The directors submit their report for the year attached consolidated and separate financial non-compliance with statutory or regulatory
ended 28 February 2014. statements and do not in our opinion require requirements or of any pending changes to
any further comment. Net loss of the group was legislation which may affect the group.
1. REVIEW OF ACTIVITIES R 23,083,142 (2013: R 37,702,376 profit), after
taxation of R 19,734,281 (2013: R 12,292,716). 3. EVENTS AFTER THE REPORTING PERIOD
Main business and operations
The group, which includes the company and The company concluded an Underwriting Subsequent to the financial year end, the group
its subsidiaries, holds investments in listed and Management Agreement (UMA) including a gained on its investment in Protea Hospitality
unlisted companies. Binding Agreement with Constantia Insurance Holdings Proprietary Limited from the disposal of
Company Limited from 01 March 2012. The the business to Marriott International. As part of
The group is engaged as follows: company company acted as an agent of the transaction, the previous owners of Protea
The subsidiaries, Workers Life Assurance Company Constantia with the profit commission from Hospitality Group created an independent
Limited and Workers Life Insurance Limited the agreement accruing to the company. The property ownership company that retained
provide long-term and shortterm insurance, as financial statements now reflect an outstanding ownership of the hotels Protea Hospitality Group
defined in the Long-term Insurance Act 1998 claims reserve and incurred but not reported formerly owned, and entered into long-term
and Short-term Insurance Act 1998, respectively. claims reserve of R 19 440 740 which, in terms of management and lease agreements with Marriott
Workerslife Direct Proprietary Limited is a financial the existing IFRS 4 for insurance contracts, is an for those hotels. The property ownership company
services broker and provides services to Workers in-substance financial adjustment but factually also retained a number of minority interests in
Life Assurance Company Limited and Workers Life represents an advance in the profit commission other Protea hotels.
Insurance Limited. due to the company.
The company will realise these assets over the
Shishangeni Lodge Proprietary Limited provides The effects of this prior year error were adjusted next five years, further enhancing the cashflow
lodging and conference facilities on a concession retrospectively and resulted in adjustments which and profitability of the company. This will have
located in the Kruger National Park and Riskcon can be found in note 43. a substantial influence on the profitability and
Security Holdings Proprietary Limited provides sustainability of the group.
security services. 2. GOING CONCERN
The company received a dividend amounting
Review of financial results and activities The directors believe that the group has to R40 828 624 as a result of the sale of business
The financial statements have been prepared adequate financial resources to continue of Protea Hospitality Holdings Proprietary Limited.
in accordance with International Financial in operation for the foreseeable future and On 1 May 2014, Workers Life Insurance Limited
Reporting Standards and the requirements of the accordingly the financial statements have terminated its underwriting management
Companies Act of South Africa. The accounting been prepared on a going concern basis. The agreement with Constantia Insurance Company
policies have been applied consistently compared directors have satisfied themselves that the Limited following the approval of the variation
to the prior year, except for the adoption of new group is in a sound financial position and that license by the Financial Services Board.
or revised accounting standards as set out in note it has access to sufficient borrowing facilities to
40 First-time adoption of International Financial meet its foreseeable cash requirements. The directors are not aware of any other material
Reporting Standards. event which occurred after the reporting date
The directors are not aware of any new material and up to the date of this report.
The operating results and state of affairs of the changes that may adversely impact the group.
company and the group are fully set out in the The directors are also not aware of any material
PGC Annual Report | 2014 5511
4. DIRECTORS’ INTEREST IN CONTRACTS The local dividends tax rate is 15%. The company 10. HOLDING ENTITY
has no STC credits available.
No material contracts involving directors’ The company’s holding entity is POPCRU Trust
interests were entered into during the year under 8. DIRECTORS which holds 100% (2013: 100%) of the company’s
review, other than transactions detailed in these equity.
consolidated and separate financial statements The directors of the company during the year and
(as set out in note 13 Loans to directors, managers to the date of this report are as follows: 11. Investment in Greytown Shopping Centre
and employees). POPCRU Group of Companies Proprietary Limited
have transferred an amount of R14 000 000 into
5. STATED CAPITAL the trust account of Cox Yeats Attorneys for shares
M.J. Dipela Executive to be acquired in Mavundla Square Proprietary
There were no changes in the authorised or issued Limited. The transaction had not been finalised at
share capital of the group during the year under J.W. Grosskopf Non-executive year end.
review.
Z.R. Mdletshe Executive 12. AUDITOR
6. PROPERTY AND EQUIPMENT
S.T. Nkosi Non-executive KPMG Inc. has been appointed and will continue
In prior years land and buildings were classified in office in accordance with section 90 of the
as property and equipment in terms of IAS 16. Independent Companies Act of South Africa.
To achieve fair presentation, the directors have
decided to reclassify certain land and buildings T.S. Nsele Non-executive 13. LIQUIDITY AND SOLVENCY
of the group as investment property in terms of
IAS 40 as those land and buildings are not owner Independent The directors have performed the liquidity and
occupied and are held for rental income purposes. solvency tests required by the Companies Act of
K.I.M. Shongwe Non-executive South Africa (No.71 of 2008).
7. DIVIDENDS PAID
Independent 14. LITIGATION STATEMENT
The group’s dividend policy is to consider an interim
and a final dividend in respect of each financial *Appointed12/06/2013 The company becomes involved from time to time
year. At its discretion, the board of directors may in various claims and lawsuits incidental to the
consider a special dividend, where appropriate. H.L. Qangule Non-executive ordinary course of business.
Depending on the perceived need to retain funds
for expansion or operating purposes, the board of Independent On advice of the attorneys, the directors are of the
directors may pass on the payment of dividends. opinion that there is a probable loss which will be
*Appointed 01/08/2013 incurred as a result of the investment made with Trinity
A final dividend of 15 000 cents per share, R1 500 Asset Management Proprietary Limited amounting
000, was approved by the board of directors on 9. SECRETARY to R2 809 250. Currently, there is ongoing litigation
12 July 2013 in South African currency in respect for the recovery of R14 411 931,22 from the insurers
of the year ended 28 February 2014. The dividend The secretary of the company is Mr M Ndaba of: of Trinity Asset Management Proprietary Limited
payment date was 23 July 2013. Business address and Grindstone Investment 132 Proprietary Limited.
PGC House
273 Paul Kruger Street
Pretoria
0001
Postal address
P.O. Box 11497
Hatfield
Pretoria
0028
5522 PGC Annual Report | 2014
However, we have impaired the investment in the Financial Reporting Standards, and requirements
current year to the value of the funds held in trust of the Companies Act of South Africa, and for
of R1 287 788. On the advice of the attorneys, the such internal control as the directors determine
possibility of recovery of the entire amount, however, is necessary to enable the preparation of
seems positive. Save as recorded above, the financial statements that are free from material
directors are not aware of any legal or arbitration misstatements, whether due to fraud or error.
proceedings, including proceedings that are
pending or threatened that may have a material Auditor’s Responsibility
effect on the financial position of the company.
Our responsibility is to express an opinion on
tInodtheepeshnadreenhtoalduderitoorf’sPOrePpCoRrtU these financial statements based on our audit.
We conducted our audit in accordance with
Group of Companies Proprietary Limited International Standards on Auditing. Those standards
require that we comply with ethical requirements
To the Shareholder of POPCRU Group of Companies and plan and perform the audit to obtain reasonable
Proprietary Limited assurance about whether the financial statements
are free from material misstatement.
We have audited the consolidated and separate
financial statements of POPCRU Group of An audit involves performing procedures to obtain
Companies Proprietary Limited, which comprise audit evidence about the amounts and disclosures
the statements of financial position as at 28 in the financial statements. The procedures
February 2014, and the statements of profit or loss selected depend on the auditor’s judgement,
and other comprehensive income, changes in including the assessment of the risks of material
equity and cash flows for the year then ended, misstatement of the financial statements, whether
and the notes to the financial statements which due to fraud or error.
include a summary of significant accounting
policies and other explanatory notes, as set out on In making those risk assessments, the auditor
pages 60 to 130. considers internal control relevant to the entity’s
preparation and fair presentation of the financial
Directors’ Responsibility for the Financial Statements statements in order to design audit procedures
that are appropriate in the circumstances, but not
The company’s directors are responsible for the for the purpose of expressing an opinion on the
preparation and fair presentation of these financial effectiveness of the entity’s internal control.
statements in accordance with International
An audit also includes evaluating the
appropriateness of accounting policies used and
the reasonableness of accounting estimates made
by management, as well as evaluating the overall
presentation of the financial statements.
PGC Annual Report | 2014 5533
We believe that the audit evidence we have obtained In our opinion, the separate financial statements
is sufficient and appropriate to provide a basis for our present fairly, in all material respects, the
qualified audit opinion on the consolidated financial separate financial position of POPCRU Group of
statements and our unqualified opinion on the Companies Proprietary Limited as at 28 February
separate financial statements. 2014, and its separate financial performance
and separate cash flows for the year then ended
Basis for Qualified Opinion on Consolidated in accordance with International Financial
Financial Statements and Unqualified Opinion on Reporting Standards and the requirements of the
the Separate Financial Statements Companies Act of South Africa.
Included in note 21 to the consolidated financial Other Reports Required by the Companies Act of
statements, is policyholder liabilities under South Africa
investment contracts amounting to R 3 687 730.
Management did not maintain sufficiently reliable As part of our audit of the financial statements
data relating to these liabilities. Accordingly, we for the year ended 28 February 2014, we have
were unable to obtain sufficient appropriate read the Directors’ report and the Company
evidence to determine whether any adjustments secretary’s certification for the purpose
are necessary to these liabilities and their of identifying whether there are material
related movement in investment contract inconsistencies between these reports and the
liabilities amounting to R 951 882 as included audited financial statements. These reports are
in movement in policyholder liabilities on the the responsibility of the respective preparers.
consolidated statements of profit or loss and other
comprehensive income. There is no effect on the Based on reading these reports we have not identified
separate financial statements. material inconsistencies between these reports and
the audited financial statements. However, we have
Qualified Opinion on Consolidated Financial not audited these reports and accordingly do not
Statements and Unqualified Opinion on the Separate express an opinion on these reports.
Financial Statements
KPMG Inc.
in our opinion, except for the possible effects PER: TH BASHALL
of the matter described in the preceding Chartered Accountant (SA)
paragraph, the consolidated financial statements Registered Auditor Director
present fairly, in all material respects, the 28 November 2014
consolidated financial position of POPCRU Group
of Companies Proprietary Limited at 28 February
2014, and its consolidated financial performance
and consolidated cash flows for the year then
ended in accordance with International Financial
Reporting Standards, and the requirements of the
Companies Act of South Africa.
