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MStewardship

Report of the Directors

The Directors of Ceylinco Life Insurance Limited, are pleased to submit their Annual Report, together with the Audited Financial Statement and Auditors' Report for the year ended 31 December 2015. Ceylinco Life Insurance Limited is a public company with limited liability incorporated on 22 April 2014, licensed as a company authorised by Insurance Board of Sri Lanka (IBSL) to carry on long term life insurance business, under the control of Regulation of Insurance Industry (Amendment) Act No. 43 of 2000. The Company was incorporated as a legal requirement arose out of Section 53 of the said Act, which required segregating long term and general insurance business from the composite insurance companies.

The Registered Office of the Company is at No. 106, Havelock Road, Colombo 05, at which the Company’s Head Office is situated.

1. Vision, Purpose and Corporate Conduct

In achieving its Vision and Purpose, all Directors and employees conduct their activities to the highest level of ethical standards.

2. Principal Activities of the Company

The Company’s principal activity is carrying out business of underwriting all classes of Life Insurance. The Company received the license to carry out its business as a long term insurance provider by the Insurance Board of Sri Lanka (IBSL) on 1 June 2015. Directors declare that the Company has not engaged in any activity, which contravene with laws and regulations of the country during the said period.

3. Ultimate Parent and Subsidiaries

The ultimate holding Company is Ceylinco Insurance PLC. Subsidiaries of the Company are Serene Resorts Limited, Ceylinco Seraka Limited and Ceylinco Healthcare Services Limited. Citizens Development Business Finance PLC is an Associate Company of CLIL.

4. Business Review

Review of the financial and operational performance and future business developments of the Company, are described in the message from the Chairman, the Chief Executive Officer's review and the Management discussion and analysis section of the Annual Report. These reports, together with the Audited Financial Statements, reflect the state of the affairs of the Company.

5. Financial Statements of the Company

The Financial Statements of the Company, for the year ended 31 December 2015, which are duly certified by the CFO, recommended by the Audit Committee, approved by the Board of Directors and signed by the MD, in compliance with the requirements of Sections 151,152 and 168 (1) (b) of the Companies Act No. 07 of 2007 are given on this section of this Annual Report.

The Auditors' Report on the Financial Statements of the Company is given under this report.

6. Directors' Responsibility For Financial Reporting

The Directors assume the responsibility for Financial Statements, which reflect a true and fair view of the state of affairs of the Company. The Statement of Directors' Responsibility for Financial Reporting, appearing on under this report, forms as integral part of this Report.

7. Accounting Policies

The Company prepared their Financial Statements, in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS). The said Accounting Policies adopted in the Financial Statements, are given under Notes to the Financial Statements as required by the Section 168 (1) (d) of the Companies Act No. 07 of 2007. The Board of Directors wish to confirm that there were no material changes in the Accounting Policies adopted by the Company, during the year under review.

8. Review of the Financial Performance During the Year

The Company's Income Statement is given on this report.

9. Total Amount of Expenses Paid in Respect of CSR Activities and Donations by the Company

During the year, the Company has made donations amounting to Rs. 4 Mn for its CSR activities, in terms of the Shareholder Resolution passed by the shareholder, in lieu of holding an AGM under Section 144 (3) of the Companies Act No. 07 of 2007.

10. Tax Expenses

Tax expense has been computed at the rates given in Note 34 to the Financial Statements.

11. Investments

Total investments of the Company and other equity investments amounted to Rs. 67.14 Bn. The details of the investments are given in Note 9 to 12 to the Financial Statements.

12. Property, Plant and Equipment

The net book value of property, plant and equipment of the Company, as at the Reporting date amounted to Rs. 5.3 Bn. Total capital expenditure during the year for acquisition of property, plant and equipment by the Company, amounted to Rs. 418 Mn. Details of property, plant and equipment are given in Note 8 to the Financial Statements.

13. Stated Capital and Reserves

The stated capital is the total of all amounts received by the Company, in respect of the issue of shares. The stated capital of the Company, as at 31 December 2015, amounted to Rs. 500,000,500.00 (Five Hundred Million and Five Hundred Rupees), which is represented by issued and fully paid 50,000,050 ordinary shares.

Total reserves of the Company stood at Rs. 8.9 Bn as at 31 December 2015, details of which are given under this section.

