Softlogic Capital PlcCSELK: SCAP.N0000

Interim Financial Statements - For the period ended 30 June 2024

Aug 15, 2024 at 11:21 AM UTC · Issued by Softlogic Capital Plc

SOFTLOGIC CAPITAL PLC

(PB 779 PQ)

Period ended 30th June 2024

SOFTLOGIC CAPITAL PLC

INCOME STATEMENT

		Group			Company
	Three months ended 30th June		Three months ended 30th June
	2024	2023	Change %	2024	2023	Change %
	Rs.	Rs.		Rs.	Rs.
Revenue
Interest income	2,294,431,330	2,831,649,424	-19%	142,276,625	300,581,198	-53%
Net Earned Premium	6,722,416,312	5,844,884,233	15%	-	-	0%
Fee and trading income	88,830,429	30,587,602	190%	54,531,468	36,223,771	51%
Other income and gains	73,916,755	90,468,300	-18%	12,665,354	2,872,951	341%
Net realized gains	14,098,235	14,551,146	-3%	-	-	0%
Net fair value gains	1,162,278,220	278,319,230	318%	-	-	0%
Dividend income	18,500	-	0%	-	-	0%
Total revenue	10,355,989,781	9,090,459,935	14%	209,473,446	339,677,920	-38%
Direct expenses
Interest expenses	(1,044,260,017)	(1,757,603,058)	-41%	(546,890,632)	(674,815,585)	-19%
Net Claims and Net Acquisition Cost	(4,852,649,002)	(4,564,702,603)	6%	-	-	0%
Other direct expenses	(50,727,926)	(27,376,547)	85%	(8,285,805)	(4,170,947)	99%
Credit loss expense on financial assets and other losses	(216,235,336)	(86,852,282)	149%	-		0%
Operating profit / (loss)	4,192,117,500	2,653,925,445	58%	(345,702,991)	(339,308,612)	2%
Administrative expenses	(1,392,882,875)	(1,477,668,112)	-6%	(24,061,190)	(36,452,300)	-34%
Distribution cost	(198,995,024)	(258,939,683)	-23%	(3,258,008)	(359,110)	807%
Change in insurance contract liabilities	(1,375,848,905)	(912,172,136)	51%	-	-	0%
Other operating expenses	(77,004,881)	(242,806,866)	-68%	(2,194,654)	(39,099)	5513%
Profit / (loss) before income tax	1,147,385,815	(237,661,352)	-583%	(375,216,843)	(376,159,121)	0%
Income tax expense	(522,740,903)	(203,730,664)	157%	-	-	0%
Profit / (loss) for the Period	624,644,912	(441,392,016)	-242%	(375,216,843)	(376,159,121)	0%
Profit (loss) for the period attributable to;
Owners of the parent	65,340,803	(639,581,906)
Non-controlling interests	559,304,109	198,189,890
	624,644,912	(441,392,016)
Basic Earning / (loss) per share (Rs.)	0.07	(0.65)		(0.38)	(0.38)
The above figures are subject to audit unless stated otherwise.
14th August 2024

SOFTLOGIC CAPITAL PLC

STATEMENT OF COMPREHENSIVE INCOME

Profit / (loss) for the Period

Other comprehensive income that may be reclassified to income statement in subsequent periods

Net gain on financial instruments at fair value through other comprehensive income

Net Other comprehensive income that may be reclassified to income statement in subsequent periods

Other comprehensive income that will not be reclassified to income statement in subsequent periods Net gain on equity instruments at fair value through other comprehensive income

Net other comprehensive income that will not be reclassified to income statement in subsequent periods

Tax on other comprehensive income

Other Comprehensive Income for the period, net of tax

Group		Company
Three months ended 30th June	Three months ended 30th June
2024	2023	2024	2023
Rs.	Rs.	Rs.	Rs.
624,644,912	(441,392,016)	(375,216,843)	(376,159,121)

8,191,739	226,233,815	-	-
8,191,739	226,233,815	-	-

437,143,484	140,483,634	-	10,025,643
437,143,484	140,483,634	-	10,025,643
	-	-	-

	445,335,223	366,717,449	-	10,025,643
Total comprehensive income for the period	1,069,980,135	(74,674,567)	(375,216,843)	(366,133,479)
Attributable to:
Owners of the parent	293,998,783	(606,920,513)
Non controlling interest	775,981,352	532,245,937
Total Comprehensive income for the period	1,069,980,135	(74,674,576)

The above figures are subject to audit unless stated otherwise.