5544 PGC Annual Report | 2014
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Statements of financial position as at 28 February 2014
Consolidated Separate
Figures in Rand Note(s) 2014 Restated 2014 2013
2013
Assets 3 8,808,097 26,487,116 - -
Non-current assets 4 56,477,688 40,226,090 463,267 840,516
Investment property
Property and equipment 5 9,162,843 9,162,843 - -
Goodwill
Intangible assets 6 75,993 260,444 1,538 16,925
Investments in subsidiaries
Investments in associates 7 - - 38,196,630 38,196,630
Loans to related parties
Other financial assets 8 - 203 - -
Deferred tax
Operating lease asset 9 - 18,927,578 16,806,878 53,375,659
Current assets 10 42,602,807 98,566,184 15,314,019 34,385,246
Inventories
Loans to related parties 11 3,418,664 5,313,288 - -
Loans to directors, managers and employees
Other financial assets - 80,728 - -
Current tax receivable
Operating lease asset 120,546,092 199,024,474 70,782,332 126,814,976
Trade and other receivables
Amounts receivable from related parties 12 1,220,196 948,484 - -
Prepayments
Cash and cash equivalents 9 - - 15,703,974 58,065,769
Total assets 13 - 94,486 - 94,486
10 450,000 1,845,000 450,000 1,845,000
6,399,589 6,613,219 659,592 3,624,875
979,847 - - -
14 44,211,031 25,951,820 627,787 2,244,413
41 - - 1,644,474 149,225
- 308,275 - -
15 101,243,907 84,563,496 1,197,107 1,888,553
154,504,570 120,324,780 20,282,934 67,912,321
275,050,662 319,349,254 91,065,266 194,727,297
PGC Annual Report | 2014 5555
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Statements of financial position as at 28 February 2014
Consolidated Separate
Figures in Rand Note(s) 2014 Restated 2014 2013
2013
Equity and liabilities 16 100 100 100 100
Equity 18 - 23,292,697 - 3,930,183
Stated capital
Non-distributable reserves 188,693,990 189,984,435 88,376,652 179,117,763
Retained income
188,694,090 213,277,232 88,376,752 183,048,046
Liabilities
19 - 9,880,588 --
Non-current liabilities --
Other financial liabilities 20 1,928,904 2,165,542 - 1,484,872
Finance lease obligation --
Deferred tax 11 - -
Policyholder liabilities - 1,484,872
21 16,330,517 13,851,647
Current liabilities
Loans from related parties 18,259,421 25,897,777
Other financial liabilities
Current tax payable 9 1,307,029 - 2,308,029 9,898,284
Finance lease obligation
Trade and other payables 19 - 4,296,883 - -
Amounts payable to related parties
Provisions 4,807,296 4,328,969 - -
Insurance contract liabilities
Bank overdraft 20 889,681 913,338 - -
Total liabilities 22 38,170,911 46,833,872 379,555 167,548
Total equity and liabilities
41 - - 930 128,547
5566 PGC Annual Report | 2014
23 900,000 6,318,846 - -
24 21,232,991 17,345,233 - -
15 789,243 137,104 - -
68,097,151 80,174,245 2,688,514 10,194,379
86,356,572 106,072,022 2,688,514 11,679,251
275,050,662 319,349,254 91,065,266 194,727,297
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Statements of profit or loss and other comprehensive income
Consolidated Separate
Figures in Rand Note(s) 2014 Restated 2014 2013
2013
Insurance premium revenue 26 292,665,288 280,681,062 - -
Insurance claims incurred 27 (101,306,028) (100,691,794) - -
Gross profit 191,359,260 179,989,268 - -
Other income 897,901
Operating expenses 28 167,997,491 133,987,957 2,071,576 4,978,484
Acquisition costs
(351,623,323) (254,591,225) (104,571,048) -
Operating (loss) profit
Finance income (20,408,956) (21,491,009) -
Fair value adjustments
Finance expense 29 (12,675,528) 37,894,991 (102,499,472) 5,876,385
(Loss) profit before taxation 30 5,829,261 11,201,181 6,838,726 150,275,727
Taxation
3,742,409 2,972,276 1,683,029 4,068,081
(Loss) profit for the year
Total comprehensive income for the year 31 (245,003) (2,073,356) (5) (2)
(3,348,861) 49,995,092 (93,977,722) 160,220,191
32 (19,734,281) (12,292,716) 806,428 (1,150,676)
(23,083,142) 37,702,376 (93,171,294) 159,069,515
(23,083,142) 37,702,376 (93,171,294) 159,069,515
(Loss) profit attributable to : (23,083,142) 37,702,376 (93,171,294) 159,069,515
Owners of the parent
Total comprehensive (loss) income attributable to: (23,083,142) 37,702,376 (93,171,294) 159,069,515
Owners of the parent
PGC Annual Report | 2014 5577
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Statements of changes in equity
Share capital Distributable Fair value Non- Total reserves Retained Total Non- Total equity
reserve reserve distributable income attributable to controlling
reserve equity holders
of the group / interest
Figures in Rand company
Consolidated 100 315,569 10,166,406 11,963,100 22,445,075 176,000,716 198,445,891 (5,084,938) 193,360,953
Balance at 01 March 2012 - - - - -
Total comprehensive income for the year - - 37,702,376 37,702,376 - 37,702,376
Transfer between reserves - - 1,322,722 (475,100) 847,622 (847,622) - - -
Balance of share acquired in subsidiary - - - - - 5,084,938
Dividends paid - - - (6,498,143) (6,498,143) - (1,413,205)
100 315,569 (2,500,000) (2,500,000) (2,500,000)
Opening balance as previously reported 11,489,128 11,488,000 23,292,697
Adjustments - 203,857,328 227,150,125 - 227,150,125
Prior period errors 100
Balance at 01 March 2013 as restated - - - - (13,872,893) (13,872,893) - (13,872,893)
Total comprehensive loss for the year - 315,569 11,489,128 11,488,000 - 213,277,232
Transfer between reserves - 23,292,697 189,984,435 213,277,232 - (23,083,142)
Dividends paid - - - - --
Balance at 28 February 2014 100 (315,569) (11,489,128) (11,488,000) - (23,083,142) (23,083,142) - (1,500,000)
16 (23,292,697) 23,292,697 - - 188,694,090
Note(s) - - - (1,500,000)
- - - - (1,500,000)
17 18 - 188,693,990 188,694,090
5588 PGC Annual Report | 2014
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Statements of changes in equity Fair value Non- Total reserves Retained Total Non- Total equity
reserve distributable income attributable to controlling
Share capital Distributable reserve equity holders
reserve of the group / interest
Figures in Rand company
Separate 100 - 1,001,164 - 1,001,164 25,477,267 26,478,531 - 26,478,531
Balance at 01 March 2012 - -- - 159,069,515
Total comprehensive income for the year - - 2,929,019 - - 159,069,515 159,069,515 --
Transfer between reserves - -- - 2,929,019 (2,929,019) - - (2,500,000)
Dividends paid - 3,930,183 - - (2,500,000) (2,500,000) - 183,048,046
100 -- - (93,171,294)
Balance at 01 March 2013 - - (3,930,183) - 3,930,183 179,117,763 183,048,046 --
Total comprehensive loss for the year - -- - (1,500,000)
Transfer between reserves - -- - - (93,171,294) (93,171,294) - 88,376,752
Dividends paid 17 - (3,930,183) 3,930,183 -
Balance at 28 February 2014 100 - - (1,500,000) (1,500,000)
16
Note(s) - - 88,376,652 88,376,752
18
PGC Annual Report | 2014 5599
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Statements of cash flows
Consolidated Separate
Figures in Rand Note(s) 2014 Restated 2014 2013
2013
Cash flows from operating activities 34 23,603,732 38,800,898 (35,886,342) (31,006,665)
Cash generated from (used in) operations 5,490,945 6,391,556 575,196 902,204
Finance income
Dividends received 338,316 435,941 6,263,530 144,980,312
Finance expense
Tax (paid) received (245,003) (2,073,356) (5) (2)
35 (17,147,701) (21,263,535) 2,953,593
Net cash from operating activities (12,632)
12,040,289 22,291,504 (26,094,028) 114,863,217
Cash flows from investing activities 4 (21,952,452) (6,421,719) - (7,015)
4 22,409,879 184,765
Purchase of property and equipment 3 (1,862,264) (21,244,284) --
Proceeds on disposal of property and equipment 3 19,413,124 --
Purchase of investment property - --
Proceeds on disposal of investment property 6 - (503,335) - (241,201)
Purchase of other intangible assets
Proceeds on disposal of investments in associates 37 203 - - -
Proceeds on disposal of businesses
Purchase of financial assets - 3,000,000 - 3,000,000
Proceeds on disposal of financial assets
(14,026,080) (3,352,514) - (2,509,672)
Net cash from investing activities
140,625 - 7,542,038 1,844,644
4,123,035 (28,337,087) 7,542,038 2,086,756
Cash flows from financing activities (14,177,471) 14,177,421 --
94,486 591,306
(Repayment)/advances of other financial liabilities - - 94,486 591,306
Loans to directors, managers and employees repaid 548,084
Receipts from amounts payable to related parties (260,295) - (127,617) 128,547
Finance lease payments -
Movement in amounts receivable from related parties (2,500,000) --
Dividends paid (1,500,000) (16,242,999)
Repayments/(advances) of loans to related parties 36 15,708,228 (1,495,249) 3,283,547
(3,426,188)
Net cash from financing activities (135,052) (1,500,000) (2,500,000)
20,888,924 (126,070,305)
17,860,544 (124,566,905)
6600 PGC Annual Report | 2014CTaosthalactatshhemboevgienmnienngtoffotrhteheyeyaerar 16,028,272 (9,471,771) (691,446) (7,616,932)
Cash balances disposed - business sold 84,426,392 96,610,067 1,888,553 9,505,485
- (2,711,904) -
-
Accounting Insurance Act, 1998, respectively. Workerslife Direct consolidated consolidated and separate financial
POLICIES Proprietary Limited is a financial services broker and statements, which significantly affect the financial
provides services to Workers Life Assurance Company position of the group or the results of its operations
1. PRESENTATION OF CONSOLIDATED AND Limited and Workers Life Insurance Limited. to the date of this report.
SEPARATE FINANCIAL STATEMENTS
Shishangeni Lodge Proprietary Limited provides Dividends
The consolidated and separate financial statements lodging and conference facilities on a concession
have been prepared in accordance with located in the Kruger National Park and Riskcon An ordinary dividend of R1 500 000 (2013: R2 500
International Financial Reporting Standards, and the Security Holdings Proprietary Limited provides 000) per ordinary share was declared and paid
requirements of the Companies Act of South Africa security services. during the year. The dividend was authorised by an
(No.71 of 2008). The consolidated and separate ordinary resolution passed by the directors as per
financial statements have been prepared on the Events after the reporting period section 46 of the Companies Act of South Africa.
historical cost basis, except for the measurement
of certain financial instruments at fair value, and Subsequent to the financial year end, the group 1.1 CONSOLIDATION
incorporate the principal accounting policies set out gained on its investment in Protea Hospitality
below. They are presented in South African Rands. Holdings Proprietary Limited from the disposal of Basis of consolidation
the business to Marriott International.
These are the group’s first consolidated and Business combinations
separate financial statements prepared in This will have a substantial influence on the
accordance with International Financial Reporting profitability and sustainability of the group. The group accounts for business combinations
Standards and IFRS 1 First time adoption of using the acquisition method when control is
International Financial Reporting Standards has The company, however, remained a shareholder transferred to the Group. The consideration
been applied. in Protea Hospitality Holdings Proprietary Limited transferred in the acquisition is generally measured
which will realise assets over the next five years, at fair value, as are the identifiable net assets
Main business and operations further enhancing the cashflow and profitability of acquired. Any goodwill that arises is tested annually
the company. for impairment. Any gain on a bargain purchase is
The group, which includes the company and its recognised in profit or loss immediately. Transaction
subsidiaries, holds investments in listed and unlisted The company received a dividend amounting to costs are expensed as incurred, except if related
companies. R40 828 624 as a result of the sale of business of to the issue of debt or equity securities.
Protea Hospitality Holdings Proprietary Limited.
The group is engaged as follows: The consideration transferred does not include
The subsidiaries, Workers Life Assurance Company On 1 May 2014, Workers Life Insurance Limited amounts related to the settlement of pre-existing
Limited and Workers Life Insurance Limited provide terminated its underwriting management relationships. Such amounts are generally
long-term and shortterm insurance, as defined in agreement with Constantia Insurance Company recognised in profit or loss.
the Long-term Insurance Act, 1998 and Short-term Limited following the approval of the variation
license by the Financial Services Board. Any contingent consideration payable is measured
at fair value at the acquisition date. If the contingent
The directors are not aware of any significant consideration is classified as equity, then it is not
matter or circumstance arising since the end of remeasured and settlement is accounted for
the financial year, not otherwise dealt with in the within equity. Otherwise, subsequent changes in
PGC Annual Report | 2014 6611
the fair value of the contingent consideration are equity method. They are recognised initially at 1.2 SIGNIFICANT JUDGEMENTS AND SOURCES
recognised in profit or loss. cost, which includes transaction costs. Subsequent OF ESTIMATION UNCERTAINTY
to initial recognition, the consolidated financial
• Non-controlling interests (NCI) statements include the group’s share of the profit In preparing the consolidated and separate
NCI are measured at their proportionate share or loss and other comprehensive income of equity- financial statements, management is required
of the acquiree’s identifiable net assets at the accounted investees, until the date on which to make estimates and assumptions that affect
acquisition date. significant influence ceases. the amounts represented in the consolidated
and separate financial statements and related
Changes in the group’s interest in a subsidiary that • Transactions eliminated on consolidation disclosures. Use of available information and
do not result in a loss of control are accounted for the application of judgement is inherent in the
as equity transactions. Intra-group balances and transactions, and any formation of estimates. Actual results in the future
unrealised income and expenses arising from intra- could differ from these estimates which may
• Subsidiaries group transactions, are eliminated. Unrealised be material to the consolidated and separate
Subsidiaries are entities controlled by the group. The gains arising from transactions with equity- financial statements. Significant estimates include:
group controls an entity when it is exposed to, or has accounted investees are eliminated against the
rights to, variable returns from its involvement with investment to the extent of the group’s interest in Fair value estimation
the entity and has the ability to affect those returns the investee. Unrealised losses are eliminated in
through its power over the entity. The financial the same way as unrealised gains, but only to the The fair value of financial instruments traded in
statements of the subsidiaries are included in the extent that there is no evidence of impairment. active markets is based on quoted market prices
consolidated financial statements from the date at the end of the reporting period. The quoted
on which control commences until the date on Control of subsidiaries market price used for financial assets held by the
which control ceases. group is the current bid price.
An investor determines whether it is a parent by
• Loss of control assessing whether it controls one or more investees. An The fair value of financial instruments that are not
When the group loses control over subsidiary, investor considers all relevant facts and circumstances traded in an active market is determined by using
it derecognises the assets and liabilities of the when assessing whether it controls an investee. An valuation techniques. The group uses a variety of
subsidiary, and any related NCI and other investor controls an investee when it is exposed, or methods and makes assumptions that are based
components of equity. Any resulting gain or loss has rights, to variable returns from its involvement with on market conditions existing at the end of each
is recognised in profit or loss. Any interest retained the investee and has the ability to affect those returns reporting period. Quoted market prices or dealer
in the former subsidiary is measured and fair value through its power over the investee. quotes for similar instruments are used for long-
when control is lost. term debt. Other techniques, such as estimated
An investor controls an investee if and only if the discounted cash flows, are used to determine fair
• Interests in equity-accounted investees investor has all of the following elements: value for the remaining financial instruments. The
• power over the investee, i.e. the investor has fair value of interest rate swaps is calculated as the
The group’s interest in equity-accounted investees present value of the estimated future cash flows.
comprises interest in associates. Associates are existing rights that give it the ability to direct
those entities in which the group has significant the relevant activities; The carrying value less impairment provision of
influence, but not control or joint control, over the • exposure, or rights, to variable returns from its trade receivables and payables are assumed
financial and operating policies. involvement with the investee; and to approximate their fair values. The fair value
Interests in associates are accounted for using the • the ability to use its power over the investee to of financial liabilities for disclosure purposes is
affect the amount of the investor’s returns.
