annual financial statements in terms section ...abacus.devee.co.za/archivefiles/auditreports/afs...

ANNUAL FINANCIAL STATEMENTS IN TERMS SECTION 15 OF THE PENSION FUNDS ACT NO 24, 1956

AS AMENDED (PENSION FUNDS ACT)

NAME OF RETIREMENT FUND: ABACUS UMBRELLA PENSION FUND

FINANCIAL SERVICES BOARD REGISTRATION NUMBER:

37087

For the period: 01/09/2013 to 31/08/2014

CONTENTS Schedule

Page Schedule

Page

A Regulatory information* 2 G Statement of changes in

net assets and funds 14

B Statement of responsibility by the Board of Fund*

4 HA Notes to the financial statements

15

C Statement of responsibility by the principal officer *

6 HB Report of the valuator* 22

D Report of the independent auditors (if applicable)

7 I Report of the independent auditors / Board of Fund (whichever is applicable) to the Registrar of Pension Funds

23

E Report of the Board of Fund*

9 IA Investment schedule pertaining to annual financial statements*

33

F Statement of net assets and funds

13 IB Assets held in compliance with Regulation 28 Report of the independent auditors on compliance with regulation 28 to the Registrar of Pension Funds

34

* Not subject to any engagement by an auditor

ABACUS UMBRELLA PENSION FUND

Page 2 of 39

SCHEDULE A REGULATORY INFORMATION For the period ended 31/08/2014

Registered office of the fund

Postal address: PO Box 829, Wilgeheuwel, 1736 Physical address: A3 Willow Crest Office Estate, Van Hoof Street, Roodepoort, 1724

Financial reporting periods

Current: 01/09/2013 To 31/08/2014 Previous: 01/09/2012 To 31/08/2013

Board of Fund

Full name E-mail address Capacity* Date appointed Date

resigned

Chairperson

Le Grellier, GD [email protected] C 13/03/2007

Trustees

Crawford, DL [email protected] I 29/10/2008

De Villiers, CM [email protected] I 21/08/2009

Le Grellier, CD [email protected] I 28/06/2005

Rollason, JD [email protected] I 03/04/2006

Schedule of meetings held by the Board of Fund in terms of the rules of the Fund

Meeting date Place of meeting Quorum (yes/no)

27/11/2013 Brefco (Pty) Ltd Yes



Fund officers

Principal officer

Full name: From Date Postal address: Physical address: Tel number:

Email address

De Villiers, CM 01/11/2009 PO Box 527, Pinegowrie, 2123

6 Mandeville Gardens, 65 Mandeville Road, Bryanston

(011) 704-1643

[email protected]

Monitoring Person


Email address

De Villiers, CM 01/11/2009 PO Box 527, Pinegowrie, 2123

6 Mandeville Gardens, 65 Mandeville Road, Bryanston

(011) 704-1643

[email protected]


Page 3 of 39

SCHEDULE A (Continued) REGULATORY INFORMATION For the period ended 31/08/2014 Professional service providers

Actuary/Valuator


Email address

Hendriks, C (Argen Actuarial Solutions)

01/03/2008 PO Box 413266, Craighall, 2024

Marlborough Gate, Hyde Lane, Hyde Park

(011) 441-2700

[email protected]

Auditor


Email address

BDO South Africa Incorporated

01/09/2005

Private Bag X60500, Houghton 2041

22 Wellington Road, Parktown

(010) 060-5000

[email protected]

Benefit Administrator


Reg Number

Brefco (Pty) Ltd 01/03/2010 PO Box 829, Wilgeheuwel, 1736

Willow Crest Office Estate, Van Hoof Street, Roodepoort

(011) 958-0511

24/218

Investment administrator

Full name: Postal address: Physical address: Tel number: Reg Number

Momentum Manager of Managers (Pty) Ltd

PO Box 330 Gallo Manor 2052

6 Merchant Place, Fredman Drive, Sandton

(086) 153-8732

19840

Investment advisor

Full name: Postal address: Physical address: Tel number: Reg Number

Sasfin Financial Advisory Services (Pty) Ltd

PO Box 95104, Grant Park, 2051

Sasfin House, 29 Scott Street, Waverley

(011) 809-7500

57/11

Participating Employers

All the participating employers have terminated with the Fund.


Page 4 of 39

SCHEDULE B STATEMENT OF RESPONSIBILITY BY THE BOARD OF FUND For the period ended 31/08/2014

Responsibilities

The Board of Fund hereby confirm to the best of their knowledge and belief that, during the period under review, in the execution of their duties they have complied with the duties imposed by Pension Funds Act legislation and the rules of the Fund, including the following: ensured that proper registers, books and records of the operations of the Fund were kept, inclusive of proper

minutes of all resolutions passed by the Board of Fund; ensured that proper internal control systems were employed by or on behalf of the Fund; ensured that adequate and appropriate information was communicated to the members of the Fund,

informing them of their rights, benefits and duties in terms of the rules of the Fund; took all reasonable steps to ensure that contributions, where applicable, were paid timeously to the Fund or

reported where necessary in accordance with section 13A and regulation 33 of the Pension Funds Act; obtained expert advice on matters where they lacked sufficient expertise; ensured that the rules and the operation and administration of the Fund complied with the Pension Funds

Act and all applicable legislation; ensured that fidelity cover was maintained and that this cover was deemed adequate and in compliance with

the rules of the Fund; and ensured that investments of the Fund were implemented and maintained in accordance with the Fund’s

investment strategy. Approval of the annual financial statements

The annual financial statements of Abacus Umbrella Pension Fund are the responsibility of the Board of Fund.

The Board of Fund fulfils this responsibility by ensuring the implementation and maintenance of accounting systems and practices adequately supported by internal financial controls. These controls, which are implemented and executed by the Fund and/or its benefit administrators, provide reasonable assurance that: the Fund’s assets are safeguarded; transactions are properly authorised and executed; and the financial records are reliable. The annual financial statements set out on pages 13 to 21 have been prepared for regulatory purposes in accordance with the Regulatory Reporting Requirements for Retirement Funds in South Africa, the rules of the Fund and the Pension Funds Act. These financial statements have been reported on by the independent auditors, BDO South Africa Incorporated, who were given unrestricted access to all financial records and related data, including minutes of all relevant meetings. The Board of Fund believes that all representations made to the independent auditors in the management representation letter during their audit were valid and appropriate. The report of the independent auditors is presented on pages 7 to 8. Notwithstanding the above-mentioned information, the Board of Fund would like to refer to paragraph 8.2 on page 11 and 12 of the Report of the Board of Fund. Instances of non-compliance

We are not aware of instances of non-compliance with laws and regulations, including the provisions of laws and regulations that determine the reported amounts and disclosures in the financial statements.


Page 5 of 39

SCHEDULE B (Continued) STATEMENT OF RESPONSIBILITY BY THE BOARD OF FUND For the period ended 31/08/2014

These financial statements: were approved by the Board of Fund on 5 February 2015

are to the best of the Board members knowledge and belief confirmed to be complete and correct; fairly represent the net assets of the Fund at 31 August 2014 as well as the results of its activities for the

period then ended; and are signed on behalf of the Board of Fund by:

___________________ ___________________ ___________________

Le Grellier, GD Rollason, JD Crawford, DL CHAIRPERSON BOARD MEMBER BOARD MEMBER

05/02/2015 05/02/2015 05/02/2015


Page 6 of 39

SCHEDULE C STATEMENT OF RESPONSIBILITY BY THE PRINCIPAL OFFICER For the period ended 31/08/2014

I confirm that for the period under review the Abacus Umbrella Pension Fund has timeously submitted all regulatory and other returns, statements, documents and any other information as required in terms of the Pension Funds Act and to the best of my knowledge all applicable legislation.


