2010
The Group reported a net loss of Rs. 35.37 Mn compared to the net loss of Rs. 52 Mn in the previous year. The Company recorded a loss of Rs. 49.56 Mn compared to the loss of Rs. 50.77 Mn in 2009.
Gross written premium in Sri Lanka for the General Business increased during the year from Rs. 593.5 Mn to Rs. 676.9 Mn which is a growth of 14.1%. The total collections for the Life segment recorded a growth of 16% from Rs. 207.1 Mn in 2009 to Rs. 240.2 Mn in 2010.
Amana Takaful Maldives, which was operating as an agency office received license from the Maldivian Monetary Authority in 2010. During the first half of 2011 we hope to have the company listed in the Maldivian stock exchange. The revenue for the year 2010 was USD 2.5 Mn compared to USD 3.2 Mn of the previous year. Certain critical decisions were taken considering the future profitability at the cost of present revenue loss.
Improving Investment Income
One of our main focuses has been to increase our Shari’ah compliant investment income. In 2010 we were compelled to continue to have most of our funds in treasury bills as Shari’ah compliant options were very limited due to regulatory and solvency rules. We understand with our discussions with the regulators, that there would be changes to the RII Act from the beginning of the 2nd quarter, which we believe will facilitate us in investing in Shari’ah compliant investment vehicles such as bullion and in Finance Companies that offer Shari’ah compliant investments.
The Company’s investment returns on the listed equities have increased by 189.4% to Rs. 20.3 Mn to Rs. 7.0 Mn in 2009. However, the total investment income for the year 2010 was
AMANA TAKAFUL PLC Annual Report 2010 7
Rs 39.5 Mn, compared with of Rs 47.2 Mn in the previous year. The dividend received from Amana Global, the fully owned subsidiary, was also part of the investment income in 2009 which is the major cause for this drop. Further, non availability of certain Shari’ah compliant investment options compared to the previous years have also contributed to the lower income from Bank Deposits category.
During the year, the company utilized the service of funds specialist NDB AVIVA Wealth Management Limited and has gradually increased its exposure to growth assets within funds, as these markets improved.
Building Long Term Performance
The ever changing regulatory landscape now sees management interacting with the Board on a more regular basis. Management and the Board have worked to ensure we manage through this change effectively. We also enhanced our internal review process in 2009 and 2010. This change delivers a more robust overview of activities throughout the company and is using a more contemporary risk based approach. This process has been very effectively managed through our Risk and Compliance Manager.
We also fulfilled our goal in formalising our Corporate Sustainability initiatives and during the year were able to carry out following activities which are explained in detail under the CSR section.
• Spreadingknowledgethroughbooks
• AIDSAwareness
• Incubatorprogram
• HelpingLadyRidgeway
• NationalHospitalofSriLanka
• Iftarprogram(BreakingFast)
• DonationtoArmy
• GampolaSchoolTransportServicesAssociation
Our People
We have also encouraged self development at all levels of the organisation. It is important for us to have emerging leaders available in the organisation. There was particular emphasis on assisting the leadership levels of the organisation towards developing skills appropriate to a modern workforce.
It is also true to say that we are raising the bar each year on what is expected of our employees, especially those in management roles. Not all employees embrace and adapt to the changing world thus this is addressed in our employment strategies.
In particular, I am proud of how willing our people have been in embracing our revised direction and their determination in delivering on the financial improvements necessary, while at the same time not compromising on customer experiences.
During the year, we refined and launched internally a common set of principles, which we believe is central in providing the employees a sense of connection and belonging to the Takaful concept. These are:
• Expertsinthefundamentalsofinsuranceandtakaful;
• Disciplinedbusinessleaders;
• Passionateaboutourcustomers;
• Innovativeandonestepahead;and
• Sustainable,sowe’rearoundforthelongterm.
In addition, we invested in internal programs designed to build capability and provide a broader base of future leaders.
Our Future Focus
We are two years into a three year turnaround strategy. I am encouraged with our progress, but I know we can do better. Our focus for the 2011 financial year is to continue the momentum we’ve gained from the significant changes made over the past two years. This means remaining committed to our three strategic priorities:
• Deliveringtherevenuebudgets;
• Pursuingselectivegeneralinsurancegrowthopportunities;and
• DrivingoperationalperformanceandServicesexcellence
As we strengthen Amana Takaful, we will continue to have a clear focus on ensuring the sustainability of all facets of our business both in Sri Lanka and overseas.
Outlook
The landscape at the end of 2010 looked very different to the start. There is many expectations and aspirations for Sri Lanka and the business community is highly excited. The role of insurance at such times becomes even more important. Amana Takaful is a long term participant in the market place and is well placed to deal with the opportunities and challenges currently at hand through adopting prudent policies and practices. The maintenance of a sound capital base has been at the forefront of our practices and this will stand us in good stead.
We wish to thank our customers for their support. We continue to enhance our customer service offering and recognise the importance to our business of each customer, whether large or small. There are other stakeholders such as distribution partners, our reinsurance broker and the reinsurers who support us, who have all played their part promoting the takaful concept in Sri Lanka. Thank you to this group for your valuable support.
Lastly, I wish to express my thanks to our Board and our employees for their enthusiasm and support throughout the year. We have committed to a particular strategic path and it is encouraging to have a committed group of people who believe in what we are doing.
We are determined to stay on the course we have set for the Company, as we are confident this is the best way to improve shareholder value in the coming years.
Ehsan ZaheedDirector/CEO
31st March 2011
| AMANA TAKAFUL PLC Annual Report 20108
AMANA TAKAFUL PLC Annual Report 2010 9
| AMANA TAKAFUL PLC Annual Report 201010
Board of Directors
Mr. Tyeab Akbarally - ChairmanMr. Tyeab Akbarally is the Chairman of the Company. He has been appointed to the board since its inception. He is also a Director of Akbar Brothers Ltd., the largest tea exporter in the country. Mr. Akbarally’s business interests extend to many sectors of the economy including Travels, Hotels, Garments and Trading. He is also on the Board of several companies in the Akbar Brothers Group.
Mr. Osman Kassim - DirectorMr. Osman Kassim is one of the main promoters and the visionary behind Amana Group of Companies. He has been actively involved right from the conceptualization of Amana Takaful PLC and takes an active role in determining and envisaging the strategic path of the group as a whole. He is also the Chairman of the Expolanka Group of Companies, which has grown at a tremendous rate to rank among the largest conglomerates in the country. Mr. Kassim is also the Chairman of the Asia Pacific Institute of Information (APIIT), Sri Lanka.
Dato’ Mohd Fadzli Yusof - Director Mr. Fadzli Yusof was appointed to the Board on 10th February 1999. He graduated in 1976, with a Diploma in Communication, Advertising and Marketing from the Communication, Advertising and Marketing Foundation, UK. He commenced his career in Broadcasting, including 6 years with BBC in the United Kingdom. He was the CEO of Takaful Malaysia till August 2005 and has been on its Board since 1984. Currently, he serves on the Board of Hei-Tech Padu Berhad (Malaysia), MRC Data Sdn Bhd. (Malaysia).
Dr. Aboobacker Admani Mohamed Haroon - Director Dr. Haroon was appointed as a director on 21st September 2000. He is a Medical Practitioner, by profession. He also holds the Chairmanship of several private companies, encompassing different industries including Garments, Health Care and Clinical Diagnostics.
Mr. Mohamed Haniffa Mohamed Rafiq - Director Mr. Rafiq has been on the Board since its inception. He has been involved in the insurance industry for over four decades. His interests are extremely diverse and include Education, Healthcare and Real Estate, just to name a few. Mr. Rafiq, with his wealth of experience in the sphere of insurance, plays an active role in Amana Takaful PLC.
Mr. Muhammad Ozman Faizal Salieh - Director Mr Faizal Salieh was appointed to the Board on 15th March 2004. He holds a Bachelor’s Degree in Economics with First Class Honours and a Master’s Degree in Business Administration. He counts well over two decades of experience in conventional commercial and development banking, both in Sri Lanka and overseas, and has held senior management positions in leading multinational and local banks.
Mr. Salieh is a member of the Executive Committee of the Ceylon Chamber of Commerce and also serves on the Boards
of several companies in the business of banking, finance, funds management and education.
Mr. Muhammad Ehsan Zaheed - Director/CEO Mr. Ehsan Zaheed was appointed as the Director/CEO of Amana Takaful on 1st October 2003. He is an Associate Member of the Institute of Chartered Accountants of Sri Lanka as well as the Society of Certified Management Accountants of Sri Lanka. He completed his articles at Ernst & Young. Having worked with several leading private sector financial bodies, Mr. Ehsan has had immense exposure in Sri Lanka and overseas.
Dr. Thirugnanasambandar Senthilverl - DirectorDr. T. Senthilverl was appointed to the Board on 12th October 2009. He holds directorships in CT Land Development PLC, Lanka Ceramics PLC, Blue Diamond Worldwide PLC, Citizens Business Development Finance PLC and MBSL Savings Bank PLC. He is also engaged in project development, construction and management of irrigation tanks.
Mr. Aboo Sally Mohamed Muzzammil - DirectorMr. Muzzammil was appointed to the Board on 29th April 2010 as an Independent Non-Executive Director. He is the Chairman/ MD at Ceylon Foods (Pvt) Ltd. He has served for over 40 years in senior management positions in commerce and industry. He holds a Masters Degree in Business Analysis from the University of Lancaster, UK and the Joint Diploma in Management Accounting, UK. He is a Fellow of the Chartered Institute of Management Accountants and Chartered Certified Accountants. Mr. Muzzammil served as the President of CIMA Sri Lanka Division, Exporters Association of Sri Lanka and the Seafood Exporters Association of Sri Lanka. He has been in the Councils of the Moratuwa University, Sri Lanka Institute of Advanced Technical Education, Sri Lanka Standards Institute and the Industrial Technical Institute and was a member of the Joint Business Forum and various Chambers of Commerce and Industry. He has been a Vice President and Treasurer of the OPA and also serves in several educational, social and religious organizations.
Mr. Mohamed Uvais Mohamed Ali Sabry - DirectorMr. Ali Sabry was appointed to the Board on 26th May 2010 as an Independent Non-Executive Director. A lawyer by profession Mr. Ali Sabry has extensive experience in civil, commercial and administrative law. He has been an active member of the Bar Association of Sri Lanka and elected as Treasurer for twice, member of the panel of lecturers in the Bar Association Continuous Legal Education (CLE) programme and Course Director and lecturer of Effective Instructing Attorney’s Course conducted at the Bar Association. Mr. Ali Sabry also served as the Sri Lanka Consul General for Jeddah, Saudi Arabia making him one of the youngest ever appointed to a similar post by the government of Sri Lanka. He has also served as Director of the National Youth Services Council, Ceylon Petroleum Corporation and a member of the Rest Board of Review.
AMANA TAKAFUL PLC Annual Report 2010 11
| AMANA TAKAFUL PLC Annual Report 201012
Management Team
1. M. Ehsan Zaheed - Director / Chief Executive Officer
2. A. Reyaz Jeffrey - General Manager / Chief Executive
Officer - Family Takaful
3. Zaid Ibnu Aboobucker - General Manager - Operations
and Medical
4. Adel Hashim - General Manager - Sales and Marketing
5. Hareez Sulaiman - General Manager - Maldives
Operations
6. A.W.M. Imthiyaz - Legal Officer
7. M. Fawas - Manager Strategic Planning / GM - Amana
Global Ltd.
8. M S M Muhajir - Senior Manager - IT
9. L.D. Kester Amarasinghe - Senior Manager - Technical
10. Mohamed Shihab - Senior Manager - Finance &
Administration
11. A.H.M. Dilshad - Senior Manager - Compliance &
Regulatory Reporting
12. M. H. Rizvan Ahamed - Senior Manager - Re Takaful
13. M. Nazeem Ghaffoor - Senior Manager - Sales &
Distribution (General Business)
14. M.G.M. Ansari - Senior Sales Manager - Motor
15. Omar Mustafa - Sales Manager - Non-Motor
16. Tasleen Ammon - Sales Manager - Corporate Accounts
17. M. Farhan Jabir - Manager - Human Resources
18. M. Aashiq Aminnuddin - Manager - Marketing
19. Shamail Annam - Manager - Business Development Unit
20. A.L.M. Inamulla - Manager - Internal Audit
21. N D B Sakalasooriya - Manager - Motor Claims
22. J C Rambukwella - Manager - Claims (Marine & Hull)
23. Meera Lebbe Basheer - Senior Regional Manager -
North West & Eastern.
24. Sumeda Lankajeewa Mirihana - Senior Regional
Manager - Western & Southern
25. Mohamed Farook Shahul Hameed Asif - Regional
Manager - Central
26. Naheem Mohamed Ifthikar - Regional Manager - North
West & Eastern
27. S Jayalath De Mel - Consultant - Family Takaful
28. M. Silmy Faizal - Manager - Sales & Distribution (Life
Business)
29. Mohamed Sathik Niyas - Regional Manager - Eastern
30. Mohamed Razik Shakir Mohamed - Assistant Sales
Manager
31. Hameed Mohideen Mohamed Irshad - Assistant
Manager - Agency Development (Western Region)
32. Mohamed Afraz Hanifa - Assistant Sales Manager -
North Western
AMANA TAKAFUL PLC Annual Report 2010 13
Management Review and Analysis
Economic Environment
The Sri Lankan economy recovered strongly recording an
impressive growth of 7.8 per cent during the first half of
2010, thus moving on to a high growth path. This growth was
underpinned by the restoration of peace, improved business
confidence, a strong macroeconomic environment as well as
a gradual recovery of the global economy from its deepest
economic recession since the Great Depression.
The low inflation and the benign inflation outlook enabled
the Central Bank to relax its monetary policy stance further
resulting in lower interest rates in all market segments
supporting the recovery of domestic economic activity. The
fiscal situation improved considerably, mainly reflecting the
increase in government revenue supported by the expansion in
domestic economic activity and recovery of international trade.
Meanwhile, the public investment program continued and all
major infrastructure development projects progressed rapidly.
The external sector, which made a remarkable turnaround
since the second quarter of 2009, continued to improve in
2010. Both exports and imports recovered rapidly during the
first eight months of 2010. Increased remittances assisted in
partly off-setting widening trade deficit. With higher foreign
financial inflows, including disbursements under the IMF-
Stand-By Arrangement (SBA) facility and proceeds from the
third international sovereign bond issue in October 2010, the
Balance of Payments (BOP) recorded a surplus by mid October
2010, thereby also raising external reserves to the highest
ever level recorded. The exchange rate remained largely stable
during the year.
The end to the prolonged internal conflict, enhanced investor
confidence and the improved macroeconomic environment
provide Sri Lanka with a great opportunity for sustainable
growth and development.
The Sri Lankan economy grew by a higher rate of 7.8 per cent
during the first half of 2010 compared to the growth of 1.9
per cent recorded during the corresponding period of 2009.
Credit granted to the private sector by finance companies,
recorded a year-on-year growth of 24.6 per cent by August
this year, compared to the growth of 3.0 per cent in December
2009.
Market interest rates continued to adjust downwards in line
with the policy rate changes by the Central Bank. The average
weighted call money rate (AWCMR) remained stable within
the policy interest rate corridor. Yield rates on government
securities declined in the primary market for government
securities during the first nine months of the year, although
there was some upward movement until mid-April.
Improvements were noted in respect of both financial
institutions as well as financial markets. The overall soundness
of financial institutions, as reflected by capital, liquidity, asset
quality and profitability improved during the first half of 2010.
The key payment and settlement systems operated with a
high degree of system availability and further improvements
were made to the business continuity arrangements. Domestic
financial markets became more liquid in 2010, largely due to
the increased capital inflows. Interest rates in many market
0
1
2
3
4
5
6
7
8
9
06 07 08 09 10H1
GDP and Sectorial Performance (Growth Rates)
Agriculture
GDP
Industry Services
Movements in Market Interest Rates
Primary Market Yield on 364-day Treasury bills Average Weiighted Deposit Rate
Average Weiighted Fixed Deposit Rate Average Weiighted Prime Leading Rate (Monthly)
Percent
0
5
10
15
20
25
Jan
-00
Sep
-00
May
-01
Jan
-02
Sep
-02
May
-03
Jan
-04
Sep
-04
May
-05
Jan
-06
Sep
-06
May
-07
Jan
-08
Sep
-08
May
-09
Jan
-10
Sep
-10
Credit Obtained by the Private Sector and Interest Rates
-10
-5
0
5
10
15
20
25
30
14
15
16
17
18
19
20
21
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
2010
Q1
2010
Q2
2010
Q3
Credit granted to the Private Sector by LCBs (Year-onyear-change)
Average Weighted Lending Rate of LCBs (Right axis)
| AMANA TAKAFUL PLC Annual Report 201014
segments declined, in view of the moderation of inflationary
pressures in the economy as well as the further easing of
monetary policy in July and August 2010. Along with the
improving credit conditions, credit flows to the private sector
picked up, reversing the negative growth recorded in the
previous year. Market capitalisation and turnover at the
Colombo Stock Exchange meanwhile, increased to record
levels during this period.
Company’s Performance in Relation to Industry
The insurance industry with a combined Life and General
ended the year 2009 with a dip in premium by 1.6% from Rs.
58.2 Bn in 2008 to Rs. 57.3 Bn in 2009. The latest available
information for the year 2010 reveals a growth of 11.5%
approximately over the previous year.
The year 2010 proved to be a year of recovery for the
insurance industry and for the economy as a whole in Sri Lanka
while the global economy too is in the recovery after the global
financial recovery. The premium income generated by the two
segments over the past eight years is provided in the graph
below.
The below graphs present the segment wise growth of Amana
Takaful and the change of market share since 2002. In the year
2009 Amana grew by 14.2% despite the negative growth by
the industry. Major component of this growth was contributed
by the Medical segment.
General Insurance
Despite the negative growth of 3.1% in year 2009, it was
expected that the industry would achieve a combined income
of Rs. 37.33 Bn which reflects a growth of 11.5% compared to
previous year. Motor insurance remained the main contributor
with 57% to the total premium production for the industry
in 2010. The total motor production for the industry was Rs.
21.24 Bn in 2010 compared to Rs. 17.87 Bn in 2009 which
reflected an increase of 18.8%. With the slashing of duty on
vehicle imports and the boom in certain industries such as
tourism etc., the motor production and all other classes of
insurance expects a higher growth potential in 2011.
Significant Features of Operating Performance by Amana in 2010
Amana’s performance had to be looked at in 2010 in two
folds, one from the local context and the other from the
Maldives branch context. The local business of the General and
Life segments grew by 14.1% and 16% respectively, the GWP
from Maldives dipped by 28.9% leading the total revenue for
the Company to grow by mere 1.1% from the year 2009.
The below table reveals the above mentioned growth values
along with the GWP in Millions. The major reasons for this
drop in GWP from Maldives were as follows:
• Duetofewprudentunderwritingissuesthecompany
decided not to compete in rates for two large premium
businesses.
• AsAmanaTakafulMaldivesreceiveditslicensetooperate
as an independent Company, ATM started to cede directly
which production was not considered as the revenue
through Agency operation.
Management Review and Analysis
Industry Production
0
10
20
30
40
50
60
70
General Life Consol
02 03 04 05 06 07 08 09
Rs. Bn
GWP Segmentwise
0
200
400
600
800
1000
1200
1400
General Local Life Consol
02 03 04 05 06 07 08 09 10
Rs. Mn
Market Share
0.0
0.5
1.0
1.5
2.0
2.5
3.0
General Life Consol
03 04 05 06 07 08 09
%
AMANA TAKAFUL PLC Annual Report 2010 15
The Revenue compared
During the year under review, the GWP from local operations
and overseas operations was Rs. 917.06 Mn and Rs. 256.29
Mn respectively which shows a 14.5% positive growth in GWP
earned from local operations compared to year 2009. The
chart below clearly depicts the contribution from local and
overseas which for the years 2009 and 2010.
Principal Risks and Uncertainties Facing the Business
The changes in the climate patterns and consequential impacts
have become a challenge to all the insurance companies. The
recent floods natural disasters have brought in significant
claims during the year. Further it has created awareness
among the general public on the importance of insurance to
compensate the loss during such an unavoidable situation. As
it has a positive contribution towards making more revenue, it
has brought in some portion of business risk on incurring more
claims in future periods.
Company and Group Performance Review
Financial Position
Company’s total asset value depicted an increase of 18.4%
reaching Rs. 1,447 Mn compared to last years Rs. 1,222 Mn.
The assets are distributed among diversified asset base which
is strongly constructed on a large qualitative portfolio rather
than on a quantitative portfolio. Company and the group
maintain a well diversified investment portfolio in order to
gain more short and long term return and to spread its risk
to an acceptable level. As at 31st of December 2010 Amana
reported a consolidated total asset value of Rs. 1.50 Bn out of
which 60% is represented by short and long term investments.
Although the group is facing investment restrictions due to
Shari’ah compliance, group increased its investment portfolio
by 56%, while the company increased its investment portfolio
by 55% seeking more short term and long term return.
Profitability
During the year under review, Amana reported a consolidated
loss after minority interest of Rs. 35.58 Mn while the Company
reported a net loss of Rs. 49.56 Mn. The corresponding group
and company loss for the year 2009 was Rs. 52 Mn and Rs.
50.77 Mn respectively.
Even though there was no major fall in the top line of the
company, the increase in Takaful claims and overheads
were the main factors for the loss incurred. Further, the fall
in investment income and other income have negatively
contributed to the bottom line of the company.
Company had to incur a significant amount of claims mainly
due to flood and natural disasters occurred during the latter
part of the year which increased claim amount by 12.8%
compared to last year. Despite the increase in staff and other
administration costs, all the costs have been managed well
within its budgets mainly due to strict cost management
measures of the company.
2010 2009 Growth (Rs. Mn) (Rs. Mn)
General 676.90 593.50 14.1%
Family 240.16 207.10 16.0%
Total Local 917.06 800.60 14.5%
Maldives 256.29 360.30 -28.9%
Total 1,173.35 1,160.90 1.1%
Description 2010 2009 Growth (Rs.Mn) (Rs.Mn)
Gross Written Premium 1,173.35 1,160.89 1.1%
Re-Takaful (203.64) (261.27) -22.1%
Net Written Contribution 969.71 899.62 7.8%
Net Un-Earned Premium (24.05) (82.49) -70.8%
Net Earned Contribution 945.65 817.13 15.7%
Benefit & Losses (644.28) (571.12) 12.8%
Under-writing Results 301.37 246.01 22.5%
Investments & Other Income 40.11 46.39 -13.5%
Total Overheads (390.00) (341.58) 14.2%
Profit/(Loss) from Operation (48.50) (49.19) -1.4%
Finance Cost (1.04) (1.58) -34%
Profit/(Loss) (49.56) (50.77) -2.39%
Local Vs Overseas Mix GWP - 2009
Local Overseas
31%
69%
Local Vs Overseas Mix GWP - 2010
Local Overseas
22%
78%
| AMANA TAKAFUL PLC Annual Report 201016
Cash Flow Analysis
During the year under review, company shows a significant
improvement in its cash flows which reveals the positive
growth in its stability due to long term financial strategies.
Despite the negative operating cash flows earned in 2009,
company was able to improve its operating cash flow position
by Rs. 116.4 Mn which an improvement of 361% compared to
last year. In order to gain a better yield through its investment
portfolio, company increased the investments and it has led to
reduce the overall cash position compared to last year.
Investment Income
The total investments of the Company stood at the year
end was Rs. 887.8 Mn out of which 606 Mn was invested
in Treasury Bills and REPOs. The investment in government
securities are made for the purpose of meeting the
requirements of the Regulation of Insurance Industry Act No.
43 of 2000. The income earned through theses government
securities will only be paid in charity. The table below shows
the investment assets as of the year end 2010 and the mix of
investment portfolio.
Investment income for the year ended 2010 was Rs. 39.5
Million out of which 20.3 Mn is earned through the equity
market.
During the year under review, the company entered in to an
agreement with a professional fund manager to optimize the
Shari’ah compliant investment income through the white listed
equities. This strategic decision has resulted in a growth of
189.4% in income from the investments in the stock market.
The table below depicts the break-up of the income earned
through equity compared with year 2009
Motor insurance production showed a steady growth
throughout the year and contributed 53% of the total general
production which is a 29.7% growth compared to last year. As
mentioned earlier, the increase in number of motor vehicles in
Sri Lanka has led the company to shift its product mix focusing
more on the contribution from Motor segment.
Claims
Note 24 to the financial statements provide the break-up of
the general segment claims by classes. While there is a drop in
all other classes especially the Fire class, the claims expenditure
Management Review and Analysis
Composition 2010 2009 Growth
Dividend income 2,231,825 1,894,532 17.8%
Net realised capital
gain or losses 13,612,288 4,263,205 219.3%
Unrealised gain or losses 4,488,082 866,749 417.8%
Total Equity 20,332,195 7,024,486 189.4%
Particulars 2010 2009 Growth (Rs. Mn) (Rs. Mn) %
Gross Written Premium 933.19 953.80 (2.16)
Re-Takaful (198.27) (257.26) (23.05)
Net Written Contribution 734.92 696.54 5.51
Net Un-Earned Premium (21.38) (82.50) (74.08)
Net Earned Contribution 713.53 614.05 16.20
Benefit & Losses (478.36) (422.60) 13.19
Under-writing Results 235.17 191.45 22.84
Investments & Other Income 6.36 2.60 144.61
Total Overheads (14.34) (10.70) 34.02
Profit/(Loss) before Management Fee 227.18 183.36 23.89
Management Fee (245.41) (263.55) (6.88)
Profit/(Loss) from Operation (18.23) (80.19) (77.27)
Product Mix - 2009
Fire Marine
Misc Medical
Motor
13%
11%
25%
11%
40%
Product Mix - 2010
Fire Marine
Misc Medical
Motor
11%
8%
18%
10%
53%
Investment Value (Rs.Mn) %
TB/REPO 606.55 68.3
Murabaha/Mudharaba/ Bank Deposit 75.80 8.5
Real Estate 85.25 9.6
Equity 112.27 12.7
Bullion 2.92 0.3
Unit Trust 5.00 0.6
Total 887.79 100.0
AMANA TAKAFUL PLC Annual Report 2010 17
in motor class has increased by Rs. 52 Mn from the year 2009.
This has lead to a net increase of Rs. 40.3 Mn, which is 10%
increase over the previous year.
Revenue of Life segment has grown by 16% from Rs. 207.1
Million in 2009 to Rs. 240.2 Mn in 2010. This growth was
mainly contributed by the Pettah branch and the teams based
at the head office.
The growth in the investment income has contributed to the
surplus for the year under review.
