2013 PGC Annual Report

ANNUAL REPORT 2012 - 2013

Non- Total Retained Total Non- Total Equity
Distributable Reserves Income Attributable to Controlling R
Equity Holders
RR R of The Group/ Interest

Company R
R

37 514 974 127 657 582 162 065 102 289 722 784 (4 302 107) 285 420 677

(2 712 762) (106 920 363) 122 301 (106 798 062) - (106 798 062)
- (343 552) - (343 552) - (343 552)
(139 259) - - -
(22 839 112) 139 259 (4 302 107)
11 963 100 20 254 408 162 326 662 182 581 170 178 279 063

- - 17 180 298 17 180 298 (782 831) 16 397 467
- 2 190 667 (2 190 667) - - -
- (1 270 000) -
- - 13 719 631 (1 270 000) (1 270 000)
11 963 100 2 190 667 176 046 293 15 910 298 (782 831) 15 127 467
22 445 075 198 491 468 (5 084 938) 193 406 530
-
(475 100) - 37 702 376 37 702 376 - 37 702 376
847 622 (847 622) - - -
- 5 084 938
- - (6 498 190) (6 498 190) - (1 413 252)
(475 100) - (2 500 000) (2 500 000) 5 084 938 (2 500 000)
847 622 27 856 564 28 704 186 33 789 124
11 488 000 -
16 23 292 697 203 902 857 227 195 654 227 195 654

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ANNUAL REPORT 2012 - 2013

Statement of
Changes in Equity cont.

Share Available for Fair Value Distributable
Capital Sale Reserve Reserve Reserve

RRR R

Company 100 1 544 118 - -

Opening balance as previously reported - (1 544 118) 1 544 118 -
Adjustments 100 - 1 544 118 -
Change in framework
Balance at 28 February 2011 as restated --- -
Changes in equity - - (542 954) -
Total comprehensive loss for the year --- -
Transfers between reserves - - (542 954) -
Dividends 100 - 1 001 164 -
Total changes
Balance at 29 February 2012 --- -
Changes in equity -
Total comprehensive income for the year - - 2 929 019 -
Transfers between reserves --- -
Dividends - - 2 929 019 -
Total changes 100 - 3 930 183
Balance at 28 February 2013 14
Note(s)

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ANNUAL REPORT 2012 - 2013

Non- Total Retained Total Non- Total Equity
Distributable Reserves Income Attributable to Controlling
Equity Holders
Reserve R of The Group/ Interest

RR Company RR
R

- 1 544 118 38 504 688 40 048 906 - 40 048 906

--- - --
40 048 906 - 40 048 906
- 1 544 118 38 504 688

- - (12 300 375) (12 300 375) - (12 300 375)
- --
- (542 954) 542 954 - (1 270 000)
(1 270 000) - (13 570 375)
- - (1 270 000) (13 570 375) - 26 478 531
26 478 531
- (542 954) (13 027 421)

- 1 001 164 25 477 267

- - 159 069 515 159 069 515 - 159 069 515
-
- 2 929 019 (2 929 019) --
(2 500 000) - (2 500 000)
- - (2 500 000) 156 569 515 - 156 569 515
183 048 046 - 183 048 046
- 2 929 019 153 640 496

- 3 930 183 179 117 763

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ANNUAL REPORT 2012 - 2013

Statement of Cash Flows

Equity and Liabilities Group Company

Cash flows from Note(s) 2013 2012 2013 2012
operating activities R R R R
27
Cash (used in) generated from 39 199 004 65 911 039 (10 204 799) 15 490 910
operations 28
6 391 556 7 144 475 902 204 1 217 422
Interest income 2 435 941 337 945 144 980 312 135 194
2
Dividends received 29 (2 073 356) (819 408) (2) (410 240)
(21 263 535) (27 214 441) (12 632) (6 214 715)
Finance costs 22 689 610 45 359 610 135 665 083 10 218 571

Tax paid (30 640 091) (3 424 470) (248 217) (194 504)

Net cash from operating 184 765 461 835 - -
activities
- - 3 000 000 -
Cash flows from
investing activities (11 869 314) (7 765 510) (126 070 305) (7 817 522)

Purchase of property, plant - - - 10 002 047
and equipment
11 364 090 - 1 844 644 -
Sale of property, plant and
equipment

Sale of businesses (incl subs,
JVs & Assocs)

Loans advanced to group
companies

Proceeds from loans from
group companies

Sale of financial assets

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ANNUAL REPORT 2012 - 2013

Equity and Liabilities Group Company

Note(s) 2013 2012 2013 2012
R R R R

Purchase of financial assets (16 120 970) (1 414 635) (2 509 672) (2 315 285)

Capital injection to subsidiary - - - (4 000 000)

Net cash from investing (47 081 520) (12 142 780) (115 077 568) 3 492 258
activities

Cash flows from
financing activities

Proceeds from other financial - 205 982 - -
liabilities

Repayment of other financial 13 568 845 - - -
liabilities

Movement in loans to 591 306 (685 792) 591 306 (685 792)
directors, managers and
employees

Finance lease payments 548 084 - - -

Proceeds from finance lease - 1 844 038 - -
obligations and instalment sale
agreements

Dividends paid (2 500 000) (1 270 000) (2 500 000) (1 270 000)

Net cash from financing 12 208 235 94 228 (1 908 694) (9 773 316)
activities

Total cash movement for (12 183 675) 33 311 058 18 678 821 3 937 513
the year

Cash at the beginning of 96 610 067 63 299 009 9 505 485 5 567 972
the year

Total cash at end of the year 13 84 426 392 96 610 067 1 888 553 9 505 485

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ANNUAL REPORT 2012 - 2013

Accounting
Policies

1. Presentation of consolidated out in note 32 First-time adoption each reporting period date. In
annual financial statements of the International Financial determining whether an
Reporting Standard for Small and impairment loss should be
The consolidated annual financial Medium-sized Entities. recorded in the statement of
statements have been prepared in comprehensive income, the group
accordance with the International 1.1 Significant judgements makes judgments as to whether
Financial Reporting Standard for and sources of estimation there is observable data indicating
Small and Medium-sized Entities, uncertainty a measurable decrease in the
and the Companies Act 71 of 2008. estimated future cash flows from a
The consolidated annual financial In preparing the consolidated financial asset.
statements have been prepared annual financial statements,
on the historical cost basis, except management is required to make The impairment for financial assets
for the measurement of certain estimates and assumptions that measured at cost and amortised
financial instruments at fair value. affect the amounts represented in cost is calculated for each financial
They are presented in South the consolidated annual financial asset, by reference to the financial
African Rands. statements and related disclosures. position of the debtor.
Use of available information and
International Financial Reporting the application of judgment Impairment testing
Standard for Small and is inherent in the formation of The group reviews and tests
Medium-sized Entities does not estimates. Actual results in the the carrying value of assets
currently provide any guidance future could differ from these when events or changes in
on accounting for insurance estimates which may be material circumstances suggest that the
contracts. The group has thus to the consolidated annual carrying amount may not be
applied the requirements of IFRS 4 financial statements. Significant recoverable. In addition, goodwill
for insurance contracts where judgments include: is only tested for impairment when
applicable. there is an indicator of impairment.
Financial assets measured at Assets are grouped at the lowest
These accounting policies are cost and amortised cost level for which identifiable cash
consistent with the previous The group assesses its financial flows are largely independent of
period, except for the changes set assets measured at cost and cash flows of other assets
amortised cost for impairment at

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ANNUAL REPORT 2012 - 2013

and liabilities. If there are indications that impairment As disclosed in the directors’ report, legal proceedings
may have occurred, estimates are prepared of expected are currently under way regarding the interpretation of
future cash flows for each group of assets. Expected the profit share agreement. The outcome of the legal
future cash flows used to determine the value in use of proceedings could materially impact the amount that
goodwill and tangible assets are inherently uncertain was recognised on the statement of comprehensive
and could materially change over time. income for the financial year ended 28 February 2011
and previous periods.
Estimate and assumptions relating to
policyholder liabilities The final amount of the profit share will only be
determined once the legal proceedings have been
Technical provisions finalised and the possibility exists that the amount
One of the purposes of insurance is to enable recognised in the statement of comprehensive income
policyholders to protect themselves against uncertain for the financial income for the financial period ended
future events. This uncertainty as reflected in the annual 28 February 2011 and previous periods might be
financial statements of the insurer principally arises in over-or under stated. In the event that the amount
respect of the technical provisions of the company. is overstated in the current or previous periods, an
amount could be recovered from beneficiaries of the
Technical provisions include the provisions for unearned profit share agreement. If the amount recognised in the
premiums, outstanding claims and IBNR. Unearned current or previous periods is understated, the company
premiums represent the amount of income set aside by could be obliged to make additional payments.
the insurer to cover the cost of claims that arise during the
unexpected period of risk of insurance policies in force at At year-end the legal proceedings have not been
reporting date. Outstanding claims represent the insurer’s finalised and significant uncertainty still exists regarding
estimate of the cost of settlement of claims that had the interpretation of profit-share agreement and the
occurred by the reporting date, but not yet been financially amount recognised as an expense in the statement of
settled. In addition to the inherent comprehensive income for the financial year ended 28
uncertainty of having to provide for the future events, there February 2011 and previous periods.
is also considerate uncertainty concerning the eventual
outcome of claims that had occurred but had not yet been Due to significant uncertainty regarding the
reported to the insurer by the reporting date (IBNR). interpretation of the profit-share agreement at year-
end, estimation of the possible effect of the legal
The risk environment can change quickly and unexpectedly proceedings on the statement of comprehensive
owing to a wide range of events or influences. There cannot income, statement of financial position and statement
and never will be absolute certainty when it comes to of cash flows of the company in the current and
identifying risks at an early age, measuring them sufficiently previous periods is impracticable.
or correctly estimating their real hazard potential.
1.2 Property, plant and equipment
The company’s outstanding claims provisions include
notified claims as well as incurred but not reported claims. Property, plant and equipment are tangible items that:
• are held for use in the production or supply of goods
Profit-share agreement
Significant judgment has been applied in determining or services, for rental to others or for administrative
the profit share expense recognised in the statement purposes;
of comprehensive income of Workers Life Assurance and
Company Ltd. The judgement relates to the • are expected to be used during more than one period.
interpretation on the profit share agreement which
impacted the amount recognised. Costs include costs incurred initially to acquire or
construct an item of property, plant and equipment and

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ANNUAL REPORT 2012 - 2013

costs incurred subsequently to add and condition necessary for it to down the cost, less estimated
to, replace part of, or service it. If a be capable of operating in the residual value over the useful life
replacement cost is recognised in manner intended by management. of the property, plant and
the carrying amount of an item of Property, plant and equipment is equipment, which is as follows:
property, plant and equipment, carried at cost less accumulated
the carrying amount of the depreciation and any impairment
replaced part is derecognised. losses.