14th August 2024

SOFTLOGIC CAPITAL PLC

STATEMENT OF FINANCIAL POSITION

As at	30.06.2024	31.03.2024	30.06.2024	31.03.2024
	Rs.	Rs.	Rs.	Rs.
ASSETS
Cash and cash equivalents	1,831,346,430	1,923,636,096	27,193,217	89,674,148
Inventories	846,192,225		-
Amounts due from related companies	119,779,573	1,287,074	141,171,933	70,108,763
Other assets	5,307,490,272	3,433,218,862	215,420,795	358,525,173
Income tax receivable	1,426,209	2,478,875	-	-
Financial assets recognised through profit or loss	3,140,975,414	5,341,367,895	-	-
Financial assets measured at fair value through other
comprehensive income	2,592,449,917	5,721,896,147	16,536,037	89,536,037
Financial assets at amortised cost	46,242,648,581	41,495,346,509	4,222,546,193	3,945,918,738
Loans and advances	3,487,121,647	3,878,852,530	-	-
Lease and hire purchase receivables	3,207,505,257	3,961,796,148	-	-
Investment in subsidiaries	-	-	13,172,212,508	13,172,212,502
Deferred tax asset	1,261,583,086	1,267,781,471	-	-
Right of use assets	841,080,119	696,867,303	156,714,001	119,221,857
Investment Property	103,237,000	103,237,000	-	-
Property, plant and equipment	745,127,839	763,165,984	1,575,575	2,599,982
Intangible assets	1,361,087,409	1,395,883,671	3,186,582	5,214,383
TOTAL ASSETS	71,089,050,978	69,986,815,565	17,956,556,841	17,853,011,584
EQUITY AND LIABILITIES
Capital and reserves
Stated capital	3,891,595,200	3,891,595,200	3,891,595,200	3,891,595,200
Reserve fund	260,448,732	260,448,732	-	-
Fair Value Reserve of financial assets at FVOCI	(1,161,581,732)	(1,390,239,712)	(52,697,061)	(52,697,061)
Revaluation Reserve	87,989,463	87,989,463	-	-
Restricted Regulatory Reserve	798,004,000	798,004,000	-	-
Non-Distributable Regulatory Loss Allowance Reserve	1,736,237,951	1,748,974,244	-	-
Retained earnings	(3,828,480,994)	(3,906,558,097)	(618,437,519)	(243,220,680)
Shareholders' funds	1,784,212,620	1,490,213,830	3,220,460,620	3,595,677,459
Non-controlling interest	7,198,176,130	6,422,194,778	-	-
Total equity	8,982,388,750	7,912,408,608	3,220,460,620	3,595,677,459
Liabilities
Bank overdraft	832,582,522	716,092,386	327,229,452	322,885,410
Trade and other payables	2,920,553,378	4,503,751,790	19,849,511	49,831,797
Amounts due to related companies	267,182,289	88,259,802	265,200,000	88,000,000
Other liabilities	1,024,833,211	433,743,793	-	-
Income tax liability	1,352,604,827	1,054,338,606	-	-
Interest bearing borrowings	19,964,890,763	19,703,582,488	14,123,650,434	13,796,450,094
Public deposits	5,336,172,827	7,481,875,598	-	-
Insurance provision	30,060,193,627	27,759,130,484	-	-
Employee benefit liabilities	346,253,016	331,525,551	166,824	166,824
Deferred tax liabilities	1,395,768	2,106,459	-	-
Total Liability	62,106,662,228	62,074,406,957	14,736,096,221	14,257,334,125
TOTAL EQUITY AND LIABILITIES	71,089,050,978	69,986,815,565	17,956,556,841	17,853,011,584
Contingent Liabilities and Commitments	1,874,007,425	3,169,743,660	1,781,002,210	2,781,002,210
Net Assets Value per Share	1.83	1.53	3.30	3.68

The financial Statements are in compliance with the requirements of Companies Act No. 07 of 2007.

sgd

……………………………..

Director - Finance

The Board of Directors is responsible for the preparation & presentation of these Financial statements.

