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2014 PGC Annual Report

2014 PGC Annual Report



continue to grow strength to strength

PGC Annual Report | 2014 11



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PGC Annual Report | 2014 33

PROFILE POPCRU Group of Companies (PGC) is a leading
financial services group that forms part of the
44 PGC Annual Report | 2014 investment wing of the Police and Prisons Civil
Rights Union (POPCRU).

Established in 1997, PGC Group is passionate
about transformation and its strategy seeks to
ensure meaningful and broad-based business
participation across South Africa and beyond. At
the core, PGC Group is focussed on the financial
services industry, and 20% of the group’s non-core
business is in the hospitality and security services.
As part of its corporate social responsibility, PGC
Group offers bursaries to deserving POPCRU
members and children of deceased union
members across the country.

To be a leading investment group in Africa with a
net asset value of R1 billion by 2020.

An investment company providing customised
financial services, products and a diversified
investment portfolio by:
• Optimising customer value in order to increase
our client base.
• Developing and implementing effective
operational strategies and policies for the group.
• Minimising risk towards the shareholder.
• Pursuing investment strategies that ensure
maximum returns.

• Integrity (ethical conduct, honesty and

• Innovation (continuous improvement and

• Customer focused (customer is king – providing

excellent customer service).
• Life-long learning (learning organisation and

focus on empowerment of employees).
• Shareholders first.


PROPRIETARY LIMITED • The lodge consist of three camps: PROPRIETARY LIMITED

Parent Company - Shishangeni (main camp), Subsidiary
• The POPCRU Group of Companies (PGC) is an - Shawu, and • A property holding company consisting of
- Shonga.
investment holding company and consists of a WORKERS LIFE GROUP PROPRIETARY LIMITED various investment properties:
very diversified group of companies, the most - Midrand
important of which are the subsidiaries and Subsidiary - PGC House
investments described below. • The group is engaged in administration - Brakpan
- Nelspruit
range of life products, personal accident Subsidiary
Subsidiary insurance and short-term insurance.
• Insurance and financial services brokers • The group consists of the following subsidiaries: This subsidiary is an investment holding in Protea
- WorkersLife Assurance Company Hospitality Holdings.
which provide the service of administration of - WorkersLife Insurance Underwriters
funeral and legal policies to not only POPCRU - WorkersLife Medical Administrators
members, but also to other unions in the
government and private sectors. RISKCON SECURITY HOLDINGS
Subsidiary • Rendering of security services, excluding
• A lodge situated in the Kruger National Park
armed response, mainly to the retail sector in
within the Mpanamana Concession south South Africa.
of the Crocodile River currently under the

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Chairperson’s “Despite the not so rosy
REPORT global and economic
climate, the business has
1144 PGC Annual Report | 2014
continued to grow”

It is unbelievable that we have reached the end people across South Africa in their unequivocal a better place. The more educated our members
of another financial year! It has not been an easy testimony that, we have a good story to tell, South and their children are, the more our business will
one although we remain optimistic the tide will Africa is better than it was yesterday! succeed, and the more our country benefits.
turn soon for the global economy to emerge out of Progressive businesses today are largely those
the bearish environment we have seen for a while PGC has grown its profit year-on-year once who subscribe to high standards of corporate
since the economic meltdown that engulfed the again and may I applaud my CEO and staff governance. I am pleased to see the work taking
world in 2008 /9. in the Group! Having said that I still have high place at PGC as outlined in the Integrated
expectations on business growth in terms of seeing Corporate Governance report, chiefly around
Leading economic indicators are slowly beginning more products for our clients, and the Workerslife Business Continuity and Disaster Management
to show some light at the end of the tunnel but we brand extending beyond the POPCRU client base. Planning, Integrated Risk Management, Talent
are not out of the woods yet. We have become a big business and we need to Management as well as Environmental Caring
act like a big player! and Community Involvement directly and through
2014 marks 20 years of democracy in South Africa, The Safer South Africa Foundation. May I thank all
where we saw the end of the apartheid regime. Our non-core business ventures in the main have involved in this kind of work!
For us the coming financial year is even more proved to be such a challenge, and I am glad
special as POPCRU, our shareholder turns 25 years to see the executive beginning to review the May I encourage all staff in the group and all
of age! As PGC we pride ourselves to have grown approach into this area. We will all remember 20% stakeholders, including our esteemed shareholder
so well and to have selflessly serviced our growing of Group performance has to come from this area. to continue to support the business and encourage
shareholder. On that note, it becomes critical Success has been achieved mainly in the Protea growth in all possible ways, as the success of PGC
that we begin to evaluate ourselves and gear-up Group investment and some lessons have been is important for us all!
accordingly, to ensure we add more value to our learnt in the likes of Riskcon, Shishangeni Lodge,
esteemed POPCRU Membership. Red and Pensys in Botswana, and others; and yes On that note may I take the opportunity to thank
some drastic decisions have to be taken around the CEO, Cde Zwi and his staff, as well as the
Despite the not so rosy global and economic such investments. shareholder for all the support they afford me, and
climate, the business has continued to grow, wish all of us a prosperous 2014/15 Financial year!!
providing much needed jobs and also assisting our The Group has taken bold steps in revamping
government in dealing with some of the stubborn our IT systems, overhauling our sales model in the
challenges of unemployment, poverty, crime, HIV Workerslife Direct space and taking our Workerslife
Aids, etc. In the period under review we regrettably brand to the broader market; all in unprecedented
also lost a giant baobab tree under whose shadow ways. This tells me the executive is gearing up for a
the new South Africa was born, President Nelson more serious game in a bigger league.
Rholihlahla Mandela.
The POPCRU Trust is growing and continues to
We are however certain that, the foundations that provide more bursaries to the POPCRU membership
he and his generation have laid will propel us to and children of deceased members, and other
greater heights. In the coming year, we will also deserving members of our society. To-date we
be going for our national elections and I have no speak of 922 individuals who have benefited from
doubt we will all do our part and retain our tried the scheme with 30% of these funded in 2014
and tested movement of the people, the leader alone. Education is one of the bedrocks through
of the democratic forces; we join millions of our which we can transform our country to become