6622 PGC Annual Report | 2014
estimated by discounting the future contractual reflected in the financial statements of the insurer
cash flows at the current market interest rate and principally arises in respect of the technical
that is available to the group for similar financial provisions of the company.
instruments.
Technical provisions include the provision for
Impairment testing outstanding claims and claims incurred but not
reported (IBNR). Outstanding claims represent
The group reviews and tests the carrying value of the insurer’s estimate of the cost of settlement of
assets when events or changes in circumstances claims that had occurred by the reporting date,
suggest that the carrying amount may not be but not yet been financially settled. In addition to
recoverable. In addition, goodwill is tested on an the inherent uncertainty of having to provide for
annual basis for impairment. Assets are grouped future events, there is also considerable uncertainty
at the lowest level for which identifiable cash flows concerning the eventual outcome of claims that
are largely independent of cash flows of other had occurred but had not yet been reported to the
assets and liabilities. If there are indications that insurer by the reporting date (IBNR). Further detail
impairment may have occurred, estimates are is provided in note 24 of the financial statements.
prepared of expected future cash flows for each
group of assets. Expected future cash flows used Underwriting insurance risks incorporate
to determine the value in use of goodwill and unpredictability and the company recognises that
tangible assets are inherently uncertain and could it is impossible to predict with absolute certainty
materially change over time. They are significantly future claims payable under existing and past
affected by a number of factors, together with insurance contracts. To this end, the company
economic factors such as exchange rates, inflation has developed a methodology that is aimed
and interest. at establishing insurance provisions that have a
reasonable likelihood of being adequate to settle
The recoverable amounts of cash-generating all its insurance obligations.
units and individual assets have been determined
based on the higher of value in-use calculations The risk environment can change quickly and
and fair values less costs to sell. These calculations unexpectedly owing to a wide range of events
require the use of estimates and assumptions. It is or influences. There cannot and never will be
reasonably possible that the assumption may absolute certainty when it comes to identifying
change which may then impact our estimations risks at an early stage, measuring them sufficiently,
and may then require a material adjustment to the or correctly estimating their real hazard potential.
carrying value of goodwill and tangible assets.
The company’s insurance contract liabilities
Insurance contract liabilities include notified claims as well as incurred but not
reported claims.
One of the purposes of insurance is to enable
policyholders to protect themselves against Estimates and assumptions relating to policyholder
uncertain future events. This uncertainty is liabilities
PGC Annual Report | 2014 6633
The determination of the liabilities under insurance Item Useful life
contracts is dependent on estimates and Property - land Indefinite
assumptions made by the group. In determining Property - buildings 40 years
fair value of long term insurance policy liabilities,
assumptions regarding mortality, persistency, 1.4 PROPERTY AND EQUIPMENT
investment returns, expense level, inflation and
tax have been made. These liabilities are derived The cost of an item of property and equipment is
from estimates of the net present value of future recognised as an asset when:
claims and benefits under existing contracts offset • it is probable that future economic benefits
by future premiums to be received.
associated with the item will flow to the group;
1.3 INVESTMENT PROPERTY and
• the cost of the item can be measured reliably.
Investment property is recognised as an asset
when, and only when, it is probable that the future Property and equipment is initially measured at cost.
economic benefits that are associated with the
investment property will flow to the enterprise, Costs include costs incurred initially to acquire or
and the cost of the investment property can be construct an item of property and equipment and
measured reliably. costs incurred subsequently to add to or replace
part of it. If a replacement cost is recognised in
Investment property is initially recognised at the carrying amount of an item of property and
cost. Transaction costs are included in the initial equipment, the carrying amount of the replaced
measurement. part is derecognised.
Costs include costs incurred initially and costs Property and equipment is carried at revalued
incurred subsequently to add to, or to replace a amount, being the fair value at the date of
part of, or service a property. If a replacement revaluation less any subsequent accumulated
part is recognised in the carrying amount of the depreciation and subsequent accumulated
investment property, the carrying amount of the impairment losses.
replaced part is derecognised.
Property and equipment is depreciated on the
Cost model straight line basis over their expected useful lives to
their estimated residual value.
Investment property is carried at cost less depreciation
less any accumulated impairment losses. Property and equipment is carried at cost less
accumulated depreciation and any impairment losses.
Depreciation is provided to write down the cost,
less estimated residual value over the useful life of
the property, which is as follows:
6644 PGC Annual Report | 2014
The useful lives of items of property and equipment 1.5 INTANGIBLE ASSETS 1.7 INVESTMENTS IN ASSOCIATES
have been assessed as follows:
Company separate financial statements
Item An intangible asset is recognised when:
• it is probable that the expected future An investment in an associate is carried at cost less
Average useful life any accumulated impairment.
economic benefits that are attributable to
Buildings 40 years the asset will flow to the entity; and 1.8 GOODWILL
• the cost of the asset can be measured
Plant and machinery 2 years reliably. Goodwill is initially measured at cost, being the
excess of the aggregate of:
Furniture and fixtures 6 - 10 years • the consideration transferred;
• the amount of any non-controlling interest in
Motor vehicles 5 years
the acquiree; and
Office equipment 5 years Intangible assets are initially recognised at cost. • In a business combination achieved in
Computer equipment 3 years stages, the acquisition-date fair value of the
acquirer’s previously held equity interest in the
Security equipment 5 years Intangible assets are carried at cost less any acquiree over the net of the acquisition-date
accumulated amortisation and any impairment amounts of the identifiable assets acquired
Gym equipment 10 years losses. and the liabilities assumed.
Other property and equipment 15 years Any gain on bargain purchase is recognised in
profit and loss immediately. Internally generated
The residual value, useful life and depreciation The amortisation period and the amortisation goodwill is not recognised as an asset.
method of each asset are reviewed at the end of method for intangible assets are reviewed every
each reporting period. If the expectations differ period-end. Goodwill is assessed annually for impairment.
from previous estimates, the change is accounted
for as a change in accounting estimate. Reassessing the useful life of an intangible asset with 1.9 FINANCIAL INSTRUMENTS
a finite useful life after it was classified as indefinite
Each part of an item of property and equipment is an indicator that the asset may be impaired. As Classification
with a cost that is significant in relation to the total a result the asset is tested for impairment and the
cost of the item is depreciated separately. remaining carrying amount is amortised over its The group classifies financial assets and financial
useful life. liabilities into the following categories:
The depreciation charge for each period is • Financial assets at fair value through profit or loss
recognised in profit or loss unless it is included in Amortisation is provided to write down the • Loans and receivables
the carrying amount of another asset. intangible assets, on a straight line basis, to their • Financial liabilities measured at amortised cost
residual values as follows:
The gain or loss arising from the derecognition of Classification depends on the purpose for which
an item of property and equipment is included in Item Useful life the financial instruments were obtained / incurred
profit or loss when the item is derecognised. Computer software 2 years and takes place at initial recognition. Classification
The gain or loss arising from the derecognition of an 1.6 INTERESTS IN SUBSIDIARIES
item of property and equipment is determined as
the difference between the net disposal proceeds, Company separate financial statements
if any, and the carrying amount of the item.
In the company’s separate financial statements,
investments in subsidiaries are carried at cost less
any accumulated impairment.
PGC Annual Report | 2014 6655
is re-assessed on an annual basis, except for receive cash flows on the asset in a transaction Impairment of financial assets
financial assets designated as at fair value through in which substantially all the risks and rewards
profit or loss, which shall not be classified out of the of ownership of the asset are transferred; or At each reporting date the group assesses all
fair value through profit or loss category. • Where the company retains the contractual financial assets, other than those at fair value
right to the cash flows from these assets but through profit or loss, to determine whether there is
Initial recognition and measurement assumes a corresponding liability to transfer objective evidence that a financial asset or group
these contractual rights to another party and of financial assets has been impaired.
Financial instruments are recognised initially when consequently transfers substantially all of the
the group becomes a party to the contractual risks and benefits associated with the asset. For amounts due to the group, significant financial
provisions of the instruments. The group classifies difficulties of the debtor, probability that the debtor
financial instruments, or their component parts, on Where the group retains substantially all the risks will enter bankruptcy and default of payments are
initial recognition as a financial asset, a financial and rewards of ownership of the financial asset, all considered indicators of impairment.
liability or an equity instrument in accordance with the company continues to recognise the asset.
the substance of the contractual arrangement. Impairment losses are recognised in profit or loss.
The group derecognises a financial liability when its
Financial instruments are measured initially at fair contractual obligations are discharged, cancelled Impairment losses are reversed when an increase
value plus ,in the case of a financial instrument not or expire. in the financial asset’s recoverable amount can
at fair value through profit and loss, transaction be related objectively to an event occurring
costs that are directly attributable to the acquisition Fair value determination after the impairment was recognised, subject to
or issue of the financial instruments. the restriction that the carrying amount of the
The fair values of quoted investments are based financial asset at the date that the impairment
Subsequent measurement on current bid prices. If the market for a financial is reversed shall not exceed what the carrying
asset is not active (and for unlisted securities), the amount would have been had the impairment
Financial instruments at fair value through profit or group establishes fair value by using valuation not been recognised.
loss are subsequently measured at fair value, with techniques. These include the use of recent arm’s
gains and losses arising from changes in fair value length transactions, reference to other instruments Reversals of impairment losses are recognised in
being recognised in profit or loss for the period. that are substantially the same, discounted cash profit or loss. Where financial assets are impaired
flow analysis, and option pricing models making through use of an allowance account, the amount
Loans and receivables are subsequently measured at maximum use of market inputs and relying as little of the loss is recognised in profit or loss within
amortised cost, using the effective interest method, as possible on entity-specific inputs. operating expenses. When such assets are written
less accumulated impairment losses. Financial off, the write off is made against the relevant
liabilities at amortised cost are subsequently measured Offsetting allowance account. Subsequent recoveries of
at amortised cost, using the effective interest method. amounts previously written off are credited against
Financial assets and financial liabilities are offset operating expenses.
Derecognition and the net amount presented in the statement of
financial position when, and only when, the Group Loans to/(from) group companies and amounts
Financial assets are derecognised: has legal right to offset the amounts and intends receivable from/(payable to) related parties
• When the contractual rights to the cash flows either to settle them on a net basis or to realize and
settle the liability simultaneously. These include loans to and from holding companies,
from the asset expires; fellow subsidiaries, subsidiaries, joint ventures and
• Where there is transfer of contractual rights to
6666 PGC Annual Report | 2014
associates and are recognised initially at fair value measured at amortised cost using the effective
plus direct transaction costs. interest method. Significant financial difficulties
of the debtor, probability that the debtor will
Subsequently these loans are measured at enter bankruptcy or financial reorganisation, and
amortised cost using the effective interest method default or delinquency in payments (more than
and in the case of loans to group companies, 30 days overdue) are considered indicators that
less any impairment loss recognised to reflect the trade receivable is impaired. The allowance
irrecoverable amounts. recognised is measured as the difference between
the asset’s carrying amount and the present
On loans to group companies and amounts value of estimated future cash flows discounted
receivable from/(payable to) related parties an at the effective interest rate computed at initial
impairment loss is recognised in profit or loss when recognition.
there is objective evidence that it is impaired.
The impairment is measured as the difference The carrying amount of the asset is reduced
between the investment’s carrying amount through the use of an allowance account, and
and the present value of estimated future cash the amount of the loss is
flows discounted at the effective interest rate recognised in profit or loss within operating expenses.
computed at initial recognition. When a trade receivable is uncollectable, it is
written off against the allowance account for
Impairment losses are reversed in subsequent trade receivables. Subsequent recoveries of
periods when an increase in the investment’s amounts previously written off are credited against
recoverable amount can be related objectively operating expenses in profit or loss.
to an event occurring after the impairment was
recognised, subject to the restriction that the Trade and other receivables are classified as loans
carrying amount on the investment at the date and receivables.
the impairment is reversed shall not exceed what
the amortised cost would have been had the Trade and other payables
impairment not been recognized
Trade payables are initially measured at fair value,
Loans to group companies and amounts and are subsequently measured at amortised
receivables from related parties are classified cost, using the effective interest method.
as loans and receivables. Loans from group
companies and amounts payable to related Trade and other payables are classified as financial
parties are classified as financial liabilities measured liabilities at amortised cost.
at amortised cost.
Cash and cash equivalents
Trade and other receivables
Cash and cash equivalents comprise cash on
Trade receivables are measured at initial hand and demand deposits with a maturity of
recognition at fair value, and are subsequently less than 3 months, and other short-term highly
PGC Annual Report | 2014 6677
liquid investments that are readily convertible to the deferred tax liability arises from the initial
a known amount of cash and are subject to an recognition of an asset or liability in a transaction
insignificant risk of changes in value. These are which at the time of the transaction, affects neither
initially recognised at fair value and subsequently accounting profit nor taxable profit (tax loss).
measured at amortised cost using the effective
interest method. A deferred tax asset is recognised for all deductible
temporary differences to the extent that it is
Bank overdraft and borrowings probable that taxable profit will be available against
which the deductible temporary difference can
Bank overdrafts and borrowings are initially be utilised. A deferred tax asset is not recognised
recognised at fair value, and are subsequently when it arises from the initial recognition of an
measured at amortised cost, using the effective asset or liability in a transaction at the time of the
interest method. Any difference between transaction, affects neither accounting profit nor
the proceeds (net of transaction costs) and taxable profit (tax loss).
the settlement or redemption of borrowings is
recognised over the term of the borrowings in A deferred tax asset is recognised for the carry
accordance with the group’s accounting policy forward of unused tax losses to the extent that it is
for borrowing costs. probable that future taxable profit will be available
against which the unused tax losses can be utilised.