Signed for and on behalf of Board by;

sgd	sgd
Director	Director

The above figures are subject to audit unless stated otherwise. 14th August 2024

SOFTLOGIC CAPITAL PLC

STATEMENT OF CHANGES IN EQUITY

Group				Attributable to equity holders of the parent
					Restricted	Distributable			Minority Interest	Total Equity
			Fair Value	Revaluation	Regulatory	Regulatory Loss

	Stated Capital	Reserve Fund	Reserve	Reserve	Reserve	Allowance	Retained Earnings	Total
	Rs.	Rs.	Rs.	Rs.	Rs.		Rs.	Rs.	Rs.	Rs.
As at 01st April 2024	3,891,595,200	260,448,732	(1,390,239,712)	87,989,463	798,004,000	1,748,974,244	(3,906,558,097)	1,490,213,830	6,422,194,779	7,912,408,608
Profit for the Period	-	-	-	-	-	-	65,340,803	65,340,803	559,304,109	624,644,912
Other comprehensive income for the period	-	-	228,657,980	-	-	-	-	228,657,980	216,677,243	445,335,223
Transfer to Non-Distributable Regulatory Loss Allowance Reserve	-	-	-	-	-	(12,736,293)	12,736,293	-	-	-
Total Comprehensive Income	-	-	228,657,980	-	-	(12,736,293)	78,077,096	293,998,783	775,981,352	1,069,980,135
As at 30th June 2024	3,891,595,200	260,448,732	(1,161,581,733)	87,989,463	798,004,000	1,736,237,951	(3,828,481,001)	1,784,212,613	7,198,176,131	8,982,388,743
	-	-	1	0	-		5,564,718,952	7	(1)	7
Group				Attributable to equity holders of the parent
					Restricted	Non-			Minority Interest	Total Equity
			Fair Value	Revaluation	Regulatory	Distributable

	Stated Capital	Reserve Fund	Reserve	Reserve	Reserve	Regulatory Loss	Retained Earnings	Total
	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.
As at 01st April 2023	3,891,595,200	260,448,732	(1,812,592,122)	216,680,948	798,004,000	-	79,763,853	3,433,900,611	5,218,386,276	8,652,286,887
Profit for the Period	-	-	-	-	-	-	(639,581,906)	(639,581,906)	198,189,890	(441,392,016)
Other comprehensive income for the period	-	-	199,689,426	-	-	-	-	199,689,426	167,028,023	366,717,449
Transfer to Non-Distributable Regulatory Loss Allowance Reserve	-	-	-	-	-	-	-	-	-	-
Total Comprehensive Income	-	-	199,689,426	-	-	-	(639,581,906)	(439,892,480)	365,217,913	(74,674,567)
As at 30th June 2023	3,891,595,200	260,448,732	(1,612,902,696)	216,680,948	798,004,000	-	(559,818,053)	2,994,008,131	5,583,604,189	8,577,612,320
The above figures are subject to audit unless stated otherwise.
14th August 2024

SOFTLOGIC CAPITAL PLC

STATEMENT OF CHANGES IN EQUITY

Company	Stated	Fair Value	Retained	Total
	Capital	Reserve	Earnings
	Rs.	Rs.	Rs.	Rs.
As at 01st April 2024	3,891,595,200	(52,697,061)	(243,220,676)	3,595,677,463
Loss for the period	-	-	(375,216,843)	(375,216,843)
Other comprehensive income	-	-	-	-
Total comprehensive income	-	-	(375,216,843)	(375,216,843)
As at 30th June 2024	3,891,595,200	(52,697,061)	(618,437,519)	3,220,460,620
	-	-	618,437,519	618,437,519
Company	Stated	Fair Value	Retained	Total
	Capital	Reserve	Earnings
	Rs.	Rs.	Rs.	Rs.
As at 01st April 2023	3,891,595,200	(88,713,726)	(723,748,837)	3,079,132,637
Loss for the period	-	-	(376,159,121)	(376,159,121)
Other comprehensive income	-	10,025,643	-	10,025,643
Total comprehensive income	-	10,025,643	(376,159,121)	(366,133,479)
As at 30th June 2023	3,891,595,200	(78,688,083)	(1,099,907,958)	2,712,999,158