PGC Annual Report | 2014 1155

Executive Officer’s DONE IN ENSURING WE
1166 PGC Annual Report | 2014

1. ECONOMIC REVIEW In the emerging economies, the CLIs point to a The consumer is still not so comfortable to spend due
tentative but positive change in momentum in to the more-or-less gloomy economic future outlook
The local economic growth outlook remains on China, and to trend growth in Brazil and Russia. The and anticipation of upward inflationary trends mainly
the low as business confidence remains subdued. CLI for India suggests below trend growth. driven by the likes of electricity costs, fuel, etc. which
Despite an improved economic forecast for 2014, tend to have ubiquitous type ripple effects.
economic growth is expected to remain below There is obviously a fairly strong relationship
previous forecasts of between 3.0% and 3.5%. between the OECD leading indicator and 2. PGC’S FINANCIAL ANALYSIS
Credit extension is low and declining, few jobs on a industrial production, which suggests that
net basis are being created, and gross fixed capital industrial production will continue to improve in As at the end of February 2014, PGC realised total
formation, particularly from the private sector, the months ahead. revenue of R460.6m which was 11% growth from
significantly remains on the low too. The Reserve the previous financial year at R414.7m.
Bank’s forecasts for growth in 2014 and 2015 have The SA’s leading indicator tends to lag the global
been revised to 2.8% and 3.3% respectively, down economic cycle, into a slowdown/recession as Total premium revenue for the year under review
from 3.0% and 3.4% in the previous forecasts. There well as into a recovery, but in only about 1 to 3 was R292.7m which was 4% higher than the
are concerns around the declining rand strength, months. With the OECD leading indicator now previous years’ at R280.7m.
which recently caused a 50 basis points rate hike. clearly trending higher, this should have positive
implications for SA growth, especially in terms of Insurance claims experienced were 0.6% higher
While the recent rand weakness is part of a general an increase in exports; helped somewhat by the than in the previous financial year at R101.3m and
emerging market phenomenon, it has been weaker Rand. R100.7m was incurred in the 2012 / 13 financial
reinforced by local idiosyncratic factors including year. This yielded a gross profit of R171m against
declining terms of trade, on-going labor disputes, The insurance industry is becoming more and a previous financial years of R159m (after sales
and the higher-than-expected current account more competitive by the day with players entering commissions) similar to premium revenue, this was
deficit in the third quarter of 2013. to join traditional insurance companies, banks, 8% growth.
funeral parlours, clothing and food chain stores,
Other economies such as Brazil, Turkey, Indonesia cellphone networks, etc both in the life and short Other income took a 25% leap from R134m to
and India, have responded to the recent currency term space. These players are spending lots of R168m mainly due to the sale of the 41 Wierda
weakness by tightening monetary policy, either in money in advertising mainly above-the-line, which building in Sandton which was sold at almost twice
reaction to inflationary pressures or in an attempt makes it quite expensive to compete. the price it was purchased for.
to stem currency depreciation and hence the
South African Reserve Banks’s decision was not It therefore becomes difficult for smaller players Operating expenses were R351.6m from R254.6m
necessarily misplaced. such as Workerslife to emerge above all these and and included here is an impairment cost of R82.5m.
hence it becomes very critical to think creatively The business took a decision to clean up its balance
In terms of other countries, the OECD leading on how to make an impact without having to raise sheet by impairing and writing-off some loans in the
indicator is pointing to growth firming in Japan, too much money to compete. group. These include Red and Pensys in Botswana,
the United States and the United Kingdom, while Protea Hospitality, Trinity and Dynamic Lotteries.
the composite leading indicator (CLI) for Canada Moving into the next financial year, it becomes critical The Finance Director will expand on in his report.
indicates a positive change in momentum. In the Euro to review the business with a view to streamlining it for The main reason is to move towards writing off the
Area as a whole, the leading indicator continues to better growth prospects whilst taking into account non-performing loans and to eventually dispose of
suggest a positive change in momentum. Germany, the proliferated competitive space as well as the the non-profitable entities. So this number has the
to be precise, is showing signs of sturdy growth. slow aggregate economic growth. effect of reducing profitability at group level

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but a critical decision to take to offload the afore 4. UPDATE ON OTHER BUSINESS VENTURES development in Workerslife Direct that has been
mentioned from the PGC group. finalised. This business has obtained its license
PGC participated in the Igwija Proposal in a bid variation from the FSB which allows it to underwrite
Operationally (without the impairments), the group to win the lotto tender which was issued during its legal business. The variation licence does not
had R269.1m indirect expenses which were 9% the course of the financial year. However, this cover motor insurance.
higher than the previous financial year of R247.9m, consortium did not succeed due to inefficiencies
a growth well in line with annual inflation. that took place during the bidding process, despite 8. WORKERSLIFE DIRECT
the fact that PGC did its part in the transaction.
Finance costs were 88% lower at R245k compared The Workerslife Direct Sales model has been finalised
to R2m the previous year due to some loans having 5. NEW PGC PREMISES and the salesforce restructuring process is nearing
been settled. Operational (normalised) profit after the end. Already December 2013 performance
tax for the year was R59.4m and was 34% growth After the sale of the 41 Wierda property in Sandton, numbers saw a surge due to performance
from the previous year at R44.4m. With the loans the group had not found new premises by the management. It clearly shows that with the right
impairment of R82.5m the group realised a book close of the financial year. sales management and monitoring approach, the
loss of R23m. required results will be achieved.
Operationally, the business did well and still has Performance management to enhance good
an opportunity to do better if new products are Workerslife Assurance remained firm and profitable performance is anticipated to end in March 2014.
introduced into the predominantly POPCRU in the 2013/14 financial year. A new Managing The NUMSA case is due for arbitration appeal sitting
market; and the insurance companies beginning Director, Mr Thulani Nxumalo, was appointed on a date to be agreed with NUMSA. The former
to venture into other markets outside of the towards the close of the year to replace Mr Joe Chief Justice Sandile Ngcobo has been secured to
POPCRU space. These are some of the strategic Peters who took over as Managing Director of preside on the matter.
moves anticipated in the new financial year. Workerslife Direct after the departure of Mr Charles
Nonkonyane. 9. MARKETING
The business remains firm and with these New branches under construction are Polokwane
An investment Committee for the group was set up changes there is a strong focus on new product and Harrismith and these are anticipated to
and is chaired by Mr Solly Lekhu who is POPCRU’s development and diversification into new markets, be completed in the first quarter of 2014 after
Provincial Chair of the Northwest Province. an effort being supported by marketing. completion of the PGC House branch. The POPCRU
membership card rollout process is on-going.
This committee has reviewed the group’s 7. WORKERSLIFE INSURANCE
investment strategy with a view of maximising The members of SAPS responsible for access to
returns and spreading risk. A number of investment Workerslife Insurance has performed well this far SAPS stations contacted the business effectively
managers were invited for pitches and Vunani with a general low claims rate. Be that as it may, restricting Workerslife Direct sales people from
Asset Managers and Skybound were chosen to there has not been much growth of its book and entering SAPS premises, a move that could have
manage the group’s long term funds. the business has high potential to do better for dire effects if fully effected. Marketing facilitated
the group. As such, a decision has been made to a meeting with the concerned officials with EXCO
Mandates are anticipated to be signed soon. refocus on it, reviewing its entire business model where a way forward was chatted. Marketing
and value proposition to maximise performance. is finalising a deal with the University of Pretoria
This will be done similar to the new sales model Football Club which plays in the PSL (AmaTuks) to

1188 PGC Annual Report | 2014

get into the students’ market, Alumni as well as staff. 12. RED EMPLOYEE BENEFITS AND PENSY’S
The university has 60,000 students, 219000 alumni IT(BOTSWANA BUSINESS)
and 4000 staff. This is being aligned with a strategy
being finalised to focus on Police Academies High Court – The matter was set down for 17
nationally as well as the tertiary students market. February 2014, because NBFIRA (the Regulator)
had refused to give consent for the liquidation
The tertiary student market is critical for PGC’s of Red Employee Benefits (Pty) Ltd. Our counsel
insurance business growth and sustainability in argued the matter on the 17th February 2014 for
general, as more can be achieved by capturing Judicial Management because NBFIRA could not
the young market when they start working. The support our request for the liquidation of RED EB,
average age of Workerslife’s client base is 47 and judgment is still pending. It is important to note
this number has to come down. that NBFIRA is now dealing with the affairs of RED
Employee Benefits and has promised to assist in
10. HUMAN RESOURCES turning its problems around.