Page 7 of 39

SCHEDULE D REPORT OF THE AUDITOR TO THE BOARD OF FUND

INDEPENDENT AUDITOR’S REPORT TO THE BOARD OF THE ABACUS UMBRELLA PENSION FUND

Report on the Financial Statements We have audited the annual financial statements of the Abacus Umbrella Pension Fund (the “Fund”) set out on pages 9 to 21, which comprise the statement of net assets and funds as at 31 August 2014, the statement of changes in net assets and funds for the period then ended, and the notes to the financial statements which include the principal accounting policies and other explanatory information. The financial statements are prepared for the purpose of reporting to the Registrar of Pension Funds. Board of Fund’s Responsibility for the Financial Statements

The Board of Fund is responsible for the preparation of these financial statements in accordance with the Regulatory Reporting Requirements for Retirement Funds in South Africa. The Board of Fund is also responsible for compliance with the requirements of the Rules of the Fund and the Pension Funds Act of South Africa and for such internal control as the Board of Fund determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the annual financial statements of the Abacus Umbrella Pension Fund for the period ended 31 August 2014 have been prepared, in all material respects, in accordance with the Regulatory Reporting Requirements for Retirement Funds in South Africa.

Emphasis of Matter Without qualifying our opinion above, we draw attention to paragraphs 8.2 on page 11 and 12 of the Report of the Board of Fund; where in the Board explain shortcomings due to maladministration by the previous administrators for the periods prior to March 2010 financial period end.

Financial Reporting Framework Without modifying our opinion, we draw attention to the principal accounting policies in which the applicable financial reporting framework is identified, as prescribed by the Registrar. Consequently, the financial statements and related auditor's report may not be suitable for another purpose.


Page 8 of 39

SCHEDULE D (Continued) REPORT OF THE AUDITOR TO THE BOARD OF FUND

Other Matters

The supplementary information contained in Schedule IA as set out on page 33 to these annual financial statements, has been extracted from the Fund’s underlying accounting records that were the subject of our engagement. We have compared the totals reflected in Schedule IA to the totals reflected in the underlying Fund’s accounting records to determine whether such totals have been correctly extracted. However, we have not performed any additional procedures to substantiate the disclosures of the individual totals included in Schedule IA. We do not express an audit opinion on this schedule.

Report on Other Legal and Regulatory Requirements

The Statement of Responsibility by the Board of Fund describes instances of non-compliance with laws and regulations, including those that determine the reported amounts and disclosures in the financial statements that have come to the attention of the Board of Fund and the corrective action taken by the Board of Fund. There are no additional instances of non-compliance with laws and regulations that came to our attention during the course of our audit of the financial statements.

Per MI Lockhat Director 23/02/2015

o O – O o End of Audit


Page 9 of 39

SCHEDULE E REPORT OF THE BOARD OF FUND For the period ended 31/08/2014 1. DESCRIPTION OF THE FUND

1.1. Type of fund

The Fund is a pension fund and is a defined contribution fund. In terms of regulation 30(2)(t) (ii) of the Regulations to the Pension Funds Act, the umbrella fund is registered as a type A umbrella fund.

1.2. Benefits

1.2.1. Summary in terms of the rules of the Fund. The benefit structure of this fund is based solely on the accumulation of contributions plus investment income earned from the appropriate investments. The Fund provides lump sum benefits to members of the Fund when they retire or resign from their employer as well as death benefits for their dependants should they die in service. The benefits provided for are: (a) Retirement benefit: Share of Fund (b) Withdrawal benefit: Share of Fund (c) Death benefit: Share of Fund

1.2.2 Unclaimed benefits

1.2.2.1. Strategy of Board of Fund towards unclaimed benefits.

Complete records are maintained from the date the member exits the Fund. Any unclaimed benefit will earn the same return the Fund declares unless specifically requested to invest in another investment portfolio.

1.2.3 Beneficiary benefits

As there are no benefits for any beneficiaries of a former member, the Board of Fund have not adopted a strategy towards beneficiaries.

1.3. Contributions

1.3.1. Description in terms of the rules of the Fund.

1.3.1.1. Members’ contributions. The Fund is closed for new membership and contributions.

1.3.1.2. Employers’ contributions. The Fund is closed for new membership and contributions.

1.4. Rule amendment

There are no rule amendments for the period under review.

1.5. Reserves

In terms of rules a Reserve Account was established to allow employers to contribute towards a reserve account which was used to meet fund expenses. The amount in the Reserve Account was utilised toward fund expenses. The Reserve Account is Nil at year end.


Page 10 of 39

SCHEDULE E (Continued) REPORT OF THE BOARD OF FUND For the period ended 31/08/2014 2. INVESTMENTS

2.1. Investment strategy The investment strategy of the Fund is set by the Board of Fund after taking due consideration of the advice of the Fund’s investment and other professional advisors. This investment strategy complies with the provisions of regulation 28 of the Pension Funds Act in South Africa. The investments are managed according to the following principles: 2.1.1. General

Members are identified according to their “period to retirement” and are then placed into a suitable mix of different asset classes, which are selected in order to provide those members furthest away from retirement with high growth potential, bearing in mind that they are able to withstand a greater standard deviation of investment returns, in that their investments have time to recover from investment return fluctuations. Members closest to retirement are placed in an asset mix that minimises the standard deviation of returns over time and is designed to protect the capital accumulated whilst delivering returns at least matching inflation over short term periods until retirement. Members between these extremes are moved progressively from portfolios at the longer “period to retirement” end of the continuum through a series of lower risk portfolios to the pre-retirement lowest risk portfolio.

2.1.2. Individual members choice The Fund does offer individual members an option of the investment products in which the Fund is invested, if they do not wish to be invested in the default portfolios.

2.1.3. Unclaimed benefits Complete records are maintained from the date the member exits the Fund. Any unclaimed benefit will earn the same return the Fund declares unless specifically requested to invest in another investment portfolio.

2.1.4. Surplus apportionment Not applicable

2.1.5. Reserve accounts Not applicable

2.2. Management of investments

The Fund’s investments consist of various portfolios which are managed on unitised principles. These portfolios were selected with the aim of achieving an optimum return, taking into account associated risks. Overall responsibility for investment and performance lies with the Board of Fund including the appointment of or changes to the investment manager(s). The Board of Fund meets from time to time to discuss investment policies and to monitor the asset allocation and performance of the investment managers.

3. MEMBERSHIP

Active members

Numbers at beginning of period 975

Adjustments* (2)

Members re – instated** 84

Withdrawals (141)

Retirements (22)

Deaths (3)

Numbers at end of period 891

Number at end of period (South African citizen) Not available

Number at end of period (Non South African citizen) Not available

Note on adjustments:

*Adjustments refer to members that were duplicated on the membership records. **Members re-instated refer to members who resigned and whose share of fund was not paid in full.


Page 11 of 39

SCHEDULE E (Continued) REPORT OF THE BOARD OF FUND For the period ended 31/08/2014 4. ACTUARIAL VALUATION

The statutory actuarial valuation as at 31 August 2013 was completed by the actuary on 29 August 2014. The valuation report has been submitted to the Financial Services Board and was approved by the Registrar on 10 February 2014. The valuators report on page 22, states:- “The Fund was in a sound financial position as at 31 August 2013”. The next statutory actuarial valuation of the Fund is due as at 31

August 2016.”