The above figures are subject to Audit unless stated otherwise. 14th August 2024

SOFTLOGIC CAPITAL PLC

STATEMENT OF CASH FLOW

	Group		Company
For the Three months ended 30th June	2024	2023	2024	2023
	Rs.	Rs.	Rs.	Rs.
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before tax	1,147,385,815	(237,661,352)	(375,216,843)	(376,159,121)
Adjustments for
Dividend income	(18,500)	-	-	-
Profit on disposal of property, plant and equipment	(2,177,713)	-	-	-
Realized gain	(14,098,235)	(14,551,146)	-	-
Fair value gain	(1,162,278,220)	(278,319,230)	-	-
Amortization of intangible assets	37,620,017	36,519,525	2,027,801	700,112
Unrealized exchange gain/loss	(80,627,105)	(138,246,325)	-	-
Impairment of financial assets at amortized cost	180,293,215
Impairment of Loans and Receivable	35,942,121
Interest expenses	1,044,260,017	1,757,603,058	546,890,632	674,815,585
Gratuity provision and related costs	17,027,676	12,027,266	-	-
Credit loss expense on financial assets and other losses	-	86,852,282	-	-
Amortisation of right of use assets	96,202,455	62,812,267	34,500,000	16,291,205
Depreciation	39,882,454	41,896,886	166,853	166,853
Operating profit before working capital changes	1,339,413,996	1,328,933,232	208,368,444	315,814,634
Operating Assets:
(Increase)/decrease in amounts due form related companies	(118,492,499)	7,770,434	(71,063,170)	-
(Increase)/decrease in other assets	(2,328,732,754)	(53,111,528)	143,104,378	(17,110,157)
(Increase)/decrease in Financial assets recognized through profit or loss	3,348,572,465	45,137,458		(191,666,588)
(Increase)/decrease in Financial assets measured at fair value through other	3,574,781,453	(379,261,634)	73,000,000	(10,025,643)
comprehensive income

(Increase)/decrease in financial assets at amortized cost	(5,116,595,287)	2,486,704,959	(276,627,454.53)	(1,069,204,507)
(Increase)/decrease in lease and hirepurchase receivables	754,290,891	690,190,634	-	-
Increase/(decrease) in trade and other payables	(1,583,198,412)	(505,719,080)	(29,982,286)	(75,907,374)
Increase /(decrease) in amount due to related companies	178,922,487	(43,897,115)	177,200,000	(57,267,567)
Increase /(decrease) in other non financial liabilities	591,089,418	(6,767,762)	-	-
Increase/(decrease) in insurance contract liabilities	2,301,063,143	906,005,849	-	-
Increase/(decrease) in public deposits	(2,145,702,771)	(2,949,641,181)	-	-
Cash (used in) / generated from operations	795,412,130	1,526,344,266	223,999,911	(1,105,367,202)
Tax Paid	(216,000,000)	(237,104,492)	-	-
Interest Paid	(1,044,260,017)	(347,505,591)	(490,710,885)	(593,996,174)
Gratuity paid	(2,562,698)	(5,112,589)	-	-
Net cash (used in) / generated from operations	(467,410,584)	936,621,593	(266,710,974)	(1,699,363,376)
CASH FLOWS FROM INVESTING ACTIVITIES
Dividend income	18,500	-	-	-
Proceeds/Disposal on ROU asset	-	(51,172,439)	-	-
Proceeds on disposal of property plant & equipment	2,387,713	-	-	-
Purchase of property, plant & equipment and intangible assets	(26,025,883)	(71,641,632)	-	-
Net cash used in investing activities	(23,619,670)	(122,814,071)	-	-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long term borrowings	(6,238,640)	-	-	123,000,000
Repayment of long term borrowings	(574,265,651)	(1,245,240,043)	(401,787,848)	(240,672,659)
Payment of principal portion of lease liability	(129,965,911)	(165,607,333)	(32,664,220)	(25,167,998)
Proceed/(repayment) from short term borrowings	992,720,654	780,864,808	634,338,069	1,920,712,395
Net cash (used in) / generated from financing activities	282,250,452	(629,982,568)	199,886,001	1,777,871,738
Net Increase/(Decrease) in Cash and Cash Equivalents	(208,779,802)	183,824,954	(66,824,973)	78,508,362
Cash & Cash Equivalents at the beginning of the period	1,207,543,710	730,835,983	(233,211,262)	(366,165,466)
Cash & Cash Equivalents at the end of the Period ( Note A)	998,763,908	914,660,937	(300,036,235)	(287,657,104)
NOTES TO THE CASH FLOW STATEMENT	2024	2023	2024	2023
A. Cash & Cash Equivalents	Rs.	Rs.	Rs.	Rs.
Cash & Bank Balances	1,831,346,430	1,831,193,315	27,193,217	41,912,865
Bank Overdrafts	(832,582,522)	(916,532,378)	(327,229,452)	(329,569,969)
	998,763,908	914,660,937	(300,036,235)	(287,657,104)