The first phase of sales reps’ restructuring was The rights issue application was lodged to
finalised towards the end of the financial year. The challenge the dilution of our company through
new Network Marketing division was also opened the rights issue. The matter has been set down
to accommodate some of those representatives if for August 2015. Police investigation – There has
they were interested. The subsequent phases are been no further progress reported on this matter.
to be finalised in the new financial year. The Police Captain in charge of the investigation
resigned in December 2013 and her cases had not
Work has begun to build a proper Human Resources yet been allocated to another officer.
department with the right systems for the group.
This will be finalised in the new financial year. 13. RISKCON SECURITY HOLDING

11. PROTEA KIMBERLY Many improvements were effected in Riskcon
during the financial year and more challenges also
Construction of the hotel extension is underway continue to emerge which are legacy problems.
as planned and the hotel is in a good financial After a series of engagement with the Edcon Group
position to effect this, with an option to utilize own and the latter not coming to the party, a decision
funds or a loan from the bank. was made to serve notice for the end of February
2014, terminating the rendering of services to the
Despite the construction work in progress, the hotel group. A letter was served to this effect and an
continued to perform well even in this financial agreement was reached.
year which gives confidence that on completion,
the bigger capacity will see much improved results Edcon absorbed the bulk of the guards into their
over and above the sterling performance seen in own security services company which helped
previous years. It is therefore without doubt this was reduce terminal benefit costs of the guards from
a worthwhile investment. Riskcon.

PGC Annual Report | 2014 1199

On the other hand, the Woolworths account service provider team (Puleng Technologies).
has been growing and had already surpassed It will assess the functionality and performance of
the Edcon account in size. However, Riskcon is the new infrastructure and produce a report for
struggling to service this account due to some the audit committee and board.
capacity issues. PGC has thus taken a stance to
resource Riskcon to be able to service accounts The development of the Enterprise Data Warehouse
efficiently. To that end, a decision has been made system for Workerslife has also been completed
to buy branded fleet cars as the current approach and was deployed into the Workerslife production
is not feasible. system platform at the end of 2013. The warehouse
database contains current as well as historical
Further, considerations are underway to introduce raw data used for creating trend reports for the
a new information and operational system to meet executive and senior management reporting such
client requirements. as annual and quarterly comparisons.

14. SHISHANGENI PRIVATE LODGE The first reports produced for the warehouse
will be uploaded for the operational systems in
Shishangeni Lodge was taken back to be marketing and sales. The report generation phase
managed by PGC in a joint venture with Keychain will commence in the beginning of the first quarter
Hotel management. The lodge has seen some of the financial year. Workerslife’s core system
operational improvements but has not reached and application systems revamp: In light of the
profitability. The group will continue to look for completion and finalizing of all the necessary
a buyer whilst also improving its operational infrastructure initiatives in 2013, the technology
performance. team will now embark on an aggressive upgrade
of the IT Core System and other IT application
15. GROUP IT systems that need to support business initiatives
and the business growth at our Workerslife.
PGC Shared Services: the PGC infrastructure for
Business Continuity (BC) and Disaster Recovery A detailed Business Requirements Specification
Plan (DRP), an alternative data storage site to (BRS) report is currently being drafted. The
be developed for the future has been secured in document will translate how IT will meet the
Midrand and a suitable site has been identified to business needs and present a road map towards
purchase. A project plan for this (BC/DRP) has also satisfying business expectations.
been completed. The project is now undergoing
Post-Implementation review (PIR) to evaluate the The focus areas of the report are the following:
effectiveness of the system whilst in production, for • Product Development initiatives (Both
a period of 3 months.
Workerslife Long and Short term business
The review will expand as a collaboration audit products)
process between the Technology team (PGC), • Policy Servicing initiatives
Internal Audit (Pericullum) and the Infrastructure • Finance Integration & Reporting Automation

2200 PGC Annual Report | 2014

16. CORPORATE GOVERNANCE 18. CONCLUSION We will continue to maintain corporate
governance at the top of our radar screen making
The first phase of director training has been finalised With all the hard work and sacrifices made in the sure we conduct business in a very principled
and attendance was great. Both Executive and 2013/4 financial year, we are positive that we are on manner upholding great values and complying
Non-Executive Directors attended the training. the right track and have invested in the right measures with all pertinent regulation by the FSB and other
KPMG has been appointed as external auditors to drastically improve performance at PGC. relevant legislation.
of the PGC Group to replace Grant Thornton
and Ernst and Young and the next AGM will be As we begin to explore other markets outside of our At this juncture may I extend my gratitude to my
appraised accordingly on 28th February 2014. core client base, we have to begin to expose our supportive Chairman, the hard working Boards of
brand and its credibility to the wider targets. By its Directors across the Group, my Executive and All
Corporate governance remains key to the nature, our business dictates that we begin to target Staff for all the great work; as well as the Shareholder
success and growth of PGC in making sure the more the younger clients to rationalize demographics for the continued support we continue to enjoy!
business observes and adheres to all key principles within our client database. We have to have a strong
of business management and remains a key tertiary market base amongst others. Thank You!
progressive organ of society. To this end a full
integrated report is attached on this AGM report. As we get into the new financial year, which marks ………………………………………
20 years of democracy of the Republic of South Mr Z. Mdletshe
17. PROTEA HOTELS DEAL Africa, and 25th birthday of POPCRU, it becomes PGC CEO
very important for us to take stock of our successes
After the conclusion of the hotel management and learnings. We have grown as a business and
company deal where Marriot is buying Protea are still looking forward to achieving greater things.
Hotels for R2bn, there has been unhappiness on To that end, we have to change the way we do
the minority shareholders regarding the property things to a certain extent.
company deal where they were excluded. The
price of R120m for all the properties was felt to be We have taken a conscious decision to write-off
unrealistic and hence the majority shareholder was non-performing loans to non-core business trading
challenged. The majority shareholder subsequently and non-trading entities, as well as bad debts, with
tabled R40m on the property deal which they a view to phasing out these in the near future.
further increased to R80m, which was also rejected We will continue to look for other profitable non-
by the minorities. core business ventures as per the provisions of our
policy, making sure we are more thorough and
The bone of contention is the valuation method of proficient in the manner in which we evaluate and
the properties as it grossly understates the values. assess their business viability.
Protea has gone ahead to sign the deal with
Marriot despite not having the required vote. More work will be done in ensuring we continue to
Protea management eventually dropped the idea expose our Workerslife brand, paving way for more
of excluding the BEE partners and thus kept the innovative and robust products for our markets
property company structure intact, leaving us still and making sure we have the right people across
participating in the property portfolio after selling the group to execute for us.
our interest in the hotel management company.

PGC Annual Report | 2014 2211


80% of its business efforts in financial services
and the remainder of its efforts is expended on
other business ventures that add value to the
business and its shareholders.