This includes cost incurred to Depreciation is provided using
bring the asset to the location the straight-line method to write

Item Average useful Life

Land Infinite
Buildings 40 years
Communication radios 2 years
Furniture and fixtures 6-10 years
Motor vehicles 5 years
Office equipment 5 years
IT equipment 3 years
Computer software 2 years
Security equipment 5 years
Gym equipment 10 years
Leasehold improvements Shorter of the useful life (5 years) or lease term

The residual value, depreciation comparing the proceeds with immediately recognised in profit or
method and the useful life of the carrying amount and are loss. Internally generated goodwill
each asset are reviewed at each recognised in profit or loss in the is not recognised as an asset.
annual reporting period if there period.
are indicators present that there Goodwill is carried at cost less
is a change from the previous 1.3 Goodwill accumulated amortisation and
estimate. accumulated impairment losses.
Goodwill is initially measured Goodwill amortisation is calculated
Each part of an item of property, at cost, being the excess of the by applying the straight-line
plant and equipment with a cost business combination over the method to its estimated useful life.
that is significant in relation to the company’s interest of the net fair The group’s goodwill is amortised
total cost of the item and value of the identifiable assets, over 25 years.
have significantly different patterns liabilities and contingent liabilities.
of consumption of economical The excess of the company’s 1.4 Intangible assets
benefits is depreciated separately interest in the net fair value of the
over its useful life. Gains and losses identifiable assets, liabilities and An intangible asset is an
on disposals are determined by contingent liabilities over the cost identifiable non-monetary asset
of the business combination is without physical substance.

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ANNUAL REPORT 2012 - 2013

Intangible assets are initially Intangible assets are carried at cost are indicators present that there
recognised at cost. less any accumulated amortisation is a change from the previous
and any impairment losses. estimate.
All research and development
costs are recognised as an expense The amortisation period and Amortisation is provided to write
unless they form part of the cost the amortisation method for down the intangible assets, on a
of another asset that meets the intangible assets are reviewed at straight line basis, to their residual
recognition criteria. each reporting period date if there values as follows:

Item Useful Life

Patents, trademarks and other rights 5 years

1.5 Investments in subsidiaries Non-controlling interests in the remaining investment is measured
net assets of consolidated to fair value with the adjustment
Company consolidated annual subsidiaries are identified and to fair value recognised in profit or
financial statements recognised separately from the loss as part of the gain or loss on
The consolidated annual financial company’s interest therein, and disposal of the controlling interest.
statements incorporate the are recognised within equity.
annual financial statements of the Losses of subsidiaries attributable Company annual financial
company and all entities, including to non-controlling interests are statements
special purpose entities, which are allocated to the non-controlling In the company’s separate annual
controlled by the company. interest even if this results in a financial statements, investments
debit balance being recognised for in subsidiaries are carried at cost
Control exists when the company non-controlling interest. less any accumulated impairment.
has the power to govern the
financial and operating policies of Transactions which result in 1.6 Investments in associates
an entity so as to obtain benefits changes in ownership levels,
from its activities. where the company has control Company consolidated annual
of the subsidiary both before financial statements
The results of subsidiaries are and after the transaction are An associate is an entity over
included in the consolidated regarded as equity transaction which the company has significant
annual financial statements from and are recognised directly in the influence and which is neither a
the effective date of acquisition to statement of changes in equity. subsidiary nor a joint venture.
the effective date of disposal. Significant influence is the power
The difference between the fair to participate in the financial and
Adjustments are made when value of consideration paid or operating policy decisions of the
necessary to the annual financial received and the movement in investee but is not control
statements of subsidiaries to bring non-controlling interest for such or joint control over those policies.
their accounting policies in line transactions is recognised in
with those of the company. equity attributable to the owners An investment in associate is
of the parent. accounted for using the equity
All intra-company transactions, method. Under the equity method,
balances, income and expenses Where a subsidiary is disposed investments in associates are
are eliminated in full on of and a non-controlling carried in the consolidated
consolidation. shareholding is retained, the statement of financial position at

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ANNUAL REPORT 2012 - 2013

cost adjusted for post-acquisition 1.7 Financial instruments profit or loss are recognised in
changes in the company’s share profit or loss.
of net assets of the associate, less Classification
any impairment losses. The group classifies financial assets Regular way purchases of financial
and financial liabilities into the assets are accounted for at trade
Losses in an associate in excess following categories: date.
of the company’s interest in that • Financial assets and liabilities at
associate are recognised only to Subsequent measurement
the extent that the company fair value through profit or loss. Financial instruments at fair
has incurred a legal or constructive • Financial assets and liabilities at value through profit or loss are
obligation to make payments on subsequently measured at fair
behalf of the associate. amortised cost. value, with gains and losses arising
• Financial assets and liabilities at from changes in fair value being
Any goodwill on acquisition included in profit or loss for the
of an associate is included in cost. period.
the carrying amount of the
investment, however, a gain Classification depends on the Loans and receivables are
on acquisition is recognised purpose for which the financial subsequently measured at
immediately in profit or loss. instruments were obtained and amortised cost, using the effective
takes place at initial recognition. interest method, less accumulated
Profits or losses on transactions impairment losses.
between the company and an Initial recognition and
associate are eliminated to the measurement Derecognition
extent of the company’s interest Financial instruments are Financial assets are derecognised
therein. recognised initially when the when the rights to receive cash
group becomes a party to the flows from the investments have
When the company reduces its contractual provisions of the expired or have been transferred
level of significant influence or loses instruments. and the group has transferred
significant influence, the company substantially all risks and rewards
proportionately reclassifies the The group classifies financial of ownership.
related items which were previously instruments on initial recognition
accumulated in equity through as a financial asset, a financial Fair value determination
other comprehensive income to liability, or an equity instrument The fair value of quoted
profit or loss as a reclassification in accordance with the substance investments are based on current
adjustment. In such cases, if of the contractual arrangement. bid prices. If the market for a
an investment remains, that financial asset is not active (and for
investment is measured to fair value, Financial instruments are measured unlisted securities), the group
with the fair value adjustment being initially at fair value, except for measures such investments at cost
recognised in profit or loss as part of equity investments for which a fair less any accumulated impairment
the gain or loss on disposal. value is not determinable, which losses.
are measured at cost.
Company annual financial Impairment of financial assets
statements For financial instruments which are At each reporting date the group
An investment in an associate not at fair value through profit or assesses all financial assets, other
is carried at cost less any loss, transaction costs are included than those at fair value through
accumulated impairment. in the initial measurement of the profit or loss, to determine
instrument. whether there is objective

Transaction costs on financial
instruments at fair value through

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ANNUAL REPORT 2012 - 2013

evidence that a financial asset or ventures and associates and are is uncollectible, it is written off
group of financial assets has been recognised initially at fair value against the allowance account
impaired. plus direct transaction costs. for trade receivables. Subsequent
recoveries of amounts previously
For amounts due to the group, Loans to (from) group companies written off are credited against
significant financial difficulties of a are classified and measured at operating expenses in profit or loss.
debtor, probability that the debtor amortised cost.
will enter bankruptcy and default Trade and other payables
of payments are all considered Loans to shareholders, directors, Trade and other payables are
indicators of impairment. managers and employees initially recognised at fair value,
Loans to shareholders, directors, and are subsequently measured at
Impairment losses are recognised managers and employees are amortised cost using the effective
in profit or loss. classified and measured at interest rate method.
amortised cost.
Impairment losses are reversed Cash and cash equivalents
when an increase in the financial Trade and other receivables Cash and cash equivalents
asset’s recoverable amount can Trade and other receivables are comprise cash on hand and
be related objectively to an event measured at initial recognition at demand deposits, and other short-
occurring after the impairment fair value, and are subsequently term highly liquid investments that
was recognised, subject to the measured at amortised cost are readily convertible to a known
restriction that the carrying using the effective interest rate amount of cash and are subject
amount of the financial asset at method. Appropriate allowances to an insignificant risk of changes
the date that the impairment is for estimated irrecoverable in value. These are initially and
reversed shall not exceed what the amounts are recognised in profit subsequently recorded at fair value.
carrying amount would have been or loss when there is objective
had the impairment not been evidence that the asset is impaired. Bank overdraft and borrowings
recognised. Significant difficulties of a debtor, Bank overdrafts and borrowings
probability that the debtor will are initially measured at fair value,
Reversals of impairment losses are enter bankruptcy or financial and are subsequently measured at
recognised in profit or loss. reorganisation and default or amortised cost using the effective
delinquency in payments (more interest rate method. Any difference
Where financial assets are impaired than 30 days overdue) are between the proceeds (net of
through the use of an allowance considered indicators that the transaction costs) and the settlement
account, the amount of the loss is trade receivable is impaired. The or redemption of borrowings is
recognised in profit or loss within allowance recognised is measured recognised over the term of the
operating expenses. When such as the difference between the borrowings in accordance with
assets are written off, the write- asset’s carrying amount and the the group’s accounting policy for
off is made against the relevant present value of estimated future borrowings costs.
allowance account. Subsequent cash flows discounted at the
recoveries of amounts previously effective interest rate computed at 1.8 Tax
written off are credited against initial recognition.
operating expenses. Current tax assets and liabilities
The carrying amount of the asset Current tax for current and prior
Loans to (from) group is reduced through the use of periods is, to the extent unpaid,
companies: an allowance account and the recognised as a liability. If the
These include loans to and amount of the loss is recognised amount already paid in respect
from holding companies, fellow in profit or loss within operating of current and prior periods
subsidiaries, subsidiaries, joint expenses. When a trade receivable exceeds the amount due for those