The above figures are subject to Audit unless stated otherwise. 14th August 2024

SOFTLOGIC CAPITAL PLC

Segment Information - Business Segment

For the Three Months Ended 30th June 2024

	Non-banking
	Financial				Adjustments and
	Institutions	Insurance	Others	Total Segments	Eliminations	Group Total
Total external revenue	13,984,510	7,933,525,050	114,048,891	8,061,558,451	-	8,061,558,451
Inter-Segment	-	-	98,515,897	98,515,897	(98,515,897)	-
Total revenue	13,984,510	7,933,525,050	212,564,788	8,160,074,349	(98,515,897)	8,061,558,451
Interest Income	368,439,940	1,778,694,193	149,658,623	2,296,792,756	(2,361,426)	2,294,431,330
Interest expense	(291,977,035)	(206,184,940)	(552,700,745)	(1,050,862,720)	6,602,704	(1,044,260,017)
Impairment of loans and receivables	(35,942,121)	(180,293,215)	-	(216,235,336)	-	(216,235,336)
Change in insurance contract liabilities	-	(1,375,848,905)	-	(1,375,848,905)	-	(1,375,848,905)
Depreciation	(3,393,696)	(35,120,902)	(1,367,856)	(39,882,454)	-	(39,882,454)
Amortization	(11,581,323)	(89,801,018)	(38,443,774)	(139,826,115)	-	(139,826,115)
Employee benefits expenses				-	-	-
Tax expense	-	(521,074,859)	(1,666,044)	(522,740,903)	-	(522,740,903)
Profit after tax for the period	(169,268,629)	1,202,595,063	(374,574,280)	658,752,153	(34,107,241)	624,644,912
Total Assets	9,199,732,607	55,073,889,435	19,305,205,182	83,578,827,223	(12,489,776,247)	71,089,050,977
Total Liabilities	6,561,384,600	40,656,141,498	15,293,608,808	62,511,134,908	(404,472,677)	62,106,662,233
For the Three Months ended 30th June 2023
	Non-banking
	Financial				Adjustments and
	Institutions	Insurance	Others	Total Segments	Eliminations	Group Total
Total external revenue	972,533,018	7,872,833,288	245,093,629	9,090,459,935	-	9,090,459,935
Inter-Segment	-	-	196,313,865	196,313,865	(196,313,865)	-
Total revenue	972,533,018	7,872,833,288	441,407,494	9,286,773,800	(196,313,865)	9,090,459,935
Interest Income	916,581,815	1,732,563,041	304,787,170	2,953,932,026	(122,282,602)	2,831,649,424
Interest expense	(1,028,232,103)	(175,375,646)	(689,000,574)	(1,892,608,323)	135,005,265	(1,757,603,058)
Impairment of loans and receivables	(139,665,823)	52,813,541	-	(86,852,282)	-	(86,852,282)
Change in insurance contract liabilities	-	(912,172,136)	-	(912,172,136)	-	(912,172,136)
Depreciation				-	-	-
Amortization				-	-	-
Employee benefits expenses				-	-	-
Tax expense	-	(203,730,664)	-	(203,730,664)	-	(203,730,664)
Profit after tax for the period	(533,106,792)	505,413,320	(400,557,216)	(428,250,688)	(13,141,337)	(441,392,025)
Total Assets	19,336,873,415	47,813,876,984	15,886,090,409	83,036,840,808	(10,482,743,091)	72,554,097,717
Total Liabilities	16,629,731,623	36,691,511,668	12,796,295,362	66,117,538,655	(2,141,053,259)	63,976,485,398

The above figures are subject to Audit unless stated otherwise. 14th August 2024

SOFTLOGIC CAPITAL PLC

EXPLANATORY NOTES

For the Three Months Ended 30th June 2024

Reporting Entity
Softlogic Capital PLC ("the Company") is a public limited liability company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at Level 16, One Galle Face Tower, Colombo 02.
Approval of Financial Statements

The interim financial statements of the Group and the Company for the period ended 30th June 2024 were authorised for issue by the Board of Directors on 14th August 2024

3. Basis of Preparation

The Interim Financial Statements are in compliance with Sri Lanka Accounting Standards 34 (LKAS 34) - Interim Financial Reporting and provide the information required by the Colombo Stock Exchange.