Group Performance
Amana Global Operational Review
Amana Global Limited is a 100% owned subsidiary of Amana
Takaful which was incorporated to provide Islamic finance
advisory services, technical support, appointed a General
Manager with revised operational objectives.
Amana Global is working towards obtaining a second
subsdiary in the Maldives who will be in Shari’ah compliant
Islamic finance service provider in the country.
Amana Takaful (Maldives) Limited which is an 80% owned
subsidiary of Amana Global acquired 50% of IGL Lanka
Limited another BOI registered Company in Sri Lanka. IGL
Lanka was incorporated to trade in gold is now in the process
of developing its revived business plans with expansions.
During the year, company earned an income of Rs. 19.3 Mn
and reported a growth in income of 65% compared to its
previous year. Company reported a net profit of Rs. 13.5 Mn
which was higher by 53% compared to year 2009.
Amana Takaful (Maldives) Limited
Amana Takaful Maldives which was operating as an agent till
the year ended 31st had to face enourmous challenges during
the year and the revenue dropped significantly compared to
the previous year.
Particulars 2010 2009 Growth (Rs. Mn) (Rs. Mn) %
Gross Written Premium 240.16 207.10 16
Re-Takaful (5.37) (4.01) 34
Net Written Contribution 234.79 203.08 16
Net Un-Earned Premium (2.67) - 100
Net Earned Contribution 232.11 203.07 14
Benefit & Losses (90.64) (87.70) 3
Under-writing Results 66.19 54.55 21
Investments & Other Income 23.28 16.05 45
Total Overheads (15.11) (14.16) 7
Profit/(Loss) before Mgt Fee 149.65 117.15 28
Management Fee (74.37 (56.33) 32
Surplus 75.28 60.82 24
Family Takaful Performance Review
Description 2010 2009 Growth (Rs. Mn) (Rs. Mn) %
Management Fee Income 319.78 319.89 (0.03)
Investment and Other Income 10.46 27.73 (62.28)
Overheads (361.57) (318.19) 13.63
Net Loss (31.33) 29.43 (206.45)
Shareholders’ Fund Performance
THE WAY IT GROWSCOMPETENCE
Sustainability report
THE RIGHT WAY
| AMANA TAKAFUL PLC Annual Report 201020
Sustainability Report
At Amana Takaful we believe acquiring and developing people,
as they are the essence of our present and future progress.
This year many programs were carried out with this in mind in
addition to the continuation of many of that existing.
“Striving to serve in an Admirable Manner”
In keeping with the HR Philosophy, “Managing Human Talent
–The Natural Way”, the HR division (now called the – Talent
Management Unit) endeavours to inculcate the concept of
admirable manner (Arabic: ‘Akhlaaq’) towards fulfilling the
corporate aspirations and HR mission at Amana Takaful.
The on-going HR projects and the program of work provides
an opportunity for the staff members to enhance their job
performance whilst creating a process of moulding of the
individual to serve the - Takaful concept, company and
moreover become an ‘admirable citizen’ to serve the country
at large.
The corporate mission statement has been very diligently
reinforced every Tuesday morning at the event called the
‘Corporate Mission Meeting’ which has been conducted
without a break since it’s launch in September 2004.
Every staff member passionately strives to emulate the key
tenets of the mission related to:
• ProvidetotalTakafulSolutions(PTS)
• WithintheGuidelinesofShari’ah(WGS)
• ServingAll(SA)
• inanAdmirableManner.
To support and nourish the overall corporate mission, the HR
strategies were mapped taking into account the Company’s
existing and future HR capacity requirements.
The HR direction and focus based on the 5 year plan was
revisited and each component on the strategic plan was re-
positioned towards enhancing the effectiveness and meeting
the emerging scenarios.
HR strategies re-focused:
• Alignment – we endeavour to attract the best talent /
acquire staff with aspirations to serve the concept and
passionate to undertake a career in the Takaful.
• Manage moments – Ensure the staff members are fully
engaged and focused in every interaction (work piece) and
handle the various customer touch points efficiently – for
both internal and external customers.
• Aspirations – Encourage staff towards seeking career
enrichment / personal development whilst delivering the
expected job performance in the current job tasks.
• Novel approaches – Provide empowerment to explore new
opportunities / discover novel methods towards adding
value on the service delivery chain.
• Acceleration – Provide impetus for the staff to ‘Raise the
bar’ voluntary in a proactive manner in serving the customer
and achieving the desired bottom-line impact.
The HR operating approach evolves around the word
‘TAKAFUL’ itself, with the sole aim giving priority for the
concept and regularly reminding the uniqueness of the
principles and values as enshrined in the teachings of Shari’ah.
• T – Talent based approach (impartial / irrespective of creed /
caste and nationality)
• A – Achievement driven (result –oriented approach) Defined
JD tasks to be delivered
• K – Knowledge. Will provide the know-how and necessary
inputs (training etc)
• A – Action required to implement what was learnt back at
job.
• F – Full personality development – an holist approach
• U - Useful to self and family. Serve the community and
country at large
• L – Lived (worthwhile) Loved by all as a team member.
Developing a RCC (Responsible Corporate Citizen)
PTS WGS
SA
Admirable Manner
Weekly Corporate Mission Meeting - Conducted every Tuesday since September 2004.
People Development
AMANA TAKAFUL PLC Annual Report 2010 21
Talent Scale-up – towards Talent Retention
Executive Development Programme – EDP
The EDP was launched in 2010 with a clear objective of
retaining good talent in Takaful and grooming them to take
up future roles of leadership within the organization. The
programme was executed with a team representing a cross
section of all functional departments of the organization.
The identified teams comprising of sales and non-sales carder
were taken through an assignment based programme,
which included unique assignments such as scenario-based
learning, developing a strategic business plan, conducting
field research / feasibility studies and presenting their case and
recommendations to the top management.
The first programme was concluded with an energized out-
bound training, which resulted in bringing about a sense of
team building and synergetic relationships within functional
departments. The participants were made to implement their
learnings in their day to day work where applicable.
The “IGNITE-Executive Development Program” was an internal
training organized by the Human Resources Department
of Amana Takaful Life for identified future leaders of the
company. The intention was to develop these personnel
through a multi faceted program that encompassed developing
skills and knowledge necessary for both their career and
personal advancement.
The inaugural session commenced on the 7th of May
2010 at the Learning centre in the honorary presence of
Mr.Reyaz Jeffrey (GM/C.E.O-Amana Takaful Life) and Mr.Zaid
Aboobucker (GM-Medical Takaful).
The programme included sessions on Sales, Marketing,
Finance, Strategy, Islamic Finance and Personal grooming etc...
The sessions were conducted by an expert panel both from the
industry and within the company.
The participants for the programme were carefully selected
by the management. The participant’s learning was evaluated
through assessments and certificates were awarded on
completion.
Talent attraction towards Talent Scale-up
Sowing the Seeds of Excellence – SSE (Management Trainee programme)
The SSE is the management trainee programme of Amana
Takaful which started with a unique concept of attracting
new talent to the organization focusing on the objectives of
introducing innovative approaches and management skills.
The candidates for SSE are selected through a screening
process where the management is also involved in the
interview process. The selected candidates are taken through a
unique style of learner-centred training method where they get
the opportunity to study all aspects of Takaful operations.
Similar to the EDP, the SSE programme was also conducted
based on assignments where the independent reports are
presented to a panel with their recommendations to improve
the function / process.
The successful candidates are offered employment
opportunities in the organization based on their performance
and skilled levels with attractive benefits.
| AMANA TAKAFUL PLC Annual Report 201022
Sustainability Report
Leadership Development
As part of our continuous effort to build strong Sales leaders,
quarterly outbound training sessions were organised. These
sessions aimed to develop and instil skills such as strategy
formulation, implantation and analysis. The program was
conducted at an outbound training facility adjacent to the
Bolgoda Lake in Moratuwa. The participants were also
encouraged to interact and build teamwork and interpersonal
skills readying them for the working environment.
Quarterly Review Meetings
All Sales teams were convened quarterly for review of
performance and direction for the next quarter. The meeting
was well attended and used as a platform for learning and
rewarding those who have performed exceptionally well. This
year we invited prominent trainers locally and internationally
to share their knowledge and expertise.
Awards Day
The best of Amana Takaful Ambassadors were recognised
this year as well in a glittering ceremony themed “The
Future is You”. The event that took place at the Taj Samudra
was adorned by the Chief Guest who was Major General
Shavendra Silva, a key proponent of the end of the 3 decade
long war.
The key note address for the morning was delivered to an
audience of invitees and members of the Amana Takaful
Insurance family by Fazal Ghaffoor.
The awards that were conferred were categorised under
general and life insurance. Under the Life insurance category,
M Z M Fawzan (Kandy branch) won the award for Best MCFP
and the Best Overall Sales Agent (Agency Category) while M H
M Fareeh (Kalmunai branch) won the award for Highest New
Business. A B H Nizam (Pettah Branch) won the award for Best
New Comer.
The award for the Best Overall Performer was won by M N M
Irshad (Pettah branch) who also won the award for Best MCFP
(Senior and employee category). M M Arshad won the award
for Highest New Business while M H M Risvi was adjudged the
Best Team Leader.
Pettah branch was victorious by clinching the Best Branch
award while the Western region won the award for the Best
Region.
In the General Takaful category W A G Fernando (Puttalam)
won the award for Overall Best Performer in the Sales Agent
category and Ruwan Dissanayeka (Kurunegala) won the same
in the Juniors category. The much anticipated Overall Best
Performer in the Senior category was awarded to M G M
Ansari (Head Office) while R M S Rathnayeka was adjudged
the Overall Best Performer in the Executive category.
Puttalam branch was awarded the Best Branch of the year
while U L Jameel (Kathankudy) won the award for the Best
Branch Manager. North Western region was adjudged the Best
Region. Riyaz Madoni (Head Office) won the award for Best
Portfolio Mix.
This time around a novel concept was realized which saw
certain members of the sales force of Amana Takaful Life
being given the opportunity to join an exclusive club of high
achievers. The following members were awarded with the
Silver Club Badge. M Z M Fawzan, K M M Anees, M N M
Irshad, M S A Sadath, M N M Nimraz, M Faizal, M M A Rikaz,
M H Alhaj, M N M Fazloon, M H M Risvi, R Thashokumar, M S
Hifny, M M Fiyaz, A A M Azam.
AMANA TAKAFUL PLC Annual Report 2010 23
Creating an Environment of Learning
Continuous learning is crucial for staff development and
keeping abreast of new information that helps us serve our
stakeholders better and faster. The company intranet and other
communication methods were used to share information and
teach staff about products and new happenings. Staff were
empowered to download learning material, including hard and
soft skills, off the intranet to learn themselves and train staff
reporting to them.
Innovation
Launch of Sri Lanka’s first Insurance portal
Amana Takaful made history in the Sri Lankan insurance
industry by launching a web portal that is meant to empower
its customers and prospective clientele. The launch event took
place in the presence of a select number of Amana Takaful Life
clients who registered their accounts symbolising the launch of
the portal.
Amana Takaful Online Services is a one-of-a-kind eportal that
enables multiple stakeholders of Amana Takaful to be able to
access their details online. A policy holder, can log in and view
his policy payment history and current information, intimate a
claim, upload claim documents and endorsement information
as well as make payment. In case of hospitalisation covers,
he can also view the claims history and past endorsements
etc. Meanwhile, agents can view their personal information,
policies managed by them and messages sent to them by their
managers. Basically, the web portal offers an interactive secure
environment with real time capabilities and offline functions.
Another key feature of the portal is its ability to link business
partners such as agents. The portal provides Agents a way to
do business anywhere, anytime. Agents can login and use their
portal to upload and download information, exchange data,
and view reports. This Insurance Portal also enhances the agent
experience and gives them a convenient means of quoting,
reporting, and customer documentation.
Stakeholder Relations
Efforts were made to understand our customers and business
partners better and listen to their many suggestions and
feedback from experiencing the services we offer. In doing
this many pro-active as well as reactive actions were taken
this year. These took the form of events, personal one-
to-one communication with customers after any service
experience, creation of a complaints and suggestions bank for
improvement.
Customer Events
Customer event were held in many parts of the island to meet
and speak to customers with regard to the Takaful concept,
the company and services offered. The opportunity was also
used for the collection of valuable customer feedback for
improvement.
Business Partner Meetings
The insurance industry is characterised by the involvement of
several key players that include brokers, leasing companies,
Banks and other financial institutions. As part of business
development this key segment of our customers were hosted
for evenings of imparting knowledge, discussions of improving
existing operations, obtaining feedback and building healthy
working relations.
Shari’ah Education
Being the pioneer of the Takaful way of insurance and also
the only Takaful provider in Sri Lanka, the onus is on Amana
Takaful to build awareness and educate the public on the
workings of the Takaful concept that is sweeping the world
by storm. Globally Takaful is growing fast and estimated to
reach a staggering 7.4 Bn by the year 2015 according to
Moody’s Investors Service of the US, from 5.3 Bn as at 2008
as mentioned in the Ernst & Young World Takaful Report of
2010. World over there are about 80 Takaful operators with
an additional 200 Takaful windows. Furthermore, according to
Bank Negara of Malaysia the global Takaful growth rate stands
at 20 percent.
With the support of the Shari’ah department programs were
held in many parts of the island for the public, customers and
scholars. The program was well received by the audiences,
which encouraged us to look at the program more extensively
in the year 2011.
Shareholders
As announced at the last Annual General Meeting all
shareholders were offered an enhanced Personal Accident
Cover. The cover included a Death, limited medical and funeral
expenses.
| AMANA TAKAFUL PLC Annual Report 201024
Sustainability Report
Incubator program
Amana Takaful Cares embarked on a novel project this year to
help identified children to reach their potential and become
contributing citizens of Sri Lanka. The essence of this project
was to create an enabling environment surrounding deserving
children that would foster balanced growth in education,
personal and spiritual guidance as well as nutrition.
As an initial phase 3 children, below Ordinary Levels, were
identified from the area of Dehiwala area who were not
receiving proper attention. As enablers for the project Amana
Takaful Cares engaged the Child Welfare officer of the District
Secretariat, the Grama Sevaka Niladari, OIC of the relevant
police station, the religious head of the area, the school
principal and a senior teacher in constant touch with the
children.
As an urgent need clothing, meals and all material necessary
for school was provided to the children by Amana Takaful
Cares that plays a purely behind the screen operation offering
financial support and advice. As a pre-requisite all partners of
the project were consented to monitor progress of the children
in terms of meetings, counselling and updates of examination
performance.
Spreading knowledge through books
Citing the need to enhance the knowledge of students the
Puttalam branch visited 4 schools and identified their needs.
An urgent requirement of books for reading and learning was
evident. Together with the schools a list of books obtained
and donated. The schools supported by this initiative were
Nagavil Muslim Maha Vidyalaya, Pallivasalthurai Muslim Maha
Vidyalaya, Kandakuda Muslim Vidyalaya, Kanukatti Muslim
Vidyalaya.
It is worthy to note that all schools displayed very high pass
rates with the principals demonstrating confidence of 0
percent failure rate in Ordinary Levels and Advanced Level
Examinations.
NHSL
A donation was made to the Accident and Orthopaedic Service
of the National Hospital of Sri Lanka, Colombo with the
participation of the Deputy Director of the National Hospital
of Sri Lanka, Accident and Orthopaedic Service, Dr. Prasad
Ariyawansa.
There were only few Pulse Oximeters available at the accident
service. These items are a dire need to keep track of the
concentration of Oxygen in the patient’s blood. Often, nurses
had to keep moving the available few items to serve the 346
beds. The portable Pulse Oximeter provided by Amana Takaful
Cares was a great relief to patients as well as the nurses
The Accident and Orthopaedic Service of the National Hospital
treats approximately 300 patients daily as outdoor patients
and another 100 to 120 patients are admitted to wards as in-
patients. Nearly 25 percent of out-patients are admitted and
treated for road traffic accident related injuries and this is the
single most cause for admission for this trauma unit. According
to a recent World Bank report Sri Lanka spends nearly 15 Bn
rupees annually on medical treatment.
Helping Lady Ridgeway
In our continuing efforts to help children Amana Takaful Cares
stepped forward to fund infrastructure projects at the Lady
Ridgeway Hospital in Borella. With the guidance of the hospital
authorities 2 projects were identified. One was the registration
counter where all admissions were handled. The structure was
old and not conducive for staff to work long hours. As such a
The Society
AMANA TAKAFUL PLC Annual Report 2010 25
new location was found and a separate structure was build to
help serve patients better.
The main telephone operator’s room that acts as the
communication hub for the hospital was found to be in
very bad shape rendering it dangerous. Steps were taken
immediately to refurbish the room with adequate masonry and
other works.
Iftar program (Breaking Fast)
A island wide campaign was launched to host people for
breaking fast irrespective of race or creed. Priority was given
to rural areas where mosques were funded to host people
for breaking fast. Staff were engaged in the organising of the
event together with the mosques for arrangements and even
the post event clean-up.
Donation to Army
A special donation was made to the Gemunu Regiment of the
Sri Lanka Army. The Regimental Centre situated in Kuruwita
houses 1500 inmates and has been in operation for the past
three decades. The Headquarter Battalion that looks into
the needs of inmates wounded in action had an acute need
increase their sanitary facilities. Amana Takaful thus, fulfilled
the said requirement in full. Similarly, the Gajaba Regiment
Headquarter Battalion Officers Mess was also aided to upgrade
the facilities offered to those heroes wounded in battle.
AIDS Awareness
As in every year this year too Amana Takaful Cares sponsored
the Annual AIDS awareness programme. AIDS has grown to
become a major social concern with more awareness needs on
protection and the acceptance of those affected by it. The Sri
Lanka AIDS Foundation organised a poster competition address
these issues that was a mammoth success with contenders
participating from many parts of the country. An awards
ceremony was organised with the participation of many
dignitaries representing political, commercial and social service
spheres.
Helping compliance
Support was given to the Gampola School Transport Services
Association to help them comply with the directions issued
by the Traffic Police. In accordance to the directive all school
services had to display their numbers and name to be
recognised in an effort to formalise the service. Amana Takaful
helped the association to comply with this requirement by
sponsoring the display boards for all vehicles.
Before refurbishment
After refurbishment
| AMANA TAKAFUL PLC Annual Report 201026
Product Portfolio
Takaful Travel Pal
Across the seven seas and beyond nation states, this
comprehensive solution for risks associated with international
travel is specially designed for the globetrotter in you. From
loss of luggage, documents and disrupted travel schedules to
personal accident/medical. TAKAFUL Travel Pal will help you to
travel with absolute peace of mind with free access to airport
lounge facilities at the Bandaranaike International Airport.
Takaful Business Cover
The business you run needs to be up on its feet all the time.
Getting things back on track after a loss is a priority to keep
up with the fast paced world of business. TAKAFUL Business
Cover gives you and your business the green light to operate
smoothly despite numerous unexpected calamities.
Takaful Easy Marine
Maritime enterprise is fraught with all sorts of risks. TAKAFUL
Easy Maritime is offered to you with speedy and efficient
service ensuring a smooth sail for your business at any stage.
We let you relax whilst your goods are on the move.
Takaful My Home
A home is more than a mere building. It is the showpiece of
a lifetime decorated with memories of love, care and family.
TAKAFUL My Home provides comprehensive cover for an array
of potential risks, making sure that heart and home abide
peacefully in each other. TAKAFUL My Home makes sure that
your home is always in good hands.
Takaful Total Drive
This is a motor insurance policy that cares not only for your
car, but also the ones you love and care about. Whilst giving
you the benefits of the world’s most rewarding concept,
TAKAFUL Total Drive makes sure that a part of your premiums
are spent on initiatives making you a partner in the country’s
efforts in building a better Sri Lanka.
Takaful Hale “N” HeartyAs the importance of keeping yourself healthy continues to rise, costs to meet medical expenses take a further toll. Do not compromise on the medical attention needed! TAKAFUL Hale & Hearty will help you plan out and meet such unexpected costs.
In line with the vision of providing health insurance to all, TAKAFUL Hale & Hearty caters to the needs of all Sri Lankans with products such as ‘Young Minds’, ‘Young Adults’, and ‘Easy. It’s a system of pooling financial resources to help one another when in need.
AMANA TAKAFUL PLC Annual Report 2010 27
Navodaya
At a time where the cost of living is ever increasing and the
less privileged in society distance themselves away from
luxuries and are trying to meet their days end, we at Amana
Takaful Insurance developed Navodaya to lend a helping
hand. Navodaya is Amana Takaful Insurance’s Micro Insurance
product which offers the participant an annually reviewable
death and disability cover.
Takaful Edukate Plan
Every parent’s wish is to give their children the best education
possible. TAKAFUL Edukate is a long-term savings and
investment plan that helps you finance your child’s education
in the future through the TAKAFUL Fund whilst providing
insurance cover for you and your child.
Takaful Secura Platinum PlanSometimes too much is not enough! Life is filled with uncompromising demands and challenges that have to be met and especially those that concern our loved ones. Secura Platinum has been designed to suit those of us who want to provide the best money can buy for the ones dearest to us.
Not only does it meet your protection needs in terms of death, critical illness and accident, it also includes a comprehensive hospitalisation cover for you and your family.
Takaful Secura Plan
Unique and innovative, bringing a comprehensive protection
under a single plan…Secura…providing protection for you and
your family whilst your money is judiciously invested to provide
great returns. Life really does get better!
Takaful Secura Gold Plan
Secura Gold…making every year a golden one…insurance
cover that ensures you are provided for financially through the
TAKAFUL Fund, in life’s difficult moments such as those arising
from critical illness, accident, disability or demise.
| AMANA TAKAFUL PLC Annual Report 201028
The concept of corporate governance has been defined as
a process by which companies are directed, managed and
controlled. It is a concept which is now increasingly gaining
prominence in the business world. In any company where
the shareholders have placed the reigns of power in the
hands of the Directors, it naturally follows that the Directors
are accountable to the shareholders. To ensure that the trust
placed in the Directors is secure, a company must adhere
to the best corporate governance practices which embody
integrity, accountability and transparency.
Amana Takaful PLC is committed to adopting best practices in
its endeavour to create shareholder wealth and gain market-
confidence. It is also committed to maintaining the smooth
functioning of the Company’s operations.
Capital Structure And Shareholding
Amana Takaful PLC has at its foundation a capital structure
consisting of an issued share capital of Rs. 500,000,360/-.
The Company has 3,001 shareholders, while the majority
shares are held by institutions. Details of the main shareholders
are given on page 85.
Board Of Directors And Board Committees
There are ten Directors on the Board of Amana Takaful PLC, of
whom nine hold office in non-executive capacities. The Board
of Directors has been drawn from a cross-section of industries.
Their expertise in their respective fields as well as insight has
contributed immensely to making effective and informed Board
decisions. The names of the Board of Directors are given on
page 36.
The main functions of the Board of Directors are as follows:
• Formulate,reviewandmonitorimplementationof
competitive business strategies
• EnsureappointmentofacompetentChiefExecutiveOfficer
and an effective management team
• SecureasoundRiskManagementsystem
• Secureeffectiveinformation,controlandauditsystems
• Adoptbusinesspracticesthatconformto‘Shari’ah’
Principles
• Ensurecompliancewithlegal/ethicalstandards
The responsibilities of the Chief Executive Officer and the
Chairman have been clearly established, adhering to best
corporate governance practices.
New Directors are nominated to bridge identified knowledge
gaps. Such Directors are elected to the Board by shareholders at
the Annual General Meeting. In accordance with the Articles of
Association, three Directors retire annually and are eligible for re-
election. The Board meets quarterly and the agenda is circulated
to the Board Members well ahead of the scheduled date.
Amana Takaful PLC has outsourced its secretarial functions to a
qualified company of secretaries.
The following subcommittees have been formed with the
objective of improving governance:
(i) Audit & Compliance Committee
(ii) Risk Management Committee
(iii) Investment Committee
(iv) Remuneration Committee
(i) The Audit & Compliance Committee
The Audit Committee of the Board of Directors comprises of
three Independent Non-Executive Directors of the Board. This
committee is chaired by Dato Mohd Fadzli Yusof who is an
Independent Non-Executive irector of the Company. The Chief
Executive Officer, Finance Manager, Other senior managers and
Internal Auditors are invited to be present at the meetings. The
details of the Audit Committee are provided in the Report of
the Board Audit & Compliance Committee on pages 33 to 34.
(ii) The Risk Management Committee (RISCO)
The Risk Management Committee of the Board comprises of
three Non-Executive Directors of which two are independent
directors. This committee is chaired by Dato Mohd Fadzli
Yusof who is an Independent Non-Executive Director of the
Company. The primary objective of RISCO is to manage a wide
range of risks pertinent to a takaful operator or an Islamic
Insurance operation. In relation to this, the RISCO inter-alia
focuses into risk factors associated with the operation, finance,
investment and other business risks in general.
The details of the Risk Management Committee are given on
page 32.
(iii) The Investment Committee
The Executive Committee members of the Company are also
members of the Investment Committee. The main concern
of the Investment Committee is the management of assets.
The Committee recommends investment strategies and
maintains an investment portfolio that ensures conformity with
regulatory, ‘Shari’ah’ requirements while being engaged in the
creation of wealth. The committee obtains the services of an
Corporate Governance
AMANA TAKAFUL PLC Annual Report 2010 29
investment consultant in managing investment portfolio of the
Company.
(iv) The Remuneration Committee
The Remuneration Committee is composed of three Non-
Executive Directors of the Board of which two are independent
directors. This Committee is entrusted with the responsibility
of maintaining competitive remuneration packages. The
Committee determines the remuneration of the Executive
Directors, the Chief Executive Officer and other senior
officers of staff and ensures that they are in line with industry
standards. Details of remuneration paid to directors are set out
in notes to the financial statements on page 80.
The details of the composition of this committee is set out in
the table below.
(v) Executive Committee
Executive Committee is composed of five members of the
Board and chaired by the chairman of the Company. Meetings
are held once a month and the committee is entrusted with
the responsibility of monitoring the implementation of the
business strategies of the Company and the Group. The
members of the committee are as follows:
1. Tyeab Akbarally – Chairman
2. Osman Kassim
3. M.H.M. Rafiq
4. M.O. Faizal Salieh
5. M. Ehsan Zaheed-Director/CEO
Ethical Standards
Amana Takaful PLC aspires to adopt the highest ethical
standards and adheres to the Code of Ethics for insurance
companies in Sri Lanka which contain the following elements:
• Honesty&fairness
• Compliancewithregulatoryrequirements
• Accountability-provisionofaccurate,timelyandessential
information to stakeholders
• Avoidingconflictofinterest
• Professionaljudgement
• Maintainingprivacyandconfidentialityofcustomerrelated
information
• Socialresponsibility
• Maintainingbestpracticesinmarketingandadvertising
The management encourages employees to adopt ethical
practices during the weekly mission meetings.