2222 PGC Annual Report | 2014


A key strategic priority of PGC is to be a leading The non-core businesses are expected to generate • Customer oriented - Retention and
investment group within organised labour in 20% of the growth of PGC in general and the new segments
Africa by providing customised products to its leadership ensures a fine balance between • Internal processes- Delivery and performance
markets and ensuring investment optimal returns organic and externally driven expansion. • Human capital – Skills development and talent
to shareholders through growing and empowered
people. Our mission is to achieve a net asset value These businesses are strategic in nature as they management
of R1 billion by 2015. seek to identify opportunities to increase the
shareholders margins, either through acquisitions, Operational performance objectives
PGC focuses 80% of its business efforts in financial mergers or through selling. • Enhance Skills Development
services and the remainder of its efforts is expended • Realign PGC and resources to new Sales Model
on other business ventures that add value to the • Shishangeni Lodge • Acquire Priority Skills
business and its shareholders. It has presence in • POPCRU Investments Holdings • Introduce Effective Talent Management
Botswana and is exploring other African countries • Riskcon Security Holdings (PTY) Ltd (Riskcon) • Optimise key Business Processes
with intent to effect investments. The group offers • Protea Hotel Group
customer tailored solutions to retail and group / Social performance objectives
corporate clients. Our strategy going to the future is aligned with • Develop communities
the overriding objective of continuing to create • Increase our Community Service initiatives
These solutions are informed by research and sustainable value over the long term for all our
changing client requirements which the group stakeholders. We expect that the positive outcome Environmental objectives
proactively seeks to fulfil at value based prices of the combined strategy is long-term real growth • Operate a business model that has a positive
which are reasonably profitable without necessarily in earnings.
maximising profit. PGC holds controlling shareholding environmental impact.
interests in its subsidiaries, and provides sound strategic Risk management, processes, people, technology
direction and corporate governance. and knowledge are aligned with these objectives.
Strategic, economic, social, operational, and
The subsidiaries of PGC are the following: environmental objectives are integrated into the
• Workerslife Assurance Proprietary Company way we do business through people, processes,
• Workerslife Insurance Proprietary Limited technology and risk management.
• Workerslife Direct Proprietary Limited
Four Pillars of our Strategic Intent
In line with the shareholder directive, the company We set ourselves four objectives to deliver our
is engaged in a process of shedding off some strategic intent:
businesses that do not add value to its strategic intent. • Financial - Growth and profitability

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Key Strategic Principles
1. Consolidate position of strength, secure the
PGC Customers Vision Internal base.
Scorecard Processes “ We are not alone”
Subsidiary 2. Exploit key advantages in the POPCRU market
Scorecard Learning 3. Growth is key, both in terms of revenue and
& growth profit
4. Segmentation is key both in channels and
6.Supplement product portfolio
7.Build better relationships with our customers


New ProductS Developed 2.Secondary Focus 4.Opportunistic Focus

Financial Financial

Customers Vision Internal Customers Vision Internal . Market intelligence suggests a . Further entrenching into
Processes Processes boarder product portfolio will the retail sector
significantly grow the business. . Financial Services products
. Effective segmentation both in trading competitively in the
chanelnels and in the customer retail market.
base will bring more focus and
Learning Learning increased revenue
& growth & growth

Financial Existing Products Portfolio 1.Primary Focus 3.Opportunistic Focus

. Huge POPCRU contigent . Exploring further growth
without any of the products into the COSATU space
. Some with just the basic plan . Exploring Group Schemes
. Need to arrest the unsustain- adn the Retal Sector
able cancellations eroding
Department the base.
Customers Vision Internal
Current Customers Base New Customers/Territory

& growth
The Risk management process at PGC is a
In the period under discussion we have also continuously evolving process that seeks to
revised our Sales Strategy in order to align it with mitigate risk at all times. The company continuously
the mandate of the shareholder that it has to engages on a process to improve risk governance,
concentrate on financial services and expand risk identification, risk assessment, risk monitoring
beyond the captive market. and risk optimization. The Risk Management Plan
with proposed activities and improvements to
PGC’s operations is prepared annually.

2244 PGC Annual Report | 2014

Being mainly a financial services company and BUSINESS RISK A mitigation strategy that includes, amongst
as such PGC views risk management as a means others, the following measures is in place:
of ensuring that sustainable value is created for This is the risk that non-performance against • Cooperation with government and industry role
stakeholders in a responsible manner. planned strategic objectives, the consequences of
inappropriate strategy or a decline in sales volumes players to ensure the successful apprehension and
During the last few years with the introduction will have a negative impact on profitability. conviction of the perpetrators of financial crime.
of significant new reporting and compliance Business risk management is overseen by the risk • Effective and comprehensive investigation
obligations, particularly in the regulated entities, committee. It meets quarterly at subsidiary level. and recovery of losses.
we have remodeled our corporate governance Daily sales and claims volumes are monitored by • Proactive identification and prevention of
model in order for it to adapt to the changed executive management. criminal acts against PGC.
corporate environment. Despite the recent • Anonymous Tip-Offs are investigated by our
economic turbulences the Group’s overall risk FUNDING AND LIQUIDITY RISK forensic services department.
profile and capital position remains stable. • Fraud awareness campaigns.
As a company that operates in the financial
PGCS RISK MANAGEMENT COMBINED services sector, this is the risk that the organization INSURANCE
ASSURANCE FRAMEWORK does not have access to sufficient or acceptable
cash and cash equivalents to fund increases in A comprehensive insurance programme is
We utilize integrated risk management in the setting assets and meet its obligations as they become maintained to cover losses from fraud, theft,
of strategy across the organization. It is a structured due, without incurring unacceptable losses. professional liability claims and damage to
and disciplined approach to risk management, physical assets.
aligning strategy, processes, people, technology Liquidity risk is managed by using the Capital
and knowledge with the purpose of evaluating Adequacy Ratio. The organization operates an BUSINESS CONTINUITY
and managing the opportunities, threats and uncomplicated low-risk liquidity profile with the
uncertainties that PGC faces. It aims to effectively management of liquidity risk taking preference. Led by our IT department, a business continuity
balance risk and control. management team is responsible for all aspects
OPERATIONAL RISK of business continuity. The business continuity
It consists of policies, methodologies, and allocation framework has been approved by the board.
of responsibilities, governance and reporting This is the risk of loss resulting from inadequate or The business continuity and disaster recovery plan
structures and is based on Good Governance failed internal processes, people and systems documents procedures to be followed should an
principles, the King III code and the FAIS, Long or from external events. All divisional heads of extreme event occur. The disaster recovery and
Term and Short Insurance Acts. the compliance, forensic, internal audit and IT evacuation plans have been tested successfully
units provide monitoring and assist business with during the year as part of a scheduled programme.
The primary objectives of the framework are to: specialist advice, policies and standards relating The IT disaster recovery plans form part of the
• Protect against possible losses to various components of operational risk. company’s business continuity plan.
• Integrate risk management in all levels of
• Anticipate and mitigate risk events before they PGC has a professional relationship with
Financial crime is a major operational risk for its regulators. PGC maintains high levels of
become a reality the company. compliance with the spirit and letter of the law
• Ensure earnings stability working with the regulators including the Financial
Services Board.

PGC Annual Report | 2014 2255

The head of compliance reports directly to the
CEO. The compliance function performs continuous
compliance monitoring in accordance with an
approved compliance monitoring coverage plan.

The Long Term Insurance Act, Short Term Insurance
Act, Companies Act, Consumer Protection, Act
and Financial Intelligence Centre Act have been
identified as significant pieces of legislation and
are the main focus of compliance function and
management system activities of the Group.


