PPS Healthcare Administrators (PPSHA) PPSHA had another exceptional year in 2021. Revenue was 7% up on 2020. Expenses were 9% up on 2020, slightly ahead of budget due to additional spending to improve B-BBEE ratings, which are especially important in this market. Profit before tax was in line with 2020. The increase in revenue and profit is mainly a result of marginal growth in membership of the Profmed scheme and very good growth in the KeyHealth scheme, where membership by the end of the year was 2% higher than at the start of the year. Membership resignations across the schemes that we administer were slightly up on 2020, but still quite low by historical standards as members are understandably very reluctant to lapse medical aid membership during a pandemic. However, COVID19-related deaths contributed to net attrition rates. Part of the strategy of PPSHA is the provision of additional services to existing clients (such as disease and dental management) and this supported the growth in revenue. Improvement in operational efficiencies continues to be a major focus, to keep costs low for our clients. It should again be noted that PPS members with qualifying Life products who are also Profmed members essentially get administration services at cost since most of the profit generated from these administration services are returned to them in the form of Profit-Share. At the same time, they enjoy industry-leading administration services from a highly professional team. PPS Namibia The COVID-19 pandemic did not have a big impact on Namibia in 2020, but unfortunately, that changed in 2021. For certain weeks of the year, Namibia experienced some of the highest per capita COVID-19 mortality rates in the world. PPS members and staff in Namibia, therefore, experienced a challenging year and also had to navigate a very weak economic environment. Gross claims of R152 million were 114% more than the R71 million in 2020. COVID-19 sickness and death claims contributed R50 million to the total. Gross premium revenue was up by 5% on the previous year. This resulted in an operating profit of R46 million in 2021. This was 5% lower than in 2020 due to the higher claims. As in South Africa, we are happy that operating profit (ignoring investment returns) ended the year positive, despite the significant claims that were paid. New business inflows were strong, with new annual life insurance income up 18% on the previous year. New member acquisition exceeded expectations, with 374 new Namibian members in 2021 against a target of 250. The professional way that PPS Namibia supported members during the difficult year no doubt contributed to new member growth through word-of-mouth referrals. Our strategy in Namibia remains to introduce new product lines to the market shortly after they were introduced in South Africa. Namibian members can also look forward to fiduciary services that will be rolled out in 2022. In terms of the investment markets, as in South Africa, members enjoyed exceptional returns which exceeded budgeted expectations four-fold. Thank you The commitment of our employees was again humbling to witness in 2021. We have now very strongly embedded our three core values, of taking extreme ownership, of curiosity and openness to new learning, and of doing the right thing. It is pleasing to see how these values guide actions and decisions throughout the business. Although we continued to operate remotely for most of the year, from more than a thousand homes across South Africa, the ball was not dropped. Ironically, despite being physically removed from each other over much of the year, we continued to feel closer as a team and very proud to work for the PPS brand. It was again a privilege to lead and be part of such a team of talented people. I thank all my colleagues for their hard work and determination, to make 2021 a year where we could continue to support and return value to our members in their time of crisis. The contribution and input of our non-executive board members remain invaluable. It is in challenging times that the guidance of a strong and diverse board is especially important. Both the chair of PPS Holdings Trust, Dr Sybil Seoka, and of PPS Insurance, Charles Erasmus, are valued sources of advice and support, as are the chairs of the various sub-committees. As was the case last year, I again want to use the opportunity to express my condolences to many staff and members who have experienced loss during these times. The fact that most families across South Africa and Namibia had to live through some form of loss or challenge in 2021 is respected. Finally, thank you to our members who continue to trust us with their financial security. We take this trust and responsibility seriously. Izak Smit PPS Group CEO 30 March 2022 51 | CEO’s message to members PPS Integrated Report 2021
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