2013 PGC Annual Report

REPORT 2013

INTEGRATED ANNUAL REPORT 2012 - 2013

3

4

Contents

GROUP PROFILE 06
COMPANY PROFILE 07
DIRECTORATE 08
CORPORATE STRUCTURE 18
GEOGRAPHICAL FOOTPRINT 19
CHAIRPERSON’S REMARKS 20
GROUP CEO’S REPORT 21
FINANCE REPORT 22

5

ANNUAL REPORT 2012 - 2013

Group Profile

POPCRU Group of Companies (PGC) is a leading financial • Developing and implementing effective
services group that forms part of the investment wing of operational strategies and policies for the group.
the Police and Prisons Civil Rights Union (POPCRU).
• Minimising risk towards the shareholder.
Established in 1997, PGC Group is passionate about • Pursuing investment strategies that ensure
transformation and its strategy seeks to ensure meaningful
and broad-based business participation across South maximum returns.
Africa and beyond.
VALUES
At the core, PGC Group is focussed on the financial
services industry, and 20% of the group’s non-core • Integrity (ethical conduct, honesty and professionalism).
business is in the hospitality and security services. • Innovation (continuous improvement and creativity).
• Customer focused (customer is king – providing
As part of its corporate social responsibility, PGC Group
offers bursaries to deserving POPCRU members and excellent customer service).
children of deceased union members across the country. • Life-long learning (learning organisation and focus on

empowerment of employees).
• Shareholders first.

VISION

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

MISSION STATEMENT

An investment company providing customised
financial services, products and a diversified investment
portfolio by:
• Optimising customer value in order to increase

our client base.

6

ANNUAL REPORT 2012 - 2013

Company
Profile

POPCRU GROUP OF COMPANIES the Crocodile River currently under RISKCON SECURITY HOLDINGS
(PROPRIETARY) LIMITED the management of the Three (PROPRIETARY) LIMITED
Cities Group.
Parent Company Subsidiary
• The lodge consist of three camps:
• The POPCRU Group of Companies - Shishangeni (main camp), • Rendering of security services,
(PGC) is an investment holding - Shawu, and excluding armed response,
company and consists of a very - Shonga. mainly to the retail sector in
diversified group of companies, South Africa.
the most important of which are WORKERS LIFE GROUP
the subsidiaries and investments (PROPRIETARY) LIMITED POPCRU PROPERTY
described below. INVESTMENTS (PROPRIETARY)
Subsidiary LIMITED
WORKERSLIFE DIRECT
(PROPRIETARY) LIMITED • The group is engaged in Subsidiary
administration services, long-
Subsidiary term insurance offering normal • A property holding company
range of life products, personal consisting of various investment
• Insurance and financial services accident insurance and short- properties:
brokers which provide the term insurance. - Midrand
service of administration of - PGC House
funeral and legal policies to • The group consists of the - Brakpan
not only POPCRU members, following subsidiaries: - Nelspruit
but also to other unions in the - WorkersLife
government and private sectors. Assurance Company GEMVEST 53 (PROPRIETARY)
- WorkersLife Insurance LIMITED
SHISHANGENI LODGE Underwriters
(PROPRIETARY) LIMITED - WorkersLife Medical Subsidiary
Administrators
Subsidiary • This subsidiary is an investment
holding in Protea Hospitality
• A lodge situated in the Kruger Holdings.
National Park within the
Mpanamana Concession south of

7

Directorate EXECUTIVE
DIRECTOR
PGC BOARD ZR Mdletshe

BOARD NON
CHAIRPERSON EXECUTIVE
ST Nsele DIRECTOR
KIM Shongwe
NON
EXECUTIVE
DIRECTOR
NNU Ngcobo

8

NON NON
EXECUTIVE EXECUTIVE
DIRECTOR DIRECTOR
HL Qangule Johann
Grosskopf
NON
EXECUTIVE EXECUTIVE
DIRECTOR DIRECTOR
ST Nkosi MJ Dipela

9

Directorate cont.

WORKERSLIFE ASSURANCE & INSURANCE BOARD

BOARD EXECUTIVE
CHAIRPERSON DIRECTOR
MPN Nkutha T Mdiya

EXECUTIVE NON
DIRECTOR EXECUTIVE
MJ Dipela DIRECTOR
MFK Masemola
10

EXECUTIVE EXECUTIVE
DIRECTOR DIRECTOR
Y Peters T Nxumalo

NON NON
EXECUTIVE EXECUTIVE
DIRECTOR DIRECTOR
B Matika SM Lekhu

11

WORKERSLIFE DIRECT BOARD EXECUTIVE
DIRECTOR
BOARD Y Peters
CHAIRPERSON
ST Nkosi NON
EXECUTIVE
NON DIRECTOR
EXECUTIVE Dr S Motuba
DIRECTOR
J Dladla NON
EXECUTIVE
NON DIRECTOR
EXECUTIVE F Fields
DIRECTOR
JW Grosskopf

12

NON DIRECTOR
EXECUTIVE S van
DIRECTOR Schalkwyk
N Nzimande
13
RISKCON BOARD

EXECUTIVE
DIRECTOR
MJ Dipela

Directorate cont.

SHISHANGENI BOARD

BOARD EXECUTIVE
CHAIRPERSON DIRECTOR
KIM Shongwe MJ Dipela

NON NON
EXECUTIVE EXECUTIVE
DIRECTOR DIRECTOR
Z Matieso VS Tshabalala

14

NON NON
EXECUTIVE EXECUTIVE
DIRECTOR DIRECTOR
L Monini LL Mdingi

NON 15
EXECUTIVE
DIRECTOR
LI Thamae

Directorate cont.

PGC EXECUTIVE COMMITTEE

GROUP CEO GROUP
Zwi Mdletshe FINANCE
DIRECTOR
COMPANY Mpho Dipela
SECRETARY
Makhubalo MANAGING
Ndaba DIRECTOR:
WORKERSLIFE
16 ASSURANCE
Thulani
Nxumalo

MANAGING PGC
DIRECTOR: MARKETING
WORKERSLIFE AND
INSURANCE OPERATIONS
Tshaka Mdiya DIRECTOR
Mphile Sibande
MANAGING
DIRECTOR: 17
WORKERSLIFE
DIRECT
Yusuf Peters

Corporate Structure

15% Protea Hotel Core 100% Workers Life Insurance Limited (Formerly Bensure 34% Pensys IT and
Kimberley Insurance Underwriters) (1996/016256/06 VAT Administration (Pty)
Galactic Deals 123 (Pty) Ltd Ltd (Botswana)
(2004/003678/07) 100% Workers Life Assurance Company Limited 25% RED Employee
(Formerly Sekunjalo Life Assurance) (1993/004296/06) Benefits (Pty) Ltd
3.26% Protea Hospitality (Botswana)
Holdings (Pty) Ltd 100%Workers Life Direct (Pty) Ltd (Formerly Lesaka Employee
Benefits) (1996/018114/07) VAT//Employees Tax 6.89% Protea
12.5% Protea Hotel: Hospitality Holdings
Breakwater Lodge 100% Workers Life Management Services (Pty) Ltd (Pty) Ltd
(Formerly Twin Cities Trading 241) (2007/017899/07) VAT
9% Protea Hotel: Transit
100% Workers Bank of SA (Pty) Ltd
POPCRU POPCRU (2008/023540/07)
TRUST Group of
(IT12558/07) Companies 100% PGC Investment Holdings (Pty) Ltd
Ultimate (Pty) Ltd (Formerly POPCRU Property Investments) (2001/009559/07) VAT
holding
entity (2004/024657/07) 100% Riskcon Security Holdings (Pty) Ltd
(2007/024036/07) VAT//Employees Tax
Holding Non-Core
company and Strategic 100% Shishangeni Lodge (Pty) Ltd
Investments (2001/010470/07) VAT//Employees Tax
VAT
Employees 100%
Tax Gemvest 53 (Pty) Ltd (2005/009752/07)

100% 100% Riyabopa Training and Consulting Solutions (Pty) Ltd
PGC 2008/000300/07
Management
Services (Pty)
Ltd (Formerly
Interest Creek
Investments 102)