Information technology forms the backbone
of the service that PGC provides to its clients.
During the reporting period the company has
invested substantially on IT infrastructure and we
anticipate good returns on the investment.

The IT governance framework also defines the
organizational structure as well as the policies and
procedures that are required to facilitate good
governance and compliance in the areas of
technology and information security management.


The board remains ultimately responsible for
ensuring that risks are adequately identified,
measured, managed and monitored and that
good governance is maintained. The board
discharges its duty through policies and frameworks
as well as board committees and subcommittees.

Executive management, together with these
committees, manage the business through a
system of internal controls functioning throughout
the entity. This promotes an awareness of risk and
good governance in every area of the business.

2266 PGC Annual Report | 2014

Risk management is seen as the responsibility of The roles of chairman and CEO are separated and GROUP AND SUBSIDIARY BOARDS
each and every employee. the chairman is a non-executive director who is The PGC Group has three subsidiaries, namely:
considered by the board to best be able to fulfil • Workerslife Assurance Company
Virtually all the principles set by the King III have the role of chairman. • Workerslife Insurance Limited
been applied during the reporting period, with a • Workerslife Direct Limited
The Group also has an interest in businesses of a
THE BOARD OF DIRECTORS All appointments to the board are formal. The strategic nature namely:
process is transparent and a matter for the board • Shishangeni Lodge
The board always strives to balance the interest of its as a whole. The chairman presides over board • POPCRU Investment Holdings
shareholders, customers, employees and suppliers appointments. When a vacancy exists or specific • Riskcon Security Holdings (PTY) Ltd (Riskcon)
by ensuring that it ensures effective governance, skills are required, candidates are identified and • Protea Hotel Group
supervises the management of the companies’ recommended to the full board for endorsement.
business and affairs, and exercises appropriate With the board’s sanction, the individual is These subsidiaries have their own boards which
business judgment on behalf of the company. approached and, subject to prior approval by the also sit four times a year.
Board members act on a fully informed basis, in shareholder, formally appointed.
good faith, with due diligence, keeping in mind the
best interests of the company. The Board relies on Shareholders have the opportunity at the first
the honesty and integrity of the company’s senior annual general meeting following the appointment
management and its outside advisors and external of a new non-executive director, to endorse the
auditors in discharging its obligation. appointment.


The PGC board comprises a majority of non- Newly appointed board members are formally
executive directors, who are mainly independent inducted. Board members attended training
non-executive directors, and the board is satisfied presented by the Institute of Directors of Southern
with this level of independent representation. The Africa (IODSA) and KPMG for and on behalf of the
election of the members takes place at the Annual PGC, an ad hoc training is presented in-house.
General Meeting of Shareholders for a maximum The training was geared more on the Financial
period of a one year term. Services industry practices, regulatory framework
and governance.
Board members need Annual General Meeting
authorization to be elected members in other MEETINGS AND QUORUM
entities with similar business activities. The renewal
of this authorization is mandatory at each Annual The board meets four times a year and a quorum
General Meeting of the Shareholder. is comprised of a majority of directors.
The composition of the board ensures that there is
a balance of power and authority so that no one
individual has unfettered decision-making powers.

PGC Annual Report | 2014 2277

Board Meetings

Workerslife Assurance Company Directors Workerslife Insurance Directors

During the year 2013/2014 Board Meetings During the year 2013/2014 Board Meetings
Attended Attended
P Nkutha 4 P Nkutha 4
T Mdiya 4 T Mdiya 4
Y Peters 3 Y Peters 3
M Masemola 4 M Masemola 4
S Lekhu 4 S Lekhu 4
B Matika 3 B Matika 3
R Shaw 3 R Shaw 3
T Nxumalo 3 T Nxumalo 2
MJ Dipela 3 MJ Dipela 3
M Ndaba* 4 M Ndaba * 4

2288 PGC Annual Report | 2014

Workerslife Direct Directors POPCRU Group of Companies Directors Shishangeni Lodge Directors

During the year 2013/2014 Board Meetings During the year 2013/2014 Board Meetings During the year 2013/2014 Board Meetings
Attended Attended Attended
T Ntsele 6 K Shongwe 4
ST Nkosi 4 Z R Mdletshe 6 L Thamae
M J Dipela 4 L Mdingi 3
C Nonkonyana 2 Resigned J Grosskopf 5 L Monini
J Dladla [09/2013] ST Nkosi 6 Z Mathieso 4
NN Ngcobo 6 V Tshabalala
4 H Qangule 5 MJ Dipela 3
K Shongwe 5 M Ndaba *
F Fields 2 M Ndaba * 6 4

S Motuba 4 3

MJ Dipela 3 2
T Nzimande 4

J Grosskopf 3

M Ndaba * 4

PGC Annual Report | 2014 2299

POPCRU Group Company
OF COMPANIES secretary
Appointed by the board, the company secretary
80% of its business efforts in financial services acts as a conduit between the board and the
and the remainder of its efforts is expended on organization. The company secretary is responsible
other business ventures that add value to the for board administration, liaison with other
business and its shareholders. stakeholders Companies and the Companies and
Intellectual Property Commission. Board members
3300 PGC Annual Report | 2014 also have access to legal and other expertise,
when required and at the cost of the company
through the company secretary.

The company secretary is not a board member
of any company in the PGC group and has
maintained a professional relationship with
board members giving direction on good
governance, as and when required.

The Group EXCO comprises of the following:
• Group Chief Executive Officer
• Group Finance Director,
• Group Marketing and Operations Director

and the;
• Managing Directors of subsidiaries.

Also a member of the Shishangeni Board of
Directors and a non-executive director of Protea Also a Director at Workerslife Insurance Limited Joe
Hospitality Holdings. Zwi Mdletshe joined PGC in joined PGC in 2010 as a Managing Director of both
2006 as Group Chief Executive Officer. Before Workerslife Assurance Company and Workerslife
joining PGC was an Executive Director at Protea Insurance Limited. Before joining PGC, he worked
Hospitality Holdings. He is also a former Provincial at Swiss Re, Reinsurance Company, as a Senior
Commissioner in the Department of Correctional Vice President. He has also worked at Investec, as
Services and has served in various leadership an Executive of Investec Employee Benefits.
positions in POPCRU, including but not limited to
being the General Secretary and Deputy President. 5. TSHAKA MDIYA (50)
Also a Director at Workerslife Assurance Company
Also a board member at all PGC subsidiaries Mpho Tshaka joined PGC in 2008 as Senior Manager
joined PGC as Group Finance Director in 2007. Operations. He was appointed as a Managing
Before joining PGC he was a Finance Director Director of Workerslife Insurance in 2012. Before
in Local Government. He has also served as the joining PGC, he was the Provincial Secretary of
Head Finance at POPCRU. POPCRU in the Eastern Cape.


Mphile joined PGC as Group Marketing and Also a Company Secretary at all PGC subsidiaries
Operations Director in 2011. and a Trustee in the GEPF, Makhubalo joined
Before joining PGC he was the Managing Director PGC in 2011 as a Senior Manager Legal and was
of the Liberty Life Group in Swaziland appointed as Company Secretary in 2013. Before
and also served as Corporate Sales Manager at joining PGC he was a Deputy Director- General in
BMW Finance South Africa. the Department of Communications and has also
served as Senior Pension Funds Adjudicator.