Executive Management
The Chief Executive Officer discusses strategic issues with
the Divisional Managers at weekly senior management
meetings, in order to obtain feedback information on the
effective implementation of strategies. Operational concerns
are discussed at monthly operational meetings attended by
the Operations Manager and Divisional Managers. The entire
executive staff is subjected to a performance evaluation
biannually.
Internal Controls
The Board of Directors has entrusted the responsibility of
establishing an effective internal control system encompassing
financial, operational and compliance controls to the
Audit Committee, which is also responsible for the regular
monitoring of such controls. In addition, an in-house audit
team conducts internal audit on the systems and various
aspects of the operations. The findings are conveyed to the
Audit Committee, which, in turn, briefs the Board on areas of
concern.
Compliance with ‘Shari’ah’ Principle
Amana Takaful PLC takes the utmost care in adhering to
‘Shari’ah’ principles. A Shari’ah unit is set up internally to
carries out quarterly reviews on the policies and operations of
the Company. The Statement of Compliance is a part of the
Annual Report and is provided on page 42.
Regulatory Compliance
The Audit Committee is responsible for regulatory compliance.
In addition, a Compliance unit has been set up to investigate
into all compliance-related matters across the organisation. It
keepsaclosetrackofallnewlegislation;regulationsetc.,and
notify and guide the respective departments.
Relationship with Stakeholders
The Board of Directors discloses policy decisions and operations
affecting shareholders through its biannual and annual reports.
The Board entertains questions from shareholders at Annual
General Meetings ensuring shareholder participation and
interaction.
The management holds weekly mission meetings at which
employees are briefed of the policies, goals and values of
Amana Takaful PLC and their views and suggestions are sought
and evaluated.
| AMANA TAKAFUL PLC Annual Report 201030
Corporate Governance
Amana Takaful PLC believes in serving its customers beyond
their expectations. An interactive website provides access to
the general public on the Company’s activities.
Solvency Requirements
The Solvency Margin for Family Takaful (Long-Term Insurance)
Business has been maintained as per the Regulation Insurance
Industry (RII) Act No. 43 of 2000. The Company has also met
the Solvency Margin for General Insurance Business as at 31st
December 2010.
Best Practices Unique to Us
Amana Takaful PLC takes pride in adopting self-regulation in
its endeavour to be fair by its customers. The appointment
of an in-house ombudsman provides customers the facility to
reassess their claims on instances of refusal.
AMANA TAKAFUL PLC Annual Report 2010 31
Corporate Governance Disclosures under CSE Rules in Relation to Directors of the Company
Areas of Compliance Current Status Remarks
Board of Directors Executive Director By the end of 2009 the Board had seven Non-
1. M. Ehsan Zaheed Executive Directors out of eight members in the
Board and has complied with the CSE Rules
Non-Executive Directors All the Non-Executive directors have submitted
1. Tyeab Akbarally - Chairman the annual declaration of their independence or
2. Osman Kassim non- independence to the Board of Directors
3. Dato’ Mohd Fadzli Yusof
4. Dr. A.A.M. Haroon
5. M.H.M. Rafiq
6. Faizal Salieh
7. Dr. T. Senthilverl
8. A.S.M. Muzzammil
(appointed w.e.f. 29.04.2010)
9. M.U.M. Ali Sabry
(appointed w.e.f. 26.05.2010)
Independent Directors 1. Dato’ Mohd Fadzli Yusof The Board comprises of four Independent
2. M.H.M. Rafiq Directors out nine Non-Executive Directors by the
3. A.S.M. Muzzammil end of 2010.
Dato’ Mohd Fadzli Yusof and Mr. M.H.M. Rafiq
do not technically qualify as independent by not
meeting Rule 10.7.4.(e) and 7.10.4.(e) &
7.10.4.g (i) of the CSE Rules respectively.
However, the board after much Independent. Set
out below are the criteria to consider them as
Independent Directors.
a) They do not provide any services to the
Company in a capacity other than director
b) They have not received financial assistance
from the Company.
c) They do not have any apparent conflict of
interest in the Company which would impair their
independent judgment as a director.
The Board was also of the view that taking into
account the contribution made by these
directors to the affairs of the Company, their
integrity and stature were not in question.
Remuneration Committee 1. Dato’ Mohd Fadzli Yusof This Committee comprises two Independent
Chairman Directors out of three Non-Executive Directors.
2. M.H.M. Rafiq
3. Tyeab Akbarally
Audit Committee 1. Dato’ Mohd Fadzli Yusof This Committee comprises of Independent
Chairman Directors by the end of 2010.
2. M.H.M. Rafiq
3. A.S.M. Muzzammil
| AMANA TAKAFUL PLC Annual Report 201032
The Risk Management Committee of the Board (hereinafter
referred to as the “RISCO”) was established in January 2010,
in accordance with the proposal made by the Board at its Thirty
Fifth (35th) meeting held on 25 October 2009.
Membership of RISCO
The membership of RISCO comprises of three (3) non-Executive
Directors of the Board of which two are independent directors.
The Chairman of RISCO is the independent non-Executive
Director.
Members
For the period under review, the members are as follows:
1. Dato Mohd Fadzli Yusof (Chairman) -
Independent Non-Executive Director
2. Mohamed Haniffa Mohamed Rafiq -
Independent Non-Executive Director
3. Dr. Aboobacker Admani Mohamed Haroon -
Non Independent Non-Executive Director
Quorum
The quorum for the meeting is two members.
Secretary
The Manager, Risk Management Department serves as the
secretary of RISCO
Objective
Essentially, the primary objective of RISCO is to manage a wide
range of risks pertinent to a takaful operator or an Islamic
Insurance operation. In relation to this, the RISCO inter-alia
focuses into risk factors associated with the operation, finance,
investment and other business risks in general.
In relation to this, the RISCO is also responsible to identify,
analyse, recommend and monitor strategic wide Risk
Management for Amana Takaful PLC and its Group. In this
respect Amana Takaful PLC & the Group are required to:
a. Safeguard its assets and resources.
b. Maintain its reputation and integrity, among all its
stakeholders
c. Optimize the return and minimise impact to, and protect
the interests of all stakeholders including shareholders,
participants, intermediaries and staff.
d. Meeting regulatory requirements of both internal and
external authorities.
e. Improve strategic competitiveness and operational
effectiveness that would enhance the long-term value of
the stakeholders.
f. Fulfill Amana Takaful PLC and the Group strategic
objectives.
g. Ensure that the Amana Takaful PLC and the Group
keep up with AAOIFI standards based on the rulings
of its Shari’ah Advisory Council, as long as they do not
contravene with local regulations.
h. Maintain and highlight value of service as ethical
insurance provider.
Duties and Responsibilities
The primary duties and responsibilities of the RISCO are as
follows:
a. Reviewing and recommending risk management
strategies, policies and risk tolerance for the approval of
theBoard;
b. Reviewing and assessing the adequacy of risk
management policies and framework for identifying,
measuring, monitoring and controlling risks as well as the
extenttowhichtheseareoperatingeffectively;
c. Ensuring adequate infrastructure, resources and system
are in place for an effective risk management i.e.
ensuring that the staff responsible for implementing risk
management system perform those duties independently
ofthetakafuloperator’srisktakingactivities;and
d. Reviewing the Management’s periodic reports on risk
exposure, risk portfolio composition and risk management
activities.
Meeting
The mandate for the RISCO is to undertake regular meetings,
at least once in every quarter and the reporting should be
directed to the Board. The RISCO had four (4) meetings during
the year. During the year under review the number of meetings
held is as follows:
No Date of Meeting
1. 18th January 2010
2. 31st March 2010
3. 27th July 2010
4. 18th October 2010
Chairman’s Remark
RISCO expresses its satisfaction that effective measures have
been in place to deal with an appropriate risk management
process of Amana Takaful PLC and its Group. It was able to
identify the risk factors, and in line with this developed a Risk
Management Manual, taking into account of all possible risks
associated with the business activities. The RISCO and the
Board believe that Amana Takaful PLC and the Group are in
the right direction in terms of developing a sound system and
process to manage and mitigate these risk factors.
Risk Management Committee Report
AMANA TAKAFUL PLC Annual Report 2010 33
The Audit Committee of the Board (Committee) was
established in January 2006 with the tasks and responsibilities,
to examine and appraise, inter-alia the Company’s internal
control system, financial management, operational procedures,
strategic planning, as well as implementing audit function and
proposing measures towards enhancing corporate governance.
Composition
The Committee comprises (as at the date of this Annual
Report) four members of whom three (3), including the
Chairman, are Independent Non-Executive Directors. The
composition of the Committee and details of attendance of
each member at meetings of the Committee during the period
under review are as follows:
Members No of Meetings attended
1) Dato Mohd Fadzli Yusof (Chairman) 4 out of 4
Independent Non-Executive Director
2) Muhammad H.M Rafiq 4 out of 4
Independent Non-Executive Director
3) Aboo Sally Mohamed Muzzammil 1 out of 2
Independent Non-Executive Director
(Appointed as member with effect
from 1st July 2010)
4) S H M Giado 3 out of 4
Non-Independent member
The members have vast experience in both Takaful and
insurance management as well as accounting and financial
matters. Dato Mohd Fadzli Yusof was a member of the
“Task Force To Examine The Establishment of an Islamic
Insurance Company in Malaysia” and subsequently joined
Bank Islam Malaysia Berhad in 1984 with the task to establish
and incorporate Syarikat Takaful Malaysia Berhad, the
pioneer Takaful operator in the Far East. He was its founder
Chief Executive Officer-cum-Director until his retirement
in September 2005. Muhammad H.M Rafiq’s involvement
in insurance was not only confined to the management of
the company but also in insurance broking, spanning over
four decades. Muhammad Muzzammil is the Chairman/
Managing Director, Ceylon Foods (Pvt) Ltd. He has served for
over 40 years in senior management position in commerce
and industry. He holds a Masters Degree in Business Analysis
from the University of Lancaster, UK and the Joint Diploma in
Management Accounting, UK. He is a Fellow of the Chartered
Institute of Management Accountants (CIMA) and Chartered
Certified Accountants. Mr. Muzzammil served as the President
of CIMA Sri Lanka Division, Exporters Association of Sri Lanka
and the Seafood Exporters Association of Sri Lanka. He has
been members of the Council of the Moratuwa University, Sri
Lanka Institute of Advanced Technical Education, Sri Lanka
Standards Institute and the Industrial Technical Institute
and was a member of the Joint Business Forum and various
Chambers of Commerce and Industry. He has been a Vice
President and Treasurer of the OPA and also serves in several
educational, social and religious organizations. S H M Giado
is the Head, Internal Audit & Compliance, Amana Investments
Limited.
As and when required the External Auditors and the
Company’s Consulting Actuary were also invited to brief the
Committee on pertinent and relevant issues.
Duties and Responsibilities
The primary duties and responsibilities of the Committee are as
follows:
The Committee focuses on ensuring the Best Practice and
Corporate Governance while its activities are centered, inter-
alia, on the following areas:
1) Review the adequacy of the internal audit programme and
plan, internal audit findings and recommend actions to
be taken by the Management of deficiencies in controls,
processes and procedures.
2) Assessment of the independence and performance of the
Company’s external auditor
3) Review the Management Letter and follow-up on its
recommendations.
4) Ensure preparation and presentation of financial reports in
line with accounting standards and ensuring the adequacy
of disclosure in such report.
5) Review the effectiveness of internal controls and risk
management processes.
6) Ensure the compliance with Regulatory Affairs and
Corporate Governance.
Internal Audit
The internal audit functions of the Company are undertaken by
the Internal Audit Department. The Department presented to
the Committee the Comprehensive Audit Plan for the financial
year under review, and instructed the Internal Auditors on the
approach to be adopted in their auditing processes. Apart from
the Audit Plan, the Committee also instructed the Auditors
to carry out investigation, inspection and auditing on certain
issues deemed necessary to maintain and ensure the adequacy
and effectiveness of internal controls and principles of best
practice.
The Committee deliberated and reviewed a number of internal
audit reports on a multitude of operational areas such as
Re insurance (Re Takaful), various types of reserve including
technical reserve, claims and underwriting. To ensure key
decisions and recommendations of the Committee were
efficiently implemented a process of follow-up programmes
had been put in place.
Board Audit and Compliance Committee Report
| AMANA TAKAFUL PLC Annual Report 201034
External Audit
The Committee reviewed the Management Letter and other
recommendations submitted by the External Auditors, Ernst
and Young and followed up the issues raised, during the
financial year under review.
The Committee further made recommendation in relation to
the remuneration, functions and terms of engagement of the
External Auditors, particularly in relation to their auditing work.
Conclusion
The Committee is satisfied that, effective measures, in
respect of internal control of the Company, are in place. The
accounting standards are duly followed and the activities and
the functions of the Company are in compliant with regulatory
and statutory requirements. The Committee is also comfortable
that, the assets of the Company have been adequately
safeguarded and the requirements of independence of
internal and external auditors are met. With the transparent
and appropriate relationship established with the External
Auditors, the latter have an obligation to raise and highlight
any significant defects or weaknesses in the Company’s system
of internal control and compliance to the attention of the
Management, the Committee and the Board. All in all, the
Committee strongly believes that the Company is in the right
direction in terms of corporate governance and best practices.
Dato Moh’d Fadzli YusofChairman
Audit Committee of the Board
31st March 2011
Board Audit and Compliance Committee Report
AMANA TAKAFUL PLC Annual Report 2010 35
The Directors are pleased to submit their report together with
the Audited Accounts for the Company and the Group, for
the year ended 31st December 2010, to be presented at the
Twelfth Annual General Meeting of the Company.
Review of the Year
Chairman’s review on pages 4 to 5 describes the Company’s
affairs and mentions important events that occurred during
the year, and up to the date of this report. The Management
Review on pages 13 to 17 elaborates the financial results
of the Company. These reports together with the audited
financial statements reflect the state of the affairs of the
Company.
Principal Activities
The principal activity of the Company is Takaful Insurance
Business.
Financial Statements
The financial statements prepared in compliance with the
requirements of Section 151 of the Companies Act No 7 of
2007 are given on pages 48 to 83 of this annual report.
Independent Auditor’s Report
The Auditor’s Report on the financial statements is given on
page 47 of this report.
Accounting Policies
The Accounting Policies adopted in preparation of the financial
statements is given on pages 58 to 65 There were no changes
in Accounting Policies adopted by the Company during the
year under review.
Financial Results and Appropriations
Net Loss after Taxation of the Shareholders’ Fund for the year
was Rs.31.3mn (2009- Profit of Rs. 29.4mn.)
The Deficit of the General Takaful Fund for the year was Rs.
18.2mn (2009- Rs.80.2 mn).
Net Loss after Taxation of the Company for the year was Rs.
49.56mn (2009-Rs. 50.77mn) and the Net Loss after Taxation
of the Group for the year was Rs. 35.4mn (2009- Rs. 52mn).
The Family Takaful (Life) Fund balance has increased to Rs.
413mn from Rs. 335mn last year.
Property, Plant & Equipment
During the year under review the capital expenditure on
Property, Plant and Equipment for the group amounted to Rs.
18.8mn (2009 – Rs. 4.9mn).
Information relating to movement in Property, Plant &
Equipment during the year is disclosed under Note 6 to the
financial statement.
Investments
Details of Investments held by the Company are given in Note
3 to the financial statements on page 66.
Reserves
Total reserves as at 31st December 2010 for the Company and
group amounted to Rs. 383mn-negative (2009- Rs. 336.6mn-
negative) and Rs. 367mn-negative (2009- Rs. 334.3mn-
negative), respectively. The breakup and the movement are
shown in the Statement of Changes in Equity in the financial
statements.
Stated Capital
As per the terms of the Companies Act No. 7 of 2007, the
stated capital of the Company as at 31st December 2009, was
Rs. 500,000,360 represented by 500,000,036 Ordinary Shares.
There were no change in the stated capital during the year.
The details are given in Note 19 to the financial statement on
page 77.
Contingent Liabilities
There were no material contingent liabilities outstanding as at
31st December 2010.
Post Balance Sheet Events
There were no material events occurring after the Balance
Sheet date that require adjustments, or disclosure which
require adjustment in the Financial Statements.
Directors’ Responsibilities
The Statement of the Directors’ Responsibilities is given on
page 41 of the annual report.
Corporate Governance
The Company has compiled with the corporate governance
rules laid down under the listing rules of the Colombo Stock
Exchange, and is given on pages 28 to 31.
Statutory Payments
The Directors, to the best of their knowledge and belief, are
satisfied that all statutory payments in relation to all relevant
regulatory and statutory authorities have been paid within the
stipulated period.
Interests Register
The Company has maintained an Interest Register as
contemplated by the Companies Act No 7 of 2007.
Details of the transactions with Director-related entities are
disclosed on pages 38 to 40.
Details of shareholding of directors are given under particulars
of Directors’ Shareholding below.
The Annual Report of the Board of Directors on the Affairs of the Company
| AMANA TAKAFUL PLC Annual Report 201036
BOARD COMMITTEES
Audit Committee
Following are the names of the Directors comprising the Audit
Committee of the Board.
1. Dato Mohd Fadzli Yusof - Chairman
2. Mr. M.H.M. Rafiq
3. Mr. A.S.M. Muzzammil
The report of the Audit Committee on page 33 set out the
manner of compliance by the Company in accordance with the
requirements of the Rule 7.10.6 of the Rules of the Colombo
Stock Exchange on Corporate Governance.
Remuneration Committee
Following are the names of the Directors comprising the
Remuneration Committee of the Board
1. Dato Mohd Fadzli Yusof - Chairman
2. Mr. M.H.M. Rafiq
3. Mr. Tyeab Akbarally
The particulars of the remuneration committee are mentioned
in the corporate governance report on page 29 The details of
the aggregate remuneration paid to the Executive and Non –
Executive Directors during the financial year are given in Note
29 on page 80 to the financial statements.
Share Information and Substantial Shareholdings
The distribution of shareholding, market value of shares and
Twenty largest Shareholders are given on page 85.
The earnings per share, dividends per share, net assets per
share are given on page 85.
Directors
The Directors of the Company during the year.
Date of Date of
Appointment Resignation
Tyeab Akbarally 07.12.1998 –
Osman Kassim 07.12.1998 –
Dato’ Mohd Fadzli Yusof 10.02.1999 –
M.H.M. Rafiq 07.12.1998 –
Dr. A.A.M. Haroon 21.09.2000 –
M. Ehsan Zaheed 01.10.2003 –
M.O. Faizal Salieh 15.03.2004 –
Dr. T. Senthilverl 12.10.2009 –
A.S.M. Muzzammil 29.04.2010 –
M.U.M. Ali Sabry 26.05.2010 –
A brief profile of directors are given on page 10 of this annual
report.
In terms of Section 84 (1) of the Articles of Association of the
Company, the following Directors retire by rotation and being
eligible had offered themselves for re-election.
Dr. A.A.M. Haroon
Mr. A.S.M. Muzzammil
Mr. M.U.M. Ali Sabry
As per Article 90 of the Articles of Association of the Company,
Mr. A.S.M. Muzzammil and Mr. M.U.M. Ali Sabry have been
elected as Directors of the Company.
Directors’ Shareholding
The interest of the Directors in the shares of the Company as at
31stDecember2010wereasfollows;
No. of Ordinary Shares As at As at 31.12.2010 31.12.2009
Mr. Tyeab Akbarally 40 4
Mr. Osman Kassim 250,040 25,004
Dato’ Mohd Fadzli Yusof - -
Dr. A.A.M. Haroon 20 2
Mr. M.H.M. Rafiq 20 2
Mr. M.E. Zaheed 5,000 3,000
Mr. M.O.Faizal Salieh - -
Dr. T. Senthilver 31,107,100 5,028,400
A.S.M. Muzzammil - -
M.U.M. Ali Sabry - -
Independence of Directors
Particulars of independent directors are mentioned under
corporate governance report on page 31.
Donations
During the year, donations amounting to Rs. 173,300 (2009 –
Rs. 272,400) were made by the Company.
Going Concern
The Directors, after making necessary inquiries and review of
the financial position and future prospects of the Company,
have a reasonable expectation that the Company has adequate
resources to continue to be in operational existence for the
foreseeable future. Therefore, the going concern basis is
adopted in the preparation of the Financial Statements.
Auditors
The resolutions to appoint the present Auditors, Messrs.
Ernst & Young Chartered Accountant, who have expressed
their willingness to continue in office, will be proposed at the
Annual General Meeting.
The Annual Report of the Board of Directors on the Affairs of the Company
AMANA TAKAFUL PLC Annual Report 2010 37
The Audit and non-audit fees paid to the auditors is disclosed
in the Note 29 on page 80.
As far as the Directors are aware, the Auditors do not have any
relationship on interest in the Company.
The Audit committee reviews the appointment of the Auditor,
its effectiveness and its relationship with the Company
including the level of audit and non-audit fees paid to the
Auditor. Details on the work on the Audit Committee are set
out in the Audit Committee Report.
Notice of Annual General Meeting
The Annual General Meeting will be held on 26th May 2011
at 9.00 a.m. at Marine Grand Banquet Hall, No. 41, Station
Avenue, Marine Drive, Colombo 6.
The Notice of the Annual General Meeting appears on
page 92.
For and on behalf of the Board.
Osman KassimDirector
Ehsan ZaheedDirector/CEO
C. Salgado (Mrs)Managers & Secretaries (Pvt) Ltd)
Secretaries
Amana Takaful PLC
31st March 2011Colombo
| AMANA TAKAFUL PLC Annual Report 201038
Name of Director Position Name of the Company Nature of the Transaction 2010 2009
Mr. Osman Kassim Chairman Amana Investments Limited Takaful Premium 5,402,730 10,506,270
Mr. Tyeab Akbarally Director Mudharaba Investments 773,744 936,846
Dr. A.A.M. Haroon Director Income from Mudharaba-Inv 287,750 256,015
Mr. Faizal Salieh Director Extended Murabaha Payable - Gross 4,628,462 5,839,212
Lease (Ijara) Facility Payable - Gross - 1,651,549
Claims Paid 3,126,196 2,452,105
Outstanding Premium 3,941,322 5,304,973
Mr. Tyeab Akbarally Director Amana Capital limited Takaful Premium 9,876 10,887
Dr. A.A.M. Haroon Director
Mr. Faizal Salieh Director
Mr. Osman Kassim Chairman Amana Securities Limited Takaful Premium 510,873 836,675
Mr. Tyeab Akbarally Director Purchase of Shares -
Dr. A.A.M. Haroon Director (Amana Securities as a Stock Broker) 194,600 829,800
Mr. Faizal Salieh Director Sale of Shares -
(Amana Securities as a Stock Broker) - 998,766
Claims Paid 357,914 701,629
Mr. Osman Kassim - Chairman Amana Asset Management Takaful Premium 362,772 411,660
Resigned w.e.f
10/06/2010
Mr. Tyeab Akbarally Director Claims Paid 61,447 131,193
Mr. Faizal Salieh Director
Mr. Ehsan Zaheed Director
Mr. Osman Kassim - Chairman Amana Global Limited Takaful Premium 8,645 84,017
Resigned w.e.f
10/06/2010
Mr. Tyeab Akbarally Director Technical Fee - 393,000
Dr. A.A.M. Haroon Director Re-Imbursement of Cost 7,598,975 5,543,768
Mr. M.H.M Rafiq Director Dividend Receivable - 10,000,000
Mr. Faizal Salieh Director Bonus Shares 10,000,000 -
Mr. Ehsan Zaheed Director Outstanding Premium 10,045 13,266
Claims Paid 48,500 40,323
Advance received for the purchase of
a Non-admissible Assets - 22,500,000
Settlement of the Advance Received - (22,500,000)
Inter-Company receivable 2,385,664 -
Mr. Osman Kassim Chairman APIIT Lanka (Pvt) Limited Takaful Premium 414,071 266,208
Claims Paid 286,596 -
Chairman SG Logistics (Pvt) Ltd -
Former Bax Global Takaful Premium 48,148 1,838
Claims Paid 417,812 -
Chairman Classic Travels (Pvt) Limited Takaful Premium 476,798 1,290,301
Claims Paid 822,815 1,101,581
Chairman Expolanka Commodities Limited Takaful Premium 961,014 985,472
Claims Paid 1,084,596 473,248
Chairman Expolanka Freight Limited Takaful Premium 10,168,468 5,520,338
Claims Paid 2,853,032 3,008,973
Chairman Expolanka International Takaful Premium 775 16,978
(Pvt) Limited
Chairman Expolanka Holdings Limited Takaful Premium 1,056,733 3,508,376
Claims Paid 832,976 60,951,554
Directors Interest in Contracts with the CompanyNo Director of the Company is directly or indirectly interested in the contracts of the Company other than the following. These
transactions have been carried out in the ordinary course of business at commercial rates.
AMANA TAKAFUL PLC Annual Report 2010 39
Name of Director Position Name of the Company Nature of the Transaction 2010 2009
Mr. Osman Kassim Chairman Expolanka Teas Limited Takaful Premium 3,202,839 2,141,803
Claims Paid 1,109,143 1,538,390
Chairman Globe Air (Pvt) Limited Takaful Premium 444,884 379,744
Claims Paid 317,990 109,573
Mr. Osman Kassim - Chairman Bio Extracts Takaful Premium 32,291 1,838
Resigned w.e.f Claims Paid 43,304 -
10/06/2010
Mr. Osman Kassim - Chairman Classic Enterprise (Pvt) Limited Takaful Premium - 35,200
Resigned w.e.f Claims Paid 74,000 6,927
10/06/2010
Mr. Osman Kassim - Chairman Classic Papers (Pvt) Ltd Takaful Premium 21,528 877,564
Resigned w.e.f Claims Paid 6,872,040 91,238,276
10/06/2010
Mr. Osman Kassim - Chairman Denshun Industries Takaful Premium 284,694 583,492
Resigned w.e.f (Pvt) Limited Claims Paid 1,600 91,387
10/06/2010
Mr. Osman Kassim - Chairman Expack Corrugated Cartons Takaful Premium 1,174,263 576,025
Resigned w.e.f (Pvt) Limited Claims Paid 333,195 515,270
10/06/2010
Mr. Osman Kassim - Chairman Expo Aviation Services Limited Takaful Premium 982,021 1,925,392
Resigned w.e.f Claims Paid 217,895 685,316
10/06/2010
Mr. Osman Kassim - Chairman Expolanka Pharmaceutical Takaful Premium 8,879 197,557
Resigned w.e.f (Pvt) Limited Claims Paid 93,422 220,563
10/06/2010
Mr. Osman Kassim - Chairman Expolanka Plantation Takaful Premium 275,856 446,024
Resigned w.e.f (Pvt) Limited.