(2005/033303/07)

VAT//
Employees Tax

18

Geographical Makhado
Footprint
LIMPOPO
Polokwane

Rustenburg Pretoria Nelspruit
Mafikeng Braamfontein Witbank

GAUTENG
Soweto

NORTH WEST Vanderbijlpark MPUMALANGA

Klerksdorp

Upington Kimberley FREE STATE Qwaqwa Newcastle Empangeni
NORTHERN CAPE LESOTHO KWAZULU-NATAL
Bloemfontein
Pietermaritzburg
Durban

Kokstad

Umtata
Queenstown

EASTERN CAPE

East London

Worcester WESTERN CAPE Port Elizabeth
Cape Town George

19

ANNUAL REPORT 2012 - 2013

Chairperson’s
Remarks

The 2012/13 financial year was not an easy one; the global I have no doubt that this was a worthwhile investment.
economy is still reeling from the economic meltdown that The Shishangeni Lodge venture, Riskcon and our Botswana
crippled the financial sector. business have proved a sticky challenge. I am positive that
my executive team will turn these businesses around soon.
Be that as it may, sub-Saharan Africa outperformed most of
the world’s economic regions in 2012 posting a 4.8% growth I have observed the efforts made by the secretariat in
after an average growth of 5.5% in the past 10 consecutive ensuring high standards of corporate governance in
years. PGC. All executive and non-executive directors across the
group, including myself, have been attending courses
The South African economy has to date seen 14 at the Institute of Directors of Southern Africa and the
consecutive quarters of positive economic growth since Gordon Institute of Business Science and participation has
the 2008/9 recession. GDP growth however declined to been great. I cannot overemphasise the importance of
2.5% in 2012 from 3.5% in 2011 and 3.1% in 2010. Pivotal world-class corporate governance in our lives today.
to the economic recovery process has been retail trade
which is explained by the average wage increase of above The Company’s remuneration policy is tabled at the Annual
8% in the past few years, and increased employment in the General Meeting every year for a non-binding advisory vote
public sector. Due to the lack of a savings culture, most of in terms of King III recommendations. The non-binding
the disposable income is spent on consumer goods. advisory vote enables the shareholders to express their views
on the remuneration policies adopted for the remuneration
Having worked with the PGC team for a the past year after of executive directors and on their implementation.
my arrival in the group, I am quite excited with the energy
and focus the team has and I have no doubt that bigger Based on the recommendations of the Remuneration
things are yet to come under the leadership of Cde Zwi Committee, which is comprised of two independent
Mdletshe and his executive team. non-executive directors as per regulatory requirement and
supported in the main by the performance appraisals that
May I also congratulate all staff members of the group and had been conducted for both executives and the staff ,
all subsidiaries for the tireless efforts they continue to exert this committee recommended to the board and the board
for the growth of the business. Indeed, without them not accepted executives and staff remuneration , informed by
much could have been achieved. industry salary surveys as well as business efficiency.

The Workerslife brand is indeed taking its position in the I am positive moving forward that PGC will continue to
market as it continues to be seen more and more in all grow from strength to strength, and with the support
corners of the Republic. This is indeed a manifestation of and importance the shareholder attaches to this business,
how effective our marketing unit is. We do hope to see things can only get better at PGC!
more and more products coming out of our flagship brand
to address the needs of our valued clients. Looking at the Thank you!
performance numbers coming out of our Protea investment,

20

ANNUAL REPORT 2012 - 2013

Group Chief Executive
Officer’s Report

The corporate sector in SA managed The Ernst & Young 2012 fourth The insurance industry is very
to establish a sound financial quarter (Q4) report paints some dynamic lately from a regulatory
position despite the uncertain optimism in the insurance industry perspective and compliance is
economic conditions which tend to as it points to a growth in premium without doubt one of the key
discourage willingness to grow and income in Q4 and suggests attributes for success. Regulatory
expand business. further growth into 2013. The life exams are on the increase and it
insurance confidence index grew is vital that our people are always
The recent national budget in Q4 from 75 to 92 index points. ahead of the game.
as presented by Finance The risk insurance industry saw
Minister Pravin Gordhan seeks rapid growth and profitability too. Treating Customers Fairly (TCF)
to restore fiscal discipline and On the downside, the industry has become the buzz word in
shift expenditure more into saw a surge in administrative and the industry and this changes
infrastructural development marketing expenses, and also saw a the whole ball game of doing
projects which will hopefully absorb decline in full-time employees and insurance business. It goes without
bigger numbers of the unemployed. agents due to poorer performance saying therefore that as a group
Moreover, it has provided some tax in the earlier quarters which were we have to champion these
reliefs for individuals and smaller characterised by high policy lapses. initiatives and become a world
businesses with a view to boost class business.
economic activity. It also seeks As a group, it became important
to ignite initiatives to absorb the that we began to rationalise the In line with the King Code of
unemployed youth into mainstream business in light of our group Governance Principles for SA (King
economic activity. The sad part aspirations. We will be reviewing the III Code) and the Global Reporting
in SA is the fact that 70% of the way we do business in the coming Initiative (GRI) Guidelines we
unemployed are below the age year, mainly around the way we do present an integrated report on
of 35 and 64% of these have no business around client servicing economic, environmental, social
matric certificate. As such, only 5.2% in Workerslife Direct. We will also and cultural sustainability across
of the unemployed have tertiary review our IT systems and assess if the organisation for the benefit of
education which dictates that more we are geared up for the magnitude all its stakeholders.
operational type of employment of work we will be doing to improve
has to be created. good performance.

21

ANNUAL REPORT 2012 - 2013

1. FINANCIAL ANALYSIS as buying the 41 Wierda Valley The insurance business
building in Sandton, refurbishing remains robust and two non-
As at the end of February 2013, the current head office, relocating core operations (Riskcon and
the group made total revenue of and reconstruction as well as Shishangeni Lodge) remain on the
R399.3m which was a decline of branding of branches nationally, radar screen as performance has
6% from the R426m achieved in building of a robust sales strategy, not quite turned to required levels.
the previous financial year. This etc. all in an effort to improve
was due to the decline of turnover performance and tap into the In a nutshell, the group is doing
at Riskcon as the business lost potential that the business has. fairly well in the context it is in,
some accounts during the financial particularly the drastic growth
year in question. As such, the current financial year measures and rebranding phase
saw some increased expenditure it is going through. These should
Trading costs were well managed geared at this growth. Be that as start paying the expected
at R159m which was 14% better it may, trading expenses were not dividends in the coming few years
than the 2011/2 financial year adverse. in line with the aspirations of the
at R184m. This is a result of the business.
overriding cost management Operating expenses stood at
discipline that is evident R218m at the same level as the
throughout the group. previous financial year.

A gross profit of R240m was Operating profit for the year was
achieved which was not very far R38m, an improvement of 25%
from the R243m realised in the from previous year at R30m and
previous financial year. investment income declined 3%
from R11.5m to R11.2m.
Other income jumped from 173%
from R5.6m to R15.5m in the Profit before tax was up 25% at
previous financial year. R50m compared to R40m in the
2011/2 financial year.
PGC embarked on a number of
investment type expenditure such

22

ANNUAL REPORT 2012 - 2013

2. STRATEGIC PLANNING AND 3. BUILDING ACQUIRED IN every year due to individual data
IMPLEMENTATION SANDTON that we could not obtain from the
previous owners of the business.
A group strategy was held in PGC bought a building at 41 We have had to reconstruct the
Riviera at the end of 2012 and a Wierda Street in Sandton which data and we believe future audits
comprehensive implementation was earmarked as a future Head will not get this qualification.
plan has been quantified and Office.
put in place, and hinges more The IPHC church was recruited as
on the new sales model as 4. WORKERSLIFE ASSURANCE a client to Workerslife Direct and
reflected in the next financial LIFE BUSINESS deducted business by the close of
year’s budget. Prominent in the the year stood at R1m per month
strategic thrust is change in our Assurance continues to grow from with a claims’ ratio of 27%. More
sales approach, improvement in strength to strength as reflected work is being done to write up
collections, branding and product in the entities’ financials attached more members of the church.
development as well as attending to this report. This entity declared
to some key human resources a dividend of R21m to PGC in the The investment strategy recently
issues. current financial year. adopted by the Workerslife
(Assurance and Insurance) board is
Be that is it may, this entity as follows:
continues to get a qualified audit