63

ANNUAL REPORT 2012 - 2013

periods, the excess is recognised Finance leases – lessee lower of cost and selling price less
as an asset. Finance leases are recognised costs to complete and sell, on the
as assets and liabilities in the first-in, first-out (FIFO) basis.
Current tax liabilities (assets) for statement of financial position at
the current and prior periods are amounts equal to the fair value 1.11 Capital adequacy
measured at the amount expected of the leased property or, if requirement
to be paid to (recovered from) lower, the present value of the
the tax authorities, using the tax minimum lease payments. The This is the minimum requirement
rates (and tax laws) that have been corresponding liability to the as determined by the company’s
enacted or substantively enacted lessor is included in the statement appointed statutory actuary to
by the reporting period date. of financial position as a finance ensure that the company has
lease obligation. sufficient capital to meet fairly
Deferred tax assets and liabilities substantial deviations in the
A deferred tax liability is The lease payments are apportioned main parameters affecting the
recognised for all taxable between the finance charge and company’s business.
temporary differences. reduction of the outstanding liability.
The finance charge is allocated to 1.12 Impairment of assets
A deferred tax asset is recognised each period during the lease term
for all deductible temporary so as to produce a constant periodic The group assesses at each reporting
differences. rate of on the remaining balance of period date whether there is any
the liability. indication that an asset may be
Deferred tax assets and liabilities impaired. If any such indication exists,
are measured at the tax rates Operating leases - lessor the group estimates the recoverable
that are expected to apply to the Operating lease income is amount of the asset.
period when the asset is realised or recognised as income on a straight-
the liability is settled, based on tax line basis over the lease term. Irrespective of whether there is
rates (and tax laws) that have been any indication of impairment, the
enacted or substantively enacted Initial direct costs incurred in group also:
by the reporting period date. negotiating and arranging
operating leases are added to • tests goodwill, with an indefinite
Tax expenses the carrying amount of the useful life or intangible assets
Current tax and deferred taxes are leased asset and recognised as an not yet available for use for
charged or credited directly to expense over the lease term on the impairment annually by
equity if the tax relates to items same basis as the lease income. comparing its carrying amount
that are credited or charged, with its recoverable amount. This
in the same or a different period, Operating leases – lessee impairment test is performed
directly to equity. Operating lease payments are during the annual period and at
recognised as an expense on a the same time every period.
1.9 Leases straight-line basis over the lease
term. The difference between the If there is any indication that
A lease is classified as a finance amounts recognised as an expense an asset may be impaired, the
lease if it transfers substantially all and the contractual payments are recoverable amount is estimated for
the risks and rewards incidental recognised as an operating lease the individual asset. If it is not
to ownership. A lease is classified asset. This liability is not discounted. possible to estimate the recoverable
as an operating lease if it does amount of the individual asset, the
not transfer substantially all the 1.10 Inventories recoverable amount of the cash-
risks and rewards incidental to generating unit to which the asset
ownership. Inventories are measured at the belongs is determined.

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ANNUAL REPORT 2012 - 2013

If an impairment loss subsequently • It is probable that the company 1.16 Revenue (continued)
reverses, the carrying amount will be required to transfer
of the asset (or group of related economic benefits in settlement; Premium income relating to
assets) is increased to the revised and Workers Life Insurance Limited:
estimate of its recoverable amount Premiums written comprise the
(selling price less costs to complete • The amount of the obligation premiums on insurance contracts
and sell, in the case of inventories), can be estimated reliably. entered into during the period or
but not in excess of the amount billed, irrespective of whether they
that would have been determined Contingent assets and contingent relate in whole or in part to a later
had no impairment loss been liabilities are not recognised. accounting period. Premiums are
recognised for the asset (or group disclosed gross of commission
of assets) in prior years. A reversal 1.16 Revenue payable to intermediaries and
of impairment is recognised excludes value added tax where
immediately in profit or loss. Revenue from the sale of goods is applicable. An unearned premium
recognised when all the following provision is recognised for any
1.13 Share capital and equity conditions have been satisfied: portion of the premium that
relates to a future risk period.
An equity instrument is any • The group has transferred to the
contract that evidences a residual buyer the significant risks and Premium income relating to
interest in the assets of an entity rewards of ownership of the Workers Life Assurance Limited:
after deducting all of its liabilities. goods; Insurance premiums are
recognised as revenue in the
1.14 Employee benefits • The group retains neither statement of comprehensive
continuing managerial income over the insured period,
Short-term employee benefits involvement to the degree net of reinsurance premiums.
The cost of short-term employee usually associated with Premiums are raised in arrears.
benefits, (those payable within ownership nor effective control
12 months after the service is over the goods sold; Interest is recognised, in profit or
rendered, such as paid vacation loss, using the effective interest
leave and sick leave, bonuses, and • The amount of revenue can be rate method.
non-monetary benefits such as measured reliably;
medical care), are recognised in Dividends are recognised, in profit
the period in which the service is • It is probable that the economic or loss, when the company’s right
rendered and are not discounted. benefits associated with the to receive payment has been
transaction will flow to the established.
Defined contribution plans group; and
Payments to defined contribution 1.17 Borrowing costs
retirement benefit plans are • The costs incurred or to be
charged as an expense as they fall incurred in respect of the Borrowing costs are recognised as
due. transaction can be measured an expense in the period in which
reliably. they are incurred.
1.15 Provisions and
contingencies Revenue is measured at the fair The capitalisation of borrowing
value of the consideration received costs commences when:
Provisions are recognised when: or receivable and represents the • Expenditure for the asset have
• The group has an obligation at amounts receivable for
goods and services provided in occurred;
the reporting period date as a the normal course of business, net • Borrowing costs have been
result of a past event; of trade discounts and volume
rebates, and value added tax. incurred, and
• Activities that are necessary to

65

ANNUAL REPORT 2012 - 2013

prepare the asset for its intended Once a contract has been classified are calculated by projecting
use or sale are in progress. as an insurance contract, the outstanding claims and expected
classification remains unchanged future premiums and discounting
Capitalisation is suspended during for the remainder of its lifetime, the cash flows to the valuation
extend periods in which active even if the insurance risk reduces date based on the valuation
development is interrupted. significantly during the year. interest rate. The exception being
cases where an Incurred But
Capitalisation ceases when Investment contracts Not Reported (IBNR) liability has
substantially all the activities Policy contracts not classified as been established. The IBNR is an
necessary to prepare the qualifying insurance contracts are classified undiscounted liability.
asset for its intended use or sale are as investment contracts.
complete. IBNR reserves are calculated for the
Measurement annually renewable company funeral
All other borrowing costs are business, based on a percentage of
recognised as an expense in the Insurance contracts the premiums payable or run-off
period in which they are incurred. The actuarial value of the policy triangles. The IBNR is included in the
liabilities is determined using policyholder liability.
1.18 Policyholder liabilities the Published Reporting Basis as
described in the Standard of The following additional reserves
Policies are recognised when Actuarial Practice SAP104 of the were also set up:
contracts are entered into and Actuarial Society of South Africa, • Claims handling expense reserve;
premiums are charged. WorkersLife which is consistent with the
Assurance Limited issues contracts valuation method prescribed in and
that transfer insurance risk or the Long-term Insurance Act, 1998 • Data contingency reserve.
financial risk or both. A distinction (LTIA) and consistent with the
has been made between investment valuation of assets at fair value as Investment contracts
contracts and insurance contracts described in the accounting policy The valuation of liabilities for pure
accounted for under IFRS 4. for investments. The underlying linked investment contracts are
philosophy is to recognise profits based on the fair value of the
Classification prudently over the term of each underlying assets linked to the
contract consistent with the work policies. Individual policyholder
Insurance contracts done and risk borne. account balances are fully matched
A contract is classified as insurance by the underlying assets.
where WorkersLife Assurance Ltd In the valuation of liabilities,
accepts significant insurance risk provision is made for: Liability adequacy test
by agreeing with the policyholder On an annual basis, insurance
to pay benefits if a specified • The best estimate of future contracts are subject to a liability
uncertain future event (the insured experience; adequacy test. The purpose of the
event) adversely affects the test is to ensure that the liability
policyholder or other beneficiary. • The compulsory margins held is sufficient to meet all
Significant insurance risk exists prescribed in SAP104; and expected future obligations under
where it is expected that for the the contract, including guarantees
duration of the policy or part • Discretionary margins and options, using current
thereof, policy benefits payable determined to release profits estimates of future cash flows. If
on the occurrence of the insured to shareholders consistent with the test shows that the liability is
event will significantly exceed policy design and company inadequate, the entire deficiency
the amount payable on early policy. needs to be recognised in income.
termination.
In accordance with SAP104, the
majority of the insurance liabilities

66

ANNUAL REPORT 2012 - 2013

Reinsurance contracts held 1.19 Insurance contracts of Financial Position includes the
Contracts entered into by Sekunjalo outstanding claim provision and the
Life Assurance with reinsurers under Classification: provision for unearned premium.
which the company is compensated Contracts under which the company
for losses on one or more contracts accepts significant insurance risk Claims incurred
issued by the company and that from another party (the policyholder) Claims incurred consist of claims
meet the classification requirements by agreeing to compensate the and external claims handling
for insurance contracts are classified policyholder or other beneficiary if expenses paid during the
as reinsurance contracts held. a specified uncertain future event financial period together with
(the insured event) adversely affects the movement in the provision
Receivables and payables the policyholder are classified as for outstanding claims. Claims
related to insurance contracts insurance contracts and remain outstanding comprise provisions
and investment contracts classified as insurance contracts for for the company’s estimate of
Receivables and payables are the lifetime of the policy. Insurance the ultimate cost of settling all
recognised when due. These risk is risk other than financial risk claims incurred but unpaid at the
include amounts due to and from transferred from the holder of the reporting date whether reported
agents, brokers and policyholders. contract to the issuer. Financial risk is or not, and an appropriate
The impairment process for the risk of a possible future change risk margin.
receivables is similar to the process in one or more of a specified interest
for loans and receivables. rate, security price, commodity price, Whilst the directors consider that
foreign exchange rate, index of prices the provision for outstanding
Reinsurance recoveries or rates, a credit rating or credit index claims is fairly stated on the basis of
Reinsurance recoveries are or other variable, provided in the the information currently available
accounted for in the same year as case of a nonfinancial variable that to them, the ultimate liability will
the related claim. the variable is not specific to a party vary as a result of subsequent
to the contract. Insurance contracts information and events and may
Acquisition costs may also transfer some financial risk. result in significant adjustments
Incremental costs directly to the amounts provided.
attributable to the acquisition Technical provisions are based on Adjustments to the amounts of
of investment contracts with the estimated ultimate cost of all claims provisions established in
investment management services the claims notified but not settled prior years are reflected in the
should be capitalised to a deferred at the reporting date, together with financial statements for the year in
acquisition cost asset, if they are related claims handling costs and which the adjustments are made,
separately identifiable, can be reduction for the expected value of and disclosed separately if material.
measured reliably and it is probable salvage and other recoveries.
that they will be recovered. Liability adequacy test
Underwriting results are determined On an annual basis, the net
Such deferred acquisition costs on an accrual basis whereby the liability recognised for insurance
are then amortised to the income incurred cost of claims, commission contracts is tested for adequacy
statement over the term of the and related expenses are charged by discounting current estimates
contracts as the related services are against the earned proportion of of all future contractual cash flows
rendered and revenue recognised. premiums, net of reinsurance, as and comparing this amount to
However, at this point in time the detailed below. the carrying value of the liability.
company does not incur costs that Where a shortfall is identified,
meet the definition of deferrable Recognition and measurement: an additional provision is made
acquisition costs. Insurance contract liabilities, and the company recognises the
represented by the outstanding deficiency in income for the year.
claim provision in the Statement