1.10 TAX
Deferred tax assets and liabilities are measured
Current tax assets and liabilities at the tax rates that are expected to apply to the
period when the asset is realised or the liability is
Current tax for current and prior periods is, to settled, based on tax rates (and tax laws) that
the extent unpaid, recognised as a liability. If the have been enacted or substantively enacted by
amount already paid in respect of current and the end of the reporting period.
prior periods exceeds the amount due for those
periods, the excess is recognised as an asset. Deferred tax assets and deferred tax liabilities are
offset if a legally enforceable right exists to set off
Current tax liabilities (assets) for the current current assets against current tax liabilities and the
and prior periods are measured at the amount deferred taxes relate to the same taxable entity
expected to be paid to (recovered from) the tax and the same taxation authority.
authorities, using the tax rates (and tax laws) that
have been enacted or substantively enacted by Tax expenses
the end of the reporting period.
Current and deferred taxes are recognised as
Deferred tax assets and liabilities income or an expense and included in profit or loss
for the period, except to the extent that the tax
A deferred tax liability is recognised for all taxable arises from:
temporary differences, except to the extent that • a transaction or event which is recognised,
6688 PGC Annual Report | 2014
in the same or a different period, to other constant periodic rate on the remaining balance 1.13 IMPAIRMENT OF NON-FINANCIAL ASSETS
comprehensive income, or of the liability. Any initial direct costs of the lessee
• a business combination. are added to the amount recognised as an asset. The group assesses at each end of the reporting
Contingent rents shall be charged as expenses in period whether there is any indication that an
Current tax and deferred taxes are charged or credited the periods in which they are incurred. asset may be impaired. If any such indication
to other comprehensive income if the tax relates to exists, the group estimates the recoverable
items that are credited or charged, in the same or a Operating leases - lessor amount of the asset.
different period, to other comprehensive income.
Operating lease income is recognised as an Irrespective of whether there is any indication of
Current tax and deferred taxes are charged or income on a straight-line basis over the lease term. impairment, the group also:
credited directly to equity if the tax relates to items Initial direct costs incurred in negotiating and • tests goodwill acquired in a business
that are credited or charged, in the same or a arranging operating leases are added to
different period, directly in equity. the carrying amount of the leased asset and combination for impairment annually.
recognised as an expense over the lease term on
1.11 LEASES the same basis as the lease income. If there is any indication that an asset may be
impaired, the recoverable amount is estimated for
A finance lease is a lease that transfers substantially Income for leases is disclosed under revenue in the individual asset. If it is not possible to estimate
all the risks and rewards incidental to ownership profit or loss. the recoverable amount of the individual asset,
of an asset. Title may or may not eventually be the recoverable amount of the cash-generating
transferred. An operating lease is a lease other Operating leases – lessee unit to which the asset belongs is determined.
than a finance lease.
Operating lease payments are recognised as an The recoverable amount of an asset or a cash-
Finance leases – lessee expense on a straight-line basis over the lease term. generating unit is the higher of its fair value less
The difference between the amounts recognised costs to sell and its value in use.
Finance lease liabilities are recognised in the as an expense and the contractual payments are
statement of financial position at amounts equal recognised as an operating lease asset or liability. If the recoverable amount of an asset is less than
to the fair value of the leased asset or, if lower, the This asset or liability is not discounted. its carrying amount, the carrying amount of the
present value of the minimum lease payments. asset is reduced to its recoverable amount. That
The corresponding liability to the lessor is included 1.12 INVENTORIES reduction is an impairment loss.
in the statement of financial position as a finance
lease obligation. Inventories are measured at the lower of cost and An impairment loss of assets carried at cost less
net realisable value on the first-in-first-out basis and any accumulated depreciation or amortisation is
The discount rate used in calculating the present consists mainly of uniforms for security guards. recognised immediately in profit or loss.
value of the minimum lease payments is the interest
rate implicit in the lease. The cost of inventories comprises of all costs of An entity assesses at each reporting date whether
purchase, costs of conversion and other costs there is any indication that an impairment
The lease payments are apportioned between the incurred in bringing the inventories to their present loss recognised in prior periods for assets other
finance charge and reduction of the outstanding location and condition. than goodwill may no longer exist or may have
liability. The finance charge is allocated to each decreased. If any such indication exists, the
period during the lease term so as to produce a recoverable amounts of those assets are estimated.
PGC Annual Report | 2014 6699
The increased carrying amount of an asset other employee and the obligation can be estimated significant risks and rewards of ownership of
than goodwill attributable to a reversal of an reliably. the goods;
impairment loss does not exceed the carrying • the group retains neither continuing
amount that would have been determined had The expected cost of compensated absences managerial involvement to the degree usually
no impairment loss been recognised for the asset is recognised as an expense as the employees associated with ownership nor effective
in prior periods. render services that increase their entitlement or, control over the goods sold;
in the case of non-accumulating absences, when • the amount of revenue can be measured
A reversal of an impairment loss of assets carried the absence occurs. reliably;
at cost less accumulated depreciation or • it is probable that the economic benefits
amortisation other than goodwill is recognised Defined contribution plans associated with the transaction will flow to the
immediately in profit or loss. group; and
Payments to defined contribution retirement • the costs incurred or to be incurred in respect
Impairment losses are recognised in profit and benefit plans are recognised as an expense as of the transaction can be measured reliably.
loss. They are allocated first to reduce the carrying they fall due.
amount of any goodwill allocated to the cash When the outcome of a transaction involving
generating unit, and then to reduce the carrying 1.16 PROVISIONS AND CONTINGENCIES the rendering of services can be estimated
amounts of the other assets in the cash generating reliably, revenue associated with the transaction
unit on a pro rata basis. An impairment in respect Provisions are recognised when: is recognised by reference to the stage of
of goodwill is not reversed. • the group has a present obligation as a result completion of the transaction at the end of the
reporting period. The outcome of a transaction
1.14 STATED CAPITAL AND EQUITY of a past event; can be estimated reliably when all the following
• it is probable that an outflow of resources conditions are satisfied:
An equity instrument is any contract that evidences • the amount of revenue can be measured
a residual interest in the assets of an entity after embodying economic benefits will be
deducting all of its liabilities. required to settle the obligation; and reliably;
• a reliable estimate can be made of the • it is probable that the economic benefits
1.15 EMPLOYEE BENEFITS obligation.
associated with the transaction will flow to the
Short-term employee benefits The amount of a provision is the present value of group;
the expenditure expected to be required to settle • the stage of completion of the transaction
The cost of short-term employee benefits, (those the obligation. at the end of the reporting period can be
payable within 12 months after the service is measured reliably; and
rendered, such as paid vacation leave and sick Provisions are not recognised for future operating • the costs incurred for the transaction and the
leave, bonuses, and non-monetary benefits losses. Contingent assets and contingent liabilities costs to complete the transaction can be
such as medical aid), are recognised in the are not recognised. Contingencies are disclosed in measured reliably.
period in which the service is rendered and are note 39.
not discounted. A liability is recognised for the When the outcome of the transaction involving the
amount expected to be paid if the Group has a 1.17 REVENUE rendering of services cannot be estimated reliably,
present legal or constructive obligation to pay this revenue shall be recognised only to the extent of
amount as a result of past service provided by the Revenue from the sale of goods is recognised when the expenses recognised that are recoverable.
all the following conditions have been satisfied:
• the group has transferred to the buyer the Revenue is measured at the fair value of the
7700 PGC Annual Report | 2014
consideration received or receivable and net carrying amount of the financial asset.
represents the amounts receivable for goods and
services provided in the normal course of business, Dividends
net of trade discounts and volume rebates, and
value added tax. Dividends are recognised, in profit or loss, when
the company’s right to receive payment has been
Revenue consists of: established.
Premium income relating to Workers Life Insurance
Limited: Other income
Premiums written comprise the premiums on Other income comprises profit on sale of
insurance contracts entered into during the period investment property and property and equipment,
and billed, irrespective of whether they relate administration and management fees received,
in whole or in part to a later accounting period. commission received, discount received, release
Premiums are disclosed gross of commission from certain of the company’s debt granted by
payable to intermediaries and exclude Value the group companies, amounts recovered from
Added Tax where applicable. group companies for expenses incurred on their
behalf, amounts recovered from bad debts,
Gross written premium comprises of reinsurance Workmen’s Compensation overprovision written
inwards premium as well as premium attributable back to income, rental income received and non-
to an in substance arrangement with Constantia insurance related revenue.
Insurance Company Limited which resulted in the
transfer of insurance risk to Workers Life Insurance 1.18 POLICYHOLDER AND INSURANCE
Limited. CONTRACT LIABILITIES
Premium income relating to Workers Life Assurance Policies are recognised when contract are
Limited: entered into and premiums are charged. Workers
Life Assurance Company Limited (“Workers
Insurance premiums are recognised as revenue Life”) issues contracts that transfer insurance risk
in profit and loss over the insured period, net of or financial risk or both. A distinction has been
reinsurance premiums. made between investment contracts (which fall
Premiums are raised in arrears. within the scope of IAS 39 Financial Instruments:
Recognition and measurement) and insurance
Finance income contracts accounted for under IFRS 4.
Interest income is recognised using the effective The group provides both short-term and long-
interest method, the effective interest method, and term insurance. Workers Life Assurance Company
the effective interest rate is the rate that exactly Limited provides long-term insurance and Workers
discounts estimated future cash receipts through Life Insurance Limited, short-term insurance.
the expected life of the financial instrument to the
PGC Annual Report | 2014 7711
LONG-TERM INSURANCE CONTRACTS fair value as described in the accounting policy for
investments. The underlying philosophy is to recognise
Classification profits prudently over the term of each contract
consistent with the work done and risk borne.
Insurance contracts
In the valuation of liabilities, provision is made for:
A contract is classified as insurance where Workers • The best estimate of future experience;
Life accepts significant risk by agreeing with the • The compulsory margins prescribed in SAP
policyholder to pay benefits if a specified uncertain
future event (the insured event) adversely affects 104; and
the policyholder or other beneficiary. • Discretionary margins determined to release
Significant insurance risk exists where it is expected profits to shareholders consistent with policy
that for the duration of the policy or part thereof, design and company policy.
policy benefits payable on the occurrence of the
insured event will significantly exceed the amount In accordance with SAP 104, the majority of the
payable on early termination. insurance liabilities are calculated by projecting
outgoing and expected future premiums and
Once a contract has been classified as an discounting cash flows to the valuation date
insurance contract, the classification remains based on the valuation interest rate. The exception
unchanged for the remainder of its lifetime, even being cases where an Incurred But Not Reported
if the insurance risk reduces significantly during the (IBNR) liability has been established. The IBNR is an
year. undiscounted liability.
Investment Contracts IBNR reserves are calculated for the annually
renewable company funeral business, based on
Policy contracts not classified as insurance a percentage of the premiums payable or run-off
contracts are classified as investment contracts. triangles. The IBNR is included in the policyholder
liability.
Measurement
The following reserves were also set up:
Insurance Contracts • Claims handling expense reserve
• Data contingency reserve
The actuarial value of the policy liabilities is
determined using the Published Reporting Basis Investment Contracts
as described in the Standard of actuarial Practice
SAP 104 of the actuarial Society of South Africa, The valuation of liabilities for pure linked investment
which is consistent with the valuation method contracts are based on the fair value of the
prescribed in the Long-Term Insurance Act, 1998 underlying assets linked to the policies. Individual
(LTIA) and consistent with the valuation of assets at policyholder account balances are fully matched
by the underlying assets.