Objective Objective Investment Benchmark / Time horizon
No Strategy Target (rolling periods)
Short-term daily
4.1.1 operational cash In-house cash deposits Suggest top Daily
4.1.2 flow with top 5 SA banks or quartile of Fund 1-3 years
Policyholder equivalent Managers
4.1.3 liabilities CPI Plus 2% p.a. 1 year
Matching if linked after costs
4.1.4 CAR ratio policies, matched to 3-5 years
product assumptions STeFI (100% CAR)
Surplus assets if non-linked, cash/ and
money market if
insurance policies CPI plus 1-2% p.a.
after costs (>100%
Cash/money market CAR)
for 100% of CAR,
conservative, focus on
capital preservation
over 12 months for
>100% of CAR (multi
asset class portfolios,
returns above cash)

Medium-term growth,
multi-asset class,
absolute return
mandates, two or
more asset managers

23

ANNUAL REPORT 2012 - 2013

5. WORKERSLIFE INSURANCE a date to be agreed on in the new motor insurance product, as well
financial year. as an investment/endowment
This entity is beginning to justify product initially before embarking
its presence in PGC as illustrated PGC adopted a resolution by the on a data based segmentation and
by its financials. Workerslife board to proceed with targeting product development
Workerslife Insurance applied to the application for liquidation approach. This will allow the
the FSB for its ‘Variation’ licence of Red Employee Benefits in business to be selling the generic
during 2012 which allows the Botswana with the aim of products whilst the segment
entity to underwrite and distribute recovering the money owed to specific products are developed
more short-term insurance Workerslife Direct. and rolled out.
products. The FSB recently
confirmed that the application A decision was also taken to The branch branding project is
was well completed and is due for change the external auditors proving successful and the group will
consideration for approval the new of Workerslife Direct to Grant be continuing with this project. KZN
financial year. Thornton for the financial year and Empangeni were completed
2013/2014. with Cape Town and Nelspruit
6. LESAKA EMPLOYEE following in the new financial year.
BENEFITS / WORKERSLIFE 7. MARKETING
DIRECT 8. HUMAN RESOURCES
The Workerslife Corporate Identity
Workerslife Direct (former Lesaka) (CI) Manual has been finalised A new HR Policy was finalised and
continues to thrive and the entity as part of the broader branding adopted by the board.
is in the verge of implementing its strategy. PGC’s and Riskcon’s CIs will
new much anticipated sales model be done in the first quarter of 2013. We have intensified training for our
which is expected to change the staff, which includes Regulatory
fate of PGC for the better. The process of new product training in the main, and hence
development is at advanced established the Midrand Training
The NUMSA issue is still pending stages. The approach is to establish Academy, whose construction is
and will be going for arbitration at a generic life, household and nearing an end.

24

ANNUAL REPORT 2012 - 2013

9. RED EMPLOYEE BENEFITS between itself and its internal Capital Adequacy Ratio is within
AND PENSYS BOTSWANA customers, plus inter-relations requirement, even after the
BUSINESS across support services and all dividend payment.
entities within the group.
There has not been much progress Workerslife Assurance and
on this matter and it seems PGC The new system to be built in IT in Workerslife Insurance are working
will have to explore liquidation of the new financial year will speak with Business Optimisation
this entity. This has become a legal to this concept at a high level to further improve the Risk
matter which is in court. and the detail will be revealed as Registers of the entity to enable
implementation happens. management and the Board
10.RISKCON SECURITY of Directors to make informed
HOLDING 13.CORPORATE GOVERNANCE decisions whilst complying with
SAM regulations.
PGC has taken its time in an effort The Business Optimisation
to turn around this business but department continued further Business Optimization is working
not much improvement has been implementation of the Group-wide with all other entities to directly
seen. As such PGC has to make a Corporate Governance five-year tie their strategic and operational
drastic move to turn around this programme to improve strategic objectives to a workable Risk
business or sell it if a buyer and operational performance Register. This process has been
is found. whilst ensuring compliance to facilitated by an outside consultant
relevant and applicable legislation/ who facilitated a Strategy
11.SHISHANGENI PRIVATE regulatory frameworks. At the end Workshop for PGC at Riviera Hotel
LODGE of this financial year, two years during November 2012.
would have been completed
The lodge is under new towards the five year programme. The BarnOwl Risk Management
management. Evident in their system was finally acquired and
operations is cost containment The programme is being installed. We have a program
without revenue growth. We will implemented on a phased to utilize the system so that
continue to assist the lodge in its basis considering the unique management and the Board are
turnaround efforts as we still believe circumstances of the different fully in control of all relevant risks
there is room for improvement. divisions, departments and using controls in place at the
The new lodge management subsidiaries in the group. organization.
has entered into a partnership
agreement with PGC. Mr T. Matsane retired as Treasurer We will expand further on
of POPCRU after fifteen (15) years governance matters in the
PGC Marketing will begin to in that position and as per the Integrated Report below.
integrate the lodge into the bigger rules and regulations of POPCRU,
PGC Marketing scheme of things he was replaced by Mr T. Ntsele as 14.SECRETARIAT OFFICE
to try and foster exposure and POPCRU’s Treasurer.
growth in bookings. Mr. Makhubalo Ndaba was
Mr Matsane is now an Executive appointed as Company Secretary
12.GROUP IT Director of HR in PGC and some of from 1st March 2013. Filling of
its subsidiaries. this position was way overdue
Key to IT’s strategy is gearing itself considering the King III’s
towards assisting all PGC’s entities The statutory interim actuarial requirements of an organization
operationally, from a policy view valuation of Workerslife our size.
point as well as facilitation of SLAs Assurance indicated that the

25

ANNUAL REPORT 2012 - 2013

Mr. Ndaba is an Advocate who product attributes and service continuous support, and do
has BJuris and LLB degrees from at the most competitive prices promise that the coming financial
the University of Transkei and an ensuring the business remains year has a lot in store for us!
LLM from the University of Central more founded on value adding
Lancashire, United Kingdom, and sustainable principles, and Z. Mdletshe
amongst others. responding to the needs of the PGC CEO
clients without the overriding
Conclusion view of profit maximization at the
PGC remains solid in its vision and expense of humanity.
mission to advance the lives of its We are in the verge of launching
clients and shareholders whilst various products to add value
remaining steadfast in meeting to our esteemed and cherished
the requirements of all key comrades who have kept us alive
stakeholders. and afloat in the past years.
The leadership of the business We thank the leadership of
remains dedicated and POPCRU, the Board of PGC,
determined to taking care of its Executive and Staff, and all
clients by offering the best of our esteemed clients for the

26

ANNUAL REPORT 2012 - 2013

Integrated Report

The report reflects the Group’s commitment to integrating economic, environmental, social and cultural
sustainability across the organization for the benefit of all its stakeholders. The compilation of this report
has been aligned with the requirements of the King Code of Governance Principles for SA (King III Code)
and complies with Global Reporting Initiative (GRI) Guidelines.