The presentation and classification of figures for the corresponding period of the previous year have been amended, where relevant, for better presentation and to be comparable with those of the current year.

These Condensed Quarterly Financial Statements do not include all the information and disclosures required in the annual Financial Statements, and should be read in conjunction with the Annual Financial Statements for the year ended 31 March 2023. The same Accounting Policies and methods of computation as stated in the Annual Financial Statements - 2022/23 have been followed in preparing these Interim Financial Statements.

In preparing these condensed quarterly financial statements, management has made judgements and estimates that affect the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual Financial statements.

New SLFRS and Interpretations issued but not yet effective have not been early adopted during the period.

3.1 Fair value measurement and related fair value disclosures

The fair values of all the financial assets and financial liabilities recognised during the period were not materially different from the transaction prices at the date of initial recognition. During the period there were no transfers between Level 1 and Level 2 and no transfers into or out of Level 3 categories as per the fair value hierarchy. The fair value changes on financial instruments in Level 3 category was properly recorded in the statement of other comprehensive income and there were no purchases and/or disposals during the period. As at the reporting date, fair value would not significantly change if one or more of the inputs of financial assets classified at level 3 were changed.

4. Insurance Contract Liabilities The results of Softlogic Life Insurance PLC is consolidated line by line into the Group's consolidated income statement. Insurance Contract Liabilities-Life are measured by using The Gross Premium Valuation (GPV) method as specified by Insurance Board of Sri Lanka (IBSL) based on the recommendation of the Independent Consultant Actuary. The liability is computed based on IBSL specified guidelines.

4.1 Transfer of One-off Surplus from Policyholder Fund to Shareholder Fund The Insurance Regulatory Commission of Sri Lanka (IRCSL) has issued a Direction No 16 on 20th March 2018 on "Guidelines/ Directions for Identiﬁcation and Treatment of One-

off Surplus" and has instructed all Life Insurance Companies to comply with the new direction. Based on the new guidelines Life Insurance Companies are directed to transfer One-

off surplus attributable to Policyholder Non-Participating Fund to shareholder fund as at the reporting year ended 31st December 2017. The transfer has been presented as a separate

line item in the Income Statement as "Change in contract liability due to transfer of One-off surplus" and as a separate reserve in the Statement of Financial Position as "Restricted

Regulatory Reserve" under Equity in accordance with above Direction. As required by the said Direction, the Company received the approval for this transfer on 29th March 2018.

Further distribution of One-off Surplus to shareholders, held as part of the Restricted Regulatory Reserve, is subject to meeting governance requirements stipulated by the IRCSL and can only be released as dividends upon receiving approval from the IRCSL. The One-off Surplus in the shareholder fund will remain invested in government debt securities and deposits as disclosed in Note 4.2 as per the directions of the IRCSL".

One-off surplus in respect of participating business is held within the participating fund as part of the unallocated valuation surplus and may only be transferred to the shareholder fund by means of bonuses to policyholders in line with Section 38 of the "Regulation of Insurance Industry Act.

Movement of One-off Surplus After Transfer

Value of Insurance Contract Liability based on Independent Actuary-NPV as at 31-12-2015 Value of Insurance Contract Liability based on Independent Actuary-GPV as at 31-12-2015

Surplus Created due to Change in Valuation method from NPV to GPV- One off Surplus as at 01-01-2016

Transfer of One-off Surplus from long term fund to Restricted Regulatory Reserve

Surplus created due to Change in Valuation Method - One-off Surplus as at 30th June 2024

Participating Fund	Non-Participating	Total
	Fund
Rs. '000	Rs. '000	Rs. '000
3,866,780	2,472,575	6,339,355
2,810,245	1,674,571	4,484,816
1,056,535	798,004	1,854,539
	(798,004)	(798,004)
1,056,535	-	1,056,535

The distribution of One-off surplus to Shareholders as dividends shall remain restricted until a Company develops appropriate policies and procedures for effective management of its business.