7722 PGC Annual Report | 2014
Liability adequacy test Reinsurance recoveries Recognition and measurement of insurance
contracts
On an annual basis, insurance contracts are Reinsurance recoveries are recognised in profit or
subject to a liability adequacy test. The purpose of loss in the same period as the related claim. Insurance contract liabilities in the Statement of
the test is to ensure that the liability held is sufficient Financial Position include the outstanding claim
to meet all expected future obligations under the SHORT-TERM INSURANCE CONTRACTS provision and the incurred but not reported reserve.
contract, including guarantees and options, using
current estimates of future cash flows. Classification of contracts Claims incurred
If the test shows that the liability is inadequate, Contracts under which the company accepts Claims incurred consist of claims and external
the entire deficiency needs to be recognised as significant insurance risk from another party (the claims handling expenses paid during the financial
reinsurance contracts held. policyholder) by agreeing to compensate the period together with the movement in the provision
policyholder or other beneficiary if a specified for outstanding claims. Claims outstanding
Reinsurance contracts held uncertain future event (the insured event) adversely comprise provisions for the company’s estimate of
affects the policyholder are classified as insurance the ultimate cost of settling all claims incurred but
Contracts entered into by Workers Life with reinsurers contracts for the lifetime of the policy. Insurance risk unpaid at the reporting date whether reported or
under which the company is compensated is risk other than financial risk transferred from the not, and an appropriate risk margin.
for losses on one or more contracts issued by holder of the contract to the issuer.
the company and that meet the classification Whilst the directors consider that the provision for
requirements for insurance contracts are classified Financial risk is the risk of possible future change in outstanding claims is fairly stated on the basis of
as reinsurance contracts held. one or more of a specified interest rate, security price, the information currently available to them, the
commodity price, foreign exchange rate, index of ultimate liability will vary as a result of subsequent
Claims and benefits prices or rates, a credit rating or credit risk or other information and events and may result in significant
variable, provided in the case of a non-financial adjustments to the amounts provided. Adjustments
Policyholder benefit payments (net of reinsurance variable that the variable is not specific to a party to to the amounts of claims provisions established in
recoveries) incurred under insurance contracts the contract. Insurance contracts may also transfer prior years are reflected in the financial statements
and investment contracts include death, disability, some financial risk. The recognition and measurement for the year in which the adjustments are made,
maturity and surrender payments and are of insurance contracts is discussed below. and disclosed separately if material.
recognised in profit and loss when notified or due
for payment. Technical provisions are based on the estimated Liability adequacy test
ultimate cost of all the claims notified but not
Receivables and payables related to insurance settled at the reporting date, together with related On an annual basis, the net liability recognised
contracts and investment contracts claims handling costs and reduction for the for insurance contracts is tested for adequacy
expected value of salvage and other recoveries. by discounting current estimates of all future
Receivables and payables are recognised when contractual cash flows and comparing this
due. These include amounts due to and from Underwriting results are determined on an accrual amount to the carrying value of the liability. Where
agents, brokers and policy holders. The impairment basis whereby the incurred cost of claims, commission a shortfall is identified, an additional provision is
process for receivables is similar to the process for and related expenses are charged against the made and the company recognises the deficiency
loans and receivables. earned proportion of premiums, net of reinsurance. in income for the year.
PGC Annual Report | 2014 7733
1.19 CAPITAL ADEQUACY REQUIREMENT In the current year, the group has adopted the The impact of the standard is not material.
following standards and interpretations that are
This is the minimum requirement as determined effective for the current financial year and that IFRS 12 Disclosure of Interests in Other Entities
by the Long-Term Insurance Act to ensure that are relevant to its operations:
the company has sufficient capital to meet fairly The standard sets out disclosure requirements
substantial deviations in the main parameters Disclosures – Offsetting Financial Assets and Finan- for investments in Subsidiaries, associates, joint
affecting the company’s business. cial Liabilities (Amendments to IFRS 7) ventures and unconsolidated structured entities.
The disclosures are aimed to provide information
1.20 OPERATING EXPENSES Amendment requires additional disclosures for about the significance and exposure to risks of
financial assets and liabilities which are offset and such interests. The most significant impact is the
All operating expenses as listed below are for financial instruments subject to master netting disclosure requirement for unconsolidated struc-
recognised through profit or loss when incurred: arrangements. tured entities or off balance sheet vehicles.
Expenses for the acquisition of insurance contracts The effective date of the amendment is for years The effective date of the standard is for years
beginning on or after 01 January 2013. beginning on or after 01 January 2013.
Expenses for the acquisition of insurance contracts
consists of commission on new insurance policies The group has adopted the amendment for the The group has adopted the standard for the first
and renewal commission as well as expenses first time in the 2014 consolidated and separate time in the 2014 consolidated and separate finan-
directly related thereto, including bonuses payable financial statements. cial statements.
to marketers.
The impact of the amendment is not material. The impact of the standard is not material.
Marketing and administration expenses
IFRS 10 Consolidated Financial Statements IFRS 13 Fair Value Measurement
Marketing and administration expenses include
policy administration expenditure, marketing and Standard replaces the consolidation sections of IAS New standard setting out guidance on the mea-
development expenditure, as well as other non- 27 Consolidated and Separate Financial State- surement and disclosure of items measured at fair
commission related expenditure. ments and SIC 12 Consolidation – Special Purpose value or required to be disclosed at fair value in
Entities. The standard sets out a new definition of terms of other IFRS’s.
1.21 BORROWING COSTS control, which exists only when an entity is exposed
to, or has rights to, variable returns from its involve- The effective date of the standard is for years
Borrowing costs are recognised as an expense in ment with the entity, and has the ability to effect beginning on or after 01 January 2013.
the period in which they are incurred. those returns through power over the investee.
The group has adopted the standard for the first
2. NEW STANDARDS AND INTERPRETATIONS The effective date of the standard is for years time in the 2014 consolidated and separate finan-
beginning on or after 01 January 2013. cial statements.
2.1 STANDARDS AND INTERPRETATIONS
EFFECTIVE AND ADOPTED IN THE CURRENT YEAR The group has adopted the standard for the first The impact of the standard is not material.
time in the 2014 consolidated and separate finan-
cial statements. Annual Improvements for 2009 – 2011 cycle
7744 PGC Annual Report | 2014
Various small amendments to several standards. The impact of the amendment is not material. The effective date of the standard is yet to be
determined.
The effective date of the amendment is for years 2.2 STANDARDS AND INTERPRETATIONS NOT
beginning on or after 01 January 2013. YET EFFECTIVE The group expects to adopt the standard for the
first time in the year after it becomes effective.
The group has adopted the amendment for the The group has chosen not to early adopt the
first time in the 2014 consolidated and separate following standards and interpretations, which The impact of this interpretation is currently being
financial statements. have been published and are mandatory for the assessed.
group’s accounting periods beginning on or after
The impact of the amendment is not material. 01 March 2014 or later periods: IFRS 9 Financial Instruments
IAS 27 Separate Financial Statements IFRS 4 Insurance contracts This new standard is the first phase of a three
phase project to replace IAS 39 Financial Instru-
Consequential amendment as a result of IFRS 10. The standard provides guidance on accounting ments: Recognition and
The amended Standard now only deals with sep- for insurance contracts. IFRS 4 applies to virtually Measurement. To date, the standard includes
arate financial statements. The effective date of all insurance contracts (including reinsurance chapters for classification, measurement and
the amendment is for years beginning on or after contracts) that an entity issues and to reinsurance derecognition of financial assets and liabilities.
01 January 2013. contracts that it holds. It does not apply to other The following are main changes from IAS 39:
assets and liabilities of an insurer, such as financial • Financial assets will be categorised as
The group has adopted the amendment for the assets and financial liabilities within the scope
first time in the 2014 consolidated and separate of IAS 39 Financial Instruments: Recognition and those subsequently measured at fair value
financial statements. Measurement. Furthermore, it does not address or at amortised cost.
accounting by policyholders. • Financial assets at amortised cost are
The impact of the amendment is not material. those financial assets where the business
The insurance industry is an important and in- model for managing the assets is to hold
IAS 28 Investments in Associates creasingly international industry and insurance the assets to collect contractual cash
contracts expose entities to long term and uncer- flows (where the contractual cash flows
IAS 28 Investments in Associates outlines the ac- tain obligations. represent payments of principal and inter-
counting for investments in associates. An associ- est only). All other financial assets are to
ate is an entity over which an investor has signif- Today, the accounting for insurance contracts be subsequently measured at fair value.
icant influence, being the power to participate does not provide users with the information they • Under certain circumstances, financial
in the financial and operating policy decisions of need to meaningfully understand the insurer’s assets may be designated as at fair value.
the investee (but not control or joint control), and financial position, performance and risk expo- • For hybrid contracts, where the host con-
investments in associates are, with limited ex- sure. In addition, IFRS does not address specific tract is an asset within the scope of IFRS 9,
ceptions, required to be accounted for using the insurance issues and it is not obvious how insurers then the whole instrument is classified in ac-
equity method. should deal with these issues under current IFRS’s. cordance with IFRS 9, without separation of
the embedded derivative. In other circum-
The group has adopted the amendment for the Consequently, great diversity in the accounting stances, the provisions of IAS 39 still apply.
first time in the 2014 consolidated and separate practices of the insurance industry has developed • Voluntary reclassification of financial assets
financial statements. over time. is prohibited. Financial assets shall be re-
classified if the entity changes its business
PGC Annual Report | 2014 7755
model for the management of financial IFRS 15 REVENUE FROM CONTRACTS WITH The effective date of the standard is for years
assets. In such circumstances, reclassifi- CUSTOMERS beginning on or after 01 January 2017.
cation takes place prospectively from the
beginning of the first reporting period after The objective of IFRS 15 is to establish the prin- The group expects to adopt the standard for the
the date of change of the business model. ciples that an entity shall apply to report useful first time in the 2018 consolidated and separate
• Financial liabilities shall not be reclassified. information to users of financial statements.
• Investments in equity instruments may financial statements about the nature, amount,
be measured at fair value through other timing, and uncertainty of revenue and cash flows The impact of this standard is currently being
comprehensive income. When such an arising from a contract with a customer. assessed.
election is made, it may not subsequently
be revoked, and gains or losses accumu- IFRS 15 Revenue from Contracts with Customers
lated in equity are not recycled to profit applies to all contracts with customers except for:
or loss on derecognition of the investment. leases within the scope of IAS 17 Leases; financial
The election may be made per individual instruments and other contractual rights or obli-
investment. gations within the scope of IFRS 9 Financial Instru-
• IFRS 9 does not allow for investments in eq- ments; IFRS 10 Consolidated Financial Statements;
uity instruments to be measured at cost. IFRS 11 Joint Arrangements; IAS 27 Separate
• The classification categories for financial Financial Statements and IAS 28 Investments in As-
liabilities remains unchanged. However, sociates and Joint Ventures; insurance contracts
where a financial liability is designated within the scope of IFRS 4 Insurance Contracts;
as at fair value through profit or loss, and non-monetary exchanges between entities
the change in fair value attributable to in the same line of business to facilitate sales to
changes in the liabilities credit risk shall be customers or potential customers.
presented in other comprehensive in-
come. This excludes situations where such A contract with a customer may be partially
presentation will create or enlarge an ac- within the scope of IFRS 15 and partially within the
counting mismatch, in which case, the full scope of another standard.
fair value adjustment shall be recognised
in profit or loss. In that scenario:
• if other standards specify how to separate
The effective date of the standard is for years
beginning on or after 01 January 2018. and/or initially measure one or more parts
of the contract, then those separation and
The group expects to adopt the standard for the measurement requirements are applied
first time in the 2019 consolidated and separate first. The transaction price is then reduced
financial statements. by the amounts that are initially measured
under other standards;
The impact of this standard is currently being • if no other standard provides guidance on
assessed. how to separate and/or initially measure
one or more parts of the contract, then
IFRS 15 will be applied.
7766 PGC Annual Report | 2014
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
3. Investment property
Group 2014 2013
Investment property
Cost Accumulated Carrying value Cost Accumulated Carrying value
depreciation depreciation
9,919,796 (1,111,699) 8,808,097 27,379,032 (891,916) 26,487,116
Reconciliation of investment property - Group - 2014
Opening Additions Disposals Depreciation Total
balance 1,862,264 8,808,097
Investment property 26,487,116 (19,413,124) (128,159)
Reconciliation of investment property - Group - 2013 Opening Additions Depreciation Total
Investment property balance 26,487,116
21,244,284 (518,405)
5,761,237
Details of property 799,000 799,000 - -
Glen Austin Agricultural Holdings Ext 3, Portion 1 5,403,146 2,994,232 - -
Title Deed - T89144/2001
- Purchase price: 20 August 2001
- Capitalised expenditure
6,202,146 3,793,232 - -
Withok Estates Agricultural Holdings Erf 85, 109 and
110
Title Deed - T169234/2007s
- Purchase price: 13 July 2007 1,800,000 1,800,000 - -
- Capitalised expenditure 162,010 162,010 - -
1,962,010 1,962,010 - -
Erf 608, Nelspruit Ext 2 1,575,000 1,575,000 - - 7777
Title Deed - T336585/2007 180,640 180,640 - -
- Purchase price: 30 September 2007 1,755,640 1,755,640 - - PGC Annual Report | 2014
- Capitalised expenditure
- Purchase price: 13 July 2007 1,800,000 1,800,000 - -
- Capitalised expenditure 162,010 162,010 - -
- -
1,962,010 1,962,010
-
Erf 608, Nelspruit Ext 2 1,575,000 1,575,000 - -
Title Deed - T336585/2007 180,640 180,640 - -
- Purchase price: 30 September 2007 -
- Capitalised expenditure 1,755,640 1,755,640 -
-
Portion 8 of Erf 1 Wierda Valley, Gauteng - 18,000,000 - -
Title Deed - T22611/2012 - 1,868,151 -
- Purchase price: 3 April 2012 - 19,868,151 -
- Capitalised expenditure
The property situated at Portion 8 of Erf 1 Wierda Valley, Gauteng was sold in October 2013 for R43 500 000.