67

ANNUAL REPORT 2012 - 2013

Notes to the
Consolidated Annual
Financial Statements

2. Property, plant and equipment

Group Cost 2013 Carrying Cost 2012 Carrying
Value Value
Buildings 66 449 393 Accumulated 43 448 695 Accumulated
Computer software 5 714 752 Depreciation 54 287 988 5 193 380 Depreciation 33 619 638
Furniture and
fixtures 15 410 131 (12 161 405) 260 444 14 131 960 (9 829 057) 212 475
Gym equipment (5 454 308) (4 980 905)
2 856 008 (11 814 583) 2 317 377
(12 554 123)

369 410 (141 503) 227 907 369 410 (104 562) 264 848

IT equipment 5 384 467 (4 197 724) 1 186 743 4 813 026 (3 677 059) 1 135 967

Land 2 555 589 (397 055) 2 158 534 2 555 589 (338 471) 2 217 118

Leasehold 5 386 961 (3 063 893) 2 323 068 2 928 621 (2 883 044) 45 577
improvements

Motor vehicles 9 078 862 (4 030 036) 5 048 826 7 493 449 (3 039 248) 4 454 201

Office equipment 1 058 016 (763 527) 294 489 998 972 (704 683) 294 289

Security 715 296 (375 343) 339 953 438 838 (247 465) 191 373
equipment

Communication 937 200 (925 169) 12 031 937 200 (841 981) 95 219
radios

Other property, 3 655 753 (3 355 025) 300 728 3 461 558 (3 209 275) 252 283
plant and
equipment

Total 116 715 830 (47 419 111) 69 296 719 86 770 698 (41 670 333) 45 100 365

68

ANNUAL REPORT 2012 - 2013

Company Cost 2013 Carrying Cost 2012 Carrying
Value Value
Computer software 3 927 654 Accumulated 3 686 454 Accumulated
Furniture and 601 509 Depreciation 16 925 601 509 Depreciation 47 608
fixtures
Gym equipment (3 910 729) 182 473 (3 638 846) 282 724
IT equipment (419 036) (318 785)

Motor vehicles 369 410 (141 503) 227 907 369 410 (104 562) 264 848
Office equipment 472 804 (427 607) 45 197 465 788 (366 334) 9 454
Leasehold
improvements 361 400 (161 678) 199 722 361 400 (89 398) 272 002
Other property, 54 608 (48 529) 6 079 54 608 (37 634) 16 974
plant and (222 474)
equipment 407 242 (303 922) 103 320 407 242 184 768
Total
472 714 (396 896) 75 818 472 714 (302 353) 170 361

6 667 341 (5 809 900) 857 441 6 419 125 (5 080 386) 1 338 739

Reconciliation of Property, Plant and Equipment - Group - 2013

Opening Additions Disposals Depreciation Impairment Total
Balance Loss
- 54 287 988
Buildings 33 457 627 23 000 697 - (2 170 336) - 260 444
-
Computer software 212 475 503 335 - (455 366) 2 856 008
-
Furniture and 2 317 377 1 278 170 - (739 539) 1 186 743
fixtures

IT equipment 1 135 965 571 441 - (520 663)

Land 2 379 127 - - - (220 593) 2 158 534
45 577 2 458 340 - (180 849) - 2 323 068
Leasehold
improvements 4 454 201 2 280 371 (78 974) (1 606 772) - 5 048 826
294 289 81 841 - (81 641) - 294 489
Motor vehicles 95 219 - - (83 188) - 12 031

Office equipment 252 283 212 236 - (163 791) - 300 728

Communication 191 373 253 660 - (105 080) - 339 953
radios 264 848 - - (36 941) - 227 907
45 100 361 (78 974) (6 144 166) (220 593) 69 296 719
Other property, plant 30 640 091
and equipment

Security equipment

Gym equipment

69

ANNUAL REPORT 2012 - 2013

Reconciliation of Property, Plant and Equipment - Group - 2012

Opening Additions Disposals Depreciation Impairment Total
Loss
Balance 33 457 627
212 475
Buildings 34 731 430 457 788 - (1 731 591) -
2 317 377
Computer software 306 817 201 519 - (295 861) -
1 135 967
Furniture and 3 593 805 116 492 - (1 392 920) -
fixtures

IT equipment 1 305 591 444 905 (16 663) (597 866) -

Land 2 541 137 - - - (162 010) 2 379 127
583 164 - - (537 587) - 45 577
Leasehold
improvements 4 296 258 1 802 675 (214 721) (1 430 011) - 4 454 201
356 626 13 825 - (76 162) - 294 289
Motor vehicles 205 425 - 95 219
300 819 (190 269) (220 756)
Office equipment 368 381 - 252 283
42 622 - (158 720)
Communication 277 774 - 191 373
radios 257 964 - - (86 401) - 264 848
48 824 372 43 825 - (36 941) (162 010) 45 100 363
Other property, plant 3 424 470 (421 653) (6 564 816)
and equipment

Security equipment

Gym equipment

70

ANNUAL REPORT 2012 - 2013

Reconciliation of Property, Plant and Equipment - Company - 2013

Opening Additions Depreciation Total
Balance
16 925
Computer software 47 608 241 201 (271 884) 182 473

Furniture and fixtures 282 724 - (100 251) 45 197
199 722
IT equipment 99 454 7 016 (61 273)
6 079
Motor vehicles 272 002 - (72 280) 75 818
Office equipment 16 974 - (10 895) 103 320
Other property, plant and equipment - (94 543) 227 907
Security equipment 170 361 - (81 448) 857 441
Gym equipment 184 768 - (36 941)
264 848 248 217 (729 515)
1 338 739

Reconciliation of Property, Plant and Equipment - Company - 2012

Opening Additions Depreciation Total
Balance
47 608
Computer software 7 262 58 466 (18 120) 282 724

Furniture and fixtures 381 747 1 228 (100 251) 99 454
272 002
IT equipment 137 182 80 461 (118 189)
16 974
Motor vehicles 344 282 - (72 280) 184 768
Office equipment 27 869 - (10 895) 170 361
Other property, plant and equipment - (81 448) 264 848
Security equipment 266 216 10 524 (94 368) 1 338 739
Gym equipment 254 205 43 825 (36 941)
257 964 194 504 (532 492)
1 676 727

71

ANNUAL REPORT 2012 - 2013

Pledged as Security Group Company

Carrying value of assets pledged 2013 2012 2013 2012
as security: R R R R

Motor vehicles 3 092 382 2 375 784 - -

These assets are subject to the terms and conditions of the instalment sale and finannce lease agreements. Refer to note 18.

Details of Properties Group Company

Glen Austin Agricultural Holdings 2013 2012 2013 2012
Ext 3, Portion 1 R R R R

Title Deed - T89144/2001 799 000 799 000 - -
Purchase price: 20 August 2001
Capitalised expenditure 2 994 232 2 404 685 - -

3 793 232 1 605685 - -

Erf 508, Pretoria (PGC House)

Title Deed - T174270/2006

Purchase price: 21 December 2006 7 000 000 7 000 000 - -

Capitalised expenditure 8 308 947 6 564 947 - -

15 308 947 13 564 947 - -

72

ANNUAL REPORT 2012 - 2013

Details of Properties Group Company

Withok Estates Agricultural 2013 2012 2013 2012
Holdings, Erf 85, 109 and 110 R R R R

Title Deed - T169234/2007 1 800 000 1 800 000 - -
Purchase price: 13 July 2007
Capitalised expenditure 162 010 162 010 - -

1 962 010 1 962 010 - -

Erf 608, Nelspruit Ext 2

Title Deed - T336585/2007

Purchase price: 30 September 2007 1 575 000 1 575 000 - -

Capitalised expenditure 180 640 180 640 - -

1 755 640 1 755 640 - -

Portion 8 of Erf 1 Wierda Valley,
Gauteng

Title Deed - T22611/2012

Purchase price: 3 April 2012 18 000 000 - - -

Capitalised expenditure 1 868 151 - - -

19 868 151 - - -

Shishangeni Lodge

A lodge built on leasehold property ----

Building costs 26 317 002 26 317 002 - -

73

ANNUAL REPORT 2012 - 2013

3. Goodwill Cost 2013 Carrying Cost 2012 Carrying
Value Value
Group 18 200 416 Accumulated 21 199 371 Accumulated
Depreciation 9 162 843 Depreciation 12 673 258
Goodwill
(9 037 573) (8 526 113)

Reconciliation of Goodwill - Group - 2013

Opening Disposal of Amortisation Total
Balance Subsidiary
(511 415) 9 162 843
Goodwill 12 673 258 (2 999 000)

Reconciliation of Goodwill - Group - 2012

Opening Impairment Amortisation Total
Balance Loss
(511 415) 12 673 258
Goodwill 16 680 400 (3 495 727)

4. Intangible assets Cost 2013 Carrying Cost 2012 Carrying
Value Value
Group 3 500 000 Accumulated 3 500 000 Accumulated
Amortisation - Amortisation -
Intellectual
property and and
Impairment impairment