5. SURPLUS APPORTIONMENT OR NIL SCHEME

In a letter dated 29 October 2010 the Registrar of Pension Funds recorded that the Fund a) “does not have an actuarial surplus to apportion as at the surplus apportionment date, i.e. 31

August 2004, b) noted the Fund's NIL returns at 31 August 2004 and c) does not require the submission of a surplus apportionment scheme as envisage by section 15B(1)

of the Act.” 6. HOUSING LOAN FACILITIES

If requested by the Employer and approved by the Board of Fund, the Fund was willing to provide to employees of that employer surety for housing loans in terms of section19(5)(a) of the Pensions Funds Act. From September 2011 all employers have terminated and the Fund is not open to any new employers or contributions therefore no guarantees for housing loans have been granted. Please refer to note 2 on page 17 for further details of the housing loans.

7. INVESTMENTS IN PARTICIPATING EMPLOYERS

The Fund holds no direct investments in the participating employer.

8. SIGNIFICANT MATTERS

8.1. SIGNIFICANT MATTERS – CURRENT FINANCIAL PERIOD

There are no significant matters to report on in the current financial year apart from those matters reported in prior years. The following information is for ease of reference:

8.2. SIGNIFICANT MATTERS – PRIOR PERIOD

Pioneer Employee Benefits (Pty) Ltd was the appointed benefit administrator for the Fund until 28 February 2009. Pioneer outsourced the administration to Dynam-ique SA Fund Administrators (Pty) Ltd and from 1 November 2007 Self Assurance Benefit Administrators (Pty) Ltd became the outsourced administrator.

In late 2008 Pioneer Employee Benefits (Pty) Ltd advised the Fund that it did not wish to continue its administration business. During March 2009 it placed itself into liquidation. The Fund then appointed Self-Assurance Benefit Administrators (Pty) Ltd (which had been the outsourced provider) to continue with the administration in terms of a direct contract with the Fund. Self-Assurance Benefit Administrators (Pty) Ltd commenced with the process of the reconstruction of data and financial records which was never concluded by them. The reconstruction of the data and financial records were required to fix errors arising from the administration difficulties referred to below. In early 2010 they advised the Fund that they were unable to continue with the reconstruction of the data or the on-going administration. The difficulties experienced by the previous administrators relating to the Fund included a change in the outsourced administrator, a high turnover of staff involved with the Fund, poor record-keeping and poor financial reporting. All of these factors contributed to a period of uncertainty with regards to the administration of the Fund. The Board of Fund would like to place on record that certain instances of poor administration and record-keeping were, subsequent to year-end 31 August 2006, brought to their attention. As a result, the trustees have concerns about the standard of record-keeping and controls that were in fact implemented, executed and maintained by the then administrators, Pioneer Employee Benefits (Pty) Ltd and Self -Assurance Benefit Administrators (Pty) Ltd.


Page 12 of 39

SCHEDULE E (Continued) REPORT OF THE BOARD OF FUND For the period ended 31/08/2014

8.2 SIGNIFICANT MATTERS – BENEFIT ADMINISTRATORS PRIOR TO MARCH 2010 (continue)

The Fund then appointed Brefco (Pty) Ltd with effect from 1 March 2010 to do the reconstruction of the data

and financial records from 1 September 2005 and to deal with the day to day administration of the Fund

The following outstanding items were identified as poor administration prior to March 2010, which resulted

in the auditors qualifying the financial statements up to 31 August 2010.

a. The signed administration agreements between the Fund, the administrator, and every participating employer were not made available.

b. The Fund has previously accounted for reinsurance premiums and administration fees on the basis

of actual contributions received. No rate confirmations from the risk insurers were made available for audit purposes.

c. Various supporting documentation could not be located. d. Due to the lack of documentation and the various changes in administration, the Board of Fund

took a prudent decision to reconstruct member’s fund records from March 2006. This resulted in member’s benefits being paid on a partial basis, with a final agterskot payment to be made after the completion of the rebuild process.

e. The Board of Fund instructed the administrator to commence the process to make the final

agterskot payments due to members from early in 2014. The process includes sending out letters to members for the required information.

The above matters will however be carried forward and all attempts to rectify these qualifications will

continue. None of the above matters have any significant effect on the financial state of the Fund.

The Board of Fund are of the opinion that the reconstruction of the data and financial records from 1

September 2005 by Brefco

1. Has been dealt with appropriately and correctly.

2. Has no significant impact on the financial status of the Fund.

3. Has resulted in members’ benefit accounts being reflected accurately

4. That no member’s benefit was jeopardised in the reconstruction of the data and financial

records process.

8.3 During the year the Board of Fund reversed historical balances, the net effect of which was a reduction of the Fund’s return of R253,881.

9. ADDITIONAL DISCLOSURE – Claims against the previous administrator

9.1 The Fund has issued summons against Santam Insurance Limited as insurers of the previous

administrators Pioneer Employee Benefits (Pty) Ltd, for losses incurred as a result of maladministration.

9.2 The Board of Fund is negotiating a settlement of a claim against Self Assurance Benefit Administrators (Pty) Ltd.

10. SUBSEQUENT EVENTS

The Fund is closed to new entrants and monthly contributions with effect from 30 September 2011. It is the

trustees’ intention to deregister the Fund after the members’ benefits are transferred and the statutory

requirements have been met.


Page 13 of 39

SCHEDULE F STATEMENT OF NET ASSETS AND FUNDS At 31/08/2014

Notes Current period

R Previous period

R

ASSETS

Non-current assets 148,164,754 152,105,196

Investments 1 148,164,754 152,105,196

Current assets 1,265,358 2,057,245

Accounts receivable 3 8,148 968,664 Cash at bank 1,257,210 1,088,581

Total assets 149,430,112 154,162,441 FUNDS AND LIABILITIES

Members’ funds and surplus account 143,941,563 145,665,264

Members’ individual accounts 143,938,241 145,662,026 Amounts to be allocated 13 3,322 3,238

Total funds and reserves 143,941,563 145,665,264 Non-current liabilities 921,679 1,944,789

Provisions 9.1 921,679 1,944,789

Current liabilities 4,566,870 6,552,388

Benefits payable 4 4,208,676 3,065,716 Accounts payable 5 358,194 3,486,672

Total funds and Liabilities 149,430,112 154,162,441


Page 14 of 39

SCHEDULE G STATEMENT OF CHANGES IN NET ASSETS AND FUNDS For the period ended 31/08/2014

Notes

Members’ individual accounts Total Total

Accumulated funds Current period Previous period

R R R

Net investment income 6 23,801,206 23,801,206 14,034,920 Other income (provide details) 7 134,479 134,479 0 Less: Expenses

Administration expenses 8 (1,057,231) (1,057,231) (893,324) Net income before transfers and benefits

22,878,454 22,878,454 13,141,596

Transfers and benefits

Benefits 4 (24,602,155) (24,602,155) (4,609,910)

Net income after transfers and benefits

(1,723,701) (1,723,701) 8,531,686

Funds and reserves

Balance at beginning of period 145,665,264 145,665,264 137,133,578

Balance at end of period 143,941,563 143,941,563 145,665,264


Page 15 of 39

SCHEDULE HA NOTES TO THE FINANCIAL STATEMENTS For the period ended 31/08/2014 PRINCIPAL ACCOUNTING POLICIES

The following are the principal accounting policies used by the Fund, which are consistent with those of the previous period.