10/06/2010
Mr. Osman Kassim - Chairman Freight Care ( Pvt ) Limited Takaful Premium 15,900 176,400
Resigned w.e.f Claims Paid - 55,465
10/06/2010
Mr. Osman Kassim - Chairman Hellocorp (Pvt) Limited Takaful Premium 49,080 307,576
Resigned w.e.f Claims Paid 206,974 64,438
10/06/2010
Mr. Osman Kassim - Chairman International Airline Services Takaful Premium - 148,600
Resigned w.e.f (Pvt) Limited
10/06/2010
Mr. Osman Kassim - Chairman Neptune Converters Takaful Premium - 50,922
Resigned w.e.f (Pvt) Limited Claims Paid 800 800
10/06/2010
Mr. Osman Kassim - Chairman Neptune Papers (Pvt) Limited Takaful Premium 566,634 2,032,323
Resigned w.e.f Claims Paid 168,035 4,708,037
10/06/2010
Mr. Osman Kassim - Chairman Skycare (Pvt) Limited Takaful Premium 130,536 330,312
Resigned w.e.f Claims Paid 96,611 233,441
10/06/2010
| AMANA TAKAFUL PLC Annual Report 201040
Name of Director Position Name of the Company Nature of the Transaction 2010 2009
Mr. Osman Kassim - Chairman UCL Logistics Takaful Premium - 166,016
Resigned w.e.f Claims Paid 30,977 -
10/06/2010
Mr. Osman Kassim Chairman Vidullanka Limited. Takaful Premium 3,486,050 3,178,137
Dr. T. Senthilverl Director Claims Paid 730,341 1,595,032
Dr. T. Senthilverl Director MBSL Savings Bank Ltd Takaful Premium 2,095,764 -
Claims Paid 1,238,514 -
Director Ceylinco Finance Takaful Premium 1,032 -
Mr. M.H.M. Rafiq Chairman Liquid Media (Pvt) Ltd Takaful Premium 71,800 73,600
Claims Paid - 72,950
Director Wycherley International School Takaful Premium 20,000 18,280
Claims Paid - 310,472
Director Sharestock (Pvt) Ltd Takaful Premium 1,160 4,480
Director Hirequip (Pvt) Limited Takaful Premium 9,818 8,241
Claims Paid - 4,721
Director Saif Capital Takaful Premium 40,100 -
Claims Paid 39,710 -
Director Corporate Investment Takaful Premium 10,580 -
Management (Pvt) Ltd
Dr. A.A.M. Haroon Director Lucky Industries (Pvt) Limited Takaful Premium 1,075,106 1,248,236
Claims Paid 608,062 30,296
Director Vanguard Industries (Pvt) Limited Takaful Premium 1,010,732 1,021,157
Claims Paid 1,288,447 252,266
Director Master Apparels (Pvt) Limited Takaful Premium 196,365 113,954
Claims Paid - 318,326
Mr. Tyeab Akbarally Director Akbar Brothers Limited Takaful Premium 2,723,884 2,757,708
Claims Paid 1,245,807 645,402
Director Falcon Trading (Pvt) Limited Takaful Premium 310,992 247,604
Claims Paid 37,774 5,773
Director Akbar Pharmaceutical Takaful Premium 560,566 1,973
(Pvt) Limited Claims Paid 60,500 237,664
Director Quick Tea (Pvt) Limited Takaful Premium 532,056 126,954
Claims Paid 234,884 -
Director Flexi Print (Pvt) Limited Takaful Premium 985,130 817,815
Claims Paid 116,726 783,418
Mr. Ehsan Zaheed Director Expat Key Relocations (Pvt) Ltd Takaful Premium - 84,017
Claims Paid 9,200 -
Directors Interest in Contracts with the Company
AMANA TAKAFUL PLC Annual Report 2010 41
This statement sets out the responsibilities of the Directors in
relation to Financial Statements of the Company. The Directors
confirm that the Financial Statements for the year 2010
prepared and presented in this Annual Report are consistent
with the requirements of the Companies Act No. 07 of 2007
and the Regulation of Insurance Industry Act No. 43 of 2000.
In preparing the Financial Statements, the Directors have
adopted appropriate accounting, principles and policies and
where relevant, disclosed and explained material departures,
if any. The Directors ensure that applicable accounting
standards have been followed and that the judgments and
estimates provided are reasonable and prudent and provide
a true and fair view of the state of affairs as well as the
profitability of the Company. The Directors also state that the
Financial Statements are prepared on a going concern basis
and a review of the Company’s performance indicates that the
Company has adequate resources to continue in operation.
The Directors have taken proper and sufficient care to ensure
the maintenance of adequate accounting records in conformity
with the applicable provisions of the Regulation of Insurance
Act No. 43 of 2000 and any other legislations including the
Companies Act No. 07 of 2007 to safeguard the assets of
the Company and to prevent and detect fraud and other
irregularities.
The Company possesses an effective internal audit system
commensurate with the size and nature of its business.
Steps have also been taken to ensure that proper records are
maintained and the information generated is reliable.
It is the responsibility of the Directors to provide the Auditors
every opportunity to carry out necessary audit work to enable
them to present their audit report. The Directors, are satisfied
that all statutory payments in relation to all relevant regulatory
and statutory authorities which were due and payable by the
Company as at the Balance Sheet date have been paid or
where relevant provided for.
The Directors are of the view that they have to the best of their
knowledge, discharged their responsibilities as set out in this
statement.
For and on behalf of the Board,
Tyeab AkbarallyChairman
Colombo, Sri Lanka
31st March 2011
Statement of Directors’ Responsibilities
| AMANA TAKAFUL PLC Annual Report 201042
Shari’ah Audit Report to the Shareholders of Amana Takaful PLC
We have examined the accompanying financial statement of
Amana Takaful PLC, (the “Company”) for the year ended 31st
December 2010. We have also conducted our review to form
an opinion as to whether the Company has complied with
Shari’ah Rules and principles and also with the specific fatwas,
regulations and guidelines issued by us.
Management’s Responsibility for the Financial Statements
The Company’s management is responsible for ensuring that
the financial institution conducts its business in accordance
with Islamic Shari’ah Rules and Principles. Our responsibility as
the Shari’ah Committee is to form an independent opinion,
based on our review of the operations of the Company, and to
report to you.
Scope of Audit and Basis of Opinion
The scope of our audit primarily involves the review of
Company’s compliance with the Shari’ah Regulations and
Guidelines. Our review also includes examining, on a test basis
of each type of product in relation to issuance, compensations
and accountings.
Opinion
In our opinion and to the best of our information and belief
and according to the explanations given to us:
a) The transactions undertaken by the Company, during the
year ended 31 December 2010, were in accordance with
the guidelines prescribed by the Shari’ah Advisory Council
and in conformity with the requirements of Takaful
Regulations;
b) The Company was, in all transactional respects, in
compliance with the Shari’ah Principles. Further, we
also concur with the accounting policies adopted for
incorporation of Participant Takaful Fund into the
accompanyingfinancialstatements;
c) Amana Takaful PLC, whose operations are regulated by
Regulations of Insurance Industry Act No. 43 of 2000, has
to invest in government treasury bills. Further, to be in
compliance with the accounting standards the company
has been compelled to record certain incomes which
are prohibited by the Shari’ah principles. All earnings
that have been realized from these sources and by other
means which are prohibited by Islamic Shari’ah Rules and
Principles have been deposited in a charity account and to
be distributed as Charity by the Company.
d) A portion of non-permissible income has been spent
on charity. The balance must be disposed of by the
Management on charitable and welfare causes in
accordance with guidelines issued by the Shari’ah Advisory
Council
e) All Takaful Life policies / Maldives policies were reviewed
by the Shari’ah Advisory Council and “Certificates of
Shari’ah Compliance” were granted.
f) Muslim Shareholders are advised to disburse Zakaah on
their shares as per the Islamic Laws of Zakaah
We beg Allah the Almighty to grant us all success and straight-
forwardness.
Ash-Sheikh M M A Mubarak
Chairman Shari’ah Advisory Council
Ash-Sheikh M I M RizweMember Shari’ah Advisory Council
Ash-Sheikh M Fazil FarookMember Shari’ah Advisory Council
Ash-Sheikh Murshid MulaffarSecretary – Shari’ah Advisory Council
Report of the Shari’ah Advisory Council
AMANA TAKAFUL PLC Annual Report 2010 43
I, Zainal Abidin Mohd. Kassim, being the actuary to the best of
my knowledge certify the following:
(a) that I have included each and every policy for which there
is a policy liability in conducting the valuation of liabilities
for the purposes of section 48 of the Regulation of
Insurance Industry Act No. 43 of 2000, and the Solvency
MarginRules;
(b) that I have taken all reasonable steps to ensure the
accuracy and completeness of the policies mentioned in
item(a)above;
(c) that I have complied with the provisions of the said Act in
item(a)above;
(d) that I have complied with provisions of the Solvency
Margin (Long Term Insurance) Rules, 2002 and guidance
notes / guidelines prescribed by the Board there under in
thedeterminationofthenetamountofliabilities;
(e) that in my opinion the net liability so determined by me, in
the Form H-LT - the valuation balance sheet, is adequate
to meet the insurer’s future commitments under the
insurance contracts, and the policyholders’ reasonable
expectations.
Zainal Abidin Mohd. KassimFellow of the Institute of Actuaries
Actuarial Partners Consulting Sdn Bhd
(formerly known as Mercer Zainal Consulting Sdn. Bhd.
Suite 17.02, Kenanga International
Jalan Sultan Ismail
50250 Kuala Lumpur
MALAYSIATel: 603 2161 0433
Fax : 603 2161 3595
Kuala Lumpur
1 March 2011
Certificate of the Actuary
THE WAY IT GROWSCOMPETENCE
Sustainability report
THE RIGHT WAY
| AMANA TAKAFUL PLC Annual Report 201046
Independent Auditors’ Report 47
Balance Sheet 48
Income Statement 49
Statement of Changes in Equity 50
Cash Flow Statement 51
Segmental Analysis - Balance Sheet 53
Segmental Analysis - Statement of Income 55
Balance Sheet - Long Term Inurance
(Family Takaful) Fund - Supplemental 57
Notes to the Financial Statements 58
Financial Information
AMANA TAKAFUL PLC Annual Report 2010 47
TO THE SHAREHOLDERS OF AMANA TAKAFUL PLC
Report on the Financial Statements
We have audited the accompanying financial statements of Amana Takaful PLC (“Company”), the consolidated financial statements of the Company and its subsidiaries which comprise the balance sheets as at 31 December 2010, and the income statements, statements of changes in equity and cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether duetofraudorerror;selectingandapplyingappropriateaccountingpolicies;andmakingaccountingestimatesthatarereasonable in the circumstances.
Scope of Audit and Basis of Opinion
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31 December 2010 and the financial statements give
a true and fair view of the Company’s state of affairs as at 31 December 2010 and its Loss and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
In our opinion, consolidated financial statements give a true and fair view of the state of affairs as at 31 December 2010 and the Loss and cash flows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiaries dealt with thereby, so far as concerns the shareholders of the Company.
Report on Other Legal and Regulatory Requirements
In our opinion,
1. These financial statements also comply with the requirements of Sections 151(2) and 153(2) to 153(7) of the Companies Act No. 07 of 2007.
2. The company’s investment in Amana Global Limited, a subsidiary of the company, amounts to Rs. 37,125,000/- as of 31 December 2010. Since the value of the investment exceeds 5% of the Technical Reserve, the company is not in compliance with Determination No.1, dated 30 October 2002, issued by Insurance Board of Sri Lanka under section 25 (1) of Insurance industry Act No 43 of 2000.
Except for the effect of the matter referred to in the preceding paragraph, the accounting records of Amana Takaful PLC have also been maintained by the management in the manner required by the rules made by the Insurance Board of Sri Lanka established under the regulation of Insurance Industry Act No 43 of 2000 so as to clearly indicate the true and fair view of financial position of the insurer.
Amana Takaful Maldives Limited, a subsidiary of The Company has issued Rs. 62,501,160/- Ordinary shares during the year ended 31 December 2010. However as stipulated by regulation the issued has not been duly registered with the Ministry of Economic Development, Maldives.
Colombo
31 March 2011
Independent Auditors’ Report
| AMANA TAKAFUL PLC Annual Report 201048
Group Company
As at 31st December 2010 2009 2010 2009
Notes Rs. Rs. Rs. Rs.
Investments 3 813,092,950 473,077,425 802,542,288 472,827,825
Investment Property 4 85,250,000 100,132,619 85,250,000 100,132,619
Intangible Assets 5 25,680,936 28,691,781 25,680,936 28,691,781
Property, Plant and Equipment 6 49,610,367 56,534,409 45,585,333 55,464,976
Improvements to Leasehold Buildings 7 3,694,875 4,831,288 3,694,875 4,831,288
Investment in Subsidiary 8 - - 37,125,000 27,125,000
Investment in Associate 9 5,247,996 - - -
Retakaful (Reinsurance) Receivables 51,340,004 108,073,015 51,340,004 108,073,015
Contribution (Premium) Receivable 10 221,138,528 206,749,461 221,138,528 206,749,461
Other Assets 11 136,850,174 171,157,401 156,646,455 167,675,597
Cash and Bank balances 107,338,131 78,047,939 18,518,718 50,758,195
Total Assets 1,499,243,961 1,227,295,338 1,447,522,137 1,222,329,757
Liabilities
Family Takaful Fund (Insurance Provision - Long Term) 13 413,141,425 335,186,236 413,141,425 335,186,236
General Takaful Fund (Insurance Provision - Non Life) 14 374,619,599 346,429,742 374,619,599 346,429,742
Other Liabilities 15 136,244,316 129,389,920 118,280,075 128,975,337
Murabaha Facility 16 3,975,218 4,728,698 3,975,218 4,728,698
Provision for Retirement Benefits 17 8,408,214 6,756,114 8,408,214 6,756,114
Finance Lease Liability 18 4,510,417 9,278,788 4,510,417 9,278,788
Bank Overdrafts 390,078,683 206,907,215 390,078,683 206,907,215
Total liabilities 1,330,977,872 1,038,676,713 1,313,013,631 1,038,262,130
Shareholders’ Equity
Equity Attributable to Equity Holders of the Parent
Stated Capital 19 500,000,360 500,000,360 500,000,360 500,000,360
Capital Reserves 20 17,504,668 20,647,964 17,504,668 20,647,964
Revenue Reserves 21 (367,112,359) (334,279,882) (382,996,522) (336,580,697)
150,392,669 186,368,442 134,508,506 184,067,627
Minority Interest 17,873,420 2,250,183 - -
Total Equity 168,266,089 188,618,625 134,508,506 184,067,627
Total Equity and Liabilities 1,499,243,961 1,227,295,338 1,447,522,137 1,222,329,757
I certify that the preparation and presentation of these financial statements comply with the requirements under Companies Act, No. 07 of
2007.
Ehsan Zaheed
Director/CEO
The Board of Directors is responsible for the preparation and presentation of these financial statements. Signed for and on behalf of the
board by,
Tyeab Akbarally Osman Kassim
Chairman Director
The accounting policies and notes as setout on pages 58 through 83 form an integral part of the financial statements.
Colombo,
31st March 2011
Balance Sheet
AMANA TAKAFUL PLC Annual Report 2010 49
Income Statement
Group Company
Year Ended 31st December 2010 2009 2010 2009
Notes Rs. Rs. Rs. Rs.
Revenue 22 1,015,526,945 864,860,085 985,761,573 863,517,798
Gross Written Contribution (Premium) 23 1,173,347,841 1,160,895,006 1,173,347,841 1,160,895,006
Less: Contribution (Premium) Ceded to Retakaful
Companies (Reinsurers) (203,642,426) (261,274,291) (203,642,426) (261,274,291)
Net Written Contribution (Premium) 969,705,415 899,620,715 969,705,415 899,620,715
Net Change in Reserve for
Unearned Contribution (Premium) (24,055,431) (82,492,681) (24,055,431) (82,492,681)
Net Earned Contribution (Premium) 945,649,984 817,128,034 945,649,984 817,128,034
Benefits, Losses and Expenses
Takaful (Insurance) claims and benefits (net) 24 (517,551,676) (476,265,728) (517,551,676) (476,265,728)
Acquisition Cost (net of reinsurance commission) (20,691,244) (34,036,086) (51,448,170) (34,036,086)
Increase in Family Takaful (Long Term Insurance) Fund (75,283,054) (60,819,733) (75,283,054) (60,819,733)
Under-writing Results 332,124,010 246,006,487 301,367,084 246,006,487
Other Revenue
Income from investments 25 41,763,312 40,147,003 39,534,583 47,230,063
Other income 26 28,113,649 7,585,048 577,006 (840,299)
Expenses
Other Operating, Investment Related
and Administration Expenses 27 (430,372,836) (338,267,079) (384,016,984) (335,689,527)
Amortisation 28 (5,977,032) (5,895,221) (5,977,032) (5,895,221)
Loss from Operations 29 (34,348,897) (50,423,762) (48,515,343) (49,188,497)
Finance Cost 30 (1,043,778) (1,581,547) (1,043,778) (1,581,547)
Share of Profit/(Loss) from Associate 31 20,090 - - -
Loss Before Taxation (35,372,585) (52,005,309) (49,559,121) (50,770,044)
Income Tax 32 - - - -
Loss for the Year (35,372,585) (52,005,309) (49,559,121) (50,770,044)
Attributable to:
Equity Holders of the Parent (35,581,754) (51,992,745) - -
Minority Interest 209,169 (12,564) - -
(35,372,585) (52,005,309) - -
Basic Earnings/(Loss) Per Share 33 (0.07) (0.10) (0.10) (0.10)
The accounting policies and notes as setout on pages 58 through 83 form an integral part of the financial statements.
| AMANA TAKAFUL PLC Annual Report 201050
Statement of Changes In Equity
Group
Revaluation Accumulated
Year ended 31st December 2010 Stated Capital Reserve Losses Minority Interest Total
Rs. Rs. Rs. Rs. Rs.
Balance as at 31st December 2008 500,000,360 - (282,263,818) 1,117,077 218,853,619
Acquisitions - - - 1,151,500 1,151,500
Net Loss for the year - - (51,992,745) (12,564) (52,005,309)
Currency Translation Differences - - (23,319) (5,830) (29,149)
Revaluation surplus during the year - 20,647,964 - - 20,647,964
Balance as at 31st December 2009 500,000,360 20,647,964 (334,279,882) 2,250,183 188,618,625
Transfer of profits from HMS 217,624 54,406 272,030
Acquisitions - - - 15,512,573 15,512,573
Net Loss for the year - - (35,581,754) 209,169 (35,372,585)
Currency Translation Differences - - (611,643) (152,911) (764,554)
Transfer of Revaluation Reserve on Disposal - (3,143,296) 3,143,296 - -
Balance as at 31st December 2010 500,000,360 17,504,668 (367,112,359) 17,873,420 168,266,089
Company
Stated Capital Revaluation Accumulated
Year ended 31st December 2010 Reserve Losses Total
Rs. Rs. Rs. Rs.
Balance as at 31st December 2008 500,000,360 - (285,810,653) 214,189,707
Net Loss for the Year - - (50,770,044) (50,770,044)
Revaluation surplus during the year - 20,647,964 - 20,647,964
Balance as at 31st December 2009 500,000,360 20,647,964 (336,580,697) 184,067,627
Net Loss for the Year - - (49,559,121) (49,559,121)
Transfer of Revaluation Reserve on Disposal - (3,143,296) 3,143,296 -
Balance as at 31st December 2010 500,000,360 17,504,668 (382,996,522) 134,508,506
The accounting policies and notes as setout on pages 58 through 83 form an integral part of the financial statements.
AMANA TAKAFUL PLC Annual Report 2010 51
Cash Flow Statement
Group Company
Year Ended 31st December 2010 2009 2010 2009
Notes Rs. Rs. Rs. Rs.
Cash flow from/(used in) operating activities
Contribution (Premium) received from participants 1,157,557,488 1,100,824,578 1,157,557,488 1,100,824,578
Retakaful (Reinsurance) premium paid (235,527,468) (255,621,009) (235,527,468) (255,621,009)
Claims, benefits and expenses paid (536,476,453) (656,704,579) (567,233,379) (656,704,579)
Retakaful (Reinsurance) receipts in respect of claims 66,021,875 134,360,333 66,021,875 134,360,333
Cash paid to and on behalf of employees (149,660,086) (128,687,742) (145,720,117) (127,772,281)
Profits received from investments and other income 62,835,451 40,379,842 33,106,909 33,643,555
Dividends received 2,231,825 1,894,532 2,231,825 1,894,532
Finance Cost paid 30 (1,043,779) (1,581,548) (1,043,779) (1,581,548)
Other operating cash payments (174,000,045) (274,279,160) (192,042,395) (272,266,348)
Cash flow from/(used in) operating activities (Note A) 191,938,808 (39,414,753) 117,350,959 (43,222,767)
Gratuity Paid (964,033) (1,380,376) (964,033) (1,380,376)
Income Tax Paid - - - -
Net cash flow from/(used in) operating activities 190,974,775 (40,795,129) 116,386,926 (44,603,143)
Cash flows from/(used in) investing activities
Purchase of liquid investments (576,191) (4,981,999) (576,191) (4,732,402)
Purchase of other investments (524,835,397) (396,399,000) (514,598,870) (396,399,000)
Sale of liquid investments - 6,032,652 - 6,032,652
Sale of other investments 309,584,410 632,345,110 309,584,411 609,845,110
Purchase of Property, Plant & Equipment - (4,979,216) (17,914,107) (4,609,248)
Purchase of Intangible Assets (18,831,577) (3,143,317) (1,829,774) (3,143,317)
Disposal of Property, Plant & Equipment (3,755,887) 31,985 3,811,623 31,985
3,833,554
Net cash flows from/(used in) investing activities (234,581,088) 228,906,215 (221,522,908) 207,025,780
Cash flows from/(used in) financing activities
Repayment of Extended Murabaha facility (753,480) (790,731) (753,480) (790,731)
Repayment of Lease facility (4,768,371) (4,516,971) (4,768,371) (4,516,971)
Repayment of Loan - (70,000,000) - (70,000,000)
Net cash flows from/(used in) financing activities (5,521,851) (75,307,702) (5,521,851) (75,307,702)
Increase/(Decrease) in cash and cash equivalents (Note B) (49,128,164) 112,803,384 (110,657,833) 87,114,935
| AMANA TAKAFUL PLC Annual Report 201052
Group Company
Year Ended 31st December 2010 2009 2010 2009
Notes Rs. Rs. Rs. Rs.
NOTE A
Reconciliation of Operating profit/(loss)
with Cash flows from operations
Operating Loss before Finance Cost & Taxation (34,348,897) (50,423,762) (48,515,343) (49,188,497)
Depreciation 27 33,897,392 24,245,042 24,266,901 23,871,767
Amortisations 5,977,032 5,895,221 5,977,032 5,895,221
Provision for Gratuity 2,616,133 2,315,947 2,616,133 2,315,947
Unrealised (Income)/Losses (4,516,049) (5,474,398) (4,488,082) (10,866,749)
Provision for doubtful debts 1,401,286 1,000,000 1,401,286 1,000,000
Recovery of doubtful debts (1,306,859) - (1,306,859) -
(Increase)/Decrease in debtors and other assets 76,556,744 (218,005,164) 43,278,659 (217,025,346)
Increase in Family Takaful (long term insurance) fund 75,283,054 60,819,733 75,283,054 60,819,733
Increase in net unearned contribution (premium) 24,055,431 82,492,681 24,055,431 82,492,681
Increase/(Decrease) in IBNR & General Reserve provision (12,169,313) 9,967,253 (12,169,313) 9,967,253
Increase/(Decrease) in claims provision 18,975,874 50,698,138 18,975,874 50,698,138
Increase in creditors 6,854,395 (1,378,968) (10,695,262) (1,636,439)
Profit on sale of Property, Plant & Equipment (293,636) 15,072 (284,773) 15,072
Finance Cost paid 30 (1,043,779) (1,581,548) (1,043,779) (1,581,548)
Cash flows from/(used in) operating activities 191,938,808 (39,414,753) 117,350,959 (43,222,767)
Note B
Increase/( decrease ) in cash and cash equivalents
Cash at bank and in hand and cash equivalents 12.1 606,725,047 472,681,743 517,905,634 445,391,999
Over drafts 12.1 (390,078,683) (206,907,215) (390,078,683) (206,907,215)
Cash and cash equivalents at the end of the year 216,646,364 265,774,528 127,826,951 238,484,784
Cash and cash equivalents at the beginning of the year 265,774,528 152,971,144 238,484,784 151,369,849
Increase/( decrease ) in cash and cash equivalents (49,128,164) 112,803,384 (110,657,833) 87,114,935
The accounting policies and notes as setout on pages 58 through 83 form an integral part of the financial statements.
Cash Flow Statement
AMANA TAKAFUL PLC Annual Report 2010 53
Segmental Analysis - Balance Sheet Family General Shareholders’ Amana Amana Takaful Adjustments Group
As at 31st December 2010 Takaful Fund Takaful Fund Fund Global Ltd. (Maldives)
Pvt Ltd.
Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Assets
Investments 424,414,248 358,161,202 19,966,838 10,031,087 519,575 - 813,092,950
Investment Property 50,750,000 34,500,000 - - - - 85,250,000
Intangible Assets - 4,486,951 21,193,985 - - - 25,680,936
Property, Plant and Equipment - 1,950,013 43,635,320 1,108,947 2,916,087 - 49,610,367
Improvements to Leasehold Buildings - - 3,694,875 - - - 3,694,875
Investment in Subsidiary - - 37,125,000 71,427,160 - (108,552,160) -
Investment in Associate - - - - 5,227,906 20,090 5,247,996
Retakaful (Reinsurance) Receivables - 51,340,004 - - - - 51,340,004
Contribution (Premium) Receivable - 221,138,528 - - 88,988,924 (88,988,924) 221,138,528
Other Assets 6,997,000 77,967,776 71,681,679 25,763,667 79,615,092 (125,175,040) 136,850,174
Inter Fund Receivable - 1,765,543 134,525,209 - - (136,290,752) -
Management Fee Receivable - - 172,973,597 - - (172,973,597) -
Cash and Bank balances 3,915,558 13,192,004 1,411,156 18,570,660 70,248,753 - 107,338,131
Total Assets 486,076,806 764,502,021 506,207,659 126,901,521 247,516,337 (631,960,383) 1,499,243,961
Liabilities
Family Takaful Fund (Insurance
Provision-Long Term) 413,141,425 - - - - - 413,141,425
General Takaful Fund (Insurance
Provision-Non Life) - 374,619,599 - - - - 374,619,599
Other Liabilities 11,551,838 67,489,802 39,238,435 74,054,681 158,073,524 (214,163,964) 136,244,316
Murabaha Facility - - 3,975,218 - - - 3,975,218
Provision for Retirement Benefits - - 8,408,214 - - - 8,408,214
Finance Lease Liability - - 4,510,417 - - - 4,510,417
Inter Fund Payable 11,216,595 95,603,788 - - - (106,820,383) -
Management Fee Payable 20,223,391 152,750,206 - - - (172,973,597) -
Bank Overdrafts 473,188 39,150,258 350,455,237 - - - 390,078,683
Total liabilities 456,606,437 729,613,653 406,587,521 74,054,681 158,073,524 (493,957,944) 1,330,977,872
Shareholders’ Equity
Equity Attributable to Equity
Holders of the Parent
Stated Capital - - 500,000,360 37,125,000 89,000,394 (126,125,394) 500,000,360
Capital Reserves 29,470,369 900,000 16,604,668 - - (29,470,369) 17,504,668
Revenue Reserves - 33,988,368 (416,984,890) 15,721,840 442,419 (280,096) (367,112,359)
29,470,369 34,888,368 99,620,138 52,846,840 89,442,813 (155,875,859) 150,392,669
Minority Interest - - - - - 17,873,420 17,873,420
Total Equity - 34,888,368 99,620,138 52,846,840 89,442,813 (138,002,439) 168,266,089
Total Equity and Liabilities 456,606,437 764,502,021 506,207,659 126,901,521 247,516,337 (631,960,383) 1,499,243,961
| AMANA TAKAFUL PLC Annual Report 201054
Segmental Analysis - Balance Sheet Family General Shareholders’ Amana Amana Takaful Adjustments Group
As at 31st December 2009 Takaful Fund Takaful Fund Fund Global Ltd. (Maldives)
Pvt Ltd.
Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Assets
Investments 260,306,603 68,917,469 143,603,753 9,175,600 - (8,926,000) 473,077,425
Investment Property 66,758,619 9,324,000 24,050,000 - - - 100,132,619
Intangible Assets 21,977,111 5,436,218 1,278,452 - - - 28,691,781
Property, Plant and Equipment 1,743,993 2,600,037 51,120,946 1,069,433 - - 56,534,409
Improvements to Leasehold Buildings - - 4,831,288 - - - 4,831,288
Investment in Subsidiary - - 27,125,000 - - (27,125,000) -
Retakaful (Reinsurance) Receivables - 108,073,015 - - - - 108,073,015
Contribution (Premium) Receivable - 206,749,461 - - - - 206,749,461
Other Assets 2,149,463 93,641,880 71,884,254 2,120,804 11,361,000 (10,000,000) 171,157,401
Inter Fund Receivable 4,846,621 - 11,507,520 - - (16,354,141) -
Management Fee Receivable - - 320,969,856 - - (320,969,856) -
Cash and Bank balances 11,404,196 38,016,964 1,337,035 27,289,744 - - 78,047,939
Total Assets 369,186,606 532,759,044 657,708,104 39,655,581 11,361,000 (383,374,997) 1,227,295,338
Liabilities
Family Takaful Fund (Insurance
Provision - Long Term) 335,186,236 - - - - - 335,186,236
General Takaful Fund
(Insurance Provision - Non Life) - 346,429,742 - - - - 346,429,742
Other Liabilities 10,741,154 94,141,114 24,093,069 10,304,500 110,083 (10,000,000) 129,389,920
Murabaha Facility - - 4,728,698 - - - 4,728,698
Provision for Retirement Benefits - - 6,756,114 - - - 6,756,114
Finance Lease Liability - - 9,278,788 - - - 9,278,788
Inter Fund Payable - 16,354,141 - - - (16,354,141) -
Management Fee Payable 8,105,508 312,864,348 - - - (320,969,856) -
Bank Overdrafts 15,153,708 47,533,542 144,219,965 - - - 206,907,215
Total liabilities 369,186,606 817,322,887 189,076,634 10,304,500 110,083 (347,323,997) 1,038,676,713
Shareholders’ Equity
Equity Attributable to Equity
Holders of the Parent
Stated Capital - - 500,000,360 27,125,000 11,165,500 (38,290,500) 500,000,360
Capital Reserves - 900,000 19,747,964 - - - 20,647,964
Revenue Reserves - (285,463,843) (51,116,854) 2,226,081 85,417 (10,683) (334,279,882)
- (284,563,843) 468,631,470 29,351,081 11,250,917 (38,301,183) 186,368,442
Minority Interest - - - - - 2,250,183 2,250,183
Total Equity - (284,563,843) 468,631,470 29,351,081 11,250,917 (36,051,000) 188,618,625
Total Equity and Liabilities 369,186,606 532,759,044 657,708,104 39,655,581 11,361,000 (383,374,997) 1,227,295,338
AMANA TAKAFUL PLC Annual Report 2010 55
Family General Shareholders’ Amana Amana Takaful Adjustments Group
Year Ended 31st December 2010 Takaful Fund Takaful Fund Fund Global Ltd. (Maldives)
Pvt Ltd.
Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Gross Written Contribution (Premium) 240,155,780 933,192,061 - - - - 1,173,347,841
Less: Contribution (Premium) Ceded to
Retakaful Companies (Reinsurers) (5,368,945) (198,273,481) - - - - (203,642,426)
Net Written Contribution (premium) 234,786,835 734,918,580 - - - - 969,705,415
Add : Unearned Takaful Contribution
(Premium) at the beginning of the year 1,503,407 223,535,938 - - - - 225,039,345
Less : Unearned Takaful Contribution
(Premium) at the end of the year (4,175,542) (244,919,234) - - - - (249,094,776)
Net Earned Contribution (Premium) 232,114,700 713,535,284 - - - - 945,649,984
Benefits, Losses and Expenses
Takaful (Insurance) claims and
benefits-net (70,582,639) (446,969,037) - - - - (517,551,676)
Acquisition Cost (net of
reinsurance commission) (20,054,178) 51,823,510 (83,217,502) - - 30,756,926 (20,691,244)
Increase in Family Takaful (Long Term
Insurance) Fund (75,283,054) - - - - - (75,283,054)
Management fee from contribution
(Premium) -comprising acquisition cost (83,217,502) 83,217,502 - - - -
Under-writing Results 66,194,829 235,172,255 - - - 30,756,926 332,124,010
Management fee from
contribution (Premium)-Others (67,746,121) (241,206,706) 308,952,827 - - - -
Management fee from
investments income (6,620,245) (4,209,882) 10,830,127 - - - -
Income from investments 23,286,477 10,496,256 5,751,850 2,228,729 - 41,763,312
Other Operating Income - (4,136,134) 4,713,140 17,112,654 41,180,915 (30,756,926) 28,113,649
Less : Indirect Expenses
Other Operating, Investment
Related and Administration Expenses (11,923,467) (12,599,152) (335,227,464) (5,364,742) (30,985,461) (375,159) (396,475,445)
Amortisations (1,696,623) (1,095,842) (3,184,567) - - (5,977,032)
Depreciation (1,494,850) (650,000) (22,122,051) (480,882) (9,149,609) - (33,897,392)
Finance Cost - - (1,043,778) - - - (1,043,778)
Share of Profit/(Loss) from Associate - 20,090 20,090
Profit/(Loss) Before Taxation - (18,229,205) (31,329,916) 13,495,759 1,045,846 (355,069) (35,372,585)
Income Tax - - - - - - -
Profit/(Loss) for the year - (18,229,205) (31,329,916) 13,495,759 1,045,846 (355,069) (35,372,585)
Segmental Analysis - Statement of Income
| AMANA TAKAFUL PLC Annual Report 201056
Family General Shareholders’ Amana Amana Takaful Adjustments Group
Year Ended 31st December 2009 Takaful Fund Takaful Fund Fund Global Ltd. (Maldives)
Pvt Ltd.
Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Gross Written Contribution (Premium) 207,096,848 953,798,158 - - - - 1,160,895,006
Less: Contribution (Premium) Ceded to
Retakaful Companies (Reinsurers) (4,017,356) (257,256,935) - - - - (261,274,291)
Net Written Contribution ( premium) 203,079,492 696,541,223 - - - - 899,620,715
Add : Unearned Takaful Contribution
(Premium) at the beginning of the year 1,500,754 141,045,910 - - - - 142,546,664
Less : Unearned Takaful Contribution
(Premium) at the end of the year (1,503,407) (223,535,938) - - - - (225,039,345)
Net Earned Contribution (Premium) 203,076,839 614,051,195 - - - - 817,128,034
Benefits, Losses and Expenses
Takaful (Insurance) claims and
benefits-net (69,629,601) (406,636,127) - - - - (476,265,728)
Acquisition Cost (net of
reinsurance commission) (18,073,621) 66,169,363 (82,131,828) - - - (34,036,086)
Increase in Family Takaful (Long Term
Insurance) Fund (60,819,733) - - - - - (60,819,733)
Management fee from contribution
(Premium)-comprising acquisition cost - (82,131,828) 82,131,828 - - - -
Under-writing Results 54,553,884 191,452,603 - - - - 246,006,487
Management fee from
contribution (Premium) - Others (49,073,401) (261,703,507) 310,776,908 - - - -
Management fee from
investments income (7,262,882) (1,851,838) 9,114,720 - - - -
Income from investments 16,049,112 4,235,477 26,945,474 2,916,940 - (10,000,000) 40,147,003
Other Operating Income - (1,623,400) 783,101 8,818,347 - (393,000) 7,585,048
Less : Indirect Expenses
Other Operating, Investment
Related and Administration
Expenses (7,866,651) (8,920,616) (295,030,493) (2,534,455) (62,822) 393,000 (314,022,037)
Amortisations (3,410,361) (1,148,475) (1,336,385) - - - (5,895,221)
Depreciation (2,989,701) (637,500) (20,244,566) (373,275) - - (24,245,042)
Finance Cost - - (1,581,547) - - - (1,581,547)
Profit/(Loss) Before Taxation - (80,197,256) 29,427,212 8,827,557 (62,822) (10,000,000) (52,005,309)
Income Tax - - - - - - -
Profit/(Loss) for the year - (80,197,256) 29,427,212 8,827,557 (62,822) (10,000,000) (52,005,309)
Segmental Analysis - Statement of Income
AMANA TAKAFUL PLC Annual Report 2010 57
Balance Sheet - Long Term Insurance (Family Takaful) Fund - Supplemental As at 31st December 2010 2009
Rs. Rs.
ASSETS
Investments 424,414,248 260,306,603
Investment Property 50,750,000 66,758,619
Intangible Assets - 21,977,111
Property, Plant and Equipment - 1,743,993
Inter fund Receivable - 4,846,621
Other Assets 6,997,000 2,149,463
Cash and Bank Balances 3,915,558 11,404,196
Total Assets 486,076,806 369,186,606
LIABILITIES
Family Takaful Fund Balance (Insurance Provision - Long Term) 413,141,425 335,186,236
Inter Fund Payables 11,216,595 -
Re Takaful (Reinsurance) Payable 1,372,694 2,434,247
Management Fee Payable 20,223,391 8,105,508
Other Liabilities 10,179,144 8,306,907
Bank Overdrafts 473,188 15,153,708
Total Liabilities 456,606,437 369,186,606
RESERVES
Special Reserve 29,470,369 -
Reserves and Liabilities 486,076,806 369,186,606
The above Family Takaful (Long Term Insurance) Balance Sheet is to be read in conjunction with the Company Balance Sheet on page 48,
accounting policies and notes to the financial statements on pages 58 through 83.
| AMANA TAKAFUL PLC Annual Report 201058
1. CORPORATE INFORMATION
1.1 General -Amana Takaful PLC (“Company”) is a public limited liability company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at 98, Bauddhaloka Mawatha, Colombo 04.
The Shares of the company are listed on the Second Board of the Colombo Stock Exchange.
1.2 Principal Activities and Nature of Operations
CompanyDuring the year, the principal activities of the Company were Family (Life) Insurance and General Takaful Insurance Businesses.
SubsidiaryThe principal activity of Amana Global Limited is providing technical services to Takaful operators.
Amana Takaful (Maldives) Pvt Ltd, which is a subsidiary (80% stake) of Amana Global Ltd was incorporated to carryout Insurance Business in the Republic of Maldives. This company has not commenced operations since it is in the process of obtaining the license from the Maldivian Authority.
1.3 Parent Enterprise The Company’s parent undertaking is Amana Investments Limited.
1.4 Date of Authorization for issueThe financial statements of Amana Takaful PLC for the year ended 31 December 2010 were authorized for issue by the board of directors on 31st March 2011.
2.1 Basis of PreparationThe consolidated financial statements are presented in Sri Lanka Rupees have been prepared on a historical cost basis except for certain investments which are stated at market value.
The preparation and presentation of these financial statements is in compliance with the requirements of the Companies Act No 7 of 2007 and the format and disclosures are also in accordance with the Statement of Recommended Practice for Insurance Contracts (SORP), adopted by the Institute of Chartered Accountants of Sri Lanka.
The company balance sheet represents the assets, liabilities and equity of General Takaful (non-life Insurance), Family Takaful (Life Insurance) and Shareholders’ Fund. The Family Takaful (Life Insurance) Fund balance sheet represents assets and liabilities of the Family Takaful (Life Insurance) Fund. The Group Balance Sheet includes the assets and liabilities of Amana Global Limited and Amana Takaful (Maldives) (Pvt) Ltd.
The Company Statement of Income reflects the Underwriting results of General Takaful business, surplus from Family Takaful business and investment and other income of General Takaful, Family Takaful and Shareholders’ Funds and related expenses. The results of Amana Global Limited and Amana Takaful (Maldives) Pvt Ltd are also included in the Group Statement of Income.
2.1.1 Statement of ComplianceThe consolidated balance sheet, statements of income, changes in equity and cash flows, together with accounting policies and notes, (“Financial Statements”) as at 31st December 2010 and for the year then ended, comply with the Sri Lanka Accounting Standards (SLASs) and the requirements of the Companies Act, No. 7 of 2007.The format and disclosures are also in accordance with the Statement of Recommended Practice for Insurance Contracts (SORP), adopted by the Institute of Chartered Accountants of Sri Lanka.
2.1.2 Change in Accounting Policies a) The following standards have been issued by the
Institute of Chartered Accountants of Sri Lanka and are effective for the accounting periods on the date specified below.
- Sri Lanka Accounting Standard 44 Financial Instruments;Presentation(SLAS44)
- Sri Lanka Accounting Standard 45 Financial Instruments;RecognitionandMeasurement(SLAS45)
- Sri Lanka Accounting Standard 39 Share Based Payments (SLAS 39)
The effective date of SLAS 44, 45 and 39 was changed during the year to be effective for financial periods beginning on or after 01 January 2012. These three standards have been amended and forms a part of the new set of financial reporting standards mentioned under note (b) below.
b) Following the convergence of Sri Lanka Accounting Standards with the International Financial Reporting Standards, the Council of the Institute of Chartered Accountants of Sri Lanka has adopted a new set of financial reporting standards that would apply for financial periods beginning on or after 01 January 2012. The application of these financial reporting standards is substantially different to the prevailing standards.
2.1.3 Comparative InformationThe accounting policies have been consistently applied by the Group and, are consistent with those used in the previous year. Previous year figures and phases have been rearranged wherever necessary in conformity with the current year’s presentation.
Notes To The Financial Statements
AMANA TAKAFUL PLC Annual Report 2010 59
2.1.4 Basis of ConsolidationThe Consolidated Financial Statements include the results, assets and liabilities of the Company, and it’s Subsidiaries as at 31st December 2010 and the proportionate share of profit of its associate companies. The Consolidated financial statements are prepared to a common financial year ending December 31. All subsidiaries in the group have a common financial year ending December 31.
All inter company balances, transactions and profits are eliminated on consolidation. Subsidiaries are fully consolidated from the date on which control is transferred to the Company and continued to be consolidated until the date that such control ceases. The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the date of acquisition or up to the date of disposal, as appropriate.
Minority interests represent the portion of profit or loss and net assets not owned, directly or indirectly, by the Company and are presented separately in the Consolidated Income Statement and within equity in the Consolidated Balance Sheet, separately from parent shareholders’ equity.
The Group financial statements comprise of financial statements of Amana Takaful PLC and its subsidiaries, Amana Global Limited and Amana Takaful (Maldives) Pvt Ltd.
2.1.5 SubsidiariesSubsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases.
The profit or loss for the year of the subsidiaries is included in the consolidated income statement. The assets and liabilities of the subsidiaries as at the balance sheet date are included in the consolidated balance sheet.
Inter-group balances and transaction and any unrealised gains and losses or income and expenses arising from inter-group transactions are eliminated in preparing the consolidated financial statements.
All companies in the Group have a common financial year, which ends on 31st December.
2.1.6 Segment ReportingA segment is a distinguishable component of the Group engaged in providing services subject to risks and rewards that are different to those of other segments.
Segmental information is based on industry segments reflecting the Group’s management structure. Segmentation has been determined based on the activities of the companies or sectors into which the product or services are sold. The primary format is based on the core business, General, Family and Fund management services of Shareholders’ Fund and Technical Services.
Inter-segment transactions are based on fair market prices.
Expenses directly identified to a particular segment are charged accordingly. Expenses that cannot be directly identified to a particular segment are allocated on bases decided by the management and applied consistently throughout the period.
The Group’s activities are located mainly in Sri Lanka. The overseas branch is principally involved in marketing and distribution. Consequently, assets and liabilities by geographic region are considered not material to be disclosed.
2.2 Significant Accounting Estimates And Assumptions In the process of applying the group accounting policies, management is required to make judgments, apart from those involving estimations, which has the most significant effect on the amounts recognised in the Financial Statements. Further management is required to consider key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below. The respective carrying amounts of assets and liabilities are given in related notes to the Financial Statements. The respective carrying amounts of such assets and liabilities are as given in related notes to the financial statements. The key items as such are discussed below.
Deferred Tax AssetsDeferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
Investment Properties The Group has determined the fair value of its investment properties based on the valuation reports submitted by Mr. M.M.M. Saleem (GMIV, DIV Sri Lanka). The fair value is determined taking into consideration the situation, location infrastructure facilities, amenities available, market value of close properties etc. The valuation of investment properties by a qualified valuer is carried out once in every three year period.
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Motor VehiclesThe motor vehicles were revalued by De Silva Motor Engineers (Pvt) Ltd, which is a professional valuation organisation. The fair value is determined based on the open market value. The valuation will be carried out once in every three year period.
Actuarial Valuations of the Insurance Provisions The valuation of Long Term Insurance Provision and General Insurance Provisions were carried out by Mr. Zainal Abidin Mohd Kassim (BSC, FIA, ASA) of Actuarial Partners Consulting Sdn Bhd (formerly known as Mercer Zainal Consulting Sdn. Bhd), Malaysia.
Long Term Insurance Provision- (Family Takaful Fund)For the risk portion of the Family Takaful Plan, the net contribution method of valuation was used, the liability being ascertained by deducting the present value of future net contributions from the present value of the future sums covered.
For Group Mortgage certificates, the liability has been determined as the present value of the future reducing sums covered.
For riders, the liability has been calculated as 50% of the unearned contribution net of retakaful (reinsurance).
Significant estimates and assumptions made in respect of Actuarial Valuations have been disclosed in the note no. 13.2 to the financial statements.
General Insurance ProvisionThe general approach to actuarial estimation of outstanding claims is to analyse all available past experience with respect to numbers of claims, claim payments and changes in estimates of outstanding liabilities. This allows patterns to be detected in the experience from which the future payments on outstanding claims can be estimated. The following methods have been considered in the valuation.
i) Link Ratio method with a Bornhuetter Ferguson (BF) Adjustment
ii) Projected Case Estimates (PCE) method
iii) Retrospective (Retro) Approach
Other Insurance Related Provisions The Management has used their judgments in estimating these provisions mainly based on the past experience which are subject to uncertainties.
Defined Benefit PlansThe Defined Benefit Obligation and the related charge for the year are determined using assumptions required under actuarial valuation techniques. The valuation involves making assumptions about discount rates, future salary increases, staff turnover rates etc. Due to the long term
nature of such obligations these estimates are subject to significant uncertainty.
2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.3.1 Foreign Currency TranslationThe Financial Statements are presented in Sri Lanka Rupees, which is the group functional and presentation currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to profit or loss. Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
2.3.2 Foreign OperationsThe balance sheet and the income statement of overseas subsidiary which is deemed to be foreign operations are translated to Sri Lanka Rupees using functional currency method.
The exchange differences arising on the translation are taken under Accumulated Losses in the changes in equity statement.
2.3.3 Taxationa) Current Taxes Current income tax assets and liabilities for the
current and prior periods are measured at the amount expected to be recovered from or paid to the commissioner general of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
The provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the Inland Revenue Act, No. 10 of 2006 and the amendments thereto.
b) Deferred Taxation Deferred income tax is provided, using the liability
method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
• Exceptwherethedeferredincometaxliabilityarisesfrom the initial recognition of an asset or liability in a transaction that is not a business combination and,
Notes To The Financial Statements
AMANA TAKAFUL PLC Annual Report 2010 61
at the time of the transaction, affects neither the accountingprofitnortaxableprofitorloss;
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
• Exceptwherethedeferredincometaxassetrelatingto the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accountingprofitnortaxableprofitorloss;and
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
2.3.4 Borrowing CostsBorrowing costs are recognised as an expense in the period in which they are incurred.
2.3.5 Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. Following the initial recognition of the intangible assets, the cost model is applied requiring the assets to be carried at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the nature of the intangible asset. Amortisation was commenced when the assets were available for use.
The useful live and the amortization method of intangible asset with finite lives are as follows :
The class of Useful life Amortisation intangible assets Method
Computer software over 08 years Straight line method
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is de-recognised
Research CostsResearch costs are expensed as incurred. .
2.3.6 Prepaid Expenditure Expenditure which is deemed to have a benefit or relationship to more than one financial year is classified as prepaid expenditure. Such expenditure is written off over the period to which it relates, on a straight-line basis.
2.3.7 Salvage StockSalvage Stocks are valued at since realized/realisable value.
2.3.8 Retakaful (Reinsurance) and Contribution (Premium)
ReceivableAll contributions (premiums) are recognised at the amounts receivable, as they are due for settlement within 90 days from the date of recognition. Collectibility of contributions is reviewed on an ongoing basis. Debts, which are known to be uncollectable, are written off. A provision for doubtful debts is raised when some doubt as to collection exists and in any event when the debt is more than 180 days overdue, to the extent that any relevant contribution (premium) has been earned.
Retakaful (Reinsurance) assets include the balances due from Retakaful (Reinsurance) companies for paid and unpaid losses and loss adjustment expenses. Amounts recoverable from retakaful companies (reinsurers) are estimated in a manner consistent with the claim liability associated with the retakaful (reinsurance) policy. Retakaful (Reinsurance) is recorded gross in the company balance sheet unless a right to offset exists.
2.3.9 Other Assets & ReceivablesOther assets & receivables are stated at their estimated realizable value.
2.3.10 Cash and Cash EquivalentsCash and cash equivalents are defined as cash in hand, demand deposits and short-term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
| AMANA TAKAFUL PLC Annual Report 201062
For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents.
2.3.11 Property, Plant and Equipmenta) Cost The property, plant & equipment are stated at
cost except for motor vehicles, less accumulated depreciation and any impairment in value.
The cost of Property, Plant & Equipment is the cost of acquisition or construction together with any expenses incurred in bringing the asset to its working condition for its intended use.
Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means of which to carry on the business or to increase the earning capacity of the business has been treated as capital expenditure.
The Company has revalued its entire class of motor vehicles and has carried it at the revalued amount in the Balance Sheet. The motor vehicles are revalued every three years on a roll-over basis to ensure that the carrying amounts do not differ materially from the fair value at the Balance Sheet date.
An item of Property, Plant and Equipment is de-recognised upon disposal or when no future economic benefits are expected from its use. Any gain or losses arising on de-recognition of the asset is included in the Income Statement in the year the asset is de-recognised.
b) Restoration Cost Expenditure incurred on repairs or maintenance of
Property, Plant and Equipment in order to restore or maintain the future economic benefits expected from originally assessed standard of performance, is recognised as an expense when incurred.
c) Depreciation The provision for depreciation is calculated by using a
straight line method on the cost of all Property, Plant and Equipment, in order to write off such amounts over the following estimated useful economic lives by equal instalments:
Motor Vehicles Over 04 Years Computer Equipment Over 03 Years Other Equipment Over 04 YearsFurniture & Fittings Over 05 YearsLeasehold vehicle Over 04 Years
Full depreciation is provided in the month of purchase and no depreciation is provided in the month of disposal.
2.3.12 Leasesa) Finance Leases – where the Company is the Lessee Property, plant and equipment on finance leases,
which effectively transfer to the Company substantially all of the risk and benefits incidental to ownership of the leased item are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Capitalized leased assets are disclosed as property, plant and equipment and depreciated consistently with that of owned assets as described under property, plant and equipment.
The corresponding principal amount payable to the lessor together with the finance cost payable over the period of the lease is shown as a liability. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of finance cost on the remaining balance of the liability.
The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements, and depreciated over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is shorter.
The useful lives of leasehold assets and depreciation of them is same as freehold assets as shown under 2.3.10 c).
b) Operating Leases Leases where the lessor effectively retains substantially
all the risks and benefits of ownership over the leased term are classified as operating leases.
Lease payments (excluding costs for services such as insurance and maintenance) paid under operating leases are recognised as an expense in the income statement on a straight-line basis over the lease term.
2.3.13 Investments(a) Quoted Shares and Gold These investments are marked to market at the
Balance Sheet date. Unrealised gains and losses are carried at market value i.e. reduction to market value, and reversals of such reductions required to reflect current investments at the market value, are credited or charged to the income statement.
(b) Mudharaba Investment These Investments are stated at cost plus profit
pertaining to the relevant period.
This represents profit based investments with financial institutions.
(c) Government Securities Investment in Government Securities are carried at
cost.
Notes To The Financial Statements
AMANA TAKAFUL PLC Annual Report 2010 63
d) Other Investments Murabaha, Profit based Bank Deposits, Unquoted
Shares and Unit Trust are stated at cost.
2.3.14 Investment PropertiesInvestment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteriaaremet;andexcludesthecostsofdaytodayservicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance sheet date (or historical cost less provisions for depreciation and amortization ) . Gains or losses arising from changes in the fair value of investment properties are included in the income statement in the year in which they arise. Valuation of Investment Property by a professional valuer is carried out once every three year period.
Investment properties are de-recognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal.