(3 500 000) (3 500 000)

Reconciliation of Intangible Assets - Group - 2012

Opening Impairment Amortisation Total
Balance Loss
(1 691 667) -
Intellectual property 2 391 667 (700 000)

74

ANNUAL REPORT 2012 - 2013

5. Investments in subsidiaries % holding % holding Carrying Carrying
Amount Amount
Name of Subsidiary
2013 2012
2013 2012
12 004 989 12 004 989
WorkersLife Direct (Pty) Ltd 100,00 % 100,00 % - 9 995 464
Khayafin (Pty) Ltd -% 92,00 % - 3 000 000
PGC Management Services (Pty) Ltd -%
WorkersLife Group (Pty) Ltd 100,00 % 1 000 24 878 125
POPCRU Investment (Pty) Ltd 100,00 % 100,00 % 100 100
WorkersLife Management Services (Pty) Ltd 100,00 % 100,00 % 100 100
Shishangeni Lodge (Pty) Ltd 100,00 % 100,00 %
PGC Investment Holdings (Pty) Ltd 100,00 % 100,00 % 1 000 1 000
Riskcon Security Holdings (Pty) Ltd 100,00 % 100,00 % 100 100
WorkersLife Insurance Ltd 100,00 %
WorkersLife Assurance Company Ltd 100,00 % 55,00 % 11 430 783 5 415 108
Gemvest 53 (Pty) Ltd 100,00 % -% 13 675 855 4 000 000
Riyabopa Training and Consulting Solutions 100,00 % -% 12 514 286
(Pty) Ltd 100,00 % -% -
Impairment of investment in subsidiaries -% 100 -
100 -

49 628 413 59 294 986
(11 431 783) (15 410 572)

38 196 630 43 884 414

The carrying amounts of subsidiaries are shown net of impairment losses.
6. Investments in associates

Name of company Listed / % % Carrying Carrying
Unlisted holding holding Amount Amount
Pensys IT and Administration
(Pty) Ltd - Botswana Unlisted 2013 2012 2013 2012
RED Employee Benefits
(Pty) Ltd - Botswana 34,00 % 34,00 % 7 953 095 7 953 095

Unlisted 25,00 % 25,00 % 203 203

7 953 298 7 953 298

(7 953 095) (7 953 095)
203 203

The carrying amount of associates are shown net of impairment losses.

75

ANNUAL REPORT 2012 - 2013

7. Loans to (from) group companies

Associates Group Company

2013 2012 2013 2012
R R R R

RED Employee Benefits (Pty) Ltd 14 302 324 18 976 438 - -

Impairment of loans to associates 14 302 324 18 976 438 - -

(11 441 859) (18 976 438) - -

2 860 465 - - -

The loan is unsecured, bears interest at the publicly quoted basic rate per annum ruling from time to time at which Absa lends
an overdraft minus 1% compounded monthly in arrears. Interest on the loan is repayable quarterly. The capital amount of the
loan will be repaid over a period of 60 months after the full R20 000 000 has been made available.

Holding entity Group Company

2013 2012 2013 2012
R R R R

POPCRU Trust 3 000 000 - 3 000 000 -

POPCRU Trust (4 850 000) (4 850 000) --

(1 850 000) (4 850 000) 3 000 000 -

The above loans are unsecured, interest free and have no fixed terms of repayment.

Related entities Group Company

2013 2012 2013 2012
R R R R

PGC Management Services (Pty) Ltd 17 917 113 - 17 917 113 -

The loan is unsecured, bears no interest and is repayble within 12 months.

76

ANNUAL REPORT 2012 - 2013

Subsidiaries Group Company

2013 2012 2013 2012
RR R R

Indospan Investments (Pty) Ltd -- - 15 019 124

Gemvest 53 (Pty) Ltd - - 31 765 286 31 739 963

PGC Investment Holdings (Pty) Ltd - - 18 712 185 16 009 023

Khayafin (Pty) Ltd -- - 4 168 627

Workers Life Direct (Pty) Ltd - - (9 897 184) (6 528 943)

POPCRU Investment (Pty) Ltd -- (100) (106 799 485)

POPCRU Hotel Investments (Pty) Ltd -- - 14 467

POPCRU Hotel Holdings (Pty) Ltd -- - 6 344

Riskcon Security Holdings (Pty) Ltd - - 7 303 200 1 537 322

WorkersLife Group (Pty) Ltd - - (1 000) -

PGC Investment Holdings (Pty) Ltd - - (4 666 190) -

POPCRU Mining Investments (Pty) Ltd -- - (6 012 481)

The above loans are unsecured, bear no interest and no terms of repayment have been determined.

PGC Investment Holdings (Pty) Ltd - - 4 765 564 4 708 539
The loan is unsecured, bears interest at 6% per annum and is
repayable in monthly instalments of R77 714. - - 1 005 913 -

Riskcon Security Holdings (Pty) Ltd - - 14 127 919 14 127 919
The loan is unsecured, has no fixed terms of repayment and bears
interest at the quoted prime rate per annum ruling from time to - - 49 274 816 47 849 592
time at which Absa lends to its preferred customers, compounded
monthly in arrears. - - 933 676 903 183

PGC Investment Holdings (Pty) Ltd - - 113 324 085 16 743 194
The loan is unsecured, bears no interest and has no fixed term of
repayment. The loan is subordinated in terms of a subordination - - (32 698 054) (49 511 309)
agreement in favour of other creditors until such time that the
company’s assets, fairly valued, exceed its liabilities.

Shishangeni Lodge (Pty) Ltd
The loan is unsecured, bears no interest and has no fixed term of
repayment. The loan is subordinated in terms of a subordination
agreement in favour of other creditors until such time that the
company’s assets, fairly valued, exceed its liabilities.

Riyabopa Training and Consulting Solutions (Pty) Ltd
The loan is unsecured, bears no interest and has no fixed term of
repayment. The loan is subordinated in terms of a subordination
agreement in favour of other creditors until such time that the
company’s assets, fairly valued, exceed its liabilities.

Impairment of loans to subsidiaries

- - 80 626 031 (32 768 115)

77

ANNUAL REPORT 2012 - 2013

Group Company

2013 2012 2013 2012
R R R R

Non-current assets -- 53 375 659 50 936 838
Current assets
Current liabilities 23 777 578 - 62 731 959 35 635 956

(4 850 000) (4 850 000) (14 564 474) (119 340 909)

18 927 578 (4 850 000) 101 543 144 (32 768 115)

8. Other financial assets Group Company

At Fair Value 2013 2012 2013 2012
R R R R
Listed shares
6 374 240 5 182 082 - -
Coronation Fund Managers 7 977 663 6 719 389 7 977 663 6 719 389
BP Bernstein (Pty) Ltd Asset Managers 7 014 222 6 352 363 7 014 222
Sanlam Limited Asset Managers 16 820 884 15 650 327 -
Trinity Asset Management (Pty) Ltd 38 187 009 33 904 161 - -
14 991 885 6 719 389

The fair values of listed or quoted investments are based on the quoted market price at reporting period date.

78

ANNUAL REPORT 2012 - 2013

Equity Instruments at cost Group Company
2013 2012 2013 2012
Unlisted shares
15 15 15 -
Protea Hotels Empowerment Consortium (Pty) Ltd
15 Ordinary shares in Protea Hotels Empowerment 15 - 15 -
Consortium (Pty) Ltd, representing a 12.5% shareholding
45 45 45 -
Galactic Deals 123 (Pty) Ltd
15 Ordinary shares in Galactic Deals (Pty) Ltd, representing a 15% 1 -1 -
shareholding.
11 - -
Protea Hotels Empowerment Initiative (Pty) Ltd
45 Ordinary shares in Protea Hotels Empowerment 75 75 75 75
Initiative (Pty) Ltd, representing a 9% shareholding 152 136 151 75

Protea Hospitality Holdings (Pty) Ltd
25 096 154 Ordinary shares in Protea Hospitality Holdings (Pty) Ltd,
representing a 3.26% shareholding

Protea Hospitality Holdings (Pty) Ltd
53 036 538 Ordinary shares in Protea Hospitality Holdings (Pty) Ltd,
representing a 6.89% shareholding

PSU Investment Holdings (Pty) Ltd
75 Ordinary shares in PSU Investment Holdings (Pty) Ltd

At Amortised cost Group Company

Debentures 2013 2012 2013 2012
The debentures were issued to Riskcon R R R R
Security Holdings (Pty) Ltd on 16 February
2011. The debentures were converted into - 4 442 288 - 4 442 288
fully paid ordinary shares of par value at the
conversion rate of 9.125 ordinary shares for - 60 --
every R500 000 on 28 February 2013.

Other financial assets

79

ANNUAL REPORT 2012 - 2013

At Amortised Cost Group Company

Protea Hospitality Holdings (Pty) Ltd 2013 2012 2013 2012
The loan is unsecured. The group’s R R R R
proportionate claim on the loan to Protea
Hospitality Holdings (Pty) Ltd is 40 985 813 38 016 984 --
R54 678 232. The loan is not repayable until
2016. The group’s proportionate claim 19 393 210 17 988 645 19 393 210 -
was discounted using an internal rate of
return of 7.54% resulting in the present - 1 000 000 --
value of R40 985 812 (2012: R38 016 984). - 100 000 - 100 000
Repayment of the loan will not be claimed
until the financial position of Protea
Hospitality Holdings (Pty) Ltd has stabilised
and consistent profits are generated.
Gemvest 53 (Pty) Ltd 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.

Protea Hospitality Holdings (Pty) Ltd
The company’s proportionate claim on the
loan is R25 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 R19 393 210 (2012:
R17 988 645). Repayment of the loan will
not be claimed until the financial position
of Protea Hospitality Holdings (Pty) Ltd
has stabilised and consistent profits are
generated. The loan was transferred from
Indospan Investments (Pty) Ltd in terms of
section 45 of the Income Tax Act.

Ngwane Treated Timber (Pty) Ltd
The loan is unsecured, bears no interest and
has no fixed terms of repayment.

PSU Investment Holdings (Pty) Ltd
The loan is unsecured, bears no interest and
has no fixed terms of repayment.