4.2 Composition of Investments Supporting the Restricted Regulatory Reserve as at 30th June 2024

Asset Category	ISIN No.	Face Value as at	MV as at 30th June
30th June 2024	2024

		Rs.	Rs.'000
Government Securities
Treasury Bond	LKB00628A153	100,000,000	98,554
	LKB00628A153	110,000,000	108,410
	LKB00628A153	100,000,000	98,554
	LKB00628A153	100,000,000	98,554
	LKB00931E153	100,000,000	93,966
	LKB00931E153	100,000,000	93,966
	LKB00931E153	120,000,000	112,759
	LKB00931E153	100,000,000	93,966
	LKB00931E153	100,000,000	93,966
	LKB00931E153	100,000,000	93,966
	LKB01528I017	100,000,000	74,795
Total Market Value of the Assets			1,061,456
Restricted Regulatory Reserve			798,004

Valuation of Life Insurance Fund -(Zeroed Basis of Negative Liabilities- Product Level) as at 30th June 2024
The valuation of life insurance fund as at 30 June 2024 was made by Appointed Actuary Mr. Kunj Behari Maheshwari, FIA, FIAI, of Messrs. Willis Towers Watson India Private
Limited, who approved to transfer from Non-Participating Life Insurance fund / insurance contract liabilities to the Shareholders fund as surplus transfer as disclosed below. The Company transferred Rs. 2,517 Mn from Non participating fund to shareholder fund as surplus transfer for the six months ended 30 June 2024 (2023 - Rs. 1,137 Mn).
For the quarter ended 30th June 2024 - Rs. 407 million (2023 - 407 million)
The Financial Statements as at 30th June 2024 were reviewed and confirmed by Messrs. KPMG for surplus declaration purpose.
Liability Adequacy Test (LAT) - Life Insurance Contract Liabilities
Liability Adequacy Test (LAT) in respect of the Insurance Contract Liabilities as required by SLFRS 4 - Insurance Contracts are carried out annually.

SOFTLOGIC CAPITAL PLC

EXPLANATORY NOTES

For the Three Months Ended 30th June 2024

6. Contingencies and Capital Commitments

6.1 Contingent Liabilities

The Contingent Liability of the Company as at 30th June 2024, relates to the followings;
Subsidiaries - Softlogic Life Insurance PLCAssessment in Respect of Value Added Tax (VAT)
VAT assessments have been issued by the Department of Inland Revenue for the taxable period 2010 and was determined by the Tax Appeal Commission (TAC) on 22nd August 2019. Out of total 11 assessments, 08 assessments were determined in favor of Commissioner General of Inland Revenue amounting to Rs. 46.5 Million including the penalty and 03 assessments were determined in favour of Softlogic Life Insurance PLC amounting to Rs. 24.8 Million including the penalty.
The Company transmitted the former case to the Court of Appeal being dissatisfied with the determination which determined in favour of the Commissioner General of Inland Revenue and case is stated for the opinion of the Honorable Court of Appeal. The Total tax exposure of this appeal is Rs. 46.5 million including the penalty.
The Commissioner General of Inland Revenue, transmitted the latter case to the Court of Appeal being dissatisfied with the determination which determined in favour of Softlogic Life Insurance PLC and case is stated for the opinion of the Honorable Court of Appeal.
Assessment in Respect of Value Added Tax on Financial Services (VAT on FS)
The Commissioner General of Inland Revenue issued its determination on the appeal filed by the Company relating to the assessment raised for Y/A 2014/15, 2016/17 and 2017/18 under the Value Added Tax Act amounting to Rs. 68.7 Million, Rs. 28.0 Million and Rs. 102.4 Million respectively, in favour of the Commissioner General of Inland Revenue. The Company is in the process of hearing the appeals with Tax Appeals Commission, on the basis that the underlying computation includes items which are out of scope of the VAT Act.
Assessments have been issued for the Company under the Value Added Tax Act, in relation to the Y/A 2018/19 and 2019/20 amounting to Rs. 72.6 Million and 147.7 Million respectively. The Company has filed an appeal in relation to 2018/19 to the Commissioner General of Inland Revenue on the basis that the underlying computation includes items which are out of scope of the VAT Act and filled an objection letter and the Company is awaiting the CGIR determination. Further, the company has requested administration review for the assessment issued for the Y/A 2019/20.
Assessment in Respect of Nation Building Tax on Financial Services (NBT on FS)
The Commissioner General of Inland Revenue issued its determination on the appeal filed by the Company relating to the assessment raised for the Y/A 2017/18 under the Nation Building Tax Act amounting to Rs. 13.7 Million, in favour of the Commissioner General of Inland Revenue. The Department of Inland Revenue has confirmed that the amount of tax in default along with the penalty has been written off as per the provisions in the Finance Act.
An assessment has been issued under the Nation Building Tax Act, in relation to the Y/A 2018/19 amounting to Rs. 9.7 Million. The Company has filed an appeal to the Commissioner General of Inland Revenue on the basis that the underlying computation includes items which are out of scope of the NBT Act. The Company is awaiting the CGIR's determination.
An assessment has been issued by the Department of Inland Revenue under the Nation Building Tax, in relation to the Y/A 2019/20 amounting Rs. 18 Million including penalty. The company has filed an appeal to the Commissioner General of Inland Revenue on the basis that the underlying computation includes items which are out of scope of NBT Act. Since it is a mandatory requirement in law to communicate the CGIR's decision on the request for administrative review in writing to the taxpayer, the company intend to make an appeal once the decision of the CGIR is served to the company.
Economic Service Charge (ESC)
An assessment has been issued by the Department of Inland Revenue under the Economic Service Charge Act, in relation to the taxable period ending 31 December 2017 amounting to Rs. 7.3 Million.
While the Company is in the process of hearing the appeal with Tax Appeals Commission, on the basis that the underlying computation includes items which are out of scope of the ESC Act; the Department of Inland Revenue has directed the Company to claim for relief through writing off the tax due under the Finance Act for which the Company has duly submitted an affidavit.