2.3.15 Liabilities and Provisions (excluding Insurance
contracts) a) Liabilities All known liabilities have been accounted for in
preparing the financial statement.
b) Provisions (excluding Insurance contracts) Provisions are recognized when the group has a
present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
2.3.16 Retirement Benefit Obligationsa) Defined Benefit Plan – Gratuity Gratuity is a post employment benefit plan. Provisions
have been made for retirement gratuity from the first year of service for all employees in conformity with SLAS 16. However, under the payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of five years of continued service. The Company is liable to pay gratuity in terms of relevant statute. In order to meet this liability, a provision is carried forward in the Balance Sheet. Up to 31 December 2010, provision had been made based on
a half month’s salary of the last month of the financial year of all employees for each completed year of service, commencing from the first year of service.
Based on the Sri Lanka Accounting Standard 16 (Revised 2006) - Employee Benefit, the company annually measures the present value of the promised retirement benefits for gratuity, which is a defined benefit plan using the Gratuity Formula in Appendix E in the aforesaid Standard, which is based on the Projected Unit Credit method as discussed in the said Standard. Although actuarial assumptions are used therein, it should not be treated as a substitute to an Actuarial Valuation.
The item is stated under Defined Benefit Liability in the Balance Sheet.
Recognition of Actuarial Gains and Losses Actuarial gains or losses are recognised in the Income
Statement in the period in which they arise.
Recognition of Past Service Cost Past Service Costs are recognised as an expense on
a straight line basis over the average period until the benefits become vested. If the benefits have already been vested, immediately following the introduction of, or changes to the plan, past service costs are recognised immediately.
Funding Arrangements The Gratuity liability is not externally funded.
b) Defined Contribution Plans – Employees’ Provident Fund & Employees’ Trust Fund
Employees are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions in line with the respective statutes and regulations. The Company contributes 12 % and 3 % of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively.
2.3.17 Impairment of AssetsThe group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value
| AMANA TAKAFUL PLC Annual Report 201064
less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.
Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to equity. In this case the impairment is also recognised in equity up to the amount of any previous revaluation.
For assets, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
2.3.18 Trade and Other PayablesTrade and other payables are stated at their cost.
2.3.19 Events after the Balance Sheet DateAll material post balance sheet events have been considered and where appropriate adjustments or disclosures have been made in the respective notes to the financial statements.
2.3.20 Capital Commitments & ContingenciesCapital commitments and contingent liabilities of the group are disclosed in the financial statements.
2.3.21 Stated CapitalStated capital in relation to a company means the total of all amounts received by the company or due and payable to the company.
2.4 General Takaful Business (Non Life Insurance
Business)
2.4.1 Gross Written Contribution (Gross Written Premium)Contributions (Premiums) are recognised earlier of the entity being on risk to provide coverage to the policyholders for insured event and the signing of the insurance contract. Upon inception of the contract, contributions (premiums) are recorded as written and are earned primarily on a pro-rata basis over the term of the related policy coverage. However, for those contracts
for which the period of risk differs significantly from the contract period, contributions (premiums) are earned over the period of risk in proportion to the amount of insurance protection provided.
2.4.2 Unearned Contribution (Premium)The unearned contribution (premium) reserve represents the portion of the contributions (premiums) written in a year but relating to the unexpired terms of coverage.
The Unearned Premium is calculated applying 1/365 method on the net premium (Gross premium minus reinsurance and management fee).
2.4.3 Unexpired Risk Provision is made where appropriate for the estimated amount required over and above unearned contribution (premium) to meet future claims and related expenses on the business in force as at 31st December.
2.4.4 Outward Retakaful (Reinsurance)Contribution (premium) ceded to retakaful companies (reinsurers) is recognised as an expense in accordance with the pattern of retakaful (reinsurance) service received.
2.4.5 ClaimsClaims expense and liability for outstanding claims are recognised in respect of direct and inward retakaful (reinsurance) business. The liability covers claims reported but not yet paid, incurred but not reported claims (“IBNR”) and the anticipated direct and indirect costs of settling those claims. Claims outstanding are assessed by review of individual claim files and estimating changes in the ultimate cost of settling claims. The provision in respect of IBNR is actuarially valued to ensure a more realistic estimation of the future liability based on past experience and trends.
Whilst the Directors consider that the provision for claims are fairly stated on the basis of information currently available, the ultimate liability will vary as a result of subsequent information and events. This may result in adjustments to the amount provided. Such amount is reflected in the financial statements for that period. The methods used and estimates made are reviewed regularly.
2.5 Family Takaful Business (Long-Term Insurance Business)
2.5.1 Takaful Contribution (premium) Contributions (premiums) from Family Takaful (traditional life insurance) contracts, including participating contracts and annuity policies with life contingencies, are recognised as revenue when cash is received from the policyholder. Benefits and expenses are provided against such revenue to recognise profits over the estimated life of the policies. Moreover, for single contribution (premium) contracts, contributions (premiums) are recorded as income when
Notes To The Financial Statements
AMANA TAKAFUL PLC Annual Report 2010 65
received with any excess profit deferred and recognised in income in a constant relationship to the insurance in-force or, for annuities, the amount of expected benefit payments.
2.5.2 Retakaful Contracts (Reinsurance Contracts) Outward retakaful contributions (reinsurance premiums) are recognised when payable. Retakaful (Reinsurance) recoveries are credited to match the relevant gross claims.
2.5.3 ClaimsDeath claims are recorded on the basis of notifications received. Maturities are recorded when due. Claims on participating business include profit. Claims payable include direct costs of settlement.
The interim payments (Part withdrawals) and surrenders are accounted only at the time of settlement.
2.5.4 Technical Provisions – Family Takaful Business provision and provision for linked liabilities The Directors agree to the Family Takaful (long term insurance) business provisions for the Company on the recommendation of Reporting Actuary following his annual investigation of the Family Takaful (life insurance) business.
The actuary’s valuation takes into account of all liabilities including contingent liabilities and is based on the assumptions recommended by the Consultant Actuary.
2.6 Revenue RecognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable net of trade discounts and sales taxes. The following specific criteria are used for the purpose of recognition of revenue.
a) Wakala Fee (Agency/Management Fee)
• WakalaFee(Agency/Managementfee)onTakafulContribution (Insurance Premium)
The Shareholders’ Fund is entitled for management fee on every Takaful Contribution (insurance premium) received in respect of the business received during the year on following basis.
General Takaful (Insurance) Business The Shareholders’ Fund is entitled for a management
fee at the rate of 40% on contribution (premium) of General Takaful (insurance) certificates. However, the Shareholders’ Fund has charged a reduced management fee at the rates given below in order strengthen the General Takaful (insurance) Fund.
- Medical Takaful(insurance) Policies 25%
- All other General Takaful (insurance) Policies 37.5%
In certain instances the Shareholders’ Fund has charged management fee at 40% for certain Medical Takaful Policies. .
Family Takaful (Life Insurance) Business The management fee is charged on contribution of
Family Takaful certificates at the following rates.
- Family Takaful Products First Year 65% Second , Third & Fourth Year 55% Fifth & after 30%
- Mortgage Family Takaful (insurance) policies 20% Family Takaful Group (insurance) Policies 30%
• WakalaFee(Agency/ManagementFee)onInvestmentIncome
The Shareholders’ fund is entitled for agency fee of 50% on net investment income and does not share the losses.
b) Investment Income i) Interest Income Interest income is recognised on cash basis. The basis
of recognition of interest income is discussed under note no. 25.2 in the financial statements.
ii) Realised/unrealised Gains and (Losses) Total net capital gains/(losses) arising on realisation
and movements in market value of investments are taken to the income statement.
iii) Other Investment Income All other investment income is recognised on an
accrual basis.
c) Others Other income is recognised on an accrual basis.
1.7 Expenditure Recognitioni) Expenses are recognised in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the Property, Plant & Equipment in a state of efficiency has been charged to the income statement.
ii) Surplus RefundSurplus refund is made only when the Fund is in a surplus and to those participants who have not made any claims during the policy period.
iii) For the purpose of presentation of Income Statement, the Directors are of the opinion that nature of expenses method presents fairly the elements of the Company’s performance, and hence such presentation method is adopted.
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Notes To The Financial Statements
3. Investments
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Murabaha Investments 9,872,980 9,843,645 - 9,843,645
Mudharaba Investments 773,744 936,846 773,744 936,846
Investments in Gold 3,603,357 2,599,084 2,925,675 2,349,484
Investments in Government Securities (3.2) 606,550,086 396,133,804 606,550,086 396,133,804
Investment in Equity Securities
- Quoted (3.3.1) 111,740,665 9,519,696 111,740,665 9,519,696
- Unquoted (3.3.2) 525,000 525,000 525,000 525,000
Bank Deposits 75,027,118 48,519,350 75,027,118 48,519,350
Unit Trust 5,000,000 5,000,000 5,000,000 5,000,000
813,092,950 473,077,425 802,542,288 472,827,825
3.1 Investments amounting to Rs. 424,414,248/- (2009 - Rs. 260,306,603/-) belonging to Family Takaful Fund has been restricted as per
the provisions in Section 38 of the Regulation of Insurance Industry Act No. 43 of 2000 and will only be used to discharge liabilities
of Family Takaful (Long Term Insurance) Fund.
3.2 Investments in Government Securities
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Treasury Bills 105,663,170 4,918,515 105,663,170 4,918,515
Repurchase Agreements 500,886,916 391,215,289 500,886,916 391,215,289
606,550,086 396,133,804 606,550,086 396,133,804
3.2.1 Investments in Government Securities are made for the purpose of meeting the requirements of The Regulation of Insurance Industry
Act, No. 43 of 2000.
AMANA TAKAFUL PLC Annual Report 2010 67
3. Investments (Contd…)
3.3 Investments in Equity Securities
3.3.1 Quoted
Group Company
2010 2009 2010 2009
Number Market Number Market Number Market Number Market
of Shares Value Rs. of Shares Value Rs. of Shares Value Rs. of Shares Value Rs.
ACL Cables PLC 24,800 2,110,480 - - 24,800 2,110,480 - -
ACL Plastics PLC 12,900 2,064,000 - - 12,900 2,064,000 - -
Balangoda Plantaions PLC 41,600 2,387,840 - - 41,600 2,387,840 - -
C.W.Mackie PLC 3,100 263,810 - - 3,100 263,810 - -
Chevron Lubricants Lanka PLC 51,600 8,230,200 - - 51,600 8,230,200 - -
Piramal Glass Ceylon PLC 71 554 180,200 396,576 71 554 180,200 396,576
Ceylon Hospitals PLC
(Non Voting) - - 4,000 200,000 - - 4,000 200,000
Ceylon Tea Services PLC 5,500 3,926,450 - - 5,500 3,926,450 - -
Colombo Dockyard PLC 26,100 7,177,500 - - 26,100 7,177,500 - -
Ceylon Grain Elevators PLC 41,500 3,100,050 - - 41,500 3,100,050 - -
Haycarb PLC 31,800 5,358,300 - - 31,800 5,358,300 - -
Hayleys PLC 7,000 2,415,000 - - 7,000 2,415,000 - -
Hemas Holdings PLC 296,400 13,189,800 - - 296,400 13,189,800 - -
Hemas Power PLC 163,500 4,823,250 - - 163,500 4,823,250 - -
Kegalle Plantations PLC 61,500 9,950,700 - - 61,500 9,950,700 - -
Kelani Cables PLC 22,600 2,373,000 - - 22,600 2,373,000 - -
Kelani Valley Plantations PLC 11,400 1,822,860 - - 11,400 1,822,860 - -
Lanka IOC PLC 10,200 192,780 10,200 175,950 10,200 192,780 10,200 175,950
Lanka Floortiles PLC 6,050 812,515 - - 6,050 812,515 - -
Lanka Walltile PLC 10,200 1,416,780 - - 10,200 1,416,780 - -
Laughs Gas Ltd. 26,200 678,580 - - 26,200 678,580 - -
Nawaloka Hospitals PLC 500,000 1,850,000 - - 500,000 1,850,000 - -
Nestle Lanka PLC 10,600 7,027,800 - - 10,600 7,027,800 - -
Odel PLC 261,600 9,522,240 - - 261,600 9,522,240 - -
Overseas Reality (Ceylon) PLC 259,000 3,962,700 - - 259,000 3,962,700 - -
Renuka Agri Foods PLC 250,000 1,675,000 368,800 829,800 250,000 1,675,000 368,800 829,800
Royal Ceramic Lanka PLC 33,600 10,244,640 - - 33,600 10,244,640 - -
Sri Lanka Telecom PLC 10,000 490,000 171,300 7,879,800 10,000 490,000 171,300 7,879,800
The Lanka Hospital
Corporation PLC 21,000 665,700 - - 21,000 665,700 - -
Tokyo Cement Company
(Lanka) PLC-Non Voting 13,700 753,500 - - 13,700 753,500 - -
Vallibel Power Erathna PLC 113,000 1,017,000 - - 113,000 1,017,000 - -
Vidullanka PLC 909 5,636 1,089 37,570 909 5,636 1,089 37,570
Watawala Plantations PLC 80,000 2,232,000 - - 80,000 2,232,000 - -
111,740,665 9,519,696 111,740,665 9,519,696
| AMANA TAKAFUL PLC Annual Report 201068
3.3.2 Unquoted
Group Company
2010 2009 2010 2009
Number Number Number Number Market
of Shares Cost of Shares Cost of Shares Cost of Shares Cost
Cleanco (Pvt) Ltd 35,000 525,000 35,000 525,000 35,000 525,000 35,000 525,000
525,000 525,000 525,000 525,000
4. Investment Property
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Balance as at 1st January 100,132,619 100,132,619 100,132,619 100,132,619
Additions 1,108,610 - 1,108,610 -
Disposals (17,500,000) - (17,500,000) -
Net gain / (loss) from fair value adjustment 1,508,771 - 1,508,771 -
Balance as at 31st December 85,250,000 100,132,619 85,250,000 100,132,619
4.1 Investment Property amounting to Rs. 50,750,000/- (2009 - Rs. 66,758,619/-) belonging to Family Takaful Fund has been restricted
as per the provisions in Section 38 of the Regulation of Insurance Industry Act No. 43 of 2000 and will only be used to discharge
liabilities of Family Takaful (Long Term Insurance) Fund.
4.2 Investment Properties are stated at fair value based on the valuation performed by Mr. M.M.M. Saleem (GMIV, DIV Sri Lanka) as at
31st December 2010. The valuation is made mainly on the basis of market evidence prevailed during the time of valuation.
4.3 Details of Investment Properties
Address Extent Value
Family Takaful Fund
a) No. 14, Station Road, Wellawatta -Land 5.8 Perches 15,000,000
b) 107/15, Buthgamuwa Road, Rajagiriya - Building 1,696 sq.ft. 33,500,000
c) Mellegama Villege, Harispattuwa, Kandy - Land 45 Perches 2,250,000
General Takaful Fund
a) 297 4/1, George R De Silva Mawatha, Colombo 13- Building 1,060 sq.ft. 9,500,000
b) No. 14, Station Road, Wellawatta -Land 5.8 Perches 15,000,000
c) Yalegoda Estate, Piligalla, Kandy- Land & Building 50 Perches 10,000,000
5. Intangible Assets
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Cost
Balance as at 1st January 46,366,305 43,222,988 46,366,305 43,222,988
Additions 1,829,774 3,143,317 1,829,774 3,143,317
Balance as at 31st December 48,196,079 46,366,305 48,196,079 46,366,305
Amortisation
Balance as at 1st January 17,674,524 12,916,076 17,674,524 12,916,076
Amortisation for the year 4,840,619 4,758,448 4,840,619 4,758,448
Balance as at 31st December 22,515,143 17,674,524 22,515,143 17,674,524
Carrying Amount as at 31st December 25,680,936 28,691,781 25,680,936 28,691,781
Notes To The Financial Statements
AMANA TAKAFUL PLC Annual Report 2010 69
6. Property, Plant & Equipment
6.1 Group
Balance Additions/ Disposals/ Balance
as at Transfers Transfers as at
01.01.2010 31.12.2010
Rs. Rs. Rs. Rs.
Cost/Valuation
Freehold (6.1.1) 106,008,768 25,958,741 (1,163,208) 130,804,300
Leasehold (6.1.2) 23,511,078 - (3,500,000) 20,011,078
129,519,846 25,958,741 (4,663,208) 150,815,848
6.1.1 Freehold Property, Plant & Equipment
Balance Additions/ Disposals/ Balance
as at Transfers Transfers as at
01.01.2010 31.12.2010
Rs. Rs. Rs. Rs.
Cost/Valuation
Motor Vehicles 7,201,990 10,561,583 (83,331) 17,680,242
Computer Equipment 40,772,285 5,937,904 (208,284) 46,501,905
Other Equipment 19,288,719 3,607,812 (794,325) 22,102,205
Furniture and Fittings 38,745,774 5,851,442 (77,268) 44,519,948
Total Value of Depreciable Assets 106,008,768 25,958,741 (1,163,208) 130,804,300
Balance Charge Balance
as at for the Disposals/ as at
01.01.2010 Year Transfers 31.12.2010
Rs. Rs. Rs. Rs.
Depreciation
Motor Vehicles - 2,846,427 (19,998) 2,826,429
Computer Equipment 33,315,262 9,353,596 (208,284) 42,460,574
Other Equipment 14,315,673 4,259,547 (737,098) 17,838,122
Furniture and Fittings 24,634,142 7,789,770 (67,155) 32,356,756
Total Depreciation 72,265,077 24,249,340 (1,032,535) 95,481,881
Carrying Amount 33,743,691 35,322,419
6.1.2 Leasehold Property,Plant & Equipment
Balance Additions/ Disposals/ Balance
as at Transfers Transfers as at
01.01.2010 31.12.2010
Rs. Rs. Rs. Rs.
Cost/Valuation
Motor Vehicles 21,350,000 - (3,500,000) 17,850,000
Generator 2,161,078 - - 2,161,078
23,511,078 - (3,500,000) 20,011,078
Balance Charge Balance
as at for the Disposals/ as at
01.01.2010 Year Transfers 31.12.2010
Rs. Rs. Rs. Rs.
Depreciation
Motor Vehicles - 4,535,417 (72,917) 4,462,500
Generator 720,360 540,270 - 1,260,630
720,360 5,075,687 (72,917) 5,723,130
Carrying Amount 22,790,718 14,287,948
| AMANA TAKAFUL PLC Annual Report 201070
6.1.3 Net Book Values
2010 2009
Rs. Rs.
At Cost/Valuation 35,322,419 33,743,691
On Finance Lease 14,287,948 22,790,718
Total Carrying Amount of Property, Plant & Equipment 49,610,367 56,534,409
6.1.4 Group Property, Plant & Equipment includes fully depreciated assets having a gross carrying amount of Rs. 53,293,222/- (2009 - Rs.
32,558,836/-).
Balance Additions/ Disposals/ Balance
as at Transfers Transfers as at
01.01.2010 31.12.2010
Rs. Rs. Rs. Rs.
Freehold (6.2.1) 104,402,708 17,914,107 (160,651) 122,156,164
Leasehold (6.2.2) 23,511,078 - (3,500,000) 20,011,078
127,913,786 17,914,107 (3,660,651) 142,167,242
6.2.1 Freehold Property, Plant & Equipment
Balance Additions/ Disposals/ Balance
as at Transfers Transfers as at
01.01.2010 31.12.2010
Rs. Rs. Rs. Rs.
Cost/Valuation
Motor Vehicles 7,201,990 9,386,535 (83,331) 16,505,194
Computer Equipment 40,343,585 4,002,321 - 44,345,906
Other Equipment 18,629,124 1,724,466 (77,320) 20,276,270
Furniture and Fittings 38,228,009 2,800,785 - 41,028,794
Total Value of Depreciable Assets 104,402,708 17,914,107 (160,651) 122,156,164
Balance Charge Balance
as at for the Disposals/ as at
01.01.2010 Year Transfers 31.12.2010
Rs. Rs. Rs. Rs.
Depreciation
Motor Vehicles - 2,016,246 (19,998) 1,996,248
Computer Equipment 33,170,320 7,813,069 - 40,983,389
Other Equipment 14,092,496 2,725,095 (40,887) 16,776,704
Furniture and Fittings 24,465,634 6,636,804 - 31,102,438
Total Depreciation 71,728,450 19,191,214 (60,885) 90,858,779
Carrying Amount 32,674,258 31,297,385
Notes To The Financial Statements
AMANA TAKAFUL PLC Annual Report 2010 71
6. Property, Plant & Equipment (Contd.)
6.2.2 Leasehold Property,Plant & Equipment
Balance Additions/ Disposals/ Balance
as at Transfers Transfers as at
01.01.2010 31.12.2010
Rs. Rs. Rs. Rs.
Cost/Valuation
Motor Vehicles 21,350,000 - (3,500,000) 17,850,000
Generator 2,161,078 - - 2,161,078
23,511,078 - (3,500,000) 20,011,078
Balance Charge Balance
as at for the Disposals/ as at
01.01.2010 Year Transfers 31.12.2010
Rs. Rs. Rs. Rs.
Depreciation
Motor Vehicles - 4,535,417 (72,917) 4,462,500
Generator 720,360 540,270 - 1,260,630
720,360 5,075,687 (72,917) 5,723,130
Carrying Amount 22,790,718 14,287,948
6.2.3 Net Book Values
2010 2009
Rs. Rs.
At Cost/Valuation 31,297,385 32,674,258
On Finance Lease 14,287,948 22,790,718
Total Carrying Amount of Property, Plant & Equipment 45,585,333 55,464,976
6.2.4 During the year, the company acquired Property, Plant & Equipment to the aggregate value of Rs. 17,914,107/- ( 2009 - Rs.
4,609,248/-) for cash consideration.
6.2.5 Company Property, Plant & Equipment includes fully depreciated assets having a gross carrying amount of Rs. 53,293,222/- ( 2009-
Rs. 32,558,836/-).
6.2.6 Revaluation
The Company’s entire class of motor vehicles were revalued on 31st December 2009 by De Silva Motor Engineers (Pvt) Ltd, which is a
professional valuation organisation. Valuation was made on the basis of open market value. The revaluation surplus was transferred
to the Revaluation Reserve. The carrying amount of revalued motor vehicles that would have been included in the financial
statementshadtheassetsbeencarriedatcostwouldhavebeenasfollows;
2010 2009
Rs. Rs.
Freehold
Cost 17,905,879 8,748,519
Accumulated depreciation (7,400,066) (6,051,910)
Carrying Value 10,505,813 2,696,609
Leasehold
Cost 18,756,741 22,346,741
Accumulated depreciation (16,717,312) (17,139,324)
Carrying Value 2,039,429 5,207,417
| AMANA TAKAFUL PLC Annual Report 201072
7. Improvements to Leasehold Buildings
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Balance at the beginning of the year 4,831,288 5,968,061 4,831,288 5,968,061
Amortised during the year (1,136,413) (1,136,773) (1,136,413) (1,136,773)
Balance at the end of the year 3,694,875 4,831,288 3,694,875 4,831,288
7.1 Improvements to Leasehold Buildings represent the expenses incurred for the renovation and enhancement made to the Leasehold
Building. These expenses will be amortised to the Profit & Loss Account over the Lease period, which is 10 years commencing from
1st April 2004. Subsequent expenditure, if any, will be amortised over the remaining period.
8. Investment in Subsidiary (Unquoted)
% Holding Number of Shares Cost
2010 2009 2010 2009 2010 2009
Rs. Rs.
Amana Global Ltd. 100% 100% 25,000 25,000 37,125,000 27,125,000
37,125,000 27,125,000
9. Investment in Associate (Unquoted)
% Holding Number of Shares Value
2010 2009 2010 2009 2010 2009
Rs. Rs.
Group
IGL Lanka Ltd. 40% - 500,000 - 5,227,906 -
Group Investment in Associate (at cost) 5,227,906 -
Share of Associate Company Profits 20,090 -
Group Investment in Associate 5,247,996 -
10. Premium (Contribution) Receivable
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Contribution (Premiums) Receivable From Participants 24,360,153 30,757,209 24,360,153 30,757,209
Contribution (Premium) Receivable From Agents,
Brokers and Intermediaries 200,663,544 179,782,994 200,663,544 179,782,994
225,023,697 210,540,203 225,023,697 210,540,203
Provision for Doubtful Debtors (3,885,169) (3,790,742) (3,885,169) (3,790,742)
Contribution (Premium) Receivable - Net 221,138,528 206,749,461 221,138,528 206,749,461
11. Other Assets
Other Receivables 29,921,949 118,341,021 117,172,469 127,463,953
Deposits, Advances and Prepayments 66,578,058 28,180,722 22,744,969 26,936,986
Loans to company officers (11.2) 12,231,137 7,191,656 12,231,137 7,191,656
Salvage Stocks 4,497,880 6,083,002 4,497,880 6,083,002
Call In Arrears 23,621,150 11,361,000 - -
136,850,174 171,157,401 156,646,455 167,675,597
Notes To The Financial Statements
AMANA TAKAFUL PLC Annual Report 2010 73
11. Other Assets (Contd.)
11.1 Other Assets amounting to Rs. 6,997,000/- (2009 - Rs.2,149,463/-) belonging to Family Takaful (Long Term Insurance) Fund has been
restricted as per the provisions in Section 38 of the Regulation of Insurance Industry Act No. 43 of 2000 and will only be used to
discharge liabilities of Family Takaful (Long Term Insurance) Fund.
11.2 Loans to Company Officers Shareholders’ Fund
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Balance at the beginning of the year 7,191,656 3,772,230 7,191,656 3,772,230
Loans granted during the year 21,062,235 18,271,193 21,062,235 18,271,193
Less : Repayments during the year (16,022,754) (14,851,767) (16,022,754) (14,851,767
Balance at the end of the year 12,231,137 7,191,656 12,231,137 7,191,656
12. Cash and Cash Equivalents in Cash Flow Statement
12.1 Components of Cash and Cash Equivalents
Cash & Bank Balances 107,338,131 78,047,939 18,518,718 50,758,195
Investments in Government Securities 499,386,916 394,633,804 499,386,916 394,633,804
606,725,047 472,681,743 517,905,634 445,391,999
Bank Overdrafts (390,078,683) (206,907,215) (390,078,683) (206,907,215)
216,646,364 265,774,528 127,826,951 238,484,784
12.2 Cash and Bank balance amounting to Rs. 3,915,558/- (2009 - Rs. 11,404,196/-) belonging to Family Takaful Fund has been restricted
as per the provisions in Section 38 of the Regulation of Insurance Industry Act No. 43 of 2000 and will only be used to discharge
liabilities of Family Takaful (Long Term Insurance) Fund.
12.3 The above Bank Overdrafts are within the limit and not subject to any Overdraft Interest.
13. Family Takaful Fund (Insurance Provision-Long Term)
2010 2009
Rs. Rs.