PURPOSE AND BASIS OF PREPARATION OF FINANCIAL STATEMENTS The annual financial statements are prepared in accordance with Regulatory Reporting Requirements for Retirement Funds in South Africa, the rules of the Fund and the provisions of the Pension Funds Act in South Africa. The financial statements are prepared on the historical cost and going concern bases, modified by the valuation of financial instruments and investment properties to fair value, and the revaluation of property, plant and equipment to market value.

FINANCIAL INSTRUMENTS Measurement

Financial instruments include cash and bank balances, investments, housing loans, receivables and accounts payable.

Financial instruments are initially measured at cost as of trade date, which includes transaction costs. Subsequent to initial recognition, these instruments are measured as set out below.

Investments Investments are measured at fair value. The fair value of marketable securities is calculated by reference to the applicable Stock Exchange quoted selling prices at the close of business on the statement of funds and net assets date

Collective Investment Schemes

Investments are measured at fair value. The fair value of marketable securities is calculated by reference to the applicable insurer, investment manager or the Stock Exchange quoted selling prices at the close of business on the statement of funds and net assets date.

Housing loans

The Fund did not grant any guarantees for loans or any direct housing loans to its members in terms of Section19(5) of the Pension Fund Act.

Other loans Not applicable

Insurance policies Insurance policies linked to listed investments are valued at fair value and are therefore equivalent to market value of the underlying assets as certified by the Insurer concerned.

Accounts receivable Accounts receivable are stated at realisation value.

Cash and cash equivalents Cash and cash equivalents are measured at fair value.

Accounts payable

Accounts payable are stated at the actual amounts due.

PROVISIONS Provisions are brought into account for known obligation as a result of past events, for which it will be required to settle the obligation. A reliable estimate has been made of the amount of the obligation.

CONTRIBUTIONS Contributions are brought to account on the accrual basis.


Page 16 of 39

SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For the period ended 31/08/2014

DIVIDEND INCOME, INSURANCE POLICY INCOME, INTEREST AND RENTALS Interest is recognised when it is determined that such income will accrue to the Fund. Insurance policy income and dividends are recognised when declared by the insurer. Gains and losses on investments are recognised during the period in which the change arises.

TRANSFERS TO AND FROM THE FUND Transfers to or from the Fund are recognised on approval being granted by the Financial Services Board as required in terms of Section 14 and 13B of the Pension Funds Act. Individual transfers are recognised when the individual member’s transfer is received or paid.

o O – O o End of Acc Pol


Page 17 of 39

SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For the period ended 31/08/2014 1. Investments

1.1 Investment summary

Local Foreign Total Fair value Total

Current

period Current

period Previous

period

R R R R R Insurance policies 113,243,090 34,921,664 148,164,754 148,164,754 151,986,825

Collective investment schemes 0 0 0 0 118,371

Total investments 113,243,090 34,921,664 148,164,754 148,164,754 152,105,196

2. Housing loan facilities

2.1 Housing loan guarantees

The Fund has granted guarantees to Standard Bank for outstanding loans amounting to R177,008 for 9 members of the Fund.

The The amount of the guarantee may not exceed 70% of the benefit that a member would

receive in terms of the rules of the Fund and Section 19(5) of the Pension Funds Act if he or she had to terminate membership to the fund voluntarily.

The total housing loan guarantee facility available to the Fund is R2, 000,000. The facility is

renewable on 31 March 2015.

The Fund has not granted any new guarantees for loans to members since April 2010. 3. Accounts receivable

Current period Previous period

R R

Income accrued 8,148 4,139

Risk premiums paid in advance 0 957,616

Tax(member) over paid - is recovered 0 6,909 TOTAL 8,148 968,664

4. Benefits

4.1 Benefits – current members

At beginning of period

Benefits for current period

Payments At end of

period

R R R R

Lump sums on retirements

Full benefit 0 13,856,283 (13,856,283) 0

Lump sums before retirement

Death benefits 0 340,644 (340,644) 0

Withdrawal benefits 3,065,716 10,405,228 (9,262,268) 4,208,676

TOTAL 3,065,716 24,602,155 (23,459,195) 4,208,676

Current period Previous period

Benefits for current period 24,602,155 4,609,910 Statement of changes in net assets and funds 24,602,155 4,609,910


Page 18 of 39

SCHEDULE HA (Continued NOTES TO THE FINANCIAL STATEMENTS For the period ended 31/08/2014

5. Accounts payable

Current period

R Previous period

R

Admin fees due to administrators 266,760 988,598

Auditors fees due 80,000 263,910

Contributions paid in advance 0 43,732

Risk premiums due to insurers 0 707,576

Loan account - Abacus Umbrella Provident Fund 10,820 1,482,856

Legal fee – member 614 0

Total accounts payable 358,194 3,486,672

6. Net_investment_income

Current period R

Previous period R

Income from investments 1,365,953 2,933,315

Dividends 266,800 561,962

Interest 1,099,153 2,371,353

Adjustment to fair value 23,296,073 12,064,446

Sub-Total 24,662,026 14,997,761

Less

Expenses incurred in managing investments (860,820) (962,841)

Total 23,801,206 14,034,920

7. Other_Income

Current Period Previous Period

R R Final Liquidation payment from Pioneer Employee Benefits 134,479 0

Total other income 134,479 0


Page 19 of 39

SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For the period ended 31/08/2014 8. Administration expenses

Notes

Current period R

Previous period R

Actuarial fees 43,200 55,753

Actuarial fees provision written back (86,094)

Administration fees 374,639 389,880

Audit fees 82,394 74,100

Fidelity Insurance 20,625 20,625

Legal Fees 318,479 240,000

Levies 92,284 19,138

Other 8.1 96,063 714

Board of Fund expenses 8.2 115,641 93,114

Total 1,057,231 893,324 8.1 Other admin expenses


Details of Other admin expenses R R Bank Charges 1,285 714

Historical contribution/risk balances written off 94,778 0

Total other income 96,063 714

8.2 Board of Fund expenses

Current period

R Previous period

R

Meeting allowances 1,109 1,440

Expenses 114,532 91,674

Total Board of Fund expenses 115,641 93,114

9. Financial liabilities and provisions

9.1 Provisions


R R Provision for actuarial fees 43,200 398,526

Provision for future liabilities 0 304,732

Provision for rebuild cost (legal fees) 878,479 583,765

Provision for rebuild cost (penalties) 0 632,766

Provision for rebuild cost (Trustees fees) 0 25,000

Total Provisions 921,679 1,944,789


Page 20 of 39

SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For the period ended 31/08/2014

10. Risk management policies

Risk management framework

The Board of Fund has overall responsibility for the establishment and oversight of the Fund’s risk

management policies.

The Fund’s risk management policies are established to identify and analyze the risks faced by the

Fund, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk

management policies and systems are reviewed regularly to reflect changes in market conditions

and the Fund’s activities.

Solvency risk

Continuous monitoring by the Board of Fund takes place to ensure that appropriate assets are held where the Funds obligation to members is dependent upon the performance of specific portfolio assets and that a suitable match of assets exists for all other liabilities.

Credit Risk

The Board of Fund monitors receivable balances on an on-going basis with the result that the Fund’s exposure to bad debts is not significant. An appropriate level of provision is maintained.

Legal Risk

Legal risk is the risk that the Fund will be exposed to contractual obligations which have not been provided for. Legal representatives of the Fund monitor the drafting of contracts to ensure that rights and obligations of all parties are clearly set out.

Cash Flow Risk

The Board of Fund agreed an amount with the administrators that should be kept in the bank account to meet the Fund’s cash flows requirements. If the agreed amount is insufficient, the administrator must disinvest to meet the required cash flow.