1. OUR STRATEGY PGC holds controlling • Shishangeni Lodge
shareholding interests in its • POPCRU Investments Holdings
The vision of PGC is to be a leading subsidiaries, and provides sound • Riskcon Security Holdings (PTY)
investment group within organised strategic direction and corporate
labour in Africa by providing governance. Ltd (Riskcon)
customised products to its markets • Protea Hotel Group
and ensuring investment optimal The subsidiaries of PGC are the
returns to the shareholder through following: Our strategy going to the future
growing and empowering people. • Workerslife Assurance is aligned with the overriding
Our mission is to achieve a net asset • Workerslife Insurance objective of continuing to create
value to R1 billion by 2015. PGC • Workerslife Direct sustainable value over the long
focuses 80% of its business efforts in term for all our stakeholders. We
financial services and the remainder 1.1 The non-core businesses expect that the positive outcome
of its efforts is expended on other of PGC of the combined strategy is long-
business ventures that add value to term real growth in earnings. Risk
the business and its shareholders. In line with the shareholder mandate management, processes, people,
in the previous AGM, the non- technology and knowledge are
It has presence in Botswana and is core businesses are expected to aligned with these objectives.
exploring other African countries generate 20% of the growth of PGC Strategic, economic, social,
with intent to effect investments. in general and leadership ensures a operational, and environmental
The group offers customer tailored fine balance between organic and objectives are integrated into
solutions to retail and group/ externally driven expansion. the way we do business through
corporate clients. These solutions people, processes, technology and
are informed by research and These businesses are strategic risk management.
changing client requirements in nature as they seek to identify
which the group proactively opportunities to increase 1.2 Our strategic objectives
seeks to fulfil at value-based shareholders’ wealth, either are to:
prices which are reasonably through acquisitions, mergers or
profitable without necessarily through selling. • Have a healthy balance sheet.
maximising profit. • Grow the business through

increased market share.

27

ANNUAL REPORT 2012 - 2013

• Improve profitability. the opportunities, threats and incurring unacceptable losses.
• Maintain good corporate uncertainties that PGC faces. Liquidity risk is managed by
It aims to effectively balance risk using the Capital Adequacy Ratio.
Governance and Compliance. and control. The organisation operates an
• Improve customer retention and uncomplicated low-risk liquidity
It consists of policies, methodologies, profile with the management of
loyalty. and allocation of responsibilities, liquidity risk taking preference.
governance and reporting
1.3 Our Operational structures and is based on good 2.3 Operational risk
performance objectives governance principles, the King III
are to: code and the FAIS, Long Term and This is the risk of loss resulting
Short Insurance Acts. from inadequate or failed internal
• Enhance skills development. processes, people and systems or
• Realign PGC and resources to The primary objectives of the from external events.
framework are to:
new sales model. • Protect against possible losses. All senior managers of business
• Acquire priority skills. • Integrate risk management in all optimisation, compliance, forensic,
• Introduce effective talent internal audit and IT units provide
levels of decision making. monitoring and assist business
management. • Anticipate and mitigate risk events with specialist advice, policies
• Optimise key business processes. and standards relating to various
before they become a reality. components of operational risk.
1.4 Our Social performance • Ensure earnings stability.
objectives are to: 2.4 Operational risk
2.1 Business risk mitigation programmes:
• Develop communities.
• Increase our community service This is the risk that non-performance 2.4.1 Financial Crime
against planned strategic Prevention
initiatives. objectives, the consequences of
inappropriate strategy or a decline Financial crime is a major
1.5 Our environmental in sales volumes, will have a operational risk for the company. A
objectives are to: negative impact on profitability. mitigation strategy that includes,
amongst others, the following
• Operate a business model that Business risk management is measures, is in place:
has a positive environmental overseen by the risk committee.
impact. It meets quarterly at subsidiary • Cooperation with government
level. Daily sales and claims and industry role players to ensure
2. INTEGRATED RISK volumes are monitored by the successful apprehension and
FRAMEWORK executive management. conviction of the perpetrators of
financial crime.
PGC is mainly a financial services 2.2 Funding and liquidity risk
company and as such it views • Effective and comprehensive
risk management as a means of As a company that operates in investigation and recovery of
ensuring that sustainable value the financial services sector, this losses.
is created for stakeholders in a is the risk that the organisation
responsible manner. We utilise does not have access to sufficient • Proactive identification and
integrated risk management in or acceptable cash and cash prevention of criminal acts
the setting of strategy across the equivalents to fund increases in against PGC.
organisation. It is a structured assets and meet its obligations
and disciplined approach to risk as they become due, without • Anonymous Tip-Offs are
management, aligning strategy, investigated by our forensic
processes, people, technology
and knowledge with the purpose
of evaluating and managing

28

ANNUAL REPORT 2012 - 2013

services department. identified as significant pieces Virtually all the principles set by
• Fraud awareness campaigns. of legislation and are the main the King III have been applied
2.4.2 Insurance focus of compliance function and during the reporting period, with a
management system activities of few exceptions.
A comprehensive insurance the group.
programme is maintained to 3.1 The board of directors
cover losses from fraud, theft, 2.4.5 Information Technology
professional liability claims and Risk The board of directors is
damage to physical assets. responsible for the organisation
Information technology forms the in its entirety. It instructs and
2.4.3 Business Continuity backbone of the service that PGC oversees a management and
provides to its clients. control structure that direct and
Led by our IT department, a During the reporting period, the execute all functions within the
business continuity management company has invested heavily on organisation. It also drives strategy.
team is responsible for all aspects IT infrastructure and we anticipate
of business continuity. good returns on the investment. 3.2 Composition
The IT governance framework
The business continuity framework also defines the organisational The PGC board comprises
has been approved by the board. structure as well as the policies a majority of non-executive
The business continuity and and procedures that are required directors, who are mainly
disaster recovery plan documents to facilitate good governance independent non-executive
procedures to be followed should and compliance in the areas directors, and the board is satisfied
an extreme event occur. of technology and information with this level of independent
security management. representation.
The IT disaster recovery plans form The composition of the board
part of the company’s business 3. GOVERNANCE ensures that there is a balance
continuity plan. of power and authority so that
The board remains ultimately no one individual has unfettered
2.4.4. Compliance Risk responsible for ensuring that decision-making powers. The
risks are adequately identified, roles of chairman and CEO are
PGC has a professional relationship measured, managed and separated and the chairman is
with its regulators. PGC maintains monitored and that good a non-executive director who
high levels of compliance with the governance is maintained. is considered by the board to
spirit and letter of the law working best be able to fulfil the role of
closely with regulators including The board discharges its duty chairman.
the Financial Services Board. through policies and frameworks
as well as board committees 3.3 Appointment process
The head of compliance reports and subcommittees. Executive
directly to the chief executive management, together with these All appointments to the board are
officer. The compliance function committees, manage the business formal. The process is transparent
performs continuous compliance through a system of internal and a matter for the board as a
monitoring in accordance with an controls functioning throughout whole. The chairman presides
approved compliance monitoring the entity. This promotes an over board appointments. When a
coverage plan. The Long Term awareness of risk and good vacancy exists or specific skills are
Insurance Act, Short Term governance in every area of the required, candidates are identified
Insurance Act, Financial Advisory business. Risk management is seen and recommended to the full
and Intermediary Services Act, as the responsibility of each and board for endorsement. With the
Companies Act, Consumer every employee. board’s sanction, the individual
Protection, Act and Financial is approached and, subject to
Intelligence Centre Act have been

29

ANNUAL REPORT 2012 - 2013

prior approval by the shareholder, 3.5 Meetings and quorum • Shishangeni Lodge
formally appointed. • POPCRU Investment Holdings
Shareholders have the opportunity The board meets four times a year • Riskcon Security Holdings (PTY)
at the first annual general meeting and a quorum is comprised of a
following the appointment of a majority of directors. Ltd (Riskcon)
new non-executive director, to • Protea Hotel Group
endorse the appointment. 3.6. Group and subsidiary
boards 3.7 Meetings attendance
3.4 Development
The PGC Group has three These subsidiaries have their own
Newly appointed board members subsidiaries, namely: boards which also sit four times
are formally inducted. Board • Workerslife Assurance a year.
members attend training • Workerslife Insurance
presented by the Gordon Institute • Workerslife Direct Following hereunder is a table
of Business Science and the that presents board meetings
Institute of Directors of Southern The group also has an interest in attendance:
Africa (IODSA) for and on behalf businesses of a strategic nature
of the PGC, and ad hoc training is namely:
presented in-house.