80

ANNUAL REPORT 2012 - 2013

At amortised Cost Group Company

Galactic Deals 123 (Pty) Ltd 2013 2012 2013 2012
The loan is unsecured, bears no interest and R R R R
has no fixed terms of repayment.
1 845 000 - 1 845 000 -
Impairment
62 224 023 61 547 977 21 238 210 4 542 288
Total other financial assets (5 542 288) - (4 542 288)
- 56 005 689
89 909 986 21 238 210 -
62 224 023 36 230 246 6 719 464
100 411 184

Non-current Assets Group Company

At fair value 2013 2012 2013 2012
Equity instruments at cost R R R R
At amortised cost
38 187 009 33 904 161 14 991 885 6 719 389

152 2 775 136 151 75

60 379 023 56 005 689 19 393 210 -

98 566 184 92 684 986 34 385 246 6 719 464

Current Assets Group Company

At amortised cost 2013 2012 2013 2012
R R R R

1 845 000 - 1 845 000 -

100 411 184 92 684 986 36 230 246 6 719 464

81

ANNUAL REPORT 2012 - 2013

9. Deferred tax Group Company

Deferred Tax Asset / (liablity) 2013 2012 2013 2012
R R R R
Accelerated capital allowances for tax purposes
Income received in advance 7 732 (28 357) --
Operating lease asset / (liability)
Other financial assets at fair value - 31 209 --
Provisions
Prepaid expenses (1 645) 29 674 --
Tax losses available for set off against future
taxable income (3 640 670) (3 222 628) (1 484 872) (389 343)

2 174 178 3 461 086 --

(13 419) (450 813) --

2 277 808 757 499 --

803 984 577 670 (1 484 872) (389 343)

Reconciliation of Deferred Tax Group Company
Asset (liability)
2013 2012 2013 2012
At beginning of the year R R R R

Increase (decrease) in tax losses available 577 670 (17 311 780) (389 343) (61 100)
for set off against future taxable income
1 520 309 757 499 --
Originating/reversing temporary difference
on lease asset (liability) (31 419) 65 238 --

Originating difference on fair value of (418 043) (2 951 596) (1 095 529) (328 243)
financial assets
(31 209) 31 209 --
Originating/reversing temporary difference
on income received in advance (1 286 908) 3 171 206 --

Originating/ (reversing) temporary 36 189 (1 242 773) --
difference on provisions
437 395 (450 813) --
Accelerated capital allowances for tax
purposes - 18 509 480 --

(Originating)/reversing temporary
difference on prepaid expenses

Originating/reversing temporary difference
in other comprehensive income

803 984 577 670 (1 484 872) (389 343)

82

ANNUAL REPORT 2012 - 2013

10. Inventories Group Company

Merchandise 2013 2012 2013 2012
Production supplies R R R R

662 823 752 397 --

285 661 282 801 --

948 484 1 035 198 --

11. Loans to directors, managers and employees

Loans to Directors, Managers and Group Company
Employees
2013 2012 2013 2012
At beginning of the year R R R R
Repayments
685 792 685 792 685 792 685 792

(591 306) - (591 306) -

94 486 685 792 94 486 685 792

The loans to directors, managers and employees bear no interest, are unsecured and have no repayment terms.

12. Trade and other receivables Group Company

Accrued income 2013 2012 2013 2012
Deposits R R R R
Employee costs in advance
Sundry debtors 302 277 31 937 --
Prepayments
Trade receivables 832 434 455 817 10 000 10 000
VAT
394 146 - 394 146 -

1 773 329 1 371 777 1 773 329 1 371 777

1 050 987 1 875 676 - 118 050
21 134 782 18 277 172 149 225 3 432 772

463 865 115 173 66 938 -
25 951 820 22 127 552 2 393 638 4 932 599

83

ANNUAL REPORT 2012 - 2013

13. Cash and cash equivalents Group Company

Cash and Cash Equivalents 2013 2012 2013 2012
Consist of: R R R R

Bank balances 65 335 007 76 963 240 134 651 2 832 722
Bank overdraft
Cash on hand (137 104) (163 592) --
Short-term deposits
39 108 36 403 - 1 822
Current assets
Current liabilities 19 189 381 19 774 016 1 753 902 6 670 941

84 426 392 96 610 067 1 888 553 9 505 485

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

(137 104) (163 592) --

84 426 392 96 610 067 1 888 553 9 505 485

Group Company

2013 2012 2013 2012
R R R R

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 (Pty) Ltd 1 850 000 1 850 000 - -

Suretyship by POPCRU Group of Companies (Pty) Ltd to Fleet Management Services limited to R192 500.
The book debts of Riskcon Security Holdings (Pty) Ltd have been ceded to the bank for overdraft facilities.
Workers Life Direct (Pty) Ltd has signed guarantees in favour of Absa Bank Ltd for office rental credit facilities granted to
Golden Pond Trading 350 (Pty) Ltd for R36 706.26 and Sandringham Family Trust for an amount of R35 891.08.

84

ANNUAL REPORT 2012 - 2013

14. Share capital Group Company

Authorised 2013 2012 2013 2012
R R R R
1 000 Ordinary shares of R1 each
1 000 1 000 1 000 1 000
Issued
Group Company
Ordinary
2013 2012 2013 2012
R R R R

100 100 100 100

15. Distributable reserve

Group Company

2013 2012 2013 2012
R R R R

Opening balance 315 569 450 813 - -

Transfer to retained earnings - (135 244) - -

315 569 315 569 - -

Workers Life Insurance Ltd
Under the Short-term Insurance Act, the company is required to raise a contingency reserve of 10% of premiums
written less approved reinsurance (as defined by the Act). However, effective 1 January 2012, this requirement was
repealed and the company is no longer required to hold such a reserve. Given the move of the old Book of Business
to another underwriter, coupled with the risk that IBNR claims at the date of transfer may not have been honoured,
management has taken the decision to maintain the above reserve to cover any such claims that may arise, for a
period of 3 years since date of transfer.

85

ANNUAL REPORT 2012 - 2013

16. Non-distributable reserve Group Company

Reserved funds for Life Licences 2013 2012 2013 2012
Reserved funds for Solvency R R R R

5 041 000 6 629 000 --

6 447 000 5 334 100 --

11 488 000 11 963 100 --

17. Other financial liabilities Group Company

At Amortised Cost 2013 2012 2013 2012
R R R R
Police and Prisons Civil Rights Union
The loan is unsecured, bears interest at prime 14 177 471 - --
plus 2% and is repayable in 48 monthly
instalments of R465 219 over a period of four 13 851 647 14 460 223 --
years beginning 1 March 2012. --
Policyholders liability - 50 --
Refer to details below.
MP Ntsobi 28 029 118 14 460 273 --
The loan is unsecured, interest free and has no
fixed terms of repayment. 23 732 235 14 460 223 --
--
Non-current liabilities 4 296 883 50
28 029 118 14 460 273
At amortised cost

Current liabilities

At amortised cost

86

ANNUAL REPORT 2012 - 2013

PolicyholdersLiability Group Company

Discounted insurance liabilities during the year: 2013 2012 2013 2012
Discounted insurance liabilities as at the R R R R
beginning of the year
Expected interest on insurance liabilities -- --
Expected premiums on insurance liabilities
(existing business) 3 959 000 4 241 000 --
Expected claims, expires and lapses
Expected expenses, commission and charges 211 000 275 000 --
(existing business) 256 000 285 000 --
Experience variances
Changes in basis (1 068 000) (1 006 000) --
Insurance liabilities at the end of the year (92 000) (100 000) --

455 000 218 000 --
30 647 46 223 --
--
3 751 647 3 959 223

Undiscounted Liabilities Changes Group Company
During the Year:
2013 2012 2013 2012
Insurance liabilities beginning of R R R R
the year
Change in basis 4 981 000 5 185 000 --
Change in data
Insurance liabilities at the end of the year 2 500 000 - --
(115 000) (204 000) --
7 366 000 4 981 000 --

87

ANNUAL REPORT 2012 - 2013

Policyholder Liabilities under Group Company
Investment Contracts
2013 2012 2013 2012
Investment contract liabilities at the R R R R
beginning of the year
Expected interest on investment 5 520 000 4 828 000 - -
liabilities
Expected premiums on investment liabilities 327 000 345 000 --
(existing business)
Expected claims, expires and lapses 668 000 687 000 --
Expected expenses, commission and
charges (existing business) (1 568 000) (774 000) --
Net cash flow (201 000) (199 000) --
Insurance liabilities at the end of the year
(2 012 000) 633 000 --
2 734 000 5 520 000 --

Total policyholder liabilities 13 851 647 14 460 223 --

18. Finance lease and instalment sale obligation

Minimum Lease Payments Due Group Company

within one year 2013 2012 2013 2012
in second to fifth year inclusive R R R R

less: future finance charges 1 131 156 911 760 --
Present value of minimum lease payments
2 411 719 2 012 551 --

3 542 875 2 924 311 --

(463 995) (393 515) --

3 078 880 2 530 796 --

Non-current liabilities 2 165 542 1 798 102 - -
Current liabilities
913 338 732 694 - -

3 078 880 2 530 796 - -

It is group policy to lease certain motor vehicles under finance leases.

The average lease term is 5 years and the average effective borrowing rate for the group was between 8.5% and 10% in
2012 and 2013.

The group’s obligations under finance leases are secured by the leased assets. Refer note 2.