Liquidity Risk

The Fund’s liabilities are backed by appropriate assets and it has significant liquid resources.

Market Risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices of market interest rates.

Interest rate Risk

The Board of Fund monitors exposures to interest rate risk by receiving regular reports of interest fluctuations.

Currency Risk

The Fund’s exposure to currency risk is mainly in respect of foreign investments made on behalf of members of the Fund for the purpose of seeking desirable international diversification of investments. The Board of Fund monitors this aspect of the Fund’s investments and limits it to SARB limits of total assets.

Investments

Investments in insurance policies are valued at fair value as certified by the insurer. Investments are managed with the aim of maximising the Fund’s returns while limiting risk to acceptable levels within the framework of statutory requirements.

Continuous monitoring takes place to ensure that appropriate assets are held where the liabilities are dependent upon the performance of specific portfolios of assets and that a suitable match of assets exists for all non–market related liabilities.


Page 21 of 39

SCHEDULE HA (Continued) NOTES TO THE FINANCIAL STATEMENTS For the period ended 31/08/2014 11. Promised retirement benefits

As a defined contribution fund, the Fund in association with the principal and participating employers provides the members a course to save towards retirement. The Fund liability to the promised retirement benefit is limited to the member’s equitable share of his/her share of fund. The member’s share of fund is the member’s retirement contributions plus the net return earned from the appropriate investment.

12. Related party transactions

The Fund’s expenses to the value of R1,057,231. The participating employer made contributions to the Fund for members’ retirement and towards the fund’s expenses to the value of R0. . Principle Officer fees are included in the Board of Fund expenses. During the current period administration fees were paid. Please refer to note 8 on page 19 the Administration expenses.

13. Amounts to be allocated123

Current period R

Previous period R

Investment return to be allocated 3,322 3,238

Total amounts to be allocated 3,322 3,238

o O – O o End of AFS


Page 22 of 39

SCHEDULE HB REPORT OF THE VALUATOR


Page 23 of 39

SCHEDULE I REPORT OF THE INDEPENDENT AUDITOR OF ABACUS UMBRELLA PENSION FUND OF FACTUAL FINDINGS TO THE BOARD OF FUND AND THE REGISTRAR OF PENSION FUNDS

We have performed the procedures agreed with the Registrar of Pension Funds (the “Registrar”) and set out below with respect to the audited financial statements (“annual financial statements”) and other information in the general ledger and management information comprising the accounting records of the Abacus Umbrella Pension Fund (the “Fund”) for the period ended 31 August 2014. Our engagement was undertaken in accordance with the International Standard on Related Services (ISRS) 4400 Engagements to perform agreed-upon procedures regarding financial information. Our procedures were performed solely to assist the Registrar in evaluating whether any instances of non-compliance with the requirements of the relevant sections of the Pension Funds Act of South Africa (the Act), regulations and rules of the Fund were identified. The responsibility for determining the adequacy or otherwise of the procedures agreed to be performed, is that of the Registrar. Procedures and findings Our procedures performed are set out in the numbered paragraphs (not bold) in the attached table, which forms part of our report, together with our findings thereon. Unless otherwise indicated, all balances, lists, schedules etc. referred to in the table relate to the accounts/balances reflected in the annual financial statements of the Fund for the period ended 31 August 2014. Because the procedures do not constitute an audit, a review or other assurance engagement performed in accordance with the IAASB’s International Standards we do not express any assurance. Had we performed additional procedures, or had we performed an audit, a review, or other assurance engagement, other matters might have come to our attention that would have been reported. Restriction on use and distribution Our report is solely for the purpose set out in the first paragraph of this report and for the information of the Registrar and accordingly may not be suitable for any other purpose and distributed to other parties. This report relates only to the information specified and does not extend to the annual financial statements of the Fund taken as a whole.

Per: MI Lockhat

Director

23/02/2015


Page 24 of 39

SCHEDULE I (Continued)

Procedures Findings

Statement of Net Assets and Funds

1 Investments

1.1 Inspect the list of investment balances reflected in the general ledger of the Fund as at 31 August 2014 for any investments in accordance with the terms of section 19(4) of the Act.

1.1.1 Agree details of the written confirmations obtained from the investment managers/insurers to the investment balances reflected in the general ledger.

Details of the written confirmations obtained from the investment managers/issuers agreed to the investment balances reflected in the general ledger.

1.1.2 Where investments held in the participating employer exceed 5% of the total assets as reflected in the financial statements, inspect the appropriate approval of the Registrar.

Not applicable, as the Fund does not have investments in the participating employer.

1.2 Obtain the signed investment policy statement and, where applicable, the portfolio management agreement/investment mandate between the Fund and the investment administrator(s), and perform the following procedures on a sample of10 mandates (comprising the 3 largest by value of investments at year end and 7 other randomly selected mandates):

1.2.1 Inspect whether the underlying investments are in compliance with the signed investment policy statement and, where applicable, the portfolio management agreement/investment mandate.

The underlying investments were in compliance with the signed investment policy statement and, where applicable, the portfolio management agreement/investment mandate.

1.2.2 Inspect whether the investment mandate and the investment policy statement provide for securities lending transactions and investments in hedge funds, private equity funds and derivatives, as prescribed.

The investment mandate and the investment policy statement did not provide for securities lending transactions and investments in hedge funds, private equity funds and derivatives, as prescribed.

1.2.3 Inspect whether the collateral and counterparty requirements as prescribed are complied with.

Not applicable.

1.2.4 For segregated portfolios, confirm directly with the investment administrator(s):

(a) whether scrip lending took place during the [period/year] and, if so,

(b) whether there was collateral provided by the counterparty/(ies) for any scrip lending activities and, if so,

(c) the percentage exposure covered by the collateral.

Report on the amount for a).

Not applicable, as the fund had no segregated portfolios.

2 Member individual accounts (defined contributions funds as well as defined contribution section of hybrid funds)

2.1 Obtain a list of member individual accounts per participating employer that agrees in total to the Statement of Net Assets and Funds as at 31 August 2014.


Page 25 of 39

Procedures Findings

2.2 Select a random sample of the lesser of 50 or 10% of the number of members (from participating employers selected in 8.1 below) from the list of members and perform the following procedures:

Not applicable, as no contributions were received throughout the period under review.

2.2.1 Compare the member and employer contributions received and allocated for the members selected as reflected on the administrator’s system, to information supplied by the participating employers for those members selected, for a randomly selected period of three months (including the last month of the [period/year] under review).

Not applicable.

2.2.2 Compare the member and employer contribution rates for the members selected as reflected on the administrator’s system, to the rules of the Fund, for a randomly selected period of three months (including the last month of the [period/year] under review).

Not applicable.

2.2.3 In respect of unitised investment products, for the three months selected in 2.2.1 and 2.2.2, calculate the conversion of the contributions at the unit price per the administration system on the dates that the contributions were invested and compare the units recalculated to the administration system units for the selected members. Inspect that the units were added to the existing units for that member.

Not applicable.

2.2.4 In respect of unitised investment products, calculate the conversion of units at the end of the [period/year], at the [period/year-end] unit price per the administration system and agree the calculated amount to the member’s fund credit amount recorded in each member's record.

The conversion of the units at period end was calculated correctly at the period unit price per administration system and agreed to the member’s fund credit amount recorded in each member's record.

2.2.5 In respect of unitised investment products, compare the unit price(s) as per investment manager/actuary/other authorised party at the period-end to the unit prices on the administration system used to calculate each member‘s credits at 31 August 2014..