POPCRU Group of Companies Directors Board Meetings Attended

T Ntsele 4
S Maphatiane 4
Z R Mdletshe 4
M J Dipela 4
J Grosskopf 4
ST Nkosi
NN Ngcobo 3
T Matsane 3
Y Peters 3
C Nonkonyana 0
0

30

ANNUAL REPORT 2012 - 2013

Workerslife Insurance Directors Board Meetings Attended 4
Board Meetings Attended 2
P Nkutha 4
T Mdiya 3
Y Peters 3
M Masemola 3
S Lekhu 4
J Grosskopf 3
R Shaw 4
T Nxumalo
MJ Dipela 4
2
Workerslife Assurance Company Directors 4
3
P Nkutha 3
T Mdiya 3
Y Peters 4
M Masemola 3
S Lekhu 4
J Grosskopf
R Shaw
T Nxumalo
MJ Dipela

31

ANNUAL REPORT 2012 - 2013

Workerslife Direct Directors Board Meetings Attended 4
Board Meetings Attended 3
ST Nkosi 2
3
C Nonkonyana 4
J Dladla 3
F Fields 2
S Motuba 4
MJ Dipela 4
N Mlotshwa - Nzimande
J Grosskopf 1
M Dipela 1
1
Shishangeni Lodge Directors 1
1
( This Board sat only once because the company was experiencing 1
problems and was being assisted by the holding company) 1
K Shongwe
L Thamae
L Mdingi
T Matsane
Z Mathieso
V Shabalala
MJ Dipela

32

ANNUAL REPORT 2012 - 2013

Riskcon Security Holdings Directors Board Meetings Attended

T Matsane 4
MJ Dipela 4
S van Schalkwyk 4
E Makhaza 4
P Gilbert 4
S Mashaba 4
Y Bebula 1

3.8 Company secretary chairman of the board, the CEO, approved by the audit committee,
the FD and the company secretary limiting such expense to a minimal
Appointed by the board, the are mandated to deal with conflict fee. Details of amounts paid to the
company secretary acts as a of interest matters. external auditor are included in the
conduit between the board and annual financial statements. The
the organisation. The company 3.10. Independent assurance engagement partner responsible
secretary is responsible for board for the audit rotates periodically.
administration, liaison with the Both the external auditors and the
Companies and Companies and internal audit department observe 3.12 Internal audit
Intellectual Property Commission. the highest levels of business
Board members also have access and professional ethics and PGC has an internal audit
to legal and other expertise, when independence. department with direct access
required and at the cost of the to the chairmen of the boards
company through the company Management encourages regular and audit committees, reporting
secretary. coordination and consultation functionally to the committee
between the external and internal and administratively to the CEO.
As the company secretary is not a auditors to ensure an efficient Internal audit functions are
board member of any company in audit process. in accordance with a charter
the PGC group, he has maintained a approved by the audit committee.
professional relationship with board 3.11. External audit The charter formally defines
members giving direction the purpose, authority and
on good governance, as and Grant Thornton are the external responsibility of internal audit
when required. auditors of PGC in the reporting activity and is consistent with
period. External audit fees are the Institute of Internal Auditors’
3.9. Conflict of interest set annually in advance by the definition. Internal audit forms
audit committee. The extent of an integral part of the combined
Executive management and the audit determines the audit assurance model and focuses on
directors declare all interests that fee. Non-audit services rendered adding value to the operations of
may relate to PGC at executive and by the external auditors are the organisation.
board meetings respectively. There limited to ad hoc tax advice and
have been no matters of conflict other assurance-related services
in the reporting period. The within the parameters of a policy

33

ANNUAL REPORT 2012 - 2013

To this end it emphasises: 4. COMMITMENT TO SOCIETY Our primary aim is to enhance
• Evaluation of the AND THE ENVIRONMENT and promote educational
opportunities to the previously
appropriateness of and 4.1 Communities disadvantaged.
adherence to company policies
and procedures. PGC is uniquely established PGC continues to contribute
• Prevention of fraud, unethical to both generate and invest to the economic welfare and
behaviour and irregularities. financial capital on behalf of a development of communities.
• Production of quality community based organisation, Both from a humanitarian and
management information. the POPCRU (Police and Prisons image building perspectives (latter
• Sound business processes and Civil Rights Union). POPCRU has view taken by the shareholder),
associated controls. a membership base of about 170 PGC and its subsidiaries will always
000 members nationally. endeavour as a corporate citizen,
The department annually submits to respond to some societal
a coverage plan to the audit The business operates needs such as education, HIV Aids
committee for approval. The scope autonomously from the trade challenges, poverty alleviation, etc.
of this plan encompasses the union and is unique in that to help the community cope with
entire business of the organisation it generates its own funding these.
and is prepared with the (without utilising union
organisation’s strategic objectives membership fees), and its business 4.2 Bursaries and
in mind. services are extended beyond Sponsorships
the POPCRU membership. It
Internal audit is risk-based and is also unique in that, while To this end the following are some
the internal auditors submit an its roots are within “organised of the things the business has
annual assessment to the audit labour”, its business operations done:
committee on the system of and investment initiatives have
internal controls. Great emphasis is no boundaries. PGC prides itself a) The POPCRU bursary scheme
placed on the implementation and on innovative life assurance and continues to look after
efficiency of systems. In addition, insurance companies that are educationally aspiring members,
the operations environment is rooted in the values of labour as well as children of deceased
closely monitored and assurance and owned by workers. We share POPCRU members. By close of
derived that controls are adequate the belief that South Africa as the 2012/3 financial year, the
and operating effectively. a developing nation needs to number of tertiary graduates
Increased emphasis is placed on be complemented with vibrant stood at 21 compared to 12
the development of centralised corporate social investment (CSI) in the previous year. The fund
monitoring and continuous programmes in order to achieve a had 38 POPCRU members
auditing. In this process, any better life for all. undergoing tertiary studies at
deficiency detected in governance a cost of R253.5k and had 23
is referred to management for Our CSI is closely aligned with members the previous year.
action. The implementation of our overall mission. Recognising
recommendations emanating the imbalances of the past, Children of deceased members
from audits is measured. The head our considered opinion is that, in school through the fund in
of internal audit is required to through our CSI programmes we 2012 were 23 and the number
attend all audit and risk meetings can augment the various initiatives had grown from 15 in 2011, and
and submit a report at each audit by the private and public sectors R176k was being spent on these
committee. in developing education, mainly to 23 children.
the previously disadvantaged.

34

ANNUAL REPORT 2012 - 2013

From these numbers it is evident Men’s Football Championships competencies (knowledge, skills
the fund continues to make a played in Pretoria in September and attitude) and understanding
difference in people’s lives. 2012 and were given soccer necessary to fully implement
kits and a prize and trophy to and sustain a community and
b)The Johannesburg Youth compete for. partnership based approach.
Orchestra Company was given d)20 interns under the SETA’s were • To mobilize resources to support
an old building by the University invited to work at PGC and most the officers and enable them to
of Johannesburg to refurbish of them are still on various jobs deliver appropriate community
and conduct its business there. and the hope is that some of based programmes.
Refurbishment of the business them will be retained.
will cost not more than R3m • To mobilize expertise, research
and will give the anchor sponsor 4.3Safer South Africa and technical skills in support
all naming rights for good. This Foundation and enhance the work done in
means every student studying partnership with the community
in the institution will know the PGC set up and funded the Safer by the police, traffic and
brand of the anchor sponsor. South Africa Foundation which correctional officers.
participates in many community
The Johannesburg Youth based crime prevention 4.4 Employment
Orchestra is a section 21 company and offender rehabilitation
registered at the Social Welfare programmes. PGC continues to PGC has a great interest in creating
department meaning if we contribute to the viability of the employment initiatives for South
sponsored them we would get Safer South Africa Foundation Africans, more so in communities
a tax deduction and recover the whose objectives as follows: in which it operates. Since
funding. Such a venture has a life- establishment, PGC has created
time value to us for almost free • To develop the community’s more than 3300 jobs. PGC’s
as we will recover the funding. capacity to engage with approach to talent acquisition
Workerslife is the key sponsor for police, correctional and traffic and management, learning and
the building in question. officers and other practitioners development, employee relations
responsible for delivering safety and employment equity is in line
c) Four schools were visited and and security with legislative imperatives.
invited to play at the SAPSFA
• To equip the police, correctional
and traffic officers with