Life Insurance Taxation

The Tax Appeals Commission issued its determination on the appeal filed by the Company relating to the assessment raised for the Y/A 2010/11 amounting to Rs. 0.68 Million, in favour of the Softlogic Life Insurance PLC and the Commissioner General of Inland Revenue has transmitted this case to the Court of Appeal being dissatisfied with the said determination of Tax Appeals Commission and case is stated for the opinion of the Honorable Court of Appeal. The Company is awaiting the decision of the Court of appeal.
The Tax Appeals Commission issued its determination on the appeal filed by the Company relating to the assessment raised for the Y/A 2011/12 and 2012/13 amounting to Rs.10.1 Million and Rs. 12.4 Million respectively, in favour of CGIR and The Company has transmitted this case to the Court of Appeal being dissatisfied with the said determination of Tax Appeals Commission and case is stated for the opinion of the Honorable Court of Appeal. The Company is awaiting the decision of the Court of appeal.
The Commissioner General of Inland Revenue issued its determination on the appeal filed by the Company relating to the assessment raised for the Y/A 2014/15, 2015/16, 2016/17 and 2017/18 amounting to Rs. 681.7 Million along with penalty, in favor of the Commissioner General of Inland Revenue. The Company is in the process of hearing the appeals with Tax Appeals Commission.
An assessment has been issued under the Income Tax Act by the Department of Inland Revenue in relation to the Y/A 2018/19, amounting to Rs. 533.4 Million including penalty and interest. The Company has filed an appeal to the Commissioner General of Inland Revenue and awaiting the CGIR determination.
The Commissioner General of Inland Revenue issued its determination on the appeal filed by the Company relating to the assessment raised for the Y/A 2019/20 amounting to Rs. 1,114 Million along with penalty, in favour of the Commissioner General of Inland Revenue. The Company is in the process of submitting a petition of appeal with Tax Appeals Commission.
The Company has received an Assessment on PAYE Tax for the Y/A 2016/17 amounting to Rs. 0.9 Million along with penalty for which company has submitted an appeal.
An assessment has been issued under the Income Tax Act by the Department of Inland Revenue in relation to the Y/A 2020/21, amounting to Rs. 931.23 Million including penalty and interest. The Company is in the process of filing an appeal to the Commissioner General of Inland Revenue.
Directors are of the view that it has followed due process and acted in accordance with the prevailing laws in its tax submission and therefore, the probability of company having to settle any of this tax assessments are very low.

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