PPS is proud to celebrate 75 years of looking after graduate professionals in 2016. Through various metamorphoses PPS has not floundered from the original objectives set out by eight visionary dentists who founded the company in 1941 to find a better system of protecting their income if they were unable to work.
PPS has evolved into a fully-fledged financial services company with the latest additions of a dedicated investment offering, a financial advisory business and a short-term insurance company, launched earlier this year.
Despite the structural changes PPS still exists only for the benefit of our members, all of whom are graduate professionals. There are no external shareholders – only members.
Total own assets of the Group grew to R29,5 billion and gross premium income to R3,2 billion. Benefits paid out to members to the value of R2,2 billion. An amount of R2,2 billion has been allocated to our members’ PPS Profit-Share Accounts.
The year 2015 saw another tough year for the South African economy. Macro-economic headwinds, including expensive and unstable electricity supply, an uncompetitive and highly regulated labour market resulting in further job cuts, constrained economic growth. Gross domestic product (GDP) rose by 1,3% last year compared with 1,5% in 2014.
The lacklustre economic performance, combined with rising inflation and interest rates, meant the consumer remained under pressure and this position will likely endure in 2016.
The global environment did not provide a lot of reprieve, with weaker global growth prospects and slower growth in key emerging markets. In South Africa this was compounded by depressed commodity prices and sharp depreciation in the value of the rand.
The investment environment was extremely difficult. High levels of volatility characterised financial and investment markets and the rand was pushed to its lowest level in 14 years to R16/$ by December. The Alsi ended the year without growth.
Despite the tough and volatile environment, the diligence and dedication of our investment team continued to bear fruit for our members.
The allocation of R2,2 billion to our members’ PPS Profit-Share Accounts was largely driven by investment performance based on prudent asset allocation. Funds under management were invested in diversified mandates which are invested in South African equities, bonds, cash and offshore.
Claims were processed in an average of five days. Based on total benefits paid out to members an average of R5,2 million per day was paid out.
Over the years the core of the PPS mission and values has remained to be a mutual organisation to provide financial services to graduate professionals. This is reflected in the successful conversion of PPS Limited into the PPS Holdings Trust in 2011 as a consequence of the amendments to the Companies Act.
The structure allows for Board members to be elected and to be nominated by professional associations. In terms of best practice in corporate governance PPS strives to ensure a balance of skills resides in the Board and representatives encompass professionals from all spheres.
With the allocation to the PPS Profit-Share Accounts, the Group created 503** new millionaires in 2015. PPS now has 2 893 members with more than R1 million in their PPS Profit-Share Accounts.
In keeping with PPS’ business strategy to grow the graduate professional pipeline and in line with our commitment to the Financial Sector Charter and the related Department of Trade and Industry Codes of Good Practice, PPS has embarked upon the establishment of a formal Foundation and an Educational Trust.
In all likelihood economic growth will remain weak. We are seeing a slowdown in investment spending and investors should expect low economic growth, rising interest rates and rising inflation.
Investment managers predict annual returns of between 7% and 10% on local equity over the next few years while global equities are expected to return between 8% to 11%, compared to 13,9% (in ZAR) over the past 10 years.
The risks are to the downside and I would like to caution members that the allocations they have seen over the last few years might not be repeated if the markets suffer a correction due to sluggish global and local economic growth.
I look forward to leading the Group as we continue to meet customer needs, and promote the financial well-being of graduate professionals who are a vital component of our country’s economy.
It remains for me to record my deep indebtedness to Dr Sybil Seoka, the Vice-Chairman of the PPS Holdings Trust, for her ongoing support, counsel and the strong work ethic that she brings to the Board.
Deep recognition of the outstanding leadership, commitment, counsel and energy applied to the business of the PPS Group by Mr Charles Erasmus, the Chairman of PPS Insurance, is acknowledged with much appreciation. Likewise to the members of the various boards and committees within the PPS Group, I record my unqualified appreciation for your guidance, input and ongoing support. I look forward to working together in the coming year with a unity of purpose to sustain and enhance PPS as an institution.
In conclusion, on behalf of our Board of trustees and the PPS Group entities I record my sincere gratitude for the inspired, committed and exceptional leadership of Mike Jackson, the CEO of PPS, and his executive management team as well as to all of our staff members. Collectively, their joint efforts have led to the growth, prosperity and sustainability of PPS, and have positioned PPS as a preferred provider of premium financial and risk products to the professional community.
Mr EA Moolla
6 April 2016
The allocation of R2,2 billion to our members’ PPS Profit-Share Accounts was largely driven by a strong investment performance based on prudent asset allocation. Funds under management were invested in diversified mandates which are invested in South African equities, bonds, cash and offshore.