The unit price(s) agreed to the unit prices on the administration system as per investment manager used to calculate each member’s credit at 31 August 2014.

2.2.6 In respect of non-unitised investment products, compare the interim and/or final return allocated to each individual member's account in the administrator's records for the [period/year] under review to the return approved in accordance with a resolution of the Board of Fund or the rules of the Fund or approved recommendation by the investment consultant/asset manager/fund valuator.

Not applicable.

2.3 Obtain a list of members who switched investment portfolios during the [period/year] from the Fund/administrator, select a random sample of the lesser of 50 or 10% of members who switched between investment portfolios during the [period/year], and perform the following procedures:


Page 26 of 39

Procedures Findings

2.3.1 Inspect evidence that the portfolios were switched in accordance with notification of the member’s instruction/ investment strategy (including life stage models) of the Fund and within a timeframe as specified in the service level agreement or client mandate between the administrator and the Fund.

The portfolios were switched in accordance with notification of the member’s instruction/investment strategy (including life stage models) of the Fund and were switched within the timeframe as specified in the service level agreement or client mandate between the administrator and the Fund.

2.3.2 Inquire as to whether any fees relating to switches were deducted, and if so, inspect evidence of the approval by the Board of Fund and/or in terms of a service level agreement or client mandate.

Fees were deducted in terms of the client mandate and Board approval.

2.4 For investment products obtain the Asset Liability Match (ALM) reconciliation per investment portfolio, excluding the reserve accounts, for member individual accounts from the administrator, and perform the following procedures:

2.4.1 Compare the investments per product on the ALM reconciliation to the investment certificates in total.

The investments per product on the ALM reconciled agreed to the investment certificates in total.

2.4.2 Compare the member individual accounts on the ALM reconciliation per investment portfolio to the administration system and to the total member individual accounts as disclosed in the Statement of Net Assets and Funds.

The values of investments specified by the members investment choice did not agree to the members liabilities per product for that choice and reconciling items amounting to (R 4 226 513) were noted.

2.4.3 Inspect whether the total mismatch (in Rand) for all portfolios was within the range as prescribed by the Registrar.

The total mismatch for all portfolios was within the range as prescribed by the Registrar.

3 Accumulated funds (for defined benefit funds as well as defined benefit sections of hybrid funds)

3.1 Select a sample of the lesser of 50 or 10% of the number of members from the list of members provided by the administrator and perform the following procedures for each member selected:

Not applicable, as this a defined contribution fund.

3.1.1 Compare the member contributions received and allocated for the members selected as reflected on the administrator’s system, to information supplied by the participating employers for those members selected, for a randomly selected period of three months (including the last month of the [period/year] under review).

Not applicable.

4 Surplus apportionment scheme

4.1 If a surplus apportionment scheme was approved by the Registrar in the current [period/year] or if allocation and/or payments to members were made during the [period/year], perform the following procedures:

The fund had no surplus apportionment scheme.

4.1.1 Active members: Select a random sample of the lesser of 50 or 10% of number of active members to whom surplus has been apportioned in the approved surplus apportionment scheme and perform the following procedures:


Page 27 of 39

Procedures Findings

4.1.1.1 Agree the original surplus amount allocated to the selected member to the individual allocation on the member records per the administration system.

Not applicable.

4.1.1.2 Inspect whether the calculation of the relevant investment return from surplus apportionment date to date of allocation was in accordance with the requirements of the Act and allocated to the member records in the administration system.

Not applicable.

4.1.2 Former members and pensioners: Select a random sample of the lesser of 50 or 10% of number of former members and pensioners as defined by the surplus apportionment scheme from the surplus schedules attached to the approved surplus apportionment scheme and perform the following procedures:

4.1.2.1 Agree the original surplus amount allocated to the selected member and/or pensioner to the individual allocation on the member records per the administration system.

Not applicable.

4.1.2.2 Inspect whether the calculation of the relevant investment return from surplus apportionment date to date of allocation was in accordance with the requirements of the Pension Funds Act and allocated to the member records in the administration system.

Not applicable.

4.1.2.3 Agree the total of the amount calculated in 4.1.2.1 and 4.1.2.2 to the surplus benefit paid per selected member and to the applicable amount per the administration system and other authorised supporting documentation.

Not applicable.

5 Member and employer surplus accounts

5.1 Obtain the analysis of the transactions in the member and/or employer surplus account per the annual financial statements, and perform the following procedure:

Not applicable, as the fund has no surplus accounts.

5.1.1 Inspect that the transactions are permitted in terms of the registered rules of the Fund and/or the Act.

Not applicable.

6 Reserves

6.1 Obtain the list of reserves and other related accounts (e.g. pensioner accounts) and the movements per the financial statements and/or in the actuarial valuation, and perform the following procedures:

Not applicable, as the fund has no reserve accounts.

6.1.1 Inspect whether the reserve and other related accounts (e.g. pensioner accounts) held by the Fund and/or reflected in the actuarial valuation are in accordance with the registered rules of the Fund.

Not applicable.

6.1.2 Inspect that the movements in reserves as disclosed in the annual financial statements are permitted in terms of the registered rules of the Fund and/or the Act.

Not applicable.

7 Other assets, liabilities and guarantees


Page 28 of 39

Procedures Findings

7.1

Obtain the list of housing loans granted to members by the Fund in terms of section 19(5) of the Act as at 31 August 2014, and perform the following procedure:

The Fund does not grant direct housing loans.

7.1.1 Agree the total loans on the above list to the corresponding account in the annual financial statements.

Not applicable.

7.2 From the list in 7.1, randomly select a sample of the lesser of 50 or 10% of the number of members’ housing loans granted and perform the following procedures:

Not applicable.

7.2.1 Inspect evidence that the value of the loan provided does not exceed the amount permitted by the rules and the home loan agreement.

Not applicable.

7.2.2 Inspect evidence that the loan has been granted in terms of Section 19(5) (a).

Not applicable.

7.2.3 Inspect evidence that repayments are being made in accordance with the loan agreement.

Not applicable.

7.2.4 Inspect the interest charged on the outstanding loan and compare the rate used to the prescribed rate.

Not applicable.

7.2.5 If the Fund issued more than 100 loans or the total principal debt of all outstanding loans exceeded R500 000, inquire whether the Fund was registered as a credit provider under the National Credit Act, 2005 (the NCA).

Not applicable.

7.3 Obtain the list of housing loan guarantees and select a sample of the lesser of 50 or 10% of the number of housing loan guarantees and perform the following procedures:

7.3.1 For the sample selected, determine that each selected guarantee did not exceed the gross value of the benefit that the member would become entitled to had they withdrawn, as at the period end, in terms of the Act, the loan agreement and/or the rules of the Fund.

For the sample selected, the guarantees did not exceed the gross value of the benefit that the member would become entitled to had they withdrawn, as at 31 August 2014, in terms of the Act, the loan agreement and/or the rules of the Fund.

7.3.2 Inspect evidence that the guarantee has been granted in terms of Section 19(5) (a).

The guarantee had been granted in terms of Section 19(5) (a).

7.4 Obtain a list of other loans per the general ledger of the Fund as at 31 August 2014 and perform the following procedure:

7.4.1 Confirm that no loans were granted and/or investments made as prohibited in terms of section 19(5)B.

The Fund does not grant other loans.

Statement of Changes in Net Assets and Funds

8 Contributions

8.1 Select a sample of the lesser of 50 or 10% of the number of participating employers or pay points (whichever is the lower) from a list of participating employer/pay-points supplied by the Fund/administrator, select three months and perform the following procedures:

Not applicable, as no contributions were received throughout the period under review.