88

ANNUAL REPORT 2012 - 2013

19. Provisions Utilised Reversed Total
during during the
Reconciliation of Provisions - Group - 2013 the year 6 119 323
Opening Additions year 199 523
balance (77 789)
- 1 240 575
Legal proceedings 6 197 112 - - 7 559 421
Other provisions - leave pay 307 062 - (107 539)
Gross outstanding claims 484 059 756 516 - Total
-
6 988 233 756 516 6 197 112
(77 789) (107 539) 307 062
484 059
Reconciliation of Provisions - Group - 2012 Utilised Reversed
during during the 6 988 233
Opening Additions the year
balance year
(1 365 035)
Legal proceedings 8 339 469 - (777 322)
Other provisions - leave pay 149 346 157 716 -
Gross outstanding claims 315 569 -
- 168 490
8 804 384 -
157 716
(1 196 545) (777 322)

Underwriting insurance risks incorporate unpredictability and becoming available about the current circumstances.
the company recognises that it is impossible to predict with Case estimates are therefore reviewed regularly and
absolute certainty future claims payable under existing and updated if new information becomes available.
past insurance contacts. To this end, the company has, over
time, developed a methodology that is aimed at establishing Claims incurred but not reported (“IBNR”)
insurance provisions that have a reasonable likelihood of IBNR is the total amount of value of claims owing to valid
being adequate to settle all its insurance obligations. claimants who have suffered a loss but have yet to report
it to the company. The company’s IBNR is calculated as
The outstanding claims provisions include notified claims a percentage of premiums written. For the current year
as well as incurred but not yet reported claims. and the comparative period the IBNR was calculated at
7% of written premium. The IBNR percentage includes a
Notified claims best estimate reserve and implicit risk margins. The best
Each notified claim is assessed on a separate, case by estimate represents the expected value of the insurance
case basis with due regard to the specific circumstances, liabilities with a 50% level of certainty i.e. the midpoint
information available from the insured and/or loss adjuster in a range of possible outcomes in the development
and past experience with similar claims. The company utilises of unreported claim liabilities. Implicit risk margins are
individuals experienced in claims handling and rigorously added to the best estimate to reflect the uncertainty
applies standardised policies and procedures around claims in the ultimate cost of claim. The risk margins are not
assessment. The provision for each notified claim includes an determined statistically but represent an allowance
estimate of the associated claims handling costs but excludes based on judgment for instances where the actual
Value Added Tax. claims development could be more severe than the best
estimate liability. The appropriateness of the risk margins
The ultimate cost of the reported claims may vary as is assessed against the past claims experience.
a result of future developments or better information

89

ANNUAL REPORT 2012 - 2013

20. Trade and other payables Group Company

Accrued audit fees 2013 2012 2013 2012
Unallocated deposits R R R R
Payroll expenses
Amounts received in advance 0- --
Deposits received
Other payables 3 931 533 3 018 461 --
Customer refunds due
Trade payables 19 485 317 26 337 761 - 5 611 565
VAT
185 456 15 616 --
21. Revenue
448 603 394 241 --
Commission received
Premiums received 799 398 7 774 849 161 460 4 063 961
Miscellaneous other revenue
Referral fee 100 279 128 222 --
Rendering of services
Rental Income 20 020 379 5 828 785 134 635 1 134 061

90 1 862 908 3 368 155 - 288 307

46 833 873 46 866 090 296 095 11 097 894

Group Company

2013 2012 2013 2012
R R R R

154 021 660 163 749 807 554 922 441 385

126 459 420 113 214 414 --

290 026 54 458 --

-- - 33 788 548

116 014 099 149 423 709 --

2 505 680 (31 545) --

399 290 885 426 410 843 554 922 34 229 933

ANNUAL REPORT 2012 - 2013

22. Operating profit (loss) Group Company

Operating Profit (loss) for the Year 2013 2012 2013 2012
is Stated after Accounting for the R R R R
following:

Income from subsidiaries

Interest - - 280 167 381 735

Remuneration, other than to employees, for: 7 592 736 20 631 296 414

Administration fees paid 64 123 737 3 221 843 518 825 1 084 386
138 359 - -
Operating lease charges
124 253 155 605
Premises - contractual amounts 3 284 657 643 078 1 239 991

Motor vehicles - contingent amounts 749 674

Equipment - contractual amounts 1 244 379 1 074 219

5 278 710 4 434 421

Group Company

2013 2012 2013 2012
R R R R

Profit on sale of property, plant and equipment 105 791 40 182 --
Loss on sale of businesses (or subsidiary)
Profit on sale of other financial assets (2 689 638) - --
Impairment on property, plant and equipment
306 906 1 207 277 306 906 471 351
Impairment on intangible assets
180 640 162 010 --
Impairment on subsidiaries, joint ventures & associates
- 1 691 667 --
Reversal of impairment of subsidiaries, joint
ventures and associates - 4 457 712 --
Impairment on loans to group companies
- 46 905 --
Impairment on trade and other receivables
(8 357 880) 23 633 775 (8 240 954) 9 919 428
Reversal of impairment on trade and other receivables - 2 980 044 - -
- 8 006 - -
Amortisation on intangible assets - 700 000 - -
6 563 530
Depreciation on property, plant and equipment 6 184 121 729 514 532 492
63 476 167 92 473 567 1 218 640 25 296 733
Employee costs

91

ANNUAL REPORT 2012 - 2013

23. Investment revenue Group Company

Dividend Revenue 2013 2012 2013 2012
R R R R
Listed financial assets - local
Other financial assets - foreign 435 941 337 747 248 729 135 194
Subsidiaries - local
- 198 --

-- 144 731 583 -

435 941 337 945 144 980 312 135 194

Interest Revenue Group Company

Bank 2013 2012 2013 2012
Debentures R R R R
Loans to directors, managers and employees
Other interest 4 792 563 4 439 828 267 582 390 899
Other loans - RED Employee Benefits (Pty) Ltd
Subsidiaries -- 244 093 440 479
Notional interest - Protea Hospitality
Holdings (Pty) Ltd 59 236 49 012 --

209 013 1 010 033 110 362 4 309

1 330 743 1 645 602 --

-- 280 167 381 735

4 373 685 4 056 619 4 393 211 -

10 765 240 11 201 094 5 295 415 1 217 422
11 201 181 1 352 616
11 539 039 150 275 727

92

ANNUAL REPORT 2012 - 2013

24. Finance costs Group Company

Bank 2013 2012 2013 2012
Finance leases R R R R
Late payment of tax
Non-current borrowings 100 937 9 001 2 67
Other interest paid
Trade and other payables 151 207 228 429 --

25. Taxation 40 550 517 813 - 405 863

Major Components of the 1 760 104 4 310 - 4 310
Tax Expense
6 798 20 780 --
Current
13 760 39 075 --
Local income tax - current period
STC 2 073 356 819 408 2 410 240

Major Components of the Group Company
Tax Expense
2013 2012 2013 2012
Deferred R R R R

Originating and reversing temporary 12 464 081 24 155 839 55 147 969 631
differences - 1 256 644 - 127 000
1 096 631
12 464 081 25 412 483 55 147

Group Company

2013 2012 2013 2012
R R R R

(171 365) (1 785 518) 1 095 529 (587 746)
1 150 676 508 885
12 292 716 23 626 965

93

ANNUAL REPORT 2012 - 2013

Reconciliation of the Tax Expense Group Company

Reconciliation between accounting 2013 2012 2013 2012
Profit and Tax Expense. R R R R

Accounting profit (loss) 49 995 092 40 024 432 160 220 191 (11 791 490)

Tax at the applicable tax rate of 28% (2012: 13 998 626 11 206 841 44 861 653 (3 301 617)
28%)

Tax Effect of adjustments on Group Company
Taxable Income
2013 2012 2013 2012
Non-deductible items R R R R
Non-taxable income
Capital gain 43 461 123 7 483 501 --
Tax loss utilised
Tax loss not recognised (43 974 398) 4 387 823 (43 180 020) 4 271 247
Correction to prior years
Difference in tax rates used (3 129) - --
STC
Change in tax rate (1 747 398) (166 027) --

1 091 137 (22 033) --

(120 269) (379 909) (117 995) (587 745)

(412 962) - (412 962) -

- 1 256 644 - 127 000

- (139 875) --

12 292 730 23 626 965 1 150 676 508 885

94

ANNUAL REPORT 2012 - 2013

26. Auditors’ remuneration Group Company

Adjustment for previous year 2013 2012 2013 2012
Fees R R R R
Tax and secretarial services
(2 384) - --

1 935 299 3 462 669 75 000 97 290

119 312 161 230 --

2 052 227 3 623 899 75 000 97 290

27. Cash generated from (used in) operations Group Company

Profit (loss) before taxation 2013 2012 2013 2012
R R R R
Adjustments for:
49 995 092 40 024 432 160 220 191 (11 791 490)
Depreciation and amortisation
Loss (profit) on sale of assets 6 655 581 7 774 945 729 514 532 492
Loans written off 2 276 941 (1 247 459) (306 906) (471 351)
Income from equity accounted investments
Dividends received (25 720) - - -
Interest received - 488 885 - -
Finance costs (337 945) (144 980 312) (135 194)
Fair value adjustments (435 941) (11 201 094) (5 295 415) (1 217 422)
Impairment (reversals) loss (10 765 240) 819 409 2 410 240
Movements in operating lease assets and 470 202 (4 068 081) 603 072
accruals 2 073 356 36 366 024 (8 240 954) 9 919 428
Movements in provisions (2 972 276) 114 121 - -
Movement in prepayments (8 137 235)
Movement in warranty claims (1 816 151) - -
(67 836) (2 700 000) - -
Changes in working capital: (1 409 142) - -
571 188
Inventories 2 391 725
Trade and other receivables 1 409 142
Trade and other payables
86 714 (340 397) - -
(3 824 268) (6 018 099) 2 538 961 9 301 820
(10 801 799) 8 339 315
(32 219) 4 923 308 (10 204 799) 15 490 910
39 199 004 65 911 039

95

ANNUAL REPORT 2012 - 2013

28. Tax paid Group Company

Balance at beginning of the year 2013 2012 2013 2012
Current tax for the year recognised in profit R R R R
or loss
Balance at end of the year (6 515 204) (8 317 162) 3 667 390 (1 978 321)

(12 464 081) (25 412 483) (55 147) (569 004)

(2 284 250) 6 515 204 (3 624 875) (3 667 390)
(21 263 535) (27 214 441) (12 632) (6 214 715)

29. Sale of businesses Group Company

Carrying Value of Assets Sold 2013 2012 2013 2012
R R R R
Other financial assets
Trade and other receivables 60 - --
Trade and other payables -
Current tax payable 39 - --
Cash and cash equivalents -
Total net assets sold (22 363) - --
Net assets sold -
Loss on disposal (2) - --
-
Consideration Received 2 711 904 - --

Amount due from POPCRU Trust 2 689 638 --

2 689 638 --

(2 689 638) --

- --

Group Company

2013 2012 2013 2012
R R R R

3 000 000 - 3 000 000 -
-
3 000 000 --

96

ANNUAL REPORT 2012 - 2013

Net Cash Outflow on Acquisition Group Company

Proceeds received 2013 2012 2013 2012
Cash sold R R R R

30. Commitments 3 000 000 - 3 000 000 -
- -
Operating Leases - as Lessor (2 711 904) - - -
(income)
288 096 3 000 000
Minimum lease payments due
Group Company
within one year
in second to fifth year inclusive 2013 2012 2013 2012
R R R R