Popcru Group of Companies Proprietar3y4 Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Figures in Rand
4. Property and equipment 2014 2013
Group
Cost Accumulated Carrying value Cost Accumulated Carrying value
Land and buildings depreciation depreciation
Plant and machinery
Furniture and fixtures 60,591,661 (13,240,395) 47,351,266 41,625,949 (11,666,544) 29,959,405
Motor vehicles - - - 937,200 (925,169) 12,031
Office equipment
Computer equipment 16,701,256 (13,402,188) 3,299,068 15,410,131 (12,554,123) 2,856,008
Gym equipment 8,482,265 (5,239,376) 3,242,889 9,078,862 (4,030,036) 5,048,826
Security equipment 1,072,671 (836,779) 1,058,016 (763,527)
Other property and equipment 5,919,415 (4,716,744) 235,892 5,384,467 (4,197,724) 294,489
Total 369,410 (172,287) 1,202,671 369,410 (141,503) 1,186,743
1,250,383 (515,848) 715,296 (375,343)
3,686,709 (3,472,465) 197,123 3,655,753 (3,355,025) 227,907
734,535 339,953
214,244 300,728
98,073,770 (41,596,082) 56,477,688 78,235,084 (38,008,994) 40,226,090
Company 2014 2013
7788 PGC Annual Report | C2o0m14puter equipment
Cost Accumulated Carrying value Cost Accumulated Carrying value
Furniture and fixtures depreciation depreciation
472,804 (460,299) 12,505 472,804 (427,607) 45,197
601,509 (519,308) 82,201 601,509 (419,036) 182,473
Security equipment 1,250,383 (515,848) 734,535 715,296 (375,343) 339,953
Other property and equipment 3,686,709 (3,472,465) 214,244 3,655,753 (3,355,025) 300,728
Total 98,073,770 (41,596,082) 56,477,688 78,235,084 (38,008,994) 40,226,090
Company 2014 2013
Computer equipment Cost Accumulated Carrying value Cost Accumulated Carrying value
Furniture and fixtures depreciation depreciation
Gym equipment
Motor vehicles 472,804 (460,299) 12,505 472,804 (427,607) 45,197
Office equipment 601,509 (519,308) 82,201 601,509 (419,036) 182,473
Other property and equipment 369,410 (172,287) 197,123 369,410 (141,503) 227,907
Security equipment 361,400 (230,595) 130,805 361,400 (161,678) 199,722
Total
54,608 (54,302) 306 54,608 (48,529) 6,079
472,714 (468,327) 4,387 472,714 (396,896) 75,818
407,242 (371,302) 35,940 407,242 (303,922) 103,320
2,739,687 (2,276,420) 463,267 2,739,687 (1,899,171) 840,516
Reconciliation of property and equipment - Group - 2014 Opening Additions Depreciation Total
Land and buildings balance
Plant and machinery 29,959,405 19,512,363 (2,120,502) 47,351,266
Furniture and fixtures 6,119 (18,150) -
Motor vehicles 12,031
Office equipment 2,856,008 1,291,131 (848,071) 3,299,068
Computer equipment 5,048,826 27,193 (1,833,130) 3,242,889
Gym equipment 14,656
Security equipment 294,489 (73,253) 235,892
Other property and equipment 1,186,743 534,947 (519,019) 1,202,671
-
227,907 (30,784) 197,123
339,953 557,885 (163,303) 734,535
300,728 8,158 214,244
40,226,090 (94,642) 56,477,688
21,952,452 (5,700,854)
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Figures in Rand
4. Property and equipment (continued)
Reconciliation of property and equipment - Group - 2013 35
Opening Additions Disposals Depreciation Total
balance 1,744,000
Land and buildings 29,867,338 - - (1,651,933) 29,959,405 PGC Annual Report | 2014 7799
Communication radios 1,278,170 - (83,188) 12,031
Furniture and fixtures 95,219 2,280,371 -
Motor vehicles 2,317,377 81,841 (78,974) (739,539) 2,856,008
Office equipment 4,454,201 571,441 - (1,606,772) 5,048,826
Computer equipment - -
Gym equipment 294,289 - (81,641) 294,489
1,135,965 (520,663) 1,186,743
264,848 (36,941) 227,907
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
4. Property and equipment (continued) 7,000,000 7,000,000 - -
Details of properties 25,946,803 8,308,947 - -
Erf 508, Pretoria (PGC House)
Title Deed - T174270/2006
- Purchase price: 21 December 2006
- Capitalised expenditure
32,946,803 15,308,947 - -
Shishangeni Lodge 27,644,858 26,317,002 - -
A lodge built on leasehold property
- Building costs
5. Goodwill Valuation Carrying value Valuation Carrying value
Group
Goodwill 9,162,843 9,162,843 9,162,843 9,162,843
Reconciliation of goodwill - Group - 2014 Opening Total
Goodwill balance 9,162,843
9,162,843
Reconciliation of goodwill - Group - 2013 Opening Disposal of Total
Goodwill balance subsidiary 9,162,843
12,161,843
(2,999,000)
6. Intangible assets
Group 2014 2013
8800 PGC Annual Report | 2014
Cost Accumulated Carrying value Cost Accumulated Carrying value
Computer software amortisation amortisation
5,714,752 (5,638,759) 75,993 5,714,752 (5,454,308) 260,444
Reconciliation of goodwill - Group - 2013 Opening Disposal of Total
Goodwill balance subsidiary 9,162,843
12,161,843
(2,999,000)
6. Intangible assets
Group 2014 2013
Computer software
Cost Accumulated Carrying value Cost Accumulated Carrying value
amortisation amortisation
5,714,752 (5,638,759) 75,993 5,714,752 (5,454,308) 260,444
Company 2014 2013
Computer software
Cost / Accumulated Carrying value Cost / Accumulated Carrying value
Valuation amortisation Valuation amortisation
3,927,654 (3,926,116) 1,538 3,927,654 (3,910,729) 16,925
Reconciliation of intangible assets - Group - 2014 Opening Amortisation Total
Computer software balance 75,993
260,444 (184,451)
37
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Figures in Rand
6. Intangible assets (continued) Opening Additions Amortisation Total
Reconciliation of intangible assets - Group - 2013 balance 260,444
503,335 (455,366)
Computer software 212,475
Reconciliation of intangible assets - Company - 2014
Opening Amortisation Total
Computer software balance 1,538 PGC Annual Report | 2014
16,925 (15,387) 8811
Computer software 212,475 503,335 (455,366) 260,444
Reconciliation of intangible assets - Company - 2014 Opening Amortisation Total
Computer software balance 1,538
16,925 (15,387)
Reconciliation of intangible assets - Company - 2013 Opening Additions Amortisation Total
Computer software balance 16,925
241,201 (271,884)
47,608
7. Investments in subsidiaries
Name of subsidiary Principal % % Carrying Carrying
activity ownership ownership amount 2014 amount 2013
Workerslife Direct Proprietary Limited Broker interest interest
Riyabopa Training and Consulting Solutions Proprietary services 2014 2013
Limited Dormant
Popcru Investments Proprietary Limited 100.00 % 100.00 % 12,004,989 12,004,989
Workers Life Management Services Proprietary Limited
Shishangeni Lodge Proprietary Limited 100.00 % 100.00 % 100 100
Workers Life Group Proprietary Limited
Workers Life Insurance Limited Liquidated - % 100.00 % 100 100
Workers Life Assurance Company Limited Management 100.00 % 100.00 % 100 100
PGC Investment Holdings Proprietary Limited services
Gemvest 53 Proprietary Limited Game lodge 100.00 % 100.00 % 1,000 1,000
Riskcon Security Holdings Proprietary Limited Liquidated - % 100.00 % 1,000 1,000
Impairment of investment in subsidiaries Short-term 13,675,855 13,675,855
insurance 100.00 % 100.00 %
Long-term
insurance 100.00 % 100.00 % 12,514,286 12,514,286
Investment
holding 100.00 % 100.00 % 100 100
Dormant
Security 100.00 % 100.00 % 100 100
100.00 % 100.00 % 11,430,783 11,430,783
49,628,413 49,628,413
(11,431,783) (11,431,783)
38,196,630 38,196,630
The carrying amount of subsidiaries are shown net of impairment losses.
8822 PGC Annual Report | 2014 38
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
8. Investments in associates Principal % % Carrying Carrying
Group activity ownership ownership amount 2014 amount 2013
Name of company Managerial interest interest
services 2014 2013
Pensys IT and Administration (Proprietary) Limited - Employee - % 34.00 % - 7,953,095
Botswana benefits
RED Employee Benefits (Proprietary) Limited - - % 25.00 % - 203
Botswana
Impairment of investments in associates - 7,953,298
- (7,953,095)
- 203
Workers Life Direct Proprietary Limited holds a 25% stake in RED Employee Benefits Proprietary Limited. There was a rights
issue in the current period that resulted in a dilution of the investment held from 25% to 0.6%. The investment is therefore
derecognised in terms of International Financial Reporting Standards.
9. Loans to (from) related parties
Subsidiaries
Shishangeni Lodge Proprietary Limited -- 49,120,241 49,274,816
Gemvest 53 Proprietary Limited -- 31,765,286 31,765,286
Workerslife Direct Proprietary Limited -- (9,897,184)
PGC Investment Holdings Proprietary Limited -- - 14,045,995
Riskcon Security Holdings Proprietary Limited -- 16,205,208
Riyabopa Training and Consulting Solutions Proprietary -- 13,333,576 7,303,200
Limited 933,676
PGC Investment Holdings Proprietary Limited -- 933,676
PGC Investment Holdings Proprietary Limited --
Riskcon Security Holdings Proprietary Limited -- 3,302,317 4,765,564
Workers Life Group Proprietary Limited -- - 14,127,919
Impairment of loans to subsidiaries -- -
-- 1,005,913
-- (1,000) (1,000) 8833
114,659,304
(83,149,451) 113,324,185
31,509,853 (32,698,054)
80,626,131 PGC Annual Report | 2014
The loans are unsecured, bear no interest and no terms of repayment have been determined.
PGC Investment Holdings Proprietary Limited - - 16,205,208 14,045,995
Riskcon Security Holdings Proprietary Limited - - 13,333,576 7,303,200
Riyabopa Training and Consulting Solutions Proprietary - - 933,676 933,676
Limited
PGC Investment Holdings Proprietary Limited - - 3,302,317 4,765,564
PGC Investment Holdings Proprietary Limited - - - 14,127,919
Riskcon Security Holdings Proprietary Limited - - - 1,005,913
Workers Life Group Proprietary Limited - - (1,000) (1,000)
Impairment of loans to subsidiaries
- - 114,659,304 113,324,185
- - (83,149,451) (32,698,054)
- - 31,509,853 80,626,131
The loans are unsecured, bear no interest and no terms of repayment have been determined.
Associates
RED Employee Benefits Proprietary Limited 15,968,239 14,302,324 - -
Impairment of loans to associates 15,968,239 14,302,324 - -
(15,968,239) (11,441,859) - -
2,860,465 - -
-
The loan is unsecured, bears interest at the prime interest rate minus 1%, as published from time to time by ABSA Bank
Limited, compounded monthly in arrears. Interest on the loan is repayable quarterly. Repayment of the capital amount of
the loan will be over a period of 60 months once the full R 20 000 000 has been made available.
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year e3n9ded 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
9. Loans to (from) related parties (continued) 1,000,000 (1,850,000) 1,000,000 3,000,000
Holding entity
POPCRU Trust
The above loans are unsecured, interest free and have no fixed terms of repayment.
Related entities
PGC Management Services Proprietary Limited (2,307,029) 17,917,113 (2,307,029) 17,917,013
The loan is unsecured, bears no interest and no terms of repayment have been determined.
8844 PGC Annual Report | 2014 Non-current assets - 18,927,578 16,806,878 53,375,659
Current assets - - 15,703,974 58,065,769
Current liabilities (1,307,029) - (2,308,029) (9,898,284)
The above loans are unsecured, interest free and have no fixed terms of repayment.
Related entities
PGC Management Services Proprietary Limited (2,307,029) 17,917,113 (2,307,029) 17,917,013
The loan is unsecured, bears no interest and no terms of repayment have been determined.
Non-current assets - 18,927,578 16,806,878 53,375,659
Current assets - - 15,703,974 58,065,769
Current liabilities (1,307,029) - (2,308,029) (9,898,284)
(1,307,029)
18,927,578 30,202,823 101,543,144
10. Other financial assets 9,397,816 7,977,663 - 7,977,663
Fair value through profit and loss 10,095,100 7,014,222 - 7,014,222
Listed shares 16,820,884 1,287,788
- BP Bernstein Proprietary Limited Asset Managers 1,287,788 6,374,240 - -
- Sanlam Limited Asset Managers 7,795,872 38,187,009 1,287,788 -
- Trinity Asset Management Proprietary Limited 28,576,576 14,991,885
- Coronation Fund Managers
Available for sale 75 76 75 75
Unlisted shares 45 45 45 45
PSU Investment Holdings Proprietary Limited 15 15 15 15
75 Ordinary shares in PSU Investment Holdings
Proprietary Limited. 1111
Protea Hotels Empowerment Initiative Proprietary 15 15 15 15
Limited 151 152 151 151
45 Ordinary shares in Protea Hospitality Holdings
Proprietary Limited, representing 9% shareholding.
Protea Hotels Empowerment Consortium Proprietary
Limited
15 Ordinary shares in Protea Hotels Empowerment
Consortium Proprietary Limited, representing a 12.5%
shareholding.
Protea Hospitality Holdings Proprietary Limited
25 096 154 Ordinary Shares in Protea Hospitality
Holdings Proprietary Limited, representing a 3.26%
shareholding.
Galactic Deals 123 Proprietary Limited
15 Ordinary shares in Galactic Deals 123 Proprietary
Limited, representing a 15% shareholding.