4.5 PGC Group Employment Equity

Occupational Males Females White Foreign Totals
level Males Nationals

A C I A C I W W Males Females

Top management 5 0 1 0 0 0 1 1 0 0 8

Senior 24 2 0 3 3 0 1 5 0 0 38

Management

Professional 3 0 0 5 00 1 5 0 0 14

Semi-skilled 1241 7 4 1866 3 2 6 16 0 0 3145

35

ANNUAL REPORT 2012 - 2013

Occupational Males Females White Foreign Totals
level Males Nationals

Skilled A C I A C I W W Males Females
Disabled
Unskilled 109 8 2 1 0 0 0 7 0 0 127
Total permanent
employees 1 0 0 0 00 0 0 0 0 1
Non-permanent
employees 8 3 0 0 00 0 0 0 0 11
Grand Total
1395 20 7 1875 6 2 9 34 0 0 3348

0 0 0 0 00 0 0 0 0 0

1395 20 7 1875 6 2 9 34 0 0 3348

4.6 Suppliers The contractual mechanism is of an Environmental Management
a concession contract which Plan. These guidelines apply to
PGC subscribes to the Codes of gives rights of occupation both construction and operational
Good Practice issued under the and commercial use of the phases and may change over
Broad-based Black Economic land together with a set of time to reflect new policies and
Empowerment Act, No 53 of 2003. obligations on the part of approaches.
It is a level four contributor and the concessionaire regarding
received a B-BBEE preferential environmental management and The rules and regulations
procurement recognition. other factors. Infringement of include the appointment of an
any of these requirements carries environmental control officer
4.7 The environment specified penalties. All aspects (ECO), protection of cultural and
of biodiversity management natural resources, biosphere
PGC operates a concession continue to be performed by manipulation, site carrying
in the Kruger National Park SANParks, consistent with the park capacity, visual impacts including
called Shishangeni Lodge. The management plan. lighting, bulk infrastructure (e.g.
concession allows the company electricity, water, communications,
to construct and operate tourism The National Parks Act and the Park waste management), the siting
facilities within the national park Regulations govern the operations construction and maintenance of
on the basis of a 20-year contract. of the concessionaire in the park roads and tracks, fire management,
Shishangeni’s mission is to create together with a comprehensive provision of artificial water points,
and maintain a reasonable balance set of environmental guidelines staff accommodation and health
between conservation, community drawn up especially for each of and safety, park access and
development, and ecotourism. the concessions. In particular each SANParks access to concessions,
The 5 star Private Game Lodge is concession is subject to a site- standards for concession vehicles,
positioned on a private concession specific Environmental Impact and codes of conduct for drives,
of 15 000 hectare in the world- Assessment and the development walks and off-road driving.
famous Kruger National Park in
South Africa.

36

ANNUAL REPORT 2012 - 2013

This famous wildlife reserve has responsibility to contribute by
the deserved status for the finest reducing their carbon footprints.
game-viewing on the continent. Due to the nature of its products
and services, PGC is a low
The global focus on climate contributor to GHG emissions with
change and the effect it has on an associated limited impact on
the environment have resulted in the environment.
corporations globally evaluating
the impact of their operations and The directors are required by
activities on the environment. The
primary focus relates to reducing
the emission of greenhouse gases
(GHG) to an acceptable level.
South Africa is committed to lower
overall national GHG emissions
and local corporates have a

37

Directors’ Responsibilities
and Approval

The directors are required by the Companies Act 71 of The directors acknowledge that they are ultimately
2008, to maintain adequate accounting records and responsible for the system of internal financial control
are responsible for the content and integrity of the established by the group and place considerable
consolidated annual financial statements and related importance on maintaining a strong control environment.
financial information included in this report. It is their To enable the directors to meet these responsibilities, the
responsibility to ensure that the consolidated annual board sets standards for internal control aimed at reducing
financial statements fairly present the state of affairs of the risk of error or loss in a cost-effective manner. The
the group as at the end of the financial year and the standards include the proper delegation of responsibilities
results of its operations and cash flows for the period within a clearly defined framework, effective accounting
then ended, in conformity with the International procedures and adequate segregation of duties to ensure
Financial Reporting Standard for Small and Medium-sized an acceptable level of risk. These controls are monitored
Entities. The external auditors are engaged to express throughout the group and all employees are required
an independent opinion on the consolidated annual to maintain the highest ethical standards in ensuring
financial statements. the group’s business is conducted in a manner that in all
reasonable circumstances is above reproach. The focus of
The consolidated annual financial statements are risk management in the group is on identifying, assessing,
prepared in accordance with the International Financial managing and monitoring all known forms of risk across
Reporting Standard for Small and Medium-sized Entities the group. While operating risk cannot be fully eliminated,
and are based upon appropriate accounting policies the group endeavours to minimise it by ensuring that
consistently applied and supported by reasonable and appropriate infrastructure, controls, systems and ethical
prudent judgments and estimates. behaviour are applied and managed within predetermined
procedures and constraints.

38

The directors are of the opinion, based on the The consolidated annual financial statements set out
information and explanations given by management, on pages 68 to 106, which have been prepared on the
that the system of internal control provides reasonable going concern basis, were approved by the board on
assurance that the financial records may be relied on 20 February 2014 and were signed on its behalf by:
for the preparation of the consolidated annual financial
statements. However, any system of internal financial Z.R. Mdletshe M.J. Dipela
control can provide only reasonable, and not absolute,
assurance against material misstatement or loss.

The directors have reviewed the group’s cash flow
forecast for the year to 28 February 2014 and, in the light
of this review and the current financial position, they are
satisfied that the group has or has access to adequate
resources to continue in operational existence for the
foreseeable future.

The external auditors are responsible for independently
reviewing and reporting on the group’s consolidated
annual financial statements. The consolidated annual
financial statements have been examined by the
group’s external auditors and their report is presented
on page 40 - 41.

39

ANNUAL REPORT 2012 - 2013

Report of the
Independent
Auditors

To the shareholder of POPCRU Group of Companies assurance whether the consolidated and separate financial
Proprietary Limited statements are free from material misstatement.

We have audited the consolidated and separate financial An audit involves performing procedures to obtain audit
statements set out on 6 to 53, which comprise the statements evidence about the amounts and disclosures in the financial
of financial position as at 28 February 2013, and the statements. The procedures selected depend on the auditor’s
statements of comprehensive income, statements of changes judgment, including the assessment of the risks of material
in equity and statement of cash flows for the year then misstatement of the financial statements, whether due to
ended, and the notes, comprising a summary of significant fraud or error. In making those risk assessments, the auditor
accounting policies and other explanatory information. considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order
Directors’ responsibility for the Financial Statements to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
The company’s directors are responsible for the opinion on the effectiveness of the entity’s internal control.
preparation and fair presentation of these consolidated An audit also includes evaluating the appropriateness
and separate financial statements in accordance with of accounting policies used and the reasonableness of
the International Financial Reporting Standard for Small accounting estimates made by management, as well as
and Medium-sized Entities, and requirements of the evaluating the overall presentation of the financial statements.
CompaTnies Act 71 of 2008, and for such internal control
as the directors determine is necessary to enable the We believe that the audit evidence we have obtained is
preparation of consolidated and separate financial sufficient and appropriate to provide a basis for our qualified
statements that are free from material misstatements, audit opinion on the consolidated financial statements and our
whether due to fraud or error. unqualified audit opinion on the separate financial statements.

Auditors’ responsibility Basis for Qualified Opinion on Consolidated Financial
Statements and Unqualified Opinion on the Separate
Our responsibility is to express an opinion on these Financial Statements
consolidated and separate financial statements based on
our audit. We conducted our audit in accordance with Profit share, sub-administration and facility fee
International Standards on Auditing. Those standards agreements
require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable As disclosed in the Directors’Report under Civil Claims, the

40

ANNUAL REPORT 2012 - 2013

subsidiary has instituted a civil claim to the amount of and its separate financial performance and separate
R57 632 815. This relates to a dispute arising over the cash flows for the year then ended in accordance with
validity and interpretation of profit share, subadministration International Financial Reporting Standards for Small
and facility fee agreements amounting to R720 062, and Medium-sized Entities, and the requirements of the
R17 248 033 and R1 868 100 in prior years respectively. Companies Act 71 of 2008.