Participant Investment Fund -PIF (13.1) 368,537,551 305,738,471
Participant Tabarru Fund-PTF & Group Fund- GF (13.1) 40,428,332 27,944,358
Unearned Premium - Group Family & Mortgage Takaful 4,175,542 1,503,407
413,141,425 335,186,236
| AMANA TAKAFUL PLC Annual Report 201074
13.1 PIF, PTF & GF
PIF PTF GF 2010 2009
Rs. Rs. Rs. Rs. Rs.
Gross Written Contribution (Premium) 104,398,686 71,271,671 64,485,423 240,155,780 207,096,848
Less: Contribution (Premium) Ceded to
Retakaful Companies
(Reinsurers) - Net - (1,711,089) (3,657,856) (5,368,945) (4,017,356)
Net Written Contribution 104,398,686 69,560,582 60,827,567 234,786,835 203,079,492
Add : Unearned Takaful
Contribution (Premium)
at The Beginning of the year - - 1,503,407 1,503,407 1,500,754
Less : Unearned Takaful
Contribution (Premium)
at the end of the year - - (4,175,542) (4,175,542) (1,503,407)
Net Earned Contribution (Premium) 104,398,686 69,560,582 58,155,432 232,114,700 203,076,839
Less : Policy Surrenders, Maturities
& Part Withdrawals (47,607,804) 5,800,339 - (41,807,465) (40,154,451)
56,790,882 75,360,921 58,155,432 190,307,235 162,922,388
Less : Direct Expenses
Management Fees On Takaful
Contribution (Premium) - (42,012,097) (25,734,024) (67,746,121) (49,073,401)
Medical Expenses - (893,353) - (893,353) (675,228)
Cess Expenses - (455,505) - (455,505) (402,014)
Operational Expenses - (9,084,967) (4,681,115) (13,766,082) (13,189,471)
Takaful Claims (88,734) (572,193) (28,114,247) (28,775,174) (29,475,150)
Acquisition Cost - (19,817,450) (236,728) (20,054,178) (18,073,621)
56,702,148 2,525,356 (610,682) 58,616,822 52,033,503
Fund Balance at the
Beginning of the Year 305,738,471 28,583,805 (639,447) 333,682,829 272,863,096
Share of Investment Income 6,096,932 523,314 - 6,620,246 7,262,882
Return on Government Securities - - 10,045,986 10,045,986 1,523,348
Fund Balance at the end of the Year 368,537,551 31,632,476 8,795,857 408,965,883 333,682,829
13.2 Insurance Provision - Long Term (Family Takaful Fund)
Long duration contract liabilities are included in the Long Term Insurance (Life Insurance) Fund, result primarily from traditional
participating Long Term (Life) insurance products. Short duration contract liabilities are primarily accident and health insurance
products.
The insurance provision has been based upon the following:
- Profit rate is consistent by product, throughout the year of valuation. The rate profit assumed was 2% p.a.
- Mortality rates based in published Mortality tables adjusted for actual experience by geographic area and modified to allow
the variations (based on gender) in policy form. The mortality table employed was the English Assured Lives Mortality Table
1967/70(Ultimate).
- Surrender rates based upon actual experience by geographic area and modified to allow for variations in policy form.
The amount of profit to be credited to the participants is determined annually by the company. The profit includes the participants
share of net income that is required to be allocated by the contract.
The valuation of the Insurance Provisions (Family Takaful Fund), as at 31.12.2010 was made by Mr. Zainal Abidin Mohd. Kassim (FIA)
for and on behalf of Actuarial Partners Consulting Sdn Bhd (formerly known as Mercer Zainal Consulting Sdn. Bhd), Malaysia. In
accordance with the actuary’s report, the fund balances are as follows.
Notes To The Financial Statements
AMANA TAKAFUL PLC Annual Report 2010 75
13.2 Insurance Provision - Long Term (Family Takaful Fund) (Contd.)
Fund Balances - Surplus/(Deficit)
2010 2009
Rs. Rs.
Participants Tabarru Fund 25,044,834 23,475,910
Group Fund (4,247,637) (15,471,198)
20,797,197 8,004,712
In the opinion of the consultant actuary, the provision is adequate to cover the liabilities pertaining to Long Term Insurance (Family
Takaful) Fund. No valuation has been carried out on Participating Investment Fund since it represents an accumulation of investments
made by the policy holders.
14. General Takaful (Non-Life) Insurance Provision
The General Takaful Fund (Non-life insurance reserve) as shown in the balance sheet represents the following
14.1 Unearned Contribution (Premium)
2010 2009
Rs. Rs.
Gross 313,093,128 295,276,881
Retakaful (Reinsurance) (71,340,274) (108,652,787)
Unexpired Risk Reserve(UERR) 3,166,380 36,911,844
Net 244,919,234 223,535,938
14.2 Gross Claims Reserve
Claims outstanding 112,353,425 93,377,551
Claims incurred but not reported (IBNR) 17,346,940 29,516,253
129,700,365 122,893,804
Insurance Provision 374,619,599 346,429,742
14.3 General Takaful (Insurance) Technical Reserves
General Insurance (Non Life) Provision 374,619,599 346,429,742
Retakaful (Reinsurance) receivable on outstanding claims (32,098,781) (50,534,737)
342,520,818 295,895,005
The incurred but not reported (IBNR) claim reserve has been actuarially computed by Mr. Zainal Abidin Mohd. Kassim (FIA) of
Actuarial Partners Consulting Sdn Bhd (formerly known as Mercer Zainal Consulting Sdn. Bhd), Malaysia. The valuation is based on
internationally accepted valuation methods, which analyses the past experience and pattern of the claims. Based on the actuaries
recommendations, the Company has provided Rs. 17,346,940/- for incurred but not reported (IBNR) claims reserve and
Rs. 3,166,380/- for Unexpired Risk Reserve for the year.
15. Other Liabilities
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Accrued liabilities 18,124,888 9,375,300 8,656,185 8,960,717
Commission payable 20,388,464 16,139,694 20,388,464 16,139,694
Other creditors 47,321,681 21,580,601 38,826,143 21,580,601
Retakaful payable 50,409,283 82,294,325 50,409,283 82,294,325
136,244,316 129,389,920 118,280,075 128,975,337
| AMANA TAKAFUL PLC Annual Report 201076
Notes To The Financial Statements
16. Murabaha Facility
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Opening Balance 5,839,212 7,207,812 5,839,212 7,207,812
Repayments (1,210,750) (1,368,600) (1,210,750) (1,368,600)
4,628,462 5,839,212 4,628,462 5,839,212
Unamortised Murabaha Profit (653,244) (1,110,514) (653,244) (1,110,514)
Net Liability 3,975,218 4,728,698 3,975,218 4,728,698
1 Year or less 1-5 Years More than 5 Years Total
Rs. Rs. Rs. Rs.
16.1 Gross Liability
1,368,600 3,259,862 - 4,628,462
Unamortised Profits (336,671) (316,573) - (653,244)
Net Liability 1,031,929 2,943,289 - 3,975,218
16.2 Extended Murabah Facility represents the facility obtained from Amana Investments Limited to finance improvements made to
Leasehold buildings during 2004. This facility is repayable over 10 years commencing from April 2004 in monthly instalments of
Rs.114,050/- each payable at the end of every month.
16.3 No Assets of the company has been pledged against this facility
17. Provision for Retirement Benefits
The gratuity liability was actuarially valued under the Projected Unit Credit Cost method by Mr. Piyal S. Goonetilleke(Fellow of the
Society of Actuaries-USA) in 2008. During 2010, an interim valuation was performed through the actuary.
Principal actuarial assumptions used:
% Per Annum
a) Discount Rate 11
b) Salary Increase 9
c) Incidence of withdrawals 15
The Liability is not externally funded.
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Retirement Benefits Obligation - Gratuity
Balance at 1st January 6,756,114 5,820,543 6,756,114 5,820,543
Provision for the year 2,616,133 2,315,947 2,616,133 2,315,947
9,372,247 8,136,490 9,372,247 8,136,490
Payments during the year (964,033) (1,380,376) (964,033) (1,380,376)
Balance at 31st December 8,408,214 6,756,114 8,408,214 6,756,114
AMANA TAKAFUL PLC Annual Report 2010 77
18. Finance Lease Liability
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Opening Balance 10,613,244 16,133,894 10,613,244 16,133,894
Profit Adjustment (127,909) - (127,909) -
Repayments (5,354,880) (5,520,650) (5,354,880) (5,520,650)
5,130,455 10,613,244 5,130,455 10,613,244
Unamortised Profit (620,038) (1,334,456) (620,038) (1,334,456)
Net Liability 4,510,417 9,278,788 4,510,417 9,278,788
1 Year or less 1-5 Years Total
18.1 Gross Liability 3,392,640 1,737,815 5,130,455
Unamortised Profits (382,523) (237,515) (620,038)
Net Liability 3,010,117 1,500,300 4,510,417
19. Stated Capital
Company
2010 2010 2009 2009
No of Shares Rs. No of Shares Rs.
Fully paid ordinary shares -Voting 500,000,360 500,000,360 50,000,036 500,000,360
20. Capital Reserves
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Revaluation Reserve
Balance as at 1st January 20,647,964 - 20,647,964 -
Revaluation surplus arising during the year - 20,647,964 - 20,647,964
Transfer of Revaluation Reserve on Disposal (3,143,296) - (3,143,296) -
Balance as at 31st December 17,504,668 20,647,964 17,504,668 20,647,964
21. Revenue Reserves
21.1 Retained Earnings
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Balance as at 1st January (334,279,882) (282,263,818) (336,580,697) (285,810,653)
Net Loss for the year (35,581,754) (51,992,745) (49,559,121) (50,770,044)
Currency Translation Differences (611,643) (23,319) - -
Transfer of Revaluation Reserve on Disposal 3,143,296 - 3,143,296 -
Transfer of profits from HMS 217,624 - - -
Balance as at 31st December (367,112,359) (334,279,882) (382,996,522) (336,580,697)
| AMANA TAKAFUL PLC Annual Report 201078
Notes To The Financial Statements
22. Revenue Group Company
2010 2009 2010 2009 Rs. Rs. Rs. Rs.
Gross Written Contribution (Premium) 1,173,347,841 1,160,895,006 1,173,347,841 1,160,895,006 Less: Contribution (Premium) Ceded to Retakaful Companies (Reinsurers) (203,642,426) (261,274,291) (203,642,426) (261,274,291Net Written Contribution (Premium) 969,705,415 899,620,715 969,705,415 899,620,715
Net change in reserve for un-earned Contribution (Premium) (24,055,431) (82,492,681) (24,055,431) (82,492,681)Net Earned Contribution (Premium) 945,649,984 817,128,034 945,649,984 817,128,034
Income from investments 41,763,312 40,147,003 39,534,583 47,230,063 Other income 28,113,649 7,585,048 577,006 (840,299) Total Revenue 1,015,526,945 864,860,085 985,761,573 863,517,798
23. Gross Written Contribution Group Company
2010 2009 2010 2009 Rs. Rs. Rs. Rs.
Long Term Policies 232,776,810 206,754,188 232,776,810 206,754,188 Family Takaful 7,378,970 342,660 7,378,970 342,660 Mortgage & Group Family Takaful 240,155,780 207,096,848 240,155,780 207,096,848 General Takaful (Insurance) 493,602,581 380,636,747 493,602,581 380,636,747 Motor 105,915,110 124,826,258 105,915,110 124,826,258 Fire 89,464,952 108,229,220 89,464,952 108,229,220 Marine 164,810,310 241,001,564 164,810,310 241,001,564 Medical 79,399,108 99,104,369 79,399,108 99,104,369 Miscellaneous 933,192,061 953,798,158 933,192,061 953,798,158 1,173,347,841 1,160,895,006 1,173,347,841 1,160,895,006
24. Insurance Claims & Benefits (Net) Group Company
2010 2009 2010 2009 Rs. Rs. Rs. Rs.
General Takaful (Insurance) Gross Claims Incurred Motor 296,228,109 243,476,399 296,228,109 243,476,399 Fire 28,171,163 154,351,981 28,171,163 154,351,981 Marine 7,852,543 24,010,483 7,852,543 24,010,483 Medical 124,468,065 130,218,311 124,468,065 130,218,311 Miscellaneous 17,939,616 28,786,109 17,939,616 28,786,109 Surplus Refund to the Participants 34,361 2,131,477 34,361 2,131,477 474,693,857 582,974,760 474,693,857 582,974,760 Retakaful (Reinsurance) recoveries (27,724,820) (176,338,633) (27,724,820) (176,338,633)General Insurance Claims & Benefits (Net) 446,969,037 406,636,127 446,969,037 406,636,127 Family Takaful (Long Term Insurance) Claims incurred 28,775,174 29,475,150 28,775,174 29,475,150 Surrenders 31,659,479 31,899,095 31,659,479 31,899,095 Policy Maturities 3,086,248 5,081,081 3,086,248 5,081,081 Interim Payments/Part withdrawals 7,061,738 3,174,275 7,061,738 3,174,275 Long Term Insurance Claims & Benefits 70,582,639 69,629,601 70,582,639 69,629,601 517,551,676 476,265,728 517,551,676 476,265,728
25. Income from Investments Group Company
2010 2009 2010 2009 Rs. Rs. Rs. Rs.
Investment Income (25.1) 23,557,875 35,017,049 21,434,213 42,100,109 Net realised capital gain or losses 13,689,388 4,263,205 13,612,288 4,263,205 Unrealised capital gain or losses 4,516,049 866,749 4,488,082 866,749 41,763,312 40,147,003 39,534,583 47,230,063
AMANA TAKAFUL PLC Annual Report 2010 79
25.1 Investment Income
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Dividend income 2,231,825 1,894,532 2,231,825 11,894,532 Income from Murabaha investment 1,217,989 4,398,335 1,217,989 4,398,335 Income from Mudharaba investments 2,411,412 6,376,641 287,750 3,459,701 Bank Deposit 3,752,598 18,659,464 3,752,598 18,659,464 Properties 1,822,136 1,632,928 1,822,136 1,632,928 Interest income from investment in Government Securities (25.2) 12,121,915 2,055,149 12,121,915 2,055,149
23,557,875 35,017,049 21,434,213 42,100,109
25.2 Interest income from Government Securities has been recognised based on a special approval given by the Shari’ah Council of the
Company in 2009. This allows the Company to utilise the returns from Government Securities to settle claims for a temporary period
considering the investment constraints and the carried forward losses of the company. However, the amount utilised by the company
must be paid in charity once the above situation of the company improved in the future. This special dispensation is subject to a
review after the temporary period by the Shari’ah Council of the company.
The Company has not recognised the notional interest income amounting to Rs. 18,983,503/- on investment in Government
Securities and interest free bank overdraft facility during the year
26. Other Income
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Profit on Disposal of Property, Plant & Equipment 284,773 (15,072) 284,773 (15,072)Sundry Income 17,268,605 1,776,291 5,800,138 1,776,291 Salvage Income 849,110 978,000 849,110 978,000 Exchange gain/(Loss) (6,122,115) (3,579,518) (6,357,015) (3,579,518)
Technical Fee income 15,833,276 8,425,347 - -
28,113,649 7,585,048 577,006 (840,299)
27. Other Operating, Investment related and Administration Expenses
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Staff expenses (27.1) 150,216,417 131,003,689 148,336,250 130,088,228 Administration & Establishment expenses 134,650,978 94,077,330 105,726,955 92,634,514 Selling expenses 23,659,841 13,556,960 18,699,576 13,556,960 Depreciation 33,897,392 24,245,042 24,266,901 23,871,767 Provision for Doubtful Debtors 1,401,286 1,000,000 1,401,286 1,000,000 Consultancy fees 24,074,277 18,852,115 24,074,277 19,245,115
Travel expenses 62,472,645 55,531,943 61,511,739 55,292,943
430,372,836 338,267,079 384,016,984 335,689,527
27.1 Staff Expenses Wages, Salaries & Bonuses 114,141,047 102,757,855 112,445,304 101,860,855 Contribution to defined contribution plans - EPF & ETF 16,467,286 14,994,977 16,467,286 14,994,977 Staff welfare 9,433,616 4,875,396 9,433,616 4,875,396 Staff training 3,922,501 3,457,474 3,873,837 3,457,474 Medical claims 3,635,834 2,602,040 3,500,074 2,583,579
Gratuity 2,616,133 2,315,947 2,616,133 2,315,947
150,216,417 131,003,689 148,336,250 130,088,228
28. Amortisations Improvements to Leasehold Buildings 1,136,413 1,136,773 1,136,413 1,136,773
Intangible Asset 4,840,619 4,758,448 4,840,619 4,758,448
5,977,032 5,895,221 5,977,032 5,895,221
| AMANA TAKAFUL PLC Annual Report 201080
Notes To The Financial Statements
29. The loss from operations for the year is stated after charging/(crediting) the following.
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Directors’ Emoluments - Executive 3,900,000 3,147,375 3,900,000 3,147,375
- Non-Executive 565,403 463,050 565,403 463,050
Auditors’ Remuneration (Fees) - Audit 960,070 825,196 764,750 665,000
- Taxation 252,928 252,928 252,928 219,938
Depreciation 33,897,392 24,245,042 24,266,901 23,871,767
Donations 173,300 272,400 173,300 272,400
Advertisement Costs 23,659,841 13,556,960 18,699,576 13,556,960
Amortisation of Intangibles 4,840,619 4,758,448 4,840,619 4,758,448
Staff Cost 150,216,417 131,003,689 148,336,250 130,088,228
(Profit)/Loss on Disposal of Property, Plant & Equipment (293,636) 15,072 (284,773) 15,072
30 Finance Cost
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Extended Murabaha Profit 457,270 577,869 457,270 577,869
Profit Mark up on Lease (Ijara) Facility 586,508 1,003,678 586,508 1,003,678
1,043,778 1,581,547 1,043,778 1,581,547
31 Share of Profit from Associate
Group
2010 2009
Rs. Rs.
IGL Lanka Ltd. 20,090 -
20,090 -
32. Income Tax Expense
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Current Income Tax
Taxation on current year profits - - - -
- - - -
32.1 Tax Reconciliation Statement
Accounting Loss before Tax (35,372,585) (52,005,309) (49,559,121) (50,770,044)
Aggregate Disallowed items 38,325,617 25,628,336 38,325,617 25,628,336
Aggregate Allowable Expenses (50,384,004) (30,643,629) (36,197,468) (31,878,894)
Tax Loss (47,430,972) (57,020,602) (47,430,972) (57,020,602)
Income Tax at 33.33% - - - -
32.1.1 Amana Takaful PLC is liable for income tax at 33.33% (2009-33.33%) on the taxable income until year of assessment 2010/2011.
32.1.2 Amana Global Ltd. is exempted from income tax for a period of three years from the date of commencement of commercial
operations under the section 17 of the BOI Act, No. 4 of 1978. The exemption continues until year of assessment 2011/2012.
AMANA TAKAFUL PLC Annual Report 2010 81
32.2 Deferred Tax Asset
2010 2009
Rs. Rs.
Tax Losses brought forward 411,626,508 354,605,906
Tax Losses arising during the year 47,430,972 57,020,602
Deferred Tax Asset @ 33.33% 459,057,480 411,626,508
Unrecognised Deferred Tax Asset 153,019,160 137,208,836
32.2.1 No provision has been made for Deferred Tax Asset for the year as the Company has incurred further tax losses and it is not probable
that the future Tax Profits will be available against which the Company can utilise the benefits therefrom.
33. Earnings/(Loss) Per Share
33.1 Basic Earnings/(Losses) per share is calculated by dividing the net profit/(loss) for the year attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the year. However, the surplus/(deficit) of the General Takaful Fund
also taken under the profit/(loss), which is not a part of the profit attributable to shareholders.
33.2 The following reflect the income and share data used in the Basic Earnings/(Losses) Per Share computations.
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Amount used as the Numerator:
Net Loss attributable to Ordinary shareholders (35,581,754) (51,992,745) (49,559,121) (50,770,044)
Number of Ordinary Shares used as Denominator: Number Number Number Number
Weighted Average number of Ordinary Shares in issue 500,000,360 500,000,360 500,000,360 500,000,360
34. Commitments & Contingencies
34..1 Commitments
There are no significant commitments as at the Balance Sheet date.
34.2 Contingencies
There are no significant contingencies as at the Balance Sheet date.
35. Events Occurring after the Balance Sheet Date
There have been no event occurring after the Balance Sheet date that require adjustments to or disclosures in these financial
statements.
36. Assets Pledged
The following assets have been pledged as security for liabilities.
Nature of Assets Nature of Liability Carrying Amount Pledged Included Under
2010 2009
Rs. Rs.
Leased Vehicle Pledged against Finance 14,287,948 22,790,718 P.P& E.
Lease Liabilities
Repurchase Agreements Bank Guarantee for a 1,500,000 1,500,000 Investments-
Performance Bond Shareholders Fund
| AMANA TAKAFUL PLC Annual Report 201082
Notes To The Financial Statements
37. Related Party Disclosures
Group
(a) Transactions with the Parent, Subsidiaries, Associate and Fellow Subsidiaries
Name of the Company Relationship Nature of Transaction 2010 2009 Rs. Rs.
Amana Investments Limited Parent Company Takaful Premium 5,402,730 10,506,270 Outstanding Premium 3,941,322 5,304,973 Mudharaba Investments 11,118,052 936,846 Income from Mudharaba - Inv 791,271 256,015 Extended Murabaha Payable - Gross 4,628,462 5,839,212 Lease (Ijara) Facility Payable - Gross - 1,651,549 Claims Paid 3,126,196 2,452,105
Amana Global Limited Fully Owned Subsidiary Takaful Premium 8,645 84,017 Technical Fee - 393,000 Reimbursement of Cost 7,598,975 5,543,768 Dividend Receivable - 10,000,000 Bonus Shares 10,000,000 - Outstanding Premium 10,045 13,266 Claims Paid 48,500 40,323 Advance received for the purchase of a Non-admissible Assets - 22,500,000 Settlement of the Advance Received - (22,500,000) Inter-Company receivable 2,385,664 - Royalty payment 1,243,053 - Subscription for rights issue 62,501,160 -
Amana Takaful (Maldives) Private Limited Sub-subsidiary Takaful Premium 212,382 102,115 Inter-Company receivable 260,160 2,534,354 Investment in Subsidiary 5,217,891 - Amana Asset Management Limited Fellow-subsidiary Takaful Premium 362,772 411,660 Claims Paid 61,447 131,193 Amana Securities Limited Fellow-subsidiary Takaful Premium 510,873 836,675 (Upto April 2010) Purchase of Shares - (Amana Securities as a Stock Broker) 194,600 829,800 Sale of Shares - (Amana Securities as a Stock Broker) - 998,766 Claims Paid 357,914 701,629
Amana Capital limited Fellow-subsidiary Takaful Premium 9,876 10,887
(b) Compensation of Key Management Personnel The total compensation to those individuals classified as key management personnel, being those having authority and responsibility for planning, directing and controlling the activities of the Company.
2010 2009 Rs. Rs.
Salary and other short term benefits 9,638,903 6,058,800 Contributions made by the Company to Provident Fund and Trust Fund 1,436,400 821,250 Non Cash Benefits 420,000 360,000
(c) Transaction with other related partiesThe Company entered into transactions with enterprises which are significantly influenced by key management personnel or their closefamilymemberswhichareasfollows;
Takaful Premium 2,395,560 4,502,183 Outstanding Premium 555,145 1,113,573 Claims Paid 1,905,709 2,112,168
AMANA TAKAFUL PLC Annual Report 2010 83
37. Related Party Disclosures (Contd.)
Company
(a) Transactions with the Parent, Subsidiaries and Fellow Subsidiaries
Name of the Company Relationship Nature of Transaction 2009 2010 Rs. Rs.
Amana Investments Limited Parent Company Takaful Premium 5,402,730 10,506,270 Outstanding Premium 3,941,322 5,304,973 Mudharaba Investments 773,744 936,846 Income from Mudharaba-Inv 287,750 256,015 Extended Murabaha Payable - Gross 4,628,462 5,839,212 Lease (Ijara) Facility Payable - Gross - 1,651,549 Claims Paid 3,126,196 2,452,105
Amana Global Limited Fully Owned Subsidiary Takaful Premium 8,645 84,017 Technical Fee - 393,000 Reimbursement of Cost 7,598,975 5,543,768 Dividend Receivable - 10,000,000 Bonus Shares 10,000,000 - Outstanding Premium 10,045 13,266 Claims Paid 48,500 40,323 Advance received for the purchase of a Non-admissible Assets - 22,500,000 Settlement of the Advance Received - (22,500,000) Inter-Company receivable 2,385,664 - Amana Takaful (Maldives) Private Limited Sub-subsidiary Takaful Premium 212,382 102,115 Inter-Company receivable 260,160 2,534,354 Amana Asset Management Limited Fellow-subsidiary Takaful Premium 362,772 411,660 Claims Paid 61,447 131,193 Amana Securities Limited Fellow-subsidiary Takaful Premium 510,873 836,675 (Upto April 2010) Purchase of Shares - (Amana Securities as a Stock Broker) 194,600 829,800 Sale of Shares - (Amana Securities as a Stock Broker) - 998,766 Claims Paid 357,914 701,629 Amana Capital Limited Fellow-subsidiary Takaful Premium 9,876 10,887
(b) Compensation of Key Management PersonnelThe total compensation to those individuals classified as key management personnel, being those having authority and responsibility for planning, directing and controlling the activities of the Company.
2010 2009 Rs. Rs.
Salary and other short term benefits 7,478,903 6,058,800 Contributions made by the Company to Provided Fund and Trust Fund 981,000 821,250 Non Cash Benefits 360,000 360,000
(c) Transactions with other related partiesThe Company entered into transactions with enterprises which are significantly influenced by key management personnel or their closefamilymemberswhichareasfollows;
Takaful Premium 2,395,560 4,502,183 Outstanding Premium 555,145 1,113,573 Claims Paid 1,905,709 2,112,168
| AMANA TAKAFUL PLC Annual Report 201084
Group Value Added Statement
2010 2009
Rs. Rs.