40 8855
PGC Annual Report | 2014
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
10. Other financial assets (continued)
At amortised cost - 40,985,813 - -
Protea Hospitality Holdings Proprietary Limited
The loan is unsecured. The group's proportionate claim
on the loan to Protea Hospitality Holdings Proprietary
Limited is R 54 678 232. The loan is not repayable until
2016. The group's proportionate claim was discounted
using an internal rate of return of 7.54% resulting in a
present value of R nil (2013: R 40 985 813). Repayment
of the loan will not be claimed until financial position
of Protea Hospitality Holdings Proprietary Limited has
stabilised and consistent profits are generated.
Gemvest 53 Proprietary Limited may only dispose of its
shares if it disposes of its sales claim in one and the
same transaction. The shares may not be pledged,
hypothecated or otherwise encumbered, unless such
pledge is given in favour of Investec for so long as any
Investec debt facility remains available to the
company. The loan was repaid during the year.
Protea Hospitality Holdings Proprietary Limited - 19,393,210 - 19,393,210
The company's proportionate claim on the loan is R 25
870 978. The loan is expected to be repaid only after
2016. The company's proportionate claim was
discounted using an internal rate of return of 7.54%
resulting in a present value of R nil (2013: R 19 393
210). Repayment of the loan will not be claimed until
financial position of Protea Hospitality Holdings
Proprietary Limited has stabilised and consistent
profits are generated. The loan was transferred from
Indospan Investments Proprietary Limited in terms of
section 45 of the Income Tax Act.
Galactic Deals 123 Proprietary Limited 450,000 1,845,000 450,000 1,845,000
The loan is unsecured, bears no interest and no terms
of repayment have been determined.
Mavundla Square Proprietary Limited 14,026,080 - 14,026,080 -
This represents funds transferred into the trust
8866 PGC Annual Report | 2014 account of Cox Yeats Attorneys as at 28 February 2014
for shares to be acquired in Mavundla Square
Galactic Deals 123 Proprietary Limited 450,000 1,845,000 450,000 1,845,000
The loan is unsecured, bears no interest and no terms
of repayment have been determined. 14,026,080 - 14,026,080 -
Mavundla Square Proprietary Limited
This represents funds transferred into the trust 14,476,080 62,224,023 14,476,080 21,238,210
account of Cox Yeats Attorneys as at 28 February 2014 43,052,807 100,411,184 15,764,019 36,230,246
for shares to be acquired in Mavundla Square
Proprietary Limited. The transaction had not been 28,576,576 38,187,009 1,287,788 14,991,885
finalised at year end. 151 152 151 151
Total other financial assets
Non-current assets 14,026,080 60,379,023 14,026,080 19,393,210
Fair value through profit and loss 42,602,807 98,566,184 15,314,019 34,385,246
Available for sale
Loans and receivables 450,000 1,845,000 450,000 1,845,000
Current assets
Loans and receivables
41
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
10. Other financial assets (continued) 43,052,807 100,411,184 15,764,019 36,230,246
Fair value hierarchy of available-for-sale financial assets
Level 1 represents those assets which are measured using unadjusted quoted prices for identical assets.
Level 2 applies inputs other than quoted prices that are observable for the assets either directly (as prices) or indirectly
(derived from prices).
Level 3 applies inputs which are not based on observable market data.
Level 1 28,576,576 38,187,009 1,287,788 14,991,885
Listed shares
Level 3 151 152 151 151 PGC Annual Report | 2014 8877
Unlisted shares 151 152 151 151
(derived from prices).
Level 3 applies inputs which are not based on observable market data.
Level 1 28,576,576 38,187,009 1,287,788 14,991,885
Listed shares
Level 3 151 152 151 151
Unlisted shares 151 152 151 151
The unlisted shares are carried at cost as no information is available to determine fair value.
11. Deferred tax
Deferred tax asset/(liability)
Capital allowances (214,886) 7,732 --
Provisions 830,142 2,174,178 --
Prepayments (692,788) --
Insurance contract liabilities 4,693,132 (13,419) --
Tax losses 488,276 4,509,904 --
Other financial assets (1,510,316) 2,277,808 - (1,484,872)
Operating lease accrual (174,896) (3,640,670) --
Total deferred tax asset/(liability) 3,418,664 - (1,484,872)
(1,645)
5,313,888
Deferred tax liability - - - (1,484,872)
Deferred tax asset 3,418,664 5,313,288 --
Total net deferred tax asset (liability) 3,418,664 5,313,288 - (1,484,872)
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
11. Deferred tax (continued)
Reconciliation of deferred tax asset / (liability)
At beginning of year 5,313,288 577,670 (1,484,872) (389,343)
Increases (decrease) in tax loss available for set off 42 (1,789,532) 1,520,309 - -
against future taxable income - gross of valuation
allowance -
8888 Deductible temporary difference movement on income - (31,209) - -
PGC Annual Report | 2014 received in advance (1,344,036) (1,286,908) -
Deductible temporary difference movement on
11. Deferred tax (continued) 5,313,288 577,670 (1,484,872) (389,343)
Reconciliation of deferred tax asset / (liability) (1,789,532) 1,520,309 - -
At beginning of year
Increases (decrease) in tax loss available for set off - (31,209) - -
against future taxable income - gross of valuation (1,344,036) (1,286,908) - -
allowance 2,130,354 1,484,872 (1,095,529)
Deductible temporary difference movement on income (418,043) - -
received in advance (173,251) (31,419) - -
Deductible temporary difference movement on (679,369) 437,395 - -
provisions (222,618) 36,189 - -
Taxable / (deductible) temporary difference on fair 183,828 - (1,484,872)
value of other financial assets 3,418,664 4,509,304
Deductible temporary difference on operating lease 5,313,288
accrual / asset
Taxable / (deductible) temporary difference
movement on prepaid expenses
Accelerated capital allowances for tax purposes
Insurance contract liabilities
12. Inventories 713,782 662,823 - -
Merchandise 506,414 285,661 - -
Production supplies
1,220,196 948,484 - -
13. Loans to directors, managers and employees 94,486 685,792 94,486 685,792
Loans to directors, managers and employees (94,486) (591,306) (94,486) (591,306)
At beginning of the year
Repayments - 94,486 - 94,486
The loans to directors, managers and employees bear no interest, are unsecured and have no repayment terms.
14. Trade and other receivables
Accrued income 289,550 302,277 - -
Deposits 1,073,477 832,434 - 10,000
Employee costs in advance 394,146 394,146 394,146
Prepayments 394,146 1,050,987 -
Amounts paid in advance* 2,724,110 - -
Value Added Taxation 2,940,754 - 450 -
Sundry debtors 3,063,821 463,865 233,191 66,938
Trade receivables 15,403,471 1,922,554 - 1,773,329
18,321,702 20,985,557 627,787 -
44,211,031 25,951,820 2,244,413
Trade and other receivables pledged as security 8899
Trade and other receivables were pledged as security for overdraft facilities of R 1,850,000 (2013: R 1,850,000) of the group. PGC Annual Report | 2014
At year end the overdraft amounted to R 789,243 (2013: R nil).
Trade receivables 18,321,702 20,985,557 - -
44,211,031 25,951,820 627,787 2,244,413
Trade and other receivables pledged as security
Trade and other receivables were pledged as security for overdraft facilities of R 1,850,000 (2013: R 1,850,000) of the group.
At year end the overdraft amounted to R 789,243 (2013: R nil).
Popcru Group of Companies Proprietar4y3 Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
14. Trade and other receivables (continued)
*Subsequent to year end the deeds office registered property in the name of PGC Investment Holdings Proprietary Limited.
The property, situated at Erf 14895 East London Township, will in future be classified as Property, Plant and Equipment.
15. Cash and cash equivalents
Cash and cash equivalents consist of:
Bank balances 80,389,740 65,335,007 1,191,655 134,651
Bank overdraft (789,243) (137,104) - -
Cash on hand 64,044 39,108 - -
Short-term deposits
20,790,123 19,189,381 5,452 1,753,902
100,454,664 84,426,392 1,197,107 1,888,553
Current assets 101,243,907 84,563,496 1,197,107 1,888,553
Current liabilities (789,243) (137,104) - -
100,454,664 84,426,392 1,197,107 1,888,553
The banking facilities of the group are secured by:
The total amount of undrawn facilities available for future operating activities and commitments
Riskcon Security Holdings Proprietary Limited 1,079,621 1,850,000 - -
Popcru Group of Companies Proprietary Limited
Suretyship by Popcru Group of Companies Proprietary Limited to Fleet Management Services limited to R 192 500.
Riskcon Security Holdings Proprietary Limited
The banking facilities of the company have been secured by:
Suretyship incorporating cession of a loan account limited to R 305 000 by Popcru Group of companies Proprietary Limited.
9900 Suretyship incorporating cession of a loan account limited to R 852 500 by Popcru Group of companies Proprietary Limited.
PGC Annual Report | 2014 Suretyship incorporating cession of a loan account limited to R 250 000 by AD Wooding, AM van der Merwe and D Strydom
each.
Popcru Group of Companies Proprietary Limited
Suretyship by Popcru Group of Companies Proprietary Limited to Fleet Management Services limited to R 192 500.
Riskcon Security Holdings Proprietary Limited
The banking facilities of the company have been secured by:
Suretyship incorporating cession of a loan account limited to R 305 000 by Popcru Group of companies Proprietary Limited.
Suretyship incorporating cession of a loan account limited to R 852 500 by Popcru Group of companies Proprietary Limited.
Suretyship incorporating cession of a loan account limited to R 250 000 by AD Wooding, AM van der Merwe and D Strydom
each.
Suretyship incorporating cession of a loan account limited to R 186 000 by AM van der Merwe, CK van Rooyen and D Strydom
each.
Suretyship incorporating cession of a loan account limited to R 139 500 by AD Wooding.
Unrestricted cession of book debts.
Unlimited suretyship by AD Wooding, D Strydom and AM van der Merwe (held by Fleet Management Services).
Suretyship limited to R 192 500 by Popcru Group of Companies Proprietary Limited (held by Fleet Management Services).
Workerslife Direct Proprietary Limited
Workerslife Direct Proprietary Limited has signed guarantees in favour of ABSA Bank Limited for office rental credit facilities
granted to Saddle Props 70 Proprietary Limited for R 30 500, Golden Pond Trading 350 Proprietary Limited for R 36 706 and
Sandringham Family Trust for an amount of R 35 891.
The following pledges are in place, cession of ABSA investments of R 500 000, ABSA account number: 20-7329-2600 of
R 310 000 and ABSA account number: 20-7347-0884 of R 190 000
Shishangeni Lodge Proprietary Limited
A pledge amounting to R 250 000 on the call account is held as security for guarantees issued by Nedbank Limited in favour of
South African National Parks. In addition there are letters of guarantee to the value of R 341 700 on the Nedbank Limited
facility.
Popcru Group of Companies Proprietar44y Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
15. Cash and cash equivalents (continued)
PGC Investment Holdings Proprietary Limited
PGC Investment Holdings Proprietary Limited has signed a guarantee in favour of Nedbank Limited for credit facilities
granted to Shishangeni Lodge Proprietary Limited amounting to R 1 000 000.
16. Stated capital
Authorised 1,000 1,000 1,000 1,000
1 000 Ordinary shares of R 1 each
PGC Annual Report | 2014 9911
100 100 100 100
Issued
100 Ordinary shares of R 1 each
PGC Investment Holdings Proprietary Limited
PGC Investment Holdings Proprietary Limited has signed a guarantee in favour of Nedbank Limited for credit facilities
granted to Shishangeni Lodge Proprietary Limited amounting to R 1 000 000.
16. Stated capital
Authorised 1,000 1,000 1,000 1,000
1 000 Ordinary shares of R 1 each
Issued 100 100 100 100
100 Ordinary shares of R 1 each
17. Distributable reserve 315,569 315,569 - -
Opening balance (315,569) - - -
Transfer to retained earnings
- 315,569 - -
There is no requirement to hold these reserves, therefore these were released to retained earnings in the current year.
18. Non-distributable reserve
Reserved funds for life licences 5,041,000 5,041,000 - -
Reserved funds for solvency 6,447,000 6,447,000 - -
Transfer to retained earnings (11,488,000) - -
- - -
- 11,488,000
19. Other financial liabilities - 14,177,471 - -
Held at amortised cost
Police and Prisons Civil Rights Union
The loan is unsecured, bears interest at prime plus 2%
and is repayable in 48 monthly installments of R 465
219 over a period of four years beginning 01 March
2012. The loan was fully repaid as at 28 February 2014.
Non-current liabilities - 9,880,588 - -
At amortised cost
Current liabilities - 4,296,883 - -
At amortised cost - 14,177,471 - -
9922 PGC Annual Report | 2014
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
20. Finance lease obligation 1,998,811 1,131,156 - 1,131,156
Minimum lease payments due 889,681 2,411,719 - 2,411,719
- within one year 3,542,875 - 3,542,875
- in second to fifth year inclusive 2,888,492 - (463,995)
(69,907) (463,995) - 3,078,880
less: future finance charges 3,078,880
Present value of minimum lease payments 2,818,585
Non-current liabilities 1,928,904 2,165,542 - -
Current liabilities 889,681 913,338 - -
2,818,585 3,078,880 - -
It is group policy to lease certain motor vehicles and equipment under finance leases. The average lease term is 5 years and
the average effective borrowing rate for the group was between 8.5% to 10% during 2014. The group's obligations under
finance leases are secured by the lessor's charge over the leased assets. Refer note 4.