PGC Annual Report | 2014 3311

CONFLICT OF INTEREST INTERNAL AUDIT and continuous auditing. In this process, any
deficiency detected in governance is referred
Executive management and directors declare all PGC has an independent internal audit to management for action. The implementation
interests that may relate to PGC at executive and department with direct access to the chairmen of recommendations emanating from audits is
board meetings respectively. of the boards and audit committees, reporting measured. The head of internal audit is required to
functionally to the committee and administratively attend all audit and risk meetings and submits a
The Company’s procedures for dealing with to the CEO. Internal audit functions in accordance report at each audit committee.
directors’ conflicts of interest continued to operate with a charter approved by the audit committee.
and there have been no matters of conflict in the The charter formally defines the purpose, authority REMUNERATION POLICY
reporting period. The chairman of the board, the and responsibility of internal audit activity and is
CEO, the FD and the company secretary are consistent with the Institute of Internal Auditors’ The remuneration policy is approved in each
mandated to deal with conflict of interest matters. definition. Internal audit forms an integral part of Annual General Meeting of Shareholders. The
the combined assurance model and focuses on group’s Remuneration Committee (Remco)
INDEPENDENT ASSURANCE adding value to the operations of the organization. works with both management and the board to
ensure that the group’s remuneration philosophy
Both the external auditors and the internal audit To this end it emphasizes: and practices meet and also maintain market
department observe the highest levels of business • Evaluation of the appropriateness of and competiveness and are consistent with, and
and professional ethics and independence. promote, effective management.
Management encourages regular coordination adherence to company policies and
and consultation between the external and internal procedures REMCO regularly reviews the group’s remuneration
auditors to ensure an efficient audit process. • Prevention of fraud, unethical behavior and policies, structures and practices, to ensure the
irregularities principles behind the reward strategy and the
EXTERNAL AUDIT • Production of quality management information elements of the strategy itself, are effective.
• Sound business processes and associated
KPMG, are the external auditors of PGC in the controls Non-executive directors on the Remuneration
reporting period. External audit fees are set annually Committee are responsible for determining
in advance by the audit committee in a manner The department annually submits a coverage appropriate levels of remuneration for the
which should not impact the scope of the audit. plan to the audit committee for approval. The executive directors and other members of the
The extent of the audit determines the audit fee. scope of this plan encompasses the entire business Group Executive Committee.
of the organization and is prepared with the
Non-audit services rendered by the external organization’s strategic objectives in mind. Principles that underpin our remuneration strategy
auditors are limited to ad hoc tax advice and
other assurance-related services within the Internal audit is risk-based and the internal PGC is committed to building a competitive
parameters of a policy approved by the audit auditors submit an annual assessment to the audit organization, aimed to serve its customers through
committee, limiting such expense to a minimal fee. committee on the system of internal controls. Great first class operations.
Details of amounts paid to the external auditor are emphasis is placed on the implementation and
included in the annual financial statements. The efficiency of systems. In addition, the operations The company works to enhance skills development,
engagement partner responsible for the audit environment is closely monitored and assurance acquire priority skills, develop a caliber of human
rotates periodically. derived that controls are adequate and operating capital that is capable of delivering sustainable
effectively. Increased emphasis is placed on growth through effective talent management.
the development of centralized monitoring

3322 PGC Annual Report | 2014

Based on the Balanced Scorecard, the main key PGC prides itself of innovative life assurance and with the Gauteng Department of Education
principles against which we determine our reward insurance companies that are rooted in the values on Communities and Justice. The Communities
strategy, design reward structures and determine of labour and owned by workers. PGC continues and Justice Programme flagship programme
individual rewards are the following: to contribute to the economic welfare and was piloted in Dirang Ka Natla Secondary
development of communities. School in Khuma, Klerksdorp and was then
• The company rewards sustainable, long-term rolled out to Lancea Vale Secondary School
business results. PGC continues to contribute to the viability of the in Eldorado Park, S.G. Mafaesa, Kagiso
Safer South Africa Foundation whose objectives as and Residensia and Katleho-Impumelelo in
• The company rewards focus is on total follows: Sebokeng.
compensation, being fixed pay and annual • To develop the community’s capacity to
bonus. We seek to be competitive on both The foundation has also been involved in the
elements, but bonus is not a function of fixed pay. engage with police, correctional and traffic following advocacy campaigns:
officers and other practitioners responsible for
• Remuneration structures encourage a focus delivering safety and security • Anti gangsterism Campaign in
on achievement of agreed deliverables. • To equip the police, correctional and traffic
officers with competencies (knowledge, skills partnership with UMUZI Photo club in
• Individual performance appraisals identify and attitude) and understanding necessary to
key talent at all levels in the organization, fully implement and sustain a community and Leeudoringstad,Venterdorp, and Klerksdorp
enabling fair and competitive remuneration partnership based approach.
to be paid. • To mobilize resources to support the officers • Anti – Rape Campaign in partnership with
and enable them to deliver appropriate
• Individual rewards are determined by group, community based Programmes. Thohoyandou Victim Empowerment Trust.
business unit and individual performances. • To mobilize expertise, research and technical
skills in support and enhance the work done in • Anti-Bullying in partnership with Tshwane
• The company rewards experience and partnership with the community by the police,
performance relative to others doing similar work, traffic and correctional officers. University of Technology Students.
as well as performance against the market.
In the year under review the foundation has • Anti-Nyaope Drug Campaign in partnership
COMMITMENT TO SOCIETY AND THE undertaken the following projects amongst others:
ENVIRONMENT COMMUNITIES • Partnership with the Dream Team Foundation with Tshwane University of Technology

PGC is uniquely established to both generate and on a Domestic Violence Project Students placed with SSAF (CSI) project
invest financial capital on behalf of a community • Partnership with the Tshwane University of
based organization, POPCRU (Police and Prisons
Civil Rights Union). POPCRU has a membership Technology on the placement of final year
base of about 170,000 members nationally. students by the faculty of Public Relations
and Business communication to conduct a
The business operates autonomously from the Corporate Social Investment Project
trade union and is unique in that it generates its • Partnership with the Thohoyandou Victim
own funding (without utilizing union membership Empowerment Trust on Victim Empowerment
fees), and its business services are extended Programmes.
beyond the POPCRU membership. It is also unique • The foundation is currently doing a programme
in that, while its roots are within “organized labor”,
its business operations and investment initiatives
have no boundaries.

PGC Annual Report | 2014 3333

PGC Group Employment

PGC has a great interest in creating employ-
ment initiatives for South Africans more so
in communities in which it operates. PGC’s
approach to talent acquisition and manage-
ment, learning and development, employee
relations and employment equity is in line with
legislative imperatives.

3344 PGC Annual Report | 2014





Top management 8 11 1 11

Senior management 14 1 36 2 26

Professionally qualified and experi- 21 1 1 15 2 1 41
enced specialists and mid manage- 47 1 4 99 6 26 165
ment 587 11 18 1231
4 615 9
Skilled technical and academically 5
qualified workers, junior management,

Semi-skilled and discretionary decision

Unskilled and defined decision making

TOTAL PERMANENT 681 14 1 9 740 28 3 7 0 0 1483

Temporary employees 8 4 11 1 2 26

GRAND TOTAL 689 14 1 13 751 29 3 9 0 0 1509

PGC Annual Report | 2014 3355

Corporate Social

We share the belief that South Africa as a
developing nation needs to be complement-
ed with vibrant corporate social investment
(CSI) programmes in order to achieve a better
life for all.