14. Shareholding and Share Information

The Company is a fully-owned subsidiary of Ceylinco Insurance PLC. The Company has issued 50,000,050 ordinary shares to the said Sole Shareholder of the Company.

Information relating to dividends and net asset per share are stated under Investor Capital.

15. Internal Control and Risk Management

Internal Control

The Directors acknowledge their responsibility for the Company’s system of internal control. The systems are designed to provide reasonable assurance that the assets of the Company are safeguarded and to ensure that proper accounting records are maintained. The Board of Directors, having reviewed the system of internal control, is satisfied with the systems and measures in effect at the date of signing this Annual Report.

Risk Management

The Company has a separate Board Risk Committee, to look after the policy development for risk management of the Company. Risk management of the Company is given under the topic of 'Risk Management'.

16. Human Resources

The Company continued to develop appropriate human resources management policies and focus their contribution towards the achievement of corporate goals.

17. Board of Directors

The Board of Directors of the Company and their brief profiles are given under this report. The following persons were the Directors of the Company as at 31 December 2015.

1. J G P Perera Chairman Non-Executive Director
2. R Renganathan Executive Director/Managing Director/Chief Executive Officer
3. E T L Ranasinghe Executive Director/Deputy Chief Executive Officer
4. P D M Cooray Executive Director/Head of HR and Training
5. P A Jayawardena Executive Director/Chief Financial Officer
6. S R Abeynayake Executive Director/Deputy Chief Financial Officer
7. D H J Gunawardena Non-Executive Director
8. Gen. C S Weerasooriya (Retired) Non-Executive Director
9. R S W Senanayake Non-Executive Director
10. J A Setukavalar Non-Executive Independent Director
11. Prof. Mohan Silva Non-Executive Independent Director
12. Dr. B G S De Silva Non-Executive Independent Director
13. J Wickramasinghe Non-Executive Independent Director
14. Sugath Caldera Non-Executive Independent Director
15. Ms. A K Seneviratne Non-Executive Independent Director

Retirement and Re-election

In accordance with the Section 210 of Companies Act No. 07 of 2007, J G P Perera will retire and be eligible himself to be re-elected as a Director of the Company. J G P Perera will be 79 years of age in December 2016 and the shareholders approval shall be sought by way of an ordinary resolution at the forthcoming AGM that J G P Perera to be re-elected as a Director and that the age limit specified in Section 210 of the Companies Act No. 07 of 2007, shall not apply to J G P Perera.

In accordance with the Section 210 of Companies Act No. 07 of 2007, Gen. C S Weerasooriya will retire and be eligible himself to be re-elected as a Director of the Company. Gen. C S Weerasooriya will be 73 years of age in December 2016 and the shareholders approval shall be sought by way of an ordinary resolution at the forthcoming AGM, that Gen. C S Weerasooriya to be re-elected as a Director and that the age limit specified in Section 210 of the Companies Act No. 07 of 2007, shall not apply to Gen. C S Weerasooriya.

18. Register of Directors and Secretaries

As required under Section 223 (1) of the Companies Act No. 07 of 2007, the Company maintains a Register of Directors and Secretaries, which contain information of each Director and the Secretary.

19. Board Committees

The Board of Directors has appointed Board Sub-committees to ensure oversight and control over certain affairs of the Company.

Board Sub-committees Composition
Audit Committee J A Setukavalar Chairman Non-Executive Independent Director Full detailed Report on the Audit Committee is disclosed under the 'Report of the Audit Committee.'
D H J Gunawardena Member Non-Executive Director
J Wickramasinghe Member Non-Executive Independent Director
Remuneration Committee Prof. Mohan De Silva Chairman Non-Executive Independent Director Full detailed Report on the Remuneration Committee is disclosed under the 'Report of the Remuneration Committee.'
R S Senanayake Member Non-Executive Director
D H J Gunawardena Member Non-Executive Director
Risk Committee Ms. A K Seneviratne Chairperson Non-Executive Independent Director
R S Senanayake Member Non-Executive Director
J Wickramasinghe Member Non-Executive Independent Director

20. Directors' Meetings

The details of the meetings which comprise Board meetings and Board Sub-committees meetings and the attendance of Directors at these meetings, are given in Corporate Governance Section of the Annual Report.