Page 29 of 39

Procedures Findings

8.1.1 Compare, in total, the contributions received by or on behalf of the Fund to the remittance advices from the participating employer/pay-point.

Not applicable.

8.1.2 Inspect the bank statements for the date on which the cash was received to determine whether the contributions were deposited with a registered bank in accordance with section 13A of the Act and whether late payment interest has been raised in terms of regulation 33, where applicable.

Not applicable.

8.2 Select a sample of the lesser of 50 or 10% of the number of participating employers or pay points which reflect arrear contributions (whichever is the lower) at [period/year-end] from a list supplied by the Fund/administrator and perform the following procedure:

Not applicable.

8.2.1 Inspect the accounting records of the Fund to determine whether amounts disclosed as arrear contributions at [period/year-end] have been paid to the Fund within the prescribed period in accordance with the requirements of section 13A of the Act. Where the amounts were received after the prescribed period, report the date of receipt and where they were not received, indicate as such.

There were no arrear contributions as at 31 August 2014.

9 Benefits

9.1 Obtain a list from the administration system of lump sum benefits reflected as expenses in the Fund’s Statement of Changes in Net Assets and Funds for the year under review and perform the following procedure:

9.1.1 Compare the list to the respective general ledger benefit expense accounts reconciliation.

The list agreed to the respective general ledger benefit expense accounts reconciliation.

9.2 Select a sample of the lesser of 50 benefits or 10% of the total number of benefits from the list and perform the following procedures:

9.2.1 Compare the benefit per selected member to the administration system and authorised supporting documentation in accordance with the procedures of the Fund.

The benefit per selected member agreed to the administration system and authorised supporting documentation in accordance with the procedures of the Fund.

9.2.2 For death benefits, where a portion of the benefit had been reinsured by the Fund, inspect a bank deposit or an accrual raised for the recovery from the insurer.

Not applicable, as no re-insurance proceeds were received or accrued during the period under review.


Page 30 of 39

Procedures Findings

9.2.3 For a defined benefit fund and hybrid funds with a defined benefit underpin Inspect that the calculation of the benefit payment was done by the actuary in accordance with the requirements of the rules of the Fund and/or the Act. For a defined contribution fund Agree the opening fund credit for the member to the opening fund credit report and determine whether contributions were added every month until the date of exit (either by Rand amount or in the case of unitised funds, by units). Agree the balance paid out to the member (inclusive of late payment interest where applicable) to the fund credit report or administration system as at the date of exit.

The opening fund credit for the member agreed to the opening fund credit report and contributions were added every month until the date of exit. The balance paid out to the member (inclusive of late payment interest where applicable) agreed to the fund credit report or administration system as at the date of exit.

9.3 Obtain a list of all benefits not yet paid at [period/year-end], select a sample of the lesser of 50 benefits or 10% of the total number of benefits from the list and perform the following procedure:

9.3.1 Agree whether the benefits that are older than the period as set out in the Act or a shorter period defined by the Rules are classified as unclaimed benefits.

The benefits that were older than the period as set out in the Act or a shorter period defined by the Rules were not classified as unclaimed benefits, but have been included in the closing fund credits until the claims are settled.

10 Transfers

10.1 Compare the list of total section 14 transfers to and from the Fund to the corresponding accounts in the general ledger.

There were no section 14 transfers to and from the Fund throughout the period under review.

10.2 From the list of section 14 transfers paid/received and accrued to and from the Fund throughout the [period/year] select a sample of the lesser of 50 or 10% of the number of transfers in and the lesser of 50 or 10% of the number of transfers out, and perform the following procedures:

Not applicable.

10.2.1 Agree the sample of section 14 transfers to and from the Fund to: a) the section 14(1) documentation as

approved by the Registrar in respect of each transfer; and/or

b) the section 14(8) documentation as prescribed.

Not applicable.

10.2.2 Inspect whether the transfers to and from the Fund were received/paid within 60 days of Registrar approval for section 14(1) transfers and 180 days from application date for section 14(8) transfers and whether the growth and investment return had been allocated from the effective date of the transfer to the date of final settlement.

Not applicable.


Page 31 of 39

Procedures Findings

10.2.3 In respect of unitised funds, select a sample of the lesser of 50 or 10% of the number of members transferred from other funds and recalculate the purchase of units for the amount received using the unit price per the administration system on the date of receipt. (Where units were purchased after date of receipt, investment return was added from the date of receipt to the date of purchase).

Not applicable.

10.3 Individual transfers Obtain the list of individual transfers throughout the [period/year] ended 31 August 2014, select a sample of the lesser of 50 or 10% of the number of individual transfers, and perform the following procedures:

There were on individual transfers to and from the fund throughout the period under review.

10.3.1 Agree the transfers to the approved recognition of transfer documentation.

Not applicable.

10.3.2 For individual transfers in selected In respect of unitised funds, recalculate the purchase of units for the amount received using the unit price per the administration system on the date of receipt. (Where units were purchased after date of receipt investment return was added from the date of receipt to the date of purchase).

Not applicable.

11 Pensioners paid

11.1 Obtain a copy of the list of pensioners and amounts paid for the [period/year] from the administration system and/or, for outsourced pensioners, confirmation from the insurer and perform the following procedure:

Not applicable, as the Fund does not have pensioners.

11.1.1 Agree the total pensions paid for the [period/year] ended 31 August 2014 to the corresponding account reconciliation to the general ledger balance.

Not applicable.

11.2 Select a sample of the lesser of 50 or 10% of the number of pensioners paid directly from the fund from the above list and perform the following procedures:

Not applicable.

11.2.1 Inspect the pensioner increases for authorisation by the Board of Fund.

Not applicable.

11.2.2 Inspect evidence obtained by the administrator/Fund supporting the fact that the pensioners selected exist.

Not applicable.

11.3 Where the Fund has purchased an annuity in the name of the Fund, obtain a written confirmation from the annuity provider summarising movements from opening market value to closing market value and perform the following procedures:

Not applicable.

11.3.1 Agree the closing market value of the annuity to the annual financial statements.

Not applicable.

11.3.2 Agree the pensioner payment per the confirmation from the insurer to the pensions paid disclosed in the notes to the annual financial statements.

Not applicable.

General


Page 32 of 39

Procedures Findings

12.1 Inspect evidence that the Fund’s fidelity insurance cover was in place throughout the [period/year] ended 31 August 2014, that the Fund’s fidelity insurance cover extends after [period/year-end] and report the date to which the subsequent fidelity insurance cover extends.

The Fund’s fidelity insurance cover was in place throughout the period ended 31 August 2014, and the Fund’s fidelity insurance cover extended after period-end. The subsequent fidelity insurance cover extended to 31 May 2015.

12.2 Confirm with the Fund’s GLA insurer as to whether the GLA policy has lapsed at period ended 31 August 2014.

Not applicable, as there is no risk premiums payable as at 31 August 2014.

12.3 Obtain the most recent statutory valuation signed and submitted by the valuator as at 31 August 2013 and perform the following procedures:

12.3.1 Report the funding status of the Fund per the report (whether the Fund was under-funded or fully funded).

Per the report the Fund was fully funded.

12.3.2 Where the Fund is under-funded, obtain evidence as to whether a scheme, as required in terms of section 18 of the Act in South Africa, has been approved by the Registrar.

Not applicable.


