2020 INTEGRATED REPORT

TRUSTEES’ REPORT HOLDING ENTITY The holding entity for the PPS Group is The Professional Provident Society Holdings Trust, registration number IT 312/2011 (‘PPS Holdings Trust’), which controls all the entities in the PPS Group. COVID-19 VIRUS PANDEMIC The outbreak of the COVID-19 virus pandemic had a significant financial impact on the results of the Group in 2020. The financial impact is seen in the increase in long-term insurance claims (both sickness and death claims), as well as increased variability in investment returns as a result of the volatile performance of financial markets. There was a positive impact on the Short-term insurance claims as a result of reduced activity due to the lockdown in 2020. The PPS Investments business revenue was adversely affected by the negative market performance at the beginning of the year. The impact of the virus is expected to continue in 2021, although at a lower intensity compared to 2020. The Group is monitoring the impact on a continuous basis and appropriate management actions are taken where appropriate. Impact on service levels The Group, as a financial services provider, qualified as an essential services provider, and operations have continued uninterrupted during the lockdown. All essential functions, such as the Group’s call centres, claims processing and payments, as well as Intermediary Servicing and new business administration are all operating uninterrupted, and at service levels comparable to the Group’s normal standards. Going concern and solvency PPS has prepared scenarios of the potential impact of the pandemic on its operations. These scenarios included qualitative and quantitative analyses. The results of these scenarios indicate that the pandemic will not impact the going concern status of the Group, as assets are estimated to be sufficient to settle liabilities. Although the pandemic had a material negative impact on operating profits in 2020, the solvency of the Group remains resilient and is expected to meet regulatory requirements, even under extreme stressed conditions. PRINCIPAL ACTIVITIES PPS Holdings Trust is a trust registered by the Master of the High Court in terms of the Trust Property Control Act of 1988. PPS Holdings Trust's sole investment is 100% of the shares of Professional Provident Society Insurance Company Limited (‘PPS Insurance’). The beneficiaries of PPS Holdings Trust are the PPS Group companies. Membership of PPS Holdings Trust is acquired through participation in PPS Group products. The Ordinary Members of PPS Holdings Trust control the PPS Group through the election of trustees. All the profits of the PPS Group are allocated to the Ordinary Members of PPS Holdings Trust through their participation in their policyholder PPS Profit-Share Accounts. PPS Insurance Company Limited (‘PPS Insurance’) is a wholly-owned subsidiary of PPS Holdings Trust and is a long-term insurance company registered in South Africa in terms of the Insurance Act, which offers a broad range of insurance products, including sickness and incapacity benefits, life and disability benefits, critical illness benefits and business assurance policies. PPS Insurance also issues linked living annuities and endowment policies to PPS members. Professional Provident Society Investments (Pty) Limited (‘PPS Investments’) and its subsidiaries are wholly- owned subsidiaries of PPS Insurance which provide, inter alia, savings and investment products primarily to PPS members. Professional Provident Society Insurance Company (Namibia) Limited (‘PPS Namibia’) is a wholly-owned subsidiary of PPS Insurance and provides insurance products exclusively to the Namibian market. A reinsurance agreement with PPS Insurance is in place for PPS Namibia. In terms of this reinsurance arrangement, PPS Namibia partially reinsures its obligations to the Namibian policyholders with PPS Insurance. This arrangement was put in place in order to protect the security and benefit expectations of the Namibian policyholders. Without this reinsurance arrangement, the Namibian subsidiary with over 5 000 Namibian policyholders would be exposed to higher volatility from fluctuations in claims experience. 116 | PPS INTEGRATED REPORT 2020