3366 PGC Annual Report | 2014

Our CSI is closely aligned with our overall mission. SUPPLIERS These guidelines apply to both construction and
Recognizing the imbalances of the past, our operational phases and may change over time to
considered opinion is that, through our CSI PGC subscribes to the Codes of Good Practice reflect new policies and approaches.
programmes we can augment the various issued under the Broad-based Black Economic
initiatives by the private and public sectors in Empowerment Act, No 53 of 2003 and has received The rules and regulations include the appointment
developing education, mainly to the previously a B-BBEE preferential procurement recognition. of an environmental control officer (ECO),
disadvantaged. protection of cultural and natural resources,
THE ENVIRONMENT biosphere manipulation, site carrying capacity,
For this reason we have developed programmes visual impacts including lighting, bulk infrastructure
and formed partnerships with various organizations PGC operates a concession in the Kruger National (e.g. Electricity, water, communications,
in the education field. Our primary aim is to Park called Shishangeni Lodge. The concession waste management), the siting construction
enhance and promote educational opportunities allows the company to construct and operate and maintenance of roads and tracks, fire
to the previously disadvantaged. tourism facilities within a national park on the basis management, provision of artificial water points,
of a 20-year contract. staff accommodation and health and safety, park
Projects undertaken during the current reporting access and SANParks access to concessions,
period include: Shishangeni’s mission is to create and maintain standards for concession vehicles, and codes of
• The main programme that the company a reasonable balance between conservation, conduct for drives, walks and off-road driving this
community development, and ecotourism. The 5 famous wildlife reserve has the deserved status
is engaged in, is the bursary programme star Private Game Lodge is positioned on a private for the finest game-viewing on the continent.
was launched with the aim of benefiting concession of 15,000 hectare in the world-famous
POPCRU members and their families. The Kruger National Park in South Africa. The global focus on climate change and the
programme pays tertiary education school effect it has on the environment have resulted in
fees for qualifying members of POPCRU, The contractual mechanism is a concession contract corporations globally evaluating the impact of their
their dependents and the dependents of which gives rights of occupation and commercial use operations and activities on the environment. The
deceased POPCRU members. Todate a of the land together with a set of obligations on the primary focus relates to reducing the emission of
number of 922 students have been assisted part of the Concessionaire regarding environmental Greenhouse gases (GHG) to an acceptable level.
to pursue their academic dreams through the management and other factors. Infringement of any
Bursary Scheme. of these requirements carries specified penalties. All South Africa is committed to lower overall
• The company continues to assist in sponsoring aspects of biodiversity management continue to national GHG emissions and local corporates
the Safer South Africa Foundation. be performed by SANParks, consistent with the park have a responsibility to contribute by reducing
• The sponsorship of Johannesburg Youth management plan. their carbon footprints. Due to the nature of its
Orchestra Sponsorship of JHB Orchestra is products and services, PGC is a low contributor
ongoing, ending next financial year and the The National Parks Act and the Park Regulations to GHG emissions with an associated limited
building being finished in the same year. govern the operations of the Concessionaire in impact on the environment.
• The company is engaged in negotiations in the park together with a comprehensive set of
order to secure the key sponsorship of the Environmental Guidelines drawn up especially
University of Pretoria Football Club (AmaTuks). for each of the concessions. In particular each
• The company sponsors the South African concession is subject to a site-specific Environmental
Police Service (SAPSFA; men and women). Impact Assessment and the development of an
• The company is also a sponsor of the annual Environmental Management Plan.
Police, Music Cultural Association (Polmusca).

PGC Annual Report | 2014 3377

Financial Director’s

The PGC Group provides short and long term
insurance products in South Africa and we
have strategic investments in the hospitality
and private security industries.

3388 PGC Annual Report | 2014

Our The Insurance business generated Revenue of insurance products. The Group’s normalized costs
GROUP R292.6 million; compared to R280.6 million in the ratio decreased to 58.42% as compared to the
previous year. prior year of 59.77%. The decrease is driven by the
We abide by a simple client centric ethos of relative cost containments per business unit.
providing tailor made insurance product solutions Overall the Group achieved 13.79% growth
backed by awesome client service. in annualized new premium business written. The claims ratio is the primary operational measure
Workerslife Direct delivered excellent new business of the Group insurance operations. The Group has
Our Group delivered another strong financial growth as the business continued to gain traction a history of maintaining a claims ratio that is within
and operational performance for the year under and solidify its presence in the public service market. profitable ranges. This experience is supported by
review. The group achieved 11.09% growth in The South African business delivered encouraging our philosophy of charging accurate premiums
Group Revenue from R460.6 million compared to new business growth in an environment where that are commensurate with risk underwritten,
R414.6 million in the previous year. The significant premium inflation continues to lag consumer adopting a more conservative approach to
drivers behind the growth in the Group’s revenue inflation. New business volume growth measured manage earnings volatility. The Group’s claims
in the main are the new sales model and our 4% in the insurance gross written premium income, ratio decreased from 67.08% to 66.76% for the year
marketing strategy. amounting to R11.9 million. under review.

The Workerslife brand launched in 2012 and good Although the life business remains small in the As at 28th February 2014, the Group realised an
operational execution coupled with management context the industry, we are excited about the impairment cost of R82.5 million as it took a decision
focus have grown the business to a notable and growth prospects of the direct life insurance to clean the balance sheet by impairing all non-
profitable player in the market. The Workerslife market, as we believe we will gradually gain more performing assets against a backdrop of slow
business now contributes 60% of the Group’s traction into it. economic growth and increasing competition.
turnover and 80% of the Group’s profits.
The Group achieved a normalized ROE of 31.49% Overall, the Group delivered a pleasing operational
One has to respect the South African financial for the financial year under review. The ROE is and financial performance for the year under
services industry as a highly advanced and measured on an “attributable to the shareholder” review if we exclude the impairments. PGC
developed environment. In recent years, basis. The historic stability of the Group ROE is delivered normalized earnings of R 59,41million,
competition in the South African short-term and supported by the operational sturdiness of the representing 33.74% growth on the prior year.
long-term insurance areas intensified considerably, Group’s earnings generation.
driven by numerous new entrants and exacerbated During the year under review, the Group changed
by limited real growth. The cost to income ratio is the primary measure the accounting standards from IFRS SMME to full IFRS.
of the Group’s operational efficiency. Cost
As a mature player, Workerslife has been able management is a key driver supporting our
to “weather the storm” and deliver consistent primary objective of providing value for money
profitability, whilst maintaining a fair market share,
chiefly in the public service space.

PGC Annual Report | 2014 3399

CONTRIBUTION TO GROUP Assurance Company Limited Workerslife Assurance provides life products and
REVENUE Insurance Limited fully underwritten life insurance products to the
South Africa market. Assurance is wholly owned
44% Direct Proprietary Limited since 2009.

CONTRIBUTION TO GROUP Workerslife Insurance provides short-term
REVENUE insurance products to the South Africa market. Its
product range includes legal products and others.
15% Insurance is wholly owned since 2009.