Net earned contribution (premium) 945,649,984 817,128,034
Investment & Other Income 69,876,961 47,732,051
1,015,526,945 864,860,085
Net Claims & Benefits (517,551,676) (476,265,728)
Cost of external services (274,163,719) (224,531,202)
Value added 223,811,550 164,063,155
To Employees 150,003,689 131,003,689
Increase in Family Takaful (Long Term Insurance) Fund 75,283,054 60,819,733
Retained with the business
- Depreciation 33,897,392 24,245,042
- In reserves (35,372,585) (52,005,309)
223,811,550 164,063,155
AMANA TAKAFUL PLC Annual Report 2010 85
Share Information
1. Analysis of the Distribution of Shareholders as at 31st December 2010
Resident Non-Resident Total No. of No. of No. of Share- No. of % Share- No. of % Share- No. of % holders Shares holders Shares holders Shares
1 - 1,000 772 455,310 0.09 3 3,000 0.00 775 458,310 0.09
1,001 - 10,000 1376 6,855,760 1.37 6 35,800 0.01 1,382 6,891,560 1.38
10,001 - 100,000 698 24,674,210 4.93 10 454,000 0.09 708 25,128,210 5.03
100,001 - 1,000,000 125 28,733,600 5.75 2 650,000 0.13 127 29,383,600 5.88
Over 1,000,000 9 438,138,680 87.63 - - 9 438,138,680 87.63
2980 498,857,560 99.77 21 1,142,800 0.23 3,001 500,000,360 100.00
2. Top 20 Shareholders as at 31st December 2010
No. of Shares %
Amana Investments Limited 375,000,080 75.00
Dr.Thirugnanasambandar Senthilverl 31,107,100 6.22
Falcon Trading (Pvt) Ltd 11,446,000 2.29
Mr. Kalugala Eraj Hasitha De Alwis 9,600,600 1.92
Pan Asia Banking Corporation Plc/Mr.S.S.C.Fernando 3,626,600 0.73
Mr. Segu Lebbe Mohamed Fausz 3,250,000 0.65
Mr. Kallara Wijetunga Mudiyansalage Sardatissa 1,589,200 0.32
Mr. Hitihami Koralage Pushpakumara 1,484,100 0.30
Mr. Mohamed Hussain Mohamed Nazeer 1,035,000 0.21
Mr. Gajath Chrysantha Goonetilleke 950,000 0.19
Mr. Vethanayagam Raymond Bernard Jehagnanendran 808,000 0.16
Pan Asia Banking Corporation Plc./Mr.Ravindra Erle Rambukwelle 800,000 0.16
Mr. Wettasinghe Arachchige Don Siriwardhana 706,300 0.14
Standard Holdings (Pvt) Limited 636,000 0.13
Dr. Sena Yaddehige 500,000 0.10
Mrs. Firthouse Marina Ahamed 500,000 0.10
Mrs. Shirani Sunila Silva 500,000 0.10
Mr. Chanaka Thilan Rodrigo 500,000 0.10
Mr. C.T. Rodrigo/Miss A.S. John/Mrs. S.M. Rodrigo 500,000 0.10
Mr. Sajid Hussein Makeen 481,000 0.10
445,019,980 89.00
3. Invester Ratios
Group Company
2010 2009 2010 2009
Rs. Rs. Rs. Rs.
Earnings per Share (0.07) (0.10) (0.09) (0.10)
Dividend per Share - - - -
Net Assets per Share 0.34 0.38 0.27 0.37
4. Market Value of Shares
2010 2009
Rs. Rs.
Highest Value 3.80 16.25
Lowest Value 2.80 6.50
Year End Value 3.00 12.50
| AMANA TAKAFUL PLC Annual Report 201086
Branch Network
Kinniya
Puttalam
Dehiwala
Kaduruwela
Kattankudy
AMANA TAKAFUL PLC Annual Report 2010 87
Head Office98, Bauddhaloka Mawatha, Colombo 04.(T) - +94 11 7501000(F) - +94 11 2597429(F) - +94 11 7501088 (General Underwriting) (F) - +94 11 7501055 (Motor Claims) (E) - [email protected](W) - www.takaful.lk
Amana Takaful Life Centre6, Glen Aber Place, Colombo-04.(T) - +94 11 7801000(F) - +94 11 7801055
Ladies Wing98, Bauddhaloka Mawatha, Colombo 04.(T) - +94 11 7501086(F) - +94 11 7501088
Medical CentreNo 62, Lauries Road, Colombo 04.(T) - +94 11 7501219, 20, 21(F) - +94 11 7501218
Dehiwela Branch135, Galle Road, Dehiwela.(T) - +94 81 7501275(F) - +94 81 7501276
Gampola134/A, Kandy Road, Gampola.(T) - +94 81 7501104-5(T) - +94 81 7501106
Galle BranchNo 41, Sri Dewamitta Road, Chaina Garden, Galle.(T) - +94 91 7501127(F) - +94 91 7501129
Kaduruwela BranchNo 823/1, Saw Mill Junction, Kaduruwela.(T) - +94 27 7501120(F) - +94 27 7501121
Kalmunai32, Malliga Building, 1st Floor, Main Street, Kalmunai.(T) - +94 67 7501116(F) - +94 67 7501117
Kalutara136, 1st Floor, Kalutara South, Kalutara.(T) - +94 34 7501132(F) - +94 34 7501133
Kandy105/1 2nd Floor, Katugodella Street, Kandy.(T) - +94 81 7501100(F) - +94 81 7501134
Kattankudy287, Main Street, Katankudy.(T) - +94 65 7501119(F) - +94 65 7501118
KinniyaNo 1, Main Street Kinniya(T) - +94 26 7501113-4(F) - +94 26 7501115
Kurunegala5, 2nd Floor, Noel Seneviratne Mawatha, Kurunegala.(T) - +94 37 7501110(F) - +94 37 7501109
Matale106, Kings Street, Matale.(T) - +94 66 7501101-2(F) - + 94 66 7501103
Matara177, Thangalle Road, Kotuwegoda, Matara.(T) - +94 41 7501130(F) - +94 41 7501131
Mawanella22 A/1, Kandy Road, Mawanella.(T) - +94 35 7501107(F) - +94 35 7501108
Negombo BranchNo 31, 2nd Floor, Station Road, Negombo.(T) - +94 31 7501121-2(F) - +94 31 7501123
Pettah Branch51-53, 3rd Floor, Bankshall Street, Colombo 11.(T) - +94 11 7501212-3(F) - +94 11 7501270
Puttlam BranchNo 68A, Mannar Road, Puttlam.(T) - +94 32 7501124-5 (F) - +94 32 7501126
Maldives-Overseas OperationsAmana Takaful (Maldives) Pvt Ltd, 4th Floor, ADK Tower, Ameer Ahmed Mogu, Male’ Republic of Maldives. (T) - +960 315262(F) - +960 340729
Amana Takaful Maldives (Pvt) Ltd3rd floor, H Mialani, Sosun Magu maleRepublic of maldives
| AMANA TAKAFUL PLC Annual Report 201088
Ten Year Summary
General Insurance Business
Statement of Income for the period ended 31.12.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005 31.12.2004 31.12.2003 31.3.2003 31.3.2002
Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Gross Written Contribution (Premium) 933,192 953,798 835,188 678,013 589,067 383,930 208,674 58,882 33,783 18,651
Net Earned Contribution (Premium) 713,535 614,051 559,563 394,132 316,365 157,099 90,839 27,469 18,787 9,413
Income from Investments and Other Income 6,360 2,612 7,420 4,114 12,346 8,132 3,909 1,525 296 66
Net Claims Incurred (446,969) (406,636) (326,946) (311,620) (160,379) (71,183) (69,931) (18,756) (9,693) (4,260)
Net Commission Incurred (31,394) (15,962) (1,295) 4,882 25,856 18,641 10,992 1,715 1,633 2,029
Expenses (259,761) (274,262) (257,545) (219,511) (193,015) (116,923) (78,951) (22,743) (13,551) (7,133)
Profit/(Loss) Before Taxation (18,229) (80,197) (18,802) (128,004) 1,172 (4,235) (43,143) (10,789) (2,528) 114
Long Term Insurance Business
Statement of Income for the 31.12.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005 31.12.2004 31.12.2003 31.3.2003 31.3.2002
period ended Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Gross Written Contribution (Premium) 240,156 207,097 188,676 130,986 90,894 48,921 38,170 24,647 21,150 11,825
Net Earned Contribution (Premium) 232,115 203,077 187,005 117,926 83,778 46,823 36,836 23,707 20,626 11,503
Income from Investments and Other Income 23,286 16,049 12,934 15,643 14,475 11,974 7,087 674 366 927
Net Claims Incurred (70,583) (69,630) (51,374) (34,237) (25,960) (11,190) (9,283) (2,923) (2,129) (1,690)
Net Commission Incurred (20,054) (18,074) (22,089) (10,636) (11,382) (1,737) (1,728) (851) (806) (451)
Expenses (89,481) (70,603) (65,658) (27,816) (22,379) (10,575) (5,969) (1,606) (2,047) (1,535)
Increase in Family Takaful (Long Term Insurance) Fund (75,283) (60,820) (60,818) (60,881) (38,532) (35,295) (26,942) (19,001) (16,009) (8,755)
Profit/(Loss) Before Taxation - - - - - - - - - -
Shareholders’ Fund
Statement of Income for the 31.12.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005 31.12.2004 31.12.2003 31.3.2003 31.3.2002
period ended Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Management fee 319,783 319,892 292,538 234,097 204,582 124,498 75,829 27,506 15,860 4,238
Income from Investments and Other Income 10,465 27,729 37,000 28,445 3,195 5,085 1,794 4,375 3,115 1,200
Expenses (361,578) (318,193) (363,253) (287,614) (196,369) (123,028) (69,720) (32,590) (32,412) (18,991)
Profit/(Loss) Before Taxation (31,330) 29,427 (33,716) (25,073) 11,408 6,554 7,903 (709) (13,437) (13,553)
Group
Statement of Income for the 31.12.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005 31.12.2004 31.12.2003 31.3.2003 31.3.2002
period ended Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Gross Written Contribution (Premium) 1,173,348 1,160,895 1,023,864 808,999 679,961 432,851 246,844 83,529 54,933 30,476
Net Earned Contribution (Premium) 945,650 817,128 746,567 512,058 400,143 247,301 148,116 51,176 39,412 20,917
Income from Investments and Other Income 69,896 47,732 64,275 48,202 30,015 25,191 12,789 6,574 3,776 2,192
Net Claims Incurred (517,552) (476,266) (378,319) (345,858) (186,340) (82,374) (79,215) (21,679) (11,822) (5,950)
Net Commission Incurred (20,691) (34,036) (23,384) (5,754) 14,474 (26,476) (11,178) 864 826 1,578
Expenses (437,392) (345,744) (397,479) (300,845) (207,180) (126,029) (78,811) (29,433) (32,149) (23,421)
Increase in Family Takaful (Long Term Insurance) Fund (75,283) (60,820) (60,818) (60,881) (38,532) (35,295) (26,942) (19,001) (16,009) (8,755)
Profit/(Loss) Before Taxation (35,372) (52,005) (49,157) (153,077) 12,581 2,320 (35,240) (11,498) (15,965) (13,439)
Income Tax Expenses - - - - (1,060) - - - - -
Net Profit/(Loss) for the year (35,372) (52,005) (49,157) (153,077) 11,521 2,320 (35,240) (11,498) (15,965) (13,439)
Basic Earnings/(Loss) Per Share (Rs.) (0.07) (0.10) (0.98) (3.27) 0.92 0.21 (4.56) (1.53) (2.13) (1.79)
AMANA TAKAFUL PLC Annual Report 2010 89
Group
Balance Sheet as at 31.12.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005 31.12.2004 31.12.2003 31.3.2003 31.3.2002
Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Assets
Investments 903,591 573,210 621,147 503,477 161,509 196,428 158,200 90,725 56,084 46,836
Intangible Assets 25,681 28,692 30,307 15,077 4,775 5,715 4,629 3,946 4,929 5,849
Property, Plant and Equipment 49,610 56,534 55,199 57,498 38,469 24,638 9,107 1,685 1,858 1,796
Other Assets 520,361 568,858 351,377 340,834 411,271 205,848 79,124 25,636 23,834 17,788
Total Assets 1,499,243 1,227,294 1,058,030 916,886 616,024 432,629 251,060 121,992 86,705 72,269
Liabilities
Family Takaful Fund (Insurance Provision -Long Term) 413,141 335,186 274,364 213,225 152,003 113,551 77,908 48,744 25,671 13,929
General Takaful Fund (Insurance Provision-Non Life) 374,619 346,430 203,274 177,297 127,730 110,301 77,314 19,404 8,931 5,455
Other Liabilities 543,217 357,060 361,539 259,657 291,507 175,514 64,894 37,660 23,507 8,324
Total liabilities 1,330,977 1,038,676 839,177 650,179 571,240 399,366 220,116 105,808 58,109 27,708
Shareholders’ Equity
Equity Attributable to Equity Holders of the Parent
Stated Capital 500,000 500,000 500,000 500,000 125,000 125,000 100,000 75,000 75,000 75,000
Capital Reserves 17,505 20,648 - - - - 25,000 - - -
Revenue Reserves (367,112) (334,280) (282,264) (233,293) (80,216) (91,737) (94,056) (58,816) (46,404) (30,439)
150,393 186,368 217,736 266,707 44,784 33,263 30,944 16,184 28,596 44,561
Minority Interest 17,873 2,250 1,117 - - - - - - -
Total Equity 168,266 188,618 218,853 266,707 44,784 33,263 30,944 16,184 28,596 44,561
Total Equity and Liabilities 1,499,243 1,227,294 1,058,030 916,886 616,024 432,629 251,060 121,992 86,705 72,269
Long Term (Family Takaful) - Supplimental
Balance Sheet as at 31.12.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005 31.12.2004 31.12.2003 31.3.2003 31.3.2002
Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Assets
Investments 475,164 327,066 273,439 182,860 88,552 128,255 89,291 63,930 30,106 11,383
Intangible Assets - 21,977 23,744 8,490 202 403 605 807 1,008 1,210
Property, Plant and Equipment - 1,744 4,734 7,723 - - - - 4 226
Other Assets 10,913 18,400 11,951 40,180 79,275 11,558 2,560 4,571 5,704 2,711
Total Assets 486,077 369,187 313,868 239,253 168,029 140,216 92,456 69,308 36,822 15,530
Equity & Liabilities
Family Takaful Fund Balance (Insurance Provision - Long Term) 413,141 335,186 274,364 213,225 152,003 113,551 77,908 48,744 29,974 13,929
Equity & Other Liabilities 72,936 34,001 39,504 26,028 16,026 26,665 14,548 20,564 6,848 1,601
Total Equity & Liabilities 486,077 369,187 313,868 239,253 168,029 140,216 92,456 69,308 36,822 15,530
| AMANA TAKAFUL PLC Annual Report 201090
Glossary
Acquisition Expenses-General Takaful (Insurance)
All expenses which vary with and are primarily related to the
acquisition of the new insurance contracts and the renewal of
existing insurance contracts.
Acquisition Expenses- Family Takaful (Life)
All expenses which vary with and are primarily related to the
acquisition of new insurance contracts.
Actuary
An expert concerned with the application of probability
and statistical theory to problems of insurance, investment,
financial management and demography.
Claims
The amount payable under a contract of insurance arising from
the occurrence of an insured event, such as, the destruction or
damage of property and related death or injuries, the incurring
of hospital or medical bills, death or disability of the insured,
the maturity of an endowment policy and the amount payable
on the surrender of a policy.
Claims Incurred
The aggregate of all claims paid during the accounting period
together with attributable claims handling expenses, where
appropriate, adjusted by the claims outstanding provisions at
the beginning and the end of the accounting period.
Claims Incurred But Not Reported (IBNR)
A reserve to cover the expected cost of losses that have
occurred by the Balance Sheet date but have not yet been
reported to the insurer.
Claim Outstanding – General Takaful (Insurance) Business
The amount provided to cover the estimated ultimate cost of
settling claims arising out of events which have occurred by
the balance sheet date including claims handling expenses, less
amounts already paid in respect of those claims.
Commissions
A payment made to intermediaries in return for selling and
servicing an insurer’s products.
Earned premium
Written premium adjusted by the unearned premium provisions
at the beginning and the end of the accounting period.
General Insurance Business (General Takaful)
Insurance business falling within the classes of insurance
specified as General Insurance Business, under the Regulation
of Insurance Industry Act, No 43 of 2000.
Ijara – (Leasing)
A contract under which, the Bank buys and leases out
equipment required by its client for a rental fee. The duration
of the lease and rental fees are agreed in advance. Ownership
of the equipment remains with the Bank and only the usufruct
is transferred to the client. The client is gifted the item at the
end of the lease period based on a separate understanding
taken by the Bank to gift the asset subject to certain
conditions.
Insurance Provision – Family Takaful (Long Term)
The fund or funds to be maintained by an insurer in respect
of its Long Term Insurance business in accordance with the
Regulation of Insurance Industry Act, No. 43 of 2000.
Insurance Provision – General Takaful (Insurance)
This includes net unearned premium, provisions for unexpired
risks, outstanding claims reserve and IBNR reserve.
Life Insurance Business (Family Takaful)
Insurance business falling within the classes of insurance
specified as Long Term Insurance, under the Regulation of
Insurance Act, No 43, 2000.
Mudharaba
This is an agreement made between two parties. The Investor,
who provides 100% of the capital for the project and the
Mudharib manages the entire project using his entrepreneurial
skills. The Investor has no control over the management of
the project. Profits arising from the project are distributed
according to a predetermined ratio. Losses are borne by the
provider of the capital.
Net Earned premium
Gross written premium adjusted for the reinsurance incurred
and for the increase or decrease in unearned premium.
Premium (Contribution)
The consideration payable by the insured for an insurance
contract.
Retakaful (Reinsurance)
Transfer of all or part of the risk assumed by an insurer under
one or more insurance to another insurer, called the re-insurer.
Shari’ah
Is the code of law for the Islamic way of life which has been
derived from the Quran and the Sunnah (The Practice of the
holy Prophet Muhammad - Peace be upon him).
Shari’ah Advisory Council (SAC)
This comprising Shari’ah Scholars or/and well versed personnel
in Sharah, which ensures Shari’ah compliance in the operations
AMANA TAKAFUL PLC Annual Report 2010 91
of the company. The SAC advises the company on all Shari’ah
matters in its business activities and involves in endorsing and
validating relevant documentation, such as products manuals,
policy terms and conditions, marketing materials, sales
illustrations, etc.
Solvency Margin – Family Takaful (Life)
The difference between the value of assets and the value of
liabilities, required to be maintained by the insurer who carries
on long term insurance business, determined as per Solvency
Margin (Long Term Insurance) Rules, 2002.
Solvency Margin – General Takaful (Insurance)
The difference between the value of the assets and the value
of the liabilities required to be maintained by the insurer who
carries on general insurance business as per Solvency Margin
(General insurance) Rules, 2004.
Surrender
The act of canceling of an insurance contract before it reaches
its date of maturity.
Takaful
Is an Arabic word, which means ‘guaranteeing each other’. It is
a system of risk management based on the principle of mutual
assistance (TA-AWUN) and contributions (Tabarru) where the
risk is shared collectively by the group voluntarily.
Underwriting
The process of selecting which risks an insurance company can
cover, and deciding the premium and terms of acceptance.
Unearned Premium / Unearned Premium Reserve
It represents the portion of premium already entered in
the accounts as due but which relates to a period of risk
subsequent to the Balance Sheet date.
Written Premium
Total premium received or due from all insurance contracts
during a period.
| AMANA TAKAFUL PLC Annual Report 201092
NOTICE IS HEREBY GIVEN that the Twelfth Annual General
Meeting of Amana Takaful PLC
will be held on Thursday, 26th May 2011 at 9.00 a.m. at
Marine Grand Banquet Hall, No. 41, Marine Drive, Colombo 6
for the following purposes:
1. To receive and consider the Annual Report of the Board
of Directors on the affairs of the Company for the
year ended 31st December 2010 and the Report of the
Auditors thereon.
2. To re-elect Dr. A. A. M. Haroon as a Director of the
Company, who retires as per Article 83 of the Articles of
Association of the Company.
3. To elect Mr. A. S. M. Muzzammil as a Director of the
Company, who has been appointed to the Board, since
the last Annual General Meeting in terms of Article 92
of the Articles of Association of the Company, and being
eligible, offers himself for election as a Director.
4. To elect Mr. M. U. M. Ali Sabry as a Director of the
Company, who has been appointed to the Board, since
the last Annual General Meeting in terms of Article 92
of the Articles of Association of the Company, and being
eligible, offers himself for election as a Director.
5. To reappoint the retiring Auditors, M/s. Ernst & Young,
Chartered Accountants for the ensuing year and to
authorise Directors to determine their remuneration.
By Order of the Board,
AMANA TAKAFUL PLC
MANAGERS & SECRETARIES (PRIVATE) LTD.Secretaries
Colombo
31st March 2011
Notes:1. A member entitled to attend and vote at the above
meeting is entitled to appoint a proxy to attend and vote
in his/her behalf. A proxy need not be a member of the
Company.
2. A form of proxy is enclosed for this purpose.
3. The instrument appointing a proxy must be completed
and deposited at the Registered Office of the Company,
No. 98, Bauddhaloka Mawatha, Colombo 4 not less than
forty eight hours prior to the time appointed for holding
the meeting.
Notice of Meeting
AMANA TAKAFUL PLC Annual Report 2010
I/We the undersigned ..........................................................................................................................................................................
of ......................................................................................................................................................................................................
being a member/members of Amana Takaful PLC, hereby appoint:
Tyeab Akbarally of Colombo or failing him
Osman Kassim of Colombo or failing him
Dato’ Mohd. Fadzli Yusof of Malaysia or failing him
Dr. A.A.M. Haroon of Colombo or failing him
M.H.M. Rafiq of Colombo or failing him
M. Ehsan Zaheed of Colombo or failing him
M.O. Faizal Salieh of Colombo or failing him
Dr.T.Senthilverl of Colombo or failing him
Mr. A. S. M. Muzzammil of Colombo or failing him
Mr. M. U. M. Ali Sabry of Colombo or failing him
............................................................................................................................................................................................................
of .......................................................................................................................................................................................................
as my/our proxy to represent me/us and * to vote for me/us on my/our behalf at the Annual General Meeting to be held on
Thursday, 26th May 2011 at 9.00 a.m and at any adjournment thereof and at every poll which may be taken in consequence thereof.
As witness my/our hands this ................................................ day of ................................................ 2011.
.........................................................
Signature
Note: Instructions as to completion are noted on the reverse hereof
Form of Proxy
| AMANA TAKAFUL PLC Annual Report 2010
INSTRUCTIONS AS TO COMPLETION
1. In order to appoint a proxy, this form shall in the case of
an individual be signed by the shareholder or by his/her
Attorney and in the case of a company/corporation, the
form of proxy must be under its Common Seal, which
should be affixed and attested in the manner prescribed
by its Articles of Association.
2. The full name and address of the Proxy holder and of
the Shareholder appointing the Proxy holder should be
entered legibly in the form of proxy.
3. The duly completed form of proxy must be deposited at
the Registered Office of the Company at
No. 98, Bauddhaloka Mawatha, Colombo 4, not later
than 48 hours prior to the time appointed for the holding
of the meeting.
4. In the case of a proxy signed by an Attorney, the relevant
Power-of-Attorney or a certified copy thereof should also
accompany the completed form of proxy and must be
deposited at the Registered Office of the Company.
THE RIGHT WAYAt Amana Takaful, we believe there are many ways in which a company may grow. We know that we have grown in the RIGHT way. Redefining the way insurance is created and delivered to our customers, we ensure that the many fortunate can help the few unfortunate, while providing excellent services in insurance at the same time.
We know that the success of our business is not just about profitability and size. And we are proud that Amana Takaful stands for all that is valuable yet honorable in the insurance industry today.
Growing our business and getting things done, the Amana way. Because we know it’s the right way.
Financial Highlights 1
Chairman’s Statement 4
Chief Executive Officer‘s Review 6
Board of Directors 8
Management Team 11
Management Review and Analysis 13
Sustainability Report 20
Product Portfolio 26
Corporate Governance 28
Risk Management Commitee Report 32
Board Audit and Compliance
Committee Report 33
The Annual Report of the Board of
Directors on the Affairs of the Company 35
Directors’ Interest in Contracts with the
Company 38
Statement of Directors’ Responsiblities 41
Report of the Shari‘ah Advisory Council 42
Certificate of the Actuary 43
Financial Information
Independent Auditors’ Report 47
Balance Sheet 48
Income Statement 49
Statement of Changes in Equity 50
Cash Flow Statement 51
Segmental Analysis - Balance Sheet 53
Segmental Analysis - Statement of Income 55
Balance Sheet - Long Term Inurance
(Family Takaful) Fund - Supplemental 57
Notes to the Financial Statements 58
Group Value Added Statement 84
Share Information 85
Branch Network 86
Ten Year Summary 88
Glossary 90
Notice of Meeting 92
Form of Proxy Enclosed
Name of the Company : Amana Takaful PLC
Legal Status : Public quoted Company with Limited Liability Incorporated in Sri Lanka on 7th December1998 Reregistered under the Companies Act, No 07 of 2007 on 27th June 2007
Company Registration Number : PQ 23
Tax Payer Identification Number : 134007958(TIN)
Stock Exchange Listing : The Shares of the company are listed in the Second Board of the Colombo Stock Exchange, Sri Lanka during November 2006.
Stock Exchange code for Amana Takaful PLC shares is ‘ATL’
Directors : Tyeab Akbarally (Chairman) Osman Kassim Dato’ Mohd Fadzli Yusof Dr.A A M Haroon M H M Rafiq M. Ehsan Zaheed (CEO) M.O. Faizal Salieh Dr. T. Senthilverl A.S.M. Muzzammil (Appointed w.e.f. 29.4.2010) M.U.M. Ali Sabry(Appointed w.e.f. 26.5.2010) Shariah Advisory Council : Moulavi M M A Mubarak- Chairman Mufti M I M Rizvi Moulavi M. Fazil Farook Moulavi M Murshid-Secretary
Chief Executive Officer : M. Ehsan Zaheed
GM/CEO – Life : A. Reyaz Jeffrey
Registered Office : 98, Bauddhaloka Mawatha Colombo 4, Sri Lanka.
Subsidiary : AMANA GLOBAL LTD 102 1/3, BAUDDHALOKA MAWATHA, COLOMBO 4Auditors : Ernst & Young Chartered Accountants
Consultant Actuaries : Actuarial Partners Consulting Sdn Bhd (formerly known as Mercer Zainal Consulting Sdn. Bhd) Suite 17.02 Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia
Reinsurance Panel : Best Re Labuan Reinsurance (L) Ltd. Malaysian Reinsurance Berhad Asian Reinsurance Corporation Kuwait Re
Secretaries : Managers & Secretaries (Pvt.) Ltd. Principal Bankers : PAN ASIA BANK/ NDB BANK/BOC COMMERCIAL BANK/ PUBLIC BANK/ NATIONS TRUST
Corporate Information
Contents
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Annual Report 2010
General Insurance . Life Insurance . Medical Insurance
Am
ana Takafu
l PLC A
nn
ual R
epo
rt 2010
Amana Takaful PLC (PQ 23)
98, Bauddhaloka Mawatha, Colombo 04,Sri Lanka.
www.takaful.lk