Page 33 of 39

SCHEDULE IA – INVESTMENT SCHEDULE As at 31/08/2014 INVESTMENT SCHEDULE PERTAINING TO ANNUAL FINANCIAL STATEMENTS

InvestmentIA

Investments

Notes

Direct Investments

Compliant Investments

Total Local Total

Foreign

Total % foreig

n

TOTAL as per Regulation 28

R R R R R % R

Cash A 1,257,210 0 1,257,210 1,257,210 0 0 1,257,210

Insurance Policies :

0 148,164,754 148,164,754 113,243,090 34,921,664 23.57 148,164,754

- Linked Policies L 0 148,164,754 148,164,754 113,243,090 34,921,664 23.57 148,164,754

TOTAL INVESTMENTS

1,257,210 148,164,754 149,421,964 114,500,300 34,921,664 23.37 149,421,964

A CASH

Instrument Fair value Previous Period

R R

Local

Notes and coins, any balance or deposit in an account held with a South African bank List issuers/entities which exceeds 5% of total assets

Standard Bank of SA Ltd 1,257,210 1,088,581

TOTAL CASH 1,257,210 1,088,581

L CERTIFIED REGULATION 28 COMPLIANT INVESTMENTS

Instrument Local or Foreign

Fair value Previous Period R

Collective Invest Schemes – reg28(8)(b)(i) 0 0 118,371

Local 0 0 118,371

List issuers/entities which exceeds 5% of total assets

0 0

Coronation (Other) 0 0 67,409

Fraters (Other) 0 0 50,962

Instrument Local or Foreign

Fair value Previous Period R

Linked Policies – reg28(8)(b)(ii) 148,164,754 148,164,754 151,986,825

Local 148,164,754 148,164,754 151,986,825

List issuers/entities which exceeds 5% of total assets

148,164,754 148,164,754 151,986,825

Momentum High Equity 76,965,789 76,965,789 73,387,640

Momentum Low Equity 18,043,604 18,043,604 18,516,676

Momentum Medium Equity 37,204,239 37,204,239 38,848,918

Momentum Pre-Retirement 15,951,122 15,951,122 21,233,591

P RECONCILIATION BETWEEN THE INVESTMENTS IN SCHEDULE H2 AND SCHEDULE IA

Cash at bank Compliant investments Total

Cash 1,257,210 1,257,210

Insurance Policies 148,164,754 148,164,754

TOTAL INVESTMENTS 1,257,210 148,164,754 149,421,964


Page 34 of 39

SCHEDULE IB

ASSETS HELD IN COMPLIANCE WITH REGULATION 28 As at 31/08/2014

Fair value R A Total assets (Schedule IA -Total investments) 149,421,964 B1 Less: Reg 28 compliant investments

(certificate received from issuing entity):- 0

B.1.1 Collective Investment Schemes (Reg 28(8)(b)(i)) 0 B.1.2 Linked Policies (Reg 28(8)(b)(ii)) 0 B.1.3 Non-Linked policies (Reg 28(8)(b)(iii)) 0 B.1.4 Entity regulated by FSB (Reg 28(8)(b)(iv)) 0

B2 Less: Reg 28 Excluded investments 0

B.2.1 Insurance Policies ( Reg 28(3)(c)) 0

C Less: Investments not disclosed /data not available for disclosure [Refer

Schedule IAN] 0

D TOTAL ASSETS for REGULATION 28 DISCLOSURE 149,421,964

1

CASH

100%

18,981,176 12.71%

1.1

Notes, deposits, money market instruments issued by a South African Bank, margin accounts, settlement accounts with an exchange and Islamic liquidity management financial instruments

100%

18,574,455 12.44%

(a)

Notes and coins, any balance or deposit in an account held with a South African bank

25% 18,553,827 12.43%

(b) A money market instrument issued by a South African bank including an Islamic liquidity management financial instrument

25% 20,628 0.01%

1.2

Balances or deposits, money market instruments issued by a foreign bank including Islamic liquidity management financial instruments

406,721 0.27%

(a)

Any balance or deposit held with a foreign bank

5%

406,721 0.27%

2

DEBT INSTRUMENTS INCLUDING ISLAMIC DEBT INSTRUMENTS

25,386,958 16.99%

2.1

Inside the Republic

100%

20,865,341 13.96%

(a)

Debt instruments issued by, and loans to, the government of the Republic, and any debt or loan guaranteed by the Republic

11,728,503 7.85%

(c)

Debt instruments issued or guaranteed by a South African Bank against its balance sheet:-

75%

5,197,862 3.48%

(c)(i)

Listed on an exchange with an issue market capitalisation of R20 billion or more,

75% 25% 4,733,875 3.17%


Page 35 of 39

SCHEDULE IB (Continue)


(c)(ii)

Listed on an exchange with an issuer market capitalisation of between R2 billion and R20 billion, or an amount or conditions as prescribed

75% 15% 152,089 0.10%

(c)(iv)

not listed on an exchange 25% 5% 311,898 0.21%

(d)

Debt instruments issued or guaranteed by an entity that has equity listed on an exchange, or debt instruments issued or guaranteed by a public entity under the Public Finance Management Act, 1999 (Act No. 1 of 1999) as prescribed:-

50%

3,305,652 2.21%

(d)(i)

Listed on an exchange 50% 10% 3,290,829 2.20%

(d)(ii)

Not listed on an exchange 25% 5% 14,823 0.01%

(e)

Other debt instruments:- 25%

633,324 0.42%

(e)(i)

Listed on an exchange 25% 5% 462,609 0.31% (e)(ii)

Not listed on an exchange 15% 5% 170,715 0.11%

2.2

Foreign

4,521,617 3.03%

(b)

Debt instruments issued or guaranteed by the government of a foreign country

3,581,538 2.40%

(c)

Debt instruments issued or guaranteed by a South African Bank against its balance sheet:-

727,187 0.49%

(c)(i)

Listed on an exchange with an issue market capitalisation of R20 billion or more, or an amount of conditions as prescribed

645,838 0.43%

(c)(iv)

Not listed on an exchange

81,349 0.05%

(d)

Debt instruments issued or guaranteed by an entity that has equity listed on an exchange, or debt instruments issued or guaranteed by a public entity under the Public Finance Management Act, 1999 (Act No. 1 of 1999) as prescribed:-

71,600 0.05%

(d)(i)

Listed on an exchange

45,109 0.03% (d)(ii)

not listed on an exchange

26,491 0.02%

(e)

Other debt instruments

141,292 0.09%

(e)(i)

Listed on an exchange

62,855 0.04% (e)(ii)

not listed on an exchange

78,437 0.05%


Page 36 of 39



3

EQUITIES

88,611,798 59.30%

3.1

Inside the Republic

75%

58,794,570 39.35%

(a)

Preference and ordinary shares in companies, excluding shares in property companies:-

75%

58,694,242 39.28%

(a)(i)

Issuer market capitalisation of R20 billion or more, or an amount or conditions as prescribed

75% 15%

48,983,688 32.78%

(a)(ii)

Issuer market capitalisation of between R2 billion and R20 billion

75% 10%

9,033,662 6.05%

(a)(iii)

Issuer market capitalisation of less than R2 billion,

75% 5%

676,892 0.45%

(b)

Preference and ordinary shares in companies, excluding shares in property companies, not listed on an exchange

10% 2.5% 100,328 0.07%

3.2

The Rest of the World (excluding Africa)

SARB

29,817,228 19.96%

(a)

Preference and ordinary shares in companies, excluding shares in property companies:-

75%

29,716,733 19.89%

(a)(i)


SARB 15%

23,688,059 15.85%

(a)(ii)

Issuer market capitalisation of between R2 billion and R20 billion

SARB 10%

238,210 0.16%

(a)(iii)

Issuer market capitalisation