CONTRIBUTION TO GROUP Workerslife Direct serves as the distribution
REVENUE channel for all insurance products developed by
Workerslife Assurance and Insurance to the South
24% Africa market. Workerslife Direct is wholly owned
since 2006.
REVENUE Shishangeni Private Lodge is situated on a 15,000
hectare private concession on the world-renowned
3% Kruger National Park. The lodge opened its doors
officially in 2005.
REVENUE Riskcon is an independent South African security
services company that protects people and
14% assets. It has designed, supplied and sustained
specialized protection services to the retail sector.
TOTAL EMPLOYEES It is wholly owned since 2012.


4400 PGC Annual Report | 2014 264 458

Financial Performance

R 11 984 Million

Up by 4%

R 460 662 Million

Up by 11.09%

R 23 083 Million

Down by 161.22%

R 59 416 MILLION

Up by 33.74%

PGC Annual Report | 2014 4411

Financial Performance

2014 2013 2012 2011 2010

Normalized ROE 31,49% 20,83% 8,48% -0,23% 9,89%
Operating cost
To income 58,42% 59,77% 50,46% 49,44% 57,26%
Claims ratio
Normalized 66,76% 67,08% 69,45% 67,33% 69,44%
Earnings per share R594 165,72 R444 273,63 R163 974,67 R(6 455,14) R277 106,81
Revenue growth
11,09% -4,03% 20,53% 5,78% 218,55%

Total cash at year end R100 454 664 R84 426 392 R96 610 067 R63 299 009 R39 588 000
1,84 1,51 1,52
Acid-Test Ratio 2,27 1,50 3,5 1,9 -

CAR 2,9 2,8

4422 PGC Annual Report | 2014

Normalized Return on Equity (ROE) Operating Cost to Income Claims Ratio

2014; 31.49% 2014; 58,42% 59.77% 2012; 69,45% 2010; 69.44%
2013; 8.83% 2013; 2011; 67.33%
2013; 67.08%
2012; 8.48% 2010; 9.89% 2012; 50.46% 2010; 57,26% 2014; 66.76%

2011; 49.44%

2011; -0,23%

PGC Annual Report | 2014 4433

Normalized Earning Per Share Revenue Growth

2010; 218.55%

600 000 2014; R549 165,72 2014; 11.09% 2012; 20.53%
500 000 2013, R444 273, 63
400 000
300 000 2010; R277 106, 81
200 000 2012: R163 974, 67
100 000
2011; (R6 455, 14)
2013; -4.03% 2011; 5.78%

-100 000

4444 PGC Annual Report | 2014

Total cash at the end of the year Acid-Test Ratio Operating Cost to Income

2014; 10045664 2014; 2,27 2012; 3;5
2013; 1,50 2011; 1,9
2012; 96610067 2012; 1,84 2014; 2,9 2013; 2,8
2011; 63299 009 2011; 1,51
120 000 000 2013; 84426 392
100 000 000
2010; 1,52

80 000 000

60 000 000 2010; 39588 000

40 000 000

20 000 000


PGC Annual Report | 2014 4455

The General Insurance

4466 PGC Annual Report | 2014

ASIA 2013 non-life and life
• Demand for insurance growing Average GDP growth
• World’s largest and population continent Growth: (2015-2017): 5.2%
• The ‘rich’ middle class phenomenon
• Insurance is among the fastest growing sectors 2013 non-life and life
Growth: 12.4%
REST OF AFRICA Average GDP growth
(2015-2017): 5.4%
• Demand for insurance growing
• Continent with youngest population and some of Growth: 13.7%
Average GDP growth
the fastest growing economies (2015-2017): 1.5%

• Many countries have reached middle income status
• Insurance is among the fastest growing sector
• Outlook dependent on continent stability


• Demand for insurance growing but constrained 2013 non-life and life
• Tough economic condition (weak rand, inflation,

pressure on consumers etc.)

• Strong competition
• High regulatory pressure


• Subdued outlook of economic growth
• The impact of climate change on claims frequency and severity
• Increased level of competition
• A myriad of regulatory requirements (SAM, TCF, etc)
• Increased efficiencies and improving risk assessment.
• Insurers need to:

- Adapt by embracing client centricity and technology
- Manage the increasing costs of complying regulation
- Price risk accurately to remain profitable in a fiercely competitive

environment and drive innovation to achieve growth and efficiency

PGC Annual Report | 2014 4477

Consolidated Financial
Pretoria, 0028
KPMG Inc, a company incorporated under Country of incorporation and domicile:
the South African Companies Act and South Africa Holding entity: POPCRU Trust
a member firm of the KPMG network of incorporated in South Africa
independent member firms affiliated with Nature of business and principal activities:
KPMG International, a Swiss cooperative. Investment holding Bankers: First National Bank
Standard Bank Limited
KPMG Inc is a Registered Auditor, in public Directors: M.J. Dipela, J.W. Grosskopf, Z.R. ABSA Bank Limited
practice, in terms of the Auditing Profession Mdletshe, S.T. Nkosi, T.S. Nsele, K.I.M. Shon- Rand Merchant Bank, a division of First Rand
Act, 26 of 2005. Registration number gwe, H.L. Qangule Bank Limited
1999/021543/21 Investec Private Bank
Registered office: PGC House, 273 Paul , Nedbank Limited
Kruger Street, Pretoria, 0001 Auditor: KPMG Inc.

Postal address: P.O. Box 11497, Hatfield, Registered Auditor
Secretary M Ndaba
Company registration number 2004/024657/07

4488 PGC Annual Report | 2014

Directors’ responsibilities Company
AND APPROVAL Certification

The directors are responsible for the preparation whether due to fraud or error, and for maintaining Declaration by the company secretary in
and fair presentation of the consolidated and adequate accounting records and an effective respect of Section 88(2)(e) of the Companies
separate financial statements of POPCRU Group system of risk management. Act In my opinion as Company Secretary, I
of Companies Proprietary Limited, comprising the hereby confirm, in terms of the Companies Act
statements of financial position at 28 February The directors have made an assessment of the of South Africa, for the year ended 28 February
2014, and the statements of profit or loss and ability of the company and its subsidiaries to 2014, that the company has lodged with the
other comprehensive income, changes in equity continue as going concerns and have no reason Commission all such returns as are required of
and cash flows for the year then ended, and the to believe that the businesses will not be going a public company in terms of this Act and that
notes to the financial statements which include a concerns in the year ahead. all such returns are true, correct and up to 28
summary of significant accounting policies and February 2014.
other explanatory notes, in accordance with The auditor is responsible for reporting on
International Financial Reporting Standards and whether the consolidated and separate financial
the requirements of the Companies Act of South statements are fairly presented in accordance
Africa. In addition, the directors are responsible for with the applicable financial reporting framework.
preparing the directors’ report. Approval of consolidated and separate financial
statements. The consolidated and separate
The directors are also responsible for such internal annual financial statements of POPCRU Group of
control as the directors determine is necessary to Companies Proprietary Limited, as identified in the
enable the preparation of financial statements first paragraph, were approved by the board of
that are free from material misstatement, directors on 28 November 2014 and signed by:

Authorised Director Authorised Director Company Secretary

PGC Annual Report | 2014 4499


5500 PGC Annual Report | 2014

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