21. Policyholder liabilities
Discounted insurance liabilities during the year: 3,750,133 3,958,550 - -
Discounted insurance liabilities as at the beginning of 246,159 210,751 - -
the year 225,595 256,132 - -
Expected interest on insurance liabilities (721,189) - -
Expected premiums on insurance liabilities (existing (240,738) (1,068,030) - -
business) 958,669 (92,447) - -
Expected claims, expires and lapses (102,417) 454,677 - -
Expected expenses, commission and charges (existing 30,500 - -
business) 4,116,212
Experience variances 3,750,133
Change in basis
Insurance liabilities at the end of the year
Undiscounted liabilities changes during the year: 7,365,664 4,980,984 - - 9933
Insurance liabilities beginning of the year 500,000 2,500,000 - -
Change in basis 660,910 - -
Change in data (115,320) - - PGC Annual Report | 2014
Insurance liabilities at the end of the year 8,526,574 7,365,664
Policyholder liabilities under investment contracts:
Experience variances 958,669 454,677 - -
Change in basis (102,417) 30,500 - -
Insurance liabilities at the end of the year 4,116,212 - -
3,750,133
Undiscounted liabilities changes during the year: - -
Insurance liabilities beginning of the year 7,365,664 4,980,984 - -
Change in basis 500,000 2,500,000 - -
Change in data 660,910 - -
Insurance liabilities at the end of the year (115,320)
8,526,574 7,365,664 - -
Policyholder liabilities under investment contracts: - -
Investment liabilities at the beginning of the year 2,735,848 5,520,689 - -
Expected interest on investment liabilities 151,179 328,209 - -
Expected premiums on investment liabilities (existing 532,614 668,084 - -
business) - -
Expected claims, expires and lapses (1,483,906) (1,568,272) - -
Expected expenses, commission and charges (existing (170,749) (200,903)
business)
Net cashflow 1,922,745 (2,011,957)
Investment liabilities at the end of the year 3,687,731 2,735,850
Total policyholder liabilities 16,330,517 13,851,647 - -
Incurred but not reported reserve 5,526,574 4,865,664 --
IBNR included in policyholder liability
46
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
22. Trade and other payables - 1 - -
Accrued audit fees - 185,456 - -
Amounts received in advance - 100,279 - -
Customer refunds due 277,065 448,602 3 5
Deposits received 2,973,822 799,397 - 6,088
Other payables 9,949,321 19,485,317 - -
Payroll expenses 20,374,580 20,020,379 - -
Trade payables 379,552 3,931,533 379,552 161,455
Unallocated deposits 2,294,107 1,862,908 - -
Value Added Taxation 1,659,653 - -
Accrued leave pay 262,811 - - -
Accrued bonus 38,170,911 - 379,555 167,548
9944 PGC Annual Report | 2014 46,833,872
Deposits received 277,065 448,602 3 5
Other payables 2,973,822 799,397 - 6,088
Payroll expenses 9,949,321 19,485,317 -
Trade payables 20,374,580 20,020,379 - -
Unallocated deposits 3,931,533 379,552 -
Value Added Taxation 379,552 1,862,908 - 161,455
Accrued leave pay 2,294,107 - -
Accrued bonus 1,659,653 - - -
23. Provisions - 379,555 -
Reconciliation of provisions - Group - 2014 262,811 46,833,872 167,548
38,170,911
Provision for adverse legal findings
Legal proceedings Opening Additions Reversed Total
Other provisions balance during the
Reconciliation of provisions - Group - 2013 900,000 900,000
- - year -
Legal proceedings 6,119,323 - - -
Other provisions - leave pay
199,523 900,000 (6,119,323) 900,000
6,318,846 (199,523)
(6,318,846)
Opening Utilised during Reversed Total
balance the year during the
6,119,323
6,197,112 (77,789) year 199,523
307,062 - -
6,318,846
6,504,174 (77,789) (107,539)
(107,539)
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 2014 2013 2014 2013
24. Insurance contract liabilities Liability at the Movement Liability at the
Group movement of insurance contract liabilities - 2014 beginning of end of the
the year
Constantia Insurance Company Limited OCR 10,247,462 year
Constantia Insurance Company Limited IBNR 6,357,106 2,781,609 13,029,071
Generic Insurance Company Limited IBNR 203,500 54,569 6,411,675
Generic Insurance Company Limited OCR 537,165 1,009,500 1,213,000
17,345,233 42,080 579,245
9955
47 3,887,758 21,232,991 PGC Annual Report | 2014
24. Insurance contract liabilities Liability at the Movement Liability at the
Group movement of insurance contract liabilities - 2014 beginning of end of the
the year year
Constantia Insurance Company Limited OCR 10,247,462 2,781,609 13,029,071
Constantia Insurance Company Limited IBNR 6,357,106 54,569 6,411,675
Generic Insurance Company Limited IBNR 203,500 1,009,500 1,213,000
Generic Insurance Company Limited OCR 537,165 42,080 579,245
17,345,233
3,887,758 21,232,991
Group movement of insurance contract liabilities - 2013 Liability at the Movement Liability at the
Constantia Insurance Company Limited OCR begriming of end of the
Constantia Insurance Company Limited IBNR the year year
Generic Insurance Company Limited IBNR 484,059 9,763,403 10,247,462
Generic Insurance Company Limited OCR - 6,357,106 6,357,106
- 203,500 203,500
- 537,165 537,165
484,059
16,861,174 17,345,233
Notified claims
Each notified claim is assessed on a separate, case by case basis with due regard to the specific circumstances, information
available from the insured and/or loss adjuster and past experience with similar claims. The group utilises individuals
experienced in claims handling and rigorously applies standardised policies and procedures around claims assessment. The
provision for each notified claim includes and estimate of the associated claims handling costs but excludes Value Added Tax.
The ultimate cost of the reported claims may vary as a result of future developments or better information becoming
available about the current circumstances. Case estimates are therefore reviewed regularly and updated if new information
becomes available.
Claims incurred but not reported ("IBNR")
IBNR is the total amount or value of claims owing to valid claimants who have suffered a loss but have yet to report it to the
company. The company's IBNR is calculated as a percentage of premiums written. For the current year and the comparative
periods, the IBNR was calculated by applying an estimated loss ratio of 15% to written premiums and considering a six month
average reporting delay.
Insurance contract liabilities
Insurance contract liabilities comprised of outstanding claims reserves and incurred but not reported reserves for both the
Generic Insurance Company Limited reinsurance inwards business as well as the in-substance arrangement with Constantia
Insurance Company Limited.
9966 PGC Annual Report | 2014
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
25. Financial assets by category
The accounting policies for financial instruments have been applied to the line items below:
Group - 2014
Loans and Fair value Available-for- Total
receivables through profit sale 43,052,807
or loss 38,423,100
Other financial assets 14,476,080 28,576,576 151 101,243,907
Trade and other receivables 38,423,100 - -
Cash and cash equivalents 101,243,907 - -
154,143,087 28,576,576 151 182,719,814
Group - 2013 Loans and Fair value Available-for- Total
Loans to related parties receivables through profit sale 18,927,578
Other financial assets or loss 100,411,184
Loans to directors, managers and employees 18,927,578 - -
Trade and other receivables 62,224,023 38,187,009 152 94,486
Cash and cash equivalents 94,486 - - 24,436,968
24,436,968 - - 84,563,496
84,563,496 - -
190,246,551 38,187,009 152 228,433,712
Company - 2014 Loans and Fair value Available-for- Total
Loans to related parties receivables through profit sale
Other financial assets or loss 32,510,852
Trade and other receivables 32,510,852 - - 15,764,019
Cash and cash equivalents 14,476,080 1,287,788 151
627,337 - - 627,337
1,197,107 - - 1,197,107
50,099,315
48,811,376 1,287,788 151
Company - 2013
Loans and Fair value Available-for- Total 9977
receivables through profit sale PGC Annual Report | 2014
or loss - held
Trade and other receivables 627,337 - - 627,337
Cash and cash equivalents 1,197,107 - - 1,197,107
Company - 2013 48,811,376 1,287,788 151 50,099,315
Loans to related parties Loans and Fair value Available-for- Total
Other financial assets receivables through profit sale 111,441,428
Loans to directors, managers and employees or loss - held
Trade and other receivables for trading 36,230,246
Cash and cash equivalents 111,441,428 - - 94,486
21,238,210 14,991,885 151
94,486 - - 2,177,475
2,177,475 - - 1,888,553
1,888,553 - -
136,840,152 14,991,885 151 151,832,188
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 49 2014 2013 2014 2013
26. Insurance premium revenue 293,021,041 280,763,733 - -
(355,753) (82,671) - -
Gross Premiums written - -
Insurance premiums ceded to reinsurers 292,665,288 280,681,062
Total revenue
27. Insurance claims incurred (94,939,400) (84,439,196) - -
(2,478,870) 608,576 - -
Gross claims incurred (2,823,689) - -
Movement in policyholder liabilities (1,064,069) (10,300,568) - -
Movement in outstanding claims (6,560,606) - -
Movement in incurred but not reported reserve
Total direct costs (101,306,028) (100,691,794)
28. Other income
Profit on sale of assets 4,115,364 446,827 1,326,175 306,906
Loss on exchange differences 1,297 - - -
Administration and management fees received - -
Commissions received 28,566,420 11,626,176
Discount received 635,931 554,922 635,931 554,922
Recoveries - 36,073 - -
9988 PGC Annual Report | 2014 Loans forgiven - -
3,244,289 25,720 27,018
Sundry income 5,048,176 - 36,073
Non-insurance related revenue 4,309,553 3,326,009 -
122,076,461 117,972,230 82,452 -
-
Total direct costs (101,306,028) (100,691,794) - -
28. Other income 4,115,364 446,827 1,326,175 306,906
Profit on sale of assets 1,297 - - -
Loss on exchange differences - -
Administration and management fees received 28,566,420 11,626,176
Commissions received 635,931 554,922 635,931 554,922
Discount received - 36,073 - -
Recoveries - -
Loans forgiven 3,244,289 25,720 27,018
Sundry income 5,048,176 - 36,073
Non-insurance related revenue 4,309,553 3,326,009 -
122,076,461 117,972,230 82,452 -
167,997,491 133,987,957 -
897,901
2,071,576
244,093
29. Operating (loss) profit 20,631
Operating (loss) profit for the year is stated after accounting for the following: 518,825
-
Income from subsidiaries - - 66,780
Interest 124,253
643,078
Remuneration, other than to employees, for: - 64,123,737 -
Administration fees paid
Operating lease charges 4,624,993 3,284,657 -
Premises
Straight-line basis 800,719 749,674 -
Motor vehicles
Contingent amounts 1,212,804 1,244,379 -
Equipment 6,638,516 5,278,710 -
Straight-line basis
Popcru Group of Companies Proprietary Limited
(Registration number 2004/024657/07)
Consolidated and separate financial statements for the year ended 28 February 2014
Notes to the financial statements
Consolidated Separate
Figures in Rand 50 2014 2013 2014 2013
29. Operating (loss) profit (continued) 22,409,879 105,791 - - 9999
Profit on disposal of property and equipment - (2,689,638) - -
Loss on sale of businesses (or subsidiary) 1,326,175 306,906
Profit on sale of other financial assets 1,326,175 306,906 - -
Impairment on property and equipment - 220,593 19,393,209 - PGC Annual Report | 2014
Other financial assets - loans written-off - 50,451,397 (8,240,954)
Impairment (reversal of impairment) on loans to group -
companies 4,526,380 (5,698,934)
29. Operating (loss) profit (continued) 22,409,879 105,791 - -
Profit on disposal of property and equipment - (2,689,638) - -
Loss on sale of businesses (or subsidiary) 1,326,175 306,906
Profit on sale of other financial assets 1,326,175 306,906 - -
Impairment on property and equipment - 220,593 19,393,209 -
Other financial assets - loans written-off - 50,451,397 (8,240,954)
Impairment (reversal of impairment) on loans to group - 15,933,393 -
companies 4,526,380 (5,698,934) - -
Impairment on other financial assets 76,312,417 392,636 729,514
Loss on exchange differences - 512,475 1,218,640
Depreciation on property and equipment (1,297) -
Employee costs 6,013,464 6,144,166
30. Finance income 67,092,076 63,476,167
Dividend income
Listed financial assets - local 338,316 435,941 263,530 248,729
Subsidiaries - local - - 6,000,000 144,731,583
Interest income
Debentures 338,316 435,941 6,263,530 144,980,312
Listed financial assets
Subsidiaries - - 66,780 244,093
Bank 31,220 - - -
Loans to directors managers and employees -
Other interest - 4,792,563 246,469 280,167
Other loan - RED Employee Benefits Proprietary 3,564,585 59,236 146,071 267,582
Limited 209,013
Other loan - Protea Hospitality Holdings Proprietary 42,374 1,330,743 - -
Limited 117,412 4,373,685 115,876 110,362
1,735,354
31. Finance expense - -
Bank - - 4,393,211
Finance leases
Late payment of tax 5,490,945 10,765,240 575,196 5,295,415
Non-current borrowings 5,829,261 11,201,181 6,838,726 150,275,727
Other interest paid
Trade and other payables 40,863 100,937 5 2
109 151,207 - -
110000 PGC Annual Report | 2014 26,360 40,550 - -
174,886 1,760,104 - -
2,785 6,798 - -
- 13,760 - -
245,003 2,073,356 5 2
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2014 PGC Annual Report
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