21. Interest Register of the Company and Directors' Interests in Contract or Proposed Contracts

Interest Register

The Company maintains an Interest Register in compliance with the Companies Act No. 07 of 2007. All Directors have made declarations as required by Section 192 (1) and (2) of the Companies Act No. 07 of 2007.

Directors’ Interest in Contracts

The Directors of the Company have no direct or indirect interest in any contract or proposed contract with the Company, except for those specified, which have been disclosed and declared at meetings of Directors.

The Company carried out transactions in the ordinary course of business on an arm’s length basis with entities where a Director of the Company is the Chairman or a Director of such entities, as detailed below:

22. Directors’ Remuneration

Directors’ remuneration in respect of the Company for the financial year ended 31 December 2015, is given in Note 43 to the Financial Statements as required by Section 168 (1) (f) of the Companies Act No. 07 of 2007.

No. Name of the Company J P G Perera R Renganathan E L T Ranasinghe P D M Cooray P A Jayawardena S R Abeynayake D H J Gunawrdena C S Weerasooriya R S W Senanayake
1 Ceylinco Insurance PLC
2 Ceylinco Seraka Limited
3 Serene Resorts Limited
4 Ceylinco Healthcare Services Limited
5 Citizens Development Business Finance PLC
6 SMB Securities (Pvt) Limited
7 SMB Real Estate Limited

In addition, Related Party Disclosures as per Sri Lanka Accounting Standards are detailed in Note 43 to the Financial Statement of this Annual Report.

23. Environmental Protection

The Company has not engaged in any activity that was detrimental to the environment and has been in due compliance with all applicable laws and regulations of the country to the best of its ability. The Company’s effort in this regard is described in the social and environment capital.

24. Statutory Payments

The Board of Directors confirm that to the best of their knowledge and belief, all taxes, duties and levies payable by the Company and in respect of the employees of the Company, and all other known statutory dues, as were due and payable by the Company, as at the Balance Sheet date have been paid or, where relevant provided for.

25. Going Concern

The Board of Directors is satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future, to justify adopting the going concern basis in preparing these Financial Statements.

26. Dividends

The Board of Directors recommends a final cash dividend of Rs. 6.25 per share as the first and final Dividend for the financial year under review.

The Board was satisfied that the Company would meet the solvency test after the declaration of the aforesaid dividend and required to obtain a solvency certificate from the Company’s Auditors to that effect. The Board authorised the distribution, in terms of Section 56 of the Companies Act No. 07 of 2007. The said dividend will be paid, subject to the approval by the shareholder and a resolution will be put forward to the shareholder at the forthcoming AGM with this regard.

27. Post-Balance Sheet Events

No material events have taken place after the Reporting date, which require an adjustment to or a disclosure in the Financial Statements.

28. Appointment of Auditors, Auditors' Fees and Auditors' Report

Appointment of Auditors

The accounts for the year have been audited by Ernst & Young (Chartered Accountants) and in accordance with the Companies Act No. 07 of 2007 a resolution will be proposed to the shareholder at the forthcoming AGM for the approval pertaining to their reappointment and authorising the Directors to determine their remuneration.

Auditors' Fees

The fees paid to the Auditors are disclosed in the Financial Statements under Note 32. The Auditors of the Company, Ernst & Young have confirmed that they do not have any relationship with the Company other than that as the Auditors which would have an impact on their independence.

Auditors' Report

Further, the Company Auditors performed the audit on the Financial Statements for the year ended 31 December 2015, and the Auditors' Report issued thereon, is given under this report as required by the Section 168 (1) (c) of the Companies Act No. 07 of 2007.

29. Annual General Meeting

The second Annual General Meeting of CLIL, will be held at the Board Room of the Ceylinco Life Insurance Limited at No. 106, Havelock Road, Colombo 05 on 30 March 2016 at 2.00 p.m. The Notice of Meeting of this Annual Report.

As required by the Section 168 (1) (k) of the Companies Act No. 07 of 2007, the Board of Directors does acknowledge the contents of the Annual Report and is signed for and on behalf of the Board of Directors.

By Order of the Board,

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P A Jayawardena
Director

renganathan_sig.bmp

R Renganathan
Director

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K I Weththasinghe
Company Secretary

Colombo

17 February 2016