As a result, we were unable to obtain sufficient Other matter
appropriate audit evidence over the rights and obligations
and measurement of the “operating expenses” prior to 28 Without qualifying our opinion, we draw attention to
February 2011. The outcome of this claim could have an the fact that supplementary information set out on
impact on Retained Income and Assets as disclosed in the pages 54 to 56 does not form part of the annual financial
Statement of Financial Position. This resulted in the prior statements and is presented as additional information.
period audit report also being qualified. We have not audited these schedules and accordingly
do not express an opinion thereon.
Policyholder liabilities
Other reports required by the Companies Act
The actuarial liabilities of R13 851 647 (2012: R14
460 223) as disclosed on the Statement of Financial As part of our audit of the consolidated and separate
Position, are made up of liabilities relating to insurance annual financial statements for the year ended 28
and investments contracts. We were unable to obtain February 2013, we have read the Directors’ Report for
sufficient appropriate audit evidence over the data used the purpose of identifying whether there are material
to calculate the liabilities in relation to the investment inconsistencies between this report and the audited
contracts and therefore were not able to consolidated and separate annual financial statements.
satisfy ourselves in relation to the valuation, existence This report is the responsibility of the respective preparers.
and completeness assertions with regards to the Based on reading this report we have not identified
specific part of the policyholder liabilities relating to material inconsistencies between this report and the
investment contracts amounting to R2 734 000 (2012: audited consolidated and separate financial statements.
R5 520 000). This resulted in the prior period audit However, we have not audited this report and accordingly
report also being qualified. do not express an opinion on this report.

Qualified Opinion on Consolidated Financial Grant Thornton
Statements and Unqualified Opinion on the Chartered Accountants (S.A.)
Separate Financial Statements Registered Auditors

In our opinion, except for the effects of the matters A Vieira
described in the preceding paragraph, the consolidated Chartered Accountant (S.A.)
financial statements present fairly, in all material Registered Auditor
respects, the consolidated financial position of
POPCRU Group of Companies Proprietary Limited as 20 February 2014
at 28 February 2013, and its consolidated financial
performance and consolidated cash flows for the year
then ended in accordance with International Financial
Reporting Standard for Small and Medium-sized Entities
and the requirements of the Companies Act 71 of 2008.

In our opinion the separate financial statements
present fairly the financial position of POPCRU Group of
Companies Proprietary Limited as at 28 February 2013,

41

ANNUAL REPORT 2012 - 2013

Directors’ Report

The directors submit their report for in the attached consolidated annual WorkersLife Assurance Company
the year ended 28 February 2013. financial statements and do not in our Limited have entered into a Cession
opinion require any further comment. and Barter Agreement in order to
1. Review of activities ensure full compliance with the Long-
Net profit of the group was R 37 702 Term Insurance Act by WorkersLife
Main business and operations 376 (2012: profit R 16 397 467), after Assurance Company Limited
taxation of R 12 292 716 (2012: R 23
The company holds investments in 626 965). 3. Directors’ interest in contracts
listed and unlisted companies.
2. Events after the reporting period No material contracts involving
The subsidiaries, WorkersLife directors’ interests were entered into
Assurance Company Ltd and Subsequent to year end, the Board during the year under review, other
WorkersLife Insurance Ltd provide of Directors has questioned the than transactions detailed in these
respectively long and short-term intrinsic value of the underlying annual financial statements.
insurance as defined in the Long- assets of its subsidiary, Workers
term Insurance Act and Short-term Life Assurance Company Limited. 4. Authorised and issued share
Insurance Act. WorkersLife Direct Investigations are still being pursued capital
(Pty) Ltd is a financial services broker and the matter has been referred
and provides the service to Workers to the Companies attorneys for There were no changes in the
Life Assurance Company Ltd and investigation and questioning of authorised or issued share capital
Workers Life Insurance Ltd. specifically the investment held in of the group during the year under
Trinity Asset Management Proprietary review.
Shishangeni Lodge (Pty) Ltd provides Limited. The outcome of such
lodging and conference facilities on investigations may have a negative 5. Dividends
a concession located in the Kruger effect on the non-current asset value
National Park and Riskcon Security of WorkersLife Assurance Company The dividends already declared
Holdings (Pty) Ltd provides private Limited. The amount has not yet and paid to shareholder during the
security services. been quantified and the impact on year are as reflected in the attached
the financial statements determined. statement of changes in equity.
The operating results and state of To address this, the company and
affairs of the company are fully set out

42

ANNUAL REPORT 2012 - 2013

6. Directors
The directors of the company during the year and to the date of this report are as follows:

Name Nationality Changes

T.H. Matsane South African Resigned 28 February 2013
S.H. Maphatiane South African Resigned 28 February 2013
J.W. Grosskopf South African
S.T. Nkosi South African Resigned 28 February 2013
Z.R. Mdletshe South African Resigned 28 February 2013
M.J. Dipela South African Resigned 28 February 2013
P.C. Nonkonyana South African Appointed 01 March 2012
Y. Peters South African Appointed 12 June 2013
A.T. Mashaba South African Appointed 01 August 2013
T.S. Nsele South African
K.I.M. Shongwe South African
H.L. Qangule South African

7. Secretary Postal address
The secretary of the company is M.J. Dipela of:
P.O Box 11497
Business address Hatfield
PGC House Pretoria
273 Paul Kruger Street 0028
Pretoria
0001 8. Holding entity

9. Interest in subsidiaries The company’s holding entity is POPCRU Trust
registered in South Africa.

Name of Subsidiary Net Income (loss) after tax

Gemvest 53 (Pty) Ltd 2 413 809
PGC Investment Holdings (Pty) Ltd (969 515)
POPCRU Investment (Pty) Ltd (1 623 329)
Riskcon Security Holdings (Pty) Ltd (5 513 825)
Riyabopa Training and Consulting Solutions (Pty) Ltd 1 337 697

43

ANNUAL REPORT 2012 - 2013

Name of Subsidiary Net Income (loss) after tax

Shishangeni Lodge (Pty) Ltd (2 547 798)
Workers Life Assurance Company Ltd 15 511 291
Workers Life Direct (Pty) Ltd 10 036 906
Workers Life Insurance Ltd
Workers Life Group (Pty) Ltd 5 871 850
Workers Life Management Services (Pty) Ltd 3 159 035
3 926 359

The following subsidiaries are non-trading entities (dormant):
WorkersLife Medical Aid Administrators (Pty) Ltd
Workers Bank of SA (Pty) Ltd
Khayafin (Pty) Ltd
PSU Investments (Pty) Ltd

Details of the company's investment in subsidiaries are set out in note 5.

10. Auditors For the year ended 28 February information in relation to the claim
2011 and feel the disclosures above
Grant Thornton will continue in are still appropriate. The claim, if
office in accordance with section The disputed amounts disclosed successful, can only enhance the
90 of the Companies Act 71 of in the annual financial statements prior year results. If on the other
2008. amount to R720 062, hand the claim is unsuccessful, it
R 17 248 033, R 1 868 100, will have no impact on any of the
11. Civil Claim (Workers Life R 3 873 985, R 2 032 715 and audited results to date.
Assurance Company Ltd R 279 498 relating to management
(previously Sekunjalo Life and profit share, subadministration, An amount of R3 873 986 receivable
Assurance Ltd) facility fee agreements, Zenith from Zenith Administration Services,
Administration Services control recognised in the prior year, has
For the year ended 28 February account receivable, Secondary Tax been written off in the current year
2010 on Companies and Employee Tax, and an amount of R1 409 142 for
respectively. The resolution of the the warranty claim has also been
The shareholders of the company above may materially influence written off in the current year.
has communicated its intent to claim the previous period financial
an amount of R57 632 815 from the statements. 12. Legal claim
previous shareholders. The claim
relates to unauthorised withdrawals As at 28 February 2013, the civil There is a claim by Doncaidh
from the company’s bank accounts. claim had not yet been finalised. Consulting Corporation against
The current shareholders also dispute Due to the continuing legal WorkersLife Insurance Limited for the
the profit share, administration fees process, management have not payment of damages as a
and facility fees amounting to been able to provide additional result of breach of a consultancy
R 24 476 316, R 23 144 234 and agreement. The claim is instituted
R 5 100 900 respectively.