- 2 727 425 - -
- 4 545 500 - -
- 7 272 925 - -

Operating Leases – as Lessee Group Company
(expense)
2013 2012 2013 2012
Minimum lease payments due R R R R

within one year 5 603 901 1 426 669 70 008 1 684 211
in second to fifth year inclusive 9 268 927 875 574 - -
14 872 828
2 302 243 70 008 1 684 211

Concession - SANPARK Group Company

Minimum lease payments due 2013 2012 2013 2012
R R R R
within one year
in second to fifth year inclusive 2 364 107 2 281 110 - -

27 022 064 31 667 281 - -

29 386 171 33 948 391 - -

97

ANNUAL REPORT 2012 - 2013

31. Contingencies Bank Limited on account of Investment held by Workers Life
borrowing facilities extended to Assurance Company Limited
Contingent asset Riskcon Security Holdings Ltd. The Board of Directors have
questioned the intrinsic value of the
Management of Workers Life Labour matters underlying assets of its subsidiary,
Insurance Limited, a major A Review application against Workers Life Assurance Company
subsidiary is of the view that an CCMA arbitration award granted Limited. Investigations are still being
asset of R95 433 is due by the in favour of Nicolene Villarini. pursued and the matter has been
previous owner in terms of the The company is awaiting the referred to the Companies attorneys
agreement. Given the current legal Opponent’s Heads of Argument in for investigation and questioning
proceedings, this amount has been this matter, after which the matter of specifically the investment
disclosed as a contingent asset. will be set down for hearing. We held in Trinity Asset Management
anticipate that this matter will be Proprietary Limited. The outcome
Contingent liabilities set down for hearing some time of such investigations may have
mid-2014. The possible financial a negative effect on the non-
A pledge amounting to exposure to the company is current asset value of Workers Life
R250 000 on the call account is R500 000.00. Assurance Company Limited. The
held as security for guarantees amount has not yet been quantified
issued by Nedbank in favour of Review application against CCMA and the impact on the financial
South African National Parks. arbitration in favour of Elliot statements determined. To address
In addition, there are letters of Majola. We are due to file Heads of this, the company and Workers Life
guarantee to the value of R341 700 Argument in this matter, after which Assurance Company Limited have
on the Nedbank Ltd facility. the Opponent will file their Heads of entered into a Cession and Barter
Argument and thereafter the matter Agreement in order to ensure full
A suretyship in the amount of will be set down for hearing. We compliance with the Long-term
R3 075 000 for interest, costs and anticipate that this matter will be set Insurance Act by Workers Life
fees has been given by POPCRU down for hearing some time in the Assurance Company Limited.
Investment (Pty) Ltd in favour of third quarter of 2014. The possible
First National Bank, a division of financial exposure to the company Other:
First Rand Bank Ltd for obligations is R500 000.00. In the 2002 tax year, Workers Life
of Galactic Deals 123 (Pty) Ltd. Assurance Limited ( the company),
The company has received a major subsidiary, repurchased
POPCRU Investment (Pty) Ltd has claims from two past employees. shares and as a result paid two
signed a guarantee in favour of Management considers these claims amounts of Secondary Tax on
Nedbank Ltd for credit facilities to be unjustified and the probability Companies (STC) over to the South
granted to Shishangeni Lodge that they will require settlement to be African Revenue Services (SARS).
(Pty) Ltd for an amount of remote. Consequently no provision One of the amounts paid to SARS
R1 000 000. has been made for these matters. was subsequently refunded to the
company but without supporting
A suretyship incorporating cession NUMSA documentation. As a result, the
of the loan account limited to The company has a claim of R7,5 company recorded this amount
R305 000 in favour of Standard million plus interest at a rate of received (R903 071) as a taxation
Bank Limited on account of 15.5% per annum accruing from payable amount until the matter
borrowing facilities extended to the 1st of May 2011 until date of has been finalised. During the
Riskcon Security Holdings Ltd. payment against NUMSA Financial 2011 tax year, the company
Services (Pty) Ltd. The matter will received notice from SARS that the
A suretyship incorporating cession be adjudicated from the 14 - 18th outstanding amount payable was
of the loan account limited to of October 2013. R2 032 715. This amount includes
R852 500 in favour of Standard

98

ANNUAL REPORT 2012 - 2013

penalties and interest and is R1 868 100, R3 873 985 relating Security Holdings (Pty) Ltd, a
under dispute due to the original to management and profit share, major subsidiary, against whom
amount having been paid to SARS. sub administration, facility fee fraud allegations were brought.
This amount may form part of a agreements, Zenith Administration The company is seeking damages
warranty claim against the former Services control account of R1 856 888. The results of this
shareholders should the claim be receivable respectively. litigation are still uncertain.
successful. The amount of R2 032
715 was paid to SARS by Workers The resolution of the above may
Life Assurance Limited on materially influence the prior
17 November 2011. period annual financial statements.

In 2005, SARS raised an investigation As at 29 February 2013, there is no
into the underdeduction of PAYE to additional information in relation to
an approximate value of R279 479 in the claim of R57 632 815 in relation
Workers Life Assurance Ltd, a major to the probability of success and
subsidiary. This amount is not seen management believes that the
as material but may form part of a above disclosure still accurately
warranty claim against the former reflects the circumstances.
shareholders should the claim by
SARS be successful. The amount A claim by Donciadh Consulting
of R279 498 was paid to SARS by Close Corporation against Workers
Workers Life Assurance Limited on Life Insurance Limited, a major
18 November 2011. subsidiary, for the payment of
damages as a result of breach of a
The warranty claim recognised in consulting agreement. The claim
the prior year has been provided is instituted for R642 000 plus
for in the current year. interest at the rate of 15.5% per
annum, calculated from
As disclosed in the 2010 annual 2 December 2008 until the date of
financial statements of Workers Life payment plus costs.
Assurance Ltd, the shareholder of
the company has communicated The plaintiff avers that it introduced
its intent to claim an amount of new business to Workers Life
R57 632 815 from the previous Insurance Limited (the Defendant)
shareholders, This claim relates to by 31 January 2008, which
unauthorised withdrawals from generated sufficient net monthly
the company’s bank accounts. profit to equal the plaintiff’s cost,
and therefore the previous main
The present shareholders agreement had to be reinstated for
also dispute the profit share, a twelve month period, which was
administration fees and facility not done by the defendant.
fees disclosed in the 28 February
2010 annual financial statements The matter was referred to
amounting to arbitration and the hearing is yet
R24 476 316, R23 144 234 and to commence.
R5 100 900 respectively, and for Litigation is in process against
2011; R720 062, R17 248 033, the former directors of Riskcon

99

ANNUAL REPORT 2012 - 2013

32. First-time adoption of the International Financial Reporting Standards for Small and Medium-sized Entities

The group has applied the International Financial Reporting Standard for Small and Medium-sized Entities, for the first
time in the 2013 year end. On principle this standard has been applied retrospectively and the 2012 comparatives
contained in these consolidated annual financial statements differ from those in the consolidated annual financial
statements for the year ended 28 February 2012. All adjustments were made to the opening comparatives in the
statement of financial position.

The date of transition was 28 February 2011 and the effect of the transition was as follows.

Group Note As Reported IFRS for SME
Reconciliation of Equity a under SA
28 February 2012 GAAP -
17 584 814
Investment property 17 584 814 17 584 814
Property, plant and equipment
Total non-current assets -

17 584 814

Total assets less total liabilities 17 584 814 17 584 814
Fair value adjustment assets-available-for-sale reserve 2 591 621 -
Fair value reserve -
Total Equity 2 591 621 2 591 621
2 591 621

Reconciliation of Profit or Loss for 2012 Note Effects of IFRS for SME
transition to
Investment revenue IFRS for SME 869 417
Net profit before tax 869 417
Taxation 869 417 (134 696)
Net profit 734 721
869 417

(134 696)

734 721

100

ANNUAL REPORT 2012 - 2013

Reconciliation of Equity at 28 February 2012 Note As reported IFRS for SME
under SA
Fair value adjustment assets-available-for-sale reserve - gross amount GAAP
Fair value adjustment assets-available-for-sale reserve - tax amount
Fair value reserve 214 711 -

328 243 -

- 542 954

Total Equity 542 954 542 954

33. Related parties POPCRU Trust

Relationships Refer to note 5

Holding entity Refer to note 6
Subsidiaries
Associates Grosskopf Attorneys
Other related companies and entities PGC Management Services (Pty) Ltd

Related Party Balances Pytron Consulting (Pty) Ltd
Unique Standing Investments 108 (Pty) Ltd
Loan accounts - Owing (to) by Related Parties
Police and Prison Civil Rights Union
Popcru Trust PSU Investments (Pty) Ltd
RED Employee Benefits (Pty) Ltd
PSU Investments (Pty) Ltd Zenith Administration Services
Police and Prisons Civil Rights Union
Khayafin (Pty) Ltd Company
PGC Management Services (Pty) Ltd
2013 2012
R R

(4 850 000) (4 850 000)
14 302 324 19 992 222

- 100 000
(14 771 471) -

- 4 168 627

17 917 113 -
18 492 932 21 196 211

101

ANNUAL REPORT 2012 - 2013

Related Party Transactions Company

Amounts included in Trade Receivable (Trade Payable) 2013 2012
regarding Related Parties R R

Unique Standing Investments 108 (Pty) Ltd - 5 460 579
Police and Prisons Civil Rights Union - 153 284
Pytron Consulting (Pty) Ltd -
Popcru Trust 79 640 (508 813)
Grosskopf Attorneys 142 965 74 451
Zenith Administration Services
PGC Management Services (Pty) Ltd - 201 729
RED Employee Benefits (Pty) Ltd (10 245 157)
3 873 986
Related Party Transactions 210 897 -
(9 954 097) -
Interest Paid to (received from) Related Parties
9 112 774
RED Employee Benefits (Pty) Ltd
Police and Prisons Civil Rights Union Company

Related Party Transactions 2013 2012
R R
Purchases from (sales to) Related Parties
(1 330 743) (1 645 602)
Pytron Consulting (Pty) Ltd 1 760 104 -
429 361
(1 645 602)

Company

2013 2012
R R

- 241 200

102