44

ANNUAL REPORT 2012 - 2013

for R642 000 plus interest at the rate rate of 15.5% per annum from 1 May number of subsidiary companies
of 15.5% per annum, calculated 2011 until date of payment against have become dormant and will be
from 2 December 2008 until date of NUMSA Financial Services (Pty) Ltd deregistered in due course.
payment plus costs. and Union Life Limited, the one to
pay, the other to be absolved. PGC Management Services
The plaintiff avers that it introduced (Pty) Ltd (previously Interest
new business to WorkersLife The summons has not yet been Creek Investments (Pty) Ltd was
Insurance Limited (the Defendant) served, since the leaders of the disposed of to POPCRU Trust for
by 31 January 2008, which Police and Prisons Civil Rights an amount of R3 000 000. This
generated sufficient net monthly Union (POPCRU) and National company now provides the group
profit to equal the plaintiff’s cost Union of Metalworkers of South of a holistic service including
and therefore the previous main Africa (NUMSA) endeavour to finance, information technology,
agreement had to be reinstated for resolve the dispute. marketing, human resources and
the twelve month period, which governance functions.
was not done by the defendant. The claim will prescribe on 30 April
2014, should summons not be
The matter was referred to served.
arbitration but the hearing is yet to
commence. 14. Group restructure

13. Litigations During the year the directors
resolved to restructure the
Workers Life Direct (Pty) Ltd has a group in order to streamline the
claim of R 7.5 million plus interest at a reporting functions. As a result a

45

ANNUAL REPORT 2012 - 2013

Statement of
Financial Position

Assets Group Company

Non-current assets Note(s) 2013 2012 2013 2012
R R R R
Property, plant and equipment 2
Goodwill 3 69 296 719 45 100 365 857 441 1 338 739
Intangible assets 4 9 162 843 12 673 258 - -
Investments in subsidiaries 5 - - -
Investments in associates 6 - -
Loans to group companies 7 203 - 38 196 630 43 884 414
Other financial assets 8 - 203 - -
Deferred tax 9 -
Operating lease asset 98 566 184 92 684 986 53 375 659 50 936 838
803 984 577 670 34 385 246 6 719 464
80 728 12 893 -
151 049 375 - -
177 910 661 -
126 814 976 102 879 455

46

ANNUAL REPORT 2012 - 2013

Assets Group Company

Current assets Note(s) 2013 2012 2013 2012
R R R R
Inventories
Loans to group companies 10 948 484 1 035 198 - -
Loans to directors, managers
and employees 7 23 777 578 - 62 731 959 35 635 956
Other financial assets
Current tax receivable 11 94 486 685 792 94 486 685 792
Trade and other receivables
Prepayments 8 1 845 000 - 1 845 000 -
Warranty claim
Cash and cash equivalents 6 613 219 4 026 008 3 624 875 3 794 390

Total a ssets 12 25 951 820 22 127 552 2 393 638 4 932 599

308 275 2 700 000 - -

- 1 409 142 - -

13 84 563 496 96 773 659 1 888 553 9 505 485

144 102 358 128 757 351 72 578 511 54 554 222

322 013 019 279 806 726 199 393 487 157 433 677

47

ANNUAL REPORT 2012 - 2013

Equity and Liabilities Group Company

Equity attributable to Note(s) 2013 2012 2013 2012
equity holders of parent R R R R
14
Share capital 100 100 100 100
Reserves
Retained income 23 292 697 22 445 075 3 930 183 1 001 164

Non-controlling interest 203 902 857 176 046 293 179 117 763 25 477 267

227 195 654 198 491 468 183 048 046 26 478 531
- (5 084 938) - -

227 195 654 193 406 530 183 048 046 26 478 531

48

ANNUAL REPORT 2012 - 2013

Equity and Liabilities Group Company

Non-current liabilities Note(s) 2013 2012 2013 2012
R R R R
Other financial liabilities 17
Finance lease and instalment 18 23 732 235 14 460 223 - -
sale obligation 9 2 165 542 1 798 102 - -
Deferred tax
- - 1 484 872 389 343
25 897 777 16 258 325 1 484 872 389 343

Current liabilities 7 4 850 000 4 850 000 14 564 474 119 340 909

Loans from group companies 17 4 296 883 50 - -
Other financial liabilities
Current tax payable 4 328 969 10 541 212 - 127 000
Finance lease and instalment
sale obligation 18 913 338 732 694 - -
Trade and other payables
Provisions 20 46 833 873 46 866 090 296 095 11 097 894
Bank overdraft
19 7 559 421 6 988 233 - -
Total Liabilities
Total equity and liabilities 13 137 104 163 592 - -

68 919 588 70 141 871 14 860 569 130 565 803

94 817 365 86 400 196 16 345 441 130 955 146

322 013 019 279 806 726 199 393 487 157 433 677

49

ANNUAL REPORT 2012 - 2013

Statement of
Comprehensive
Income

Group Company

Note(s) 2013 2012 2013 2012
R R R R
21
Revenue 399 290 885 426 410 843 554 922 34 229 933
Cost of sales 22
Gross profit 23 (158 941 164) (183 776 003) --
Other income
24 240 349 721 242 634 840 554 922 34 229 933
Operating expenses 25
Operating profit (loss) 15 460 805 5 658 153 342 979 4 902 715
Investment revenue
Fair value adjustments (217 915 535) (218 029 104) 4 978 484 (51 263 442)
Income from equity accounted
investments 37 894 991 30 263 889 5 876 385 (12 130 794)
Finance costs
Profit (loss) before taxation 11 201 181 11 539 039 150 275 727 1 352 616
Taxation
2 972 276 (470 202) 4 068 081 (603 072)

- (488 885) --

(2 073 356) (819 409) (2) (410 240)
49 995 092 40 024 432 160 220 191 (11 791 490)
(12 292 716) (23 626 965)
(1 150 676) (508 885)

50

ANNUAL REPORT 2012 - 2013

Group Company

Note(s) 2013 2012 2013 2012
R R R R
Profit (loss) for the year
Other comprehensive income 37 702 376 16 397 467 159 069 515 (12 300 375)
Total comprehensive income
(loss) for the year -- --

37 702 376 16 397 467 159 069 515 (12 300 375)

Total comprehensive income (loss) 37 702 376 17 180 298 159 069 515 (12 300 375)
- (782 831) - -
Owners of the parent
Non-controlling interest 37 702 376 16 397 467 159 069 515 (12 300 375)

51

ANNUAL REPORT 2012 - 2013

Statement of
Changes in Equity

Share Available For Fair Value Distributable
Capital Sale Reserve Reserve Reserve

Group RR R R

Opening balance as previously reported 100 90 142 608 - -
Adjustments
Prior period error - (108 721 752) 4 514 151 -
Change in framework - (3 669 896) 3 326 344 -
Prior year adjustments - 22 249 040 450 813
Balance at 28 February 2011 as 100 - - 450 813
restated 7 840 495
Changes in equity
Total comprehensive income for the year ----
Transfer between reserves
Dividends - - 2 325 911 (135 244)
Total changes
Balance at 29 February 2012 ----
Changes in equity
Total comprehensive income for the year - - 2 325 911 (135 244)
Transfer between reserves
Balance of shares acquired in subsidiary 100 - 10 166 406 315 569
Dividends
Total changes ----
- - 1 322 722 -
Balance at 28 February 2013 ----
Note(s) ----
52 - - 1 322 722 -

100 - 11 489 128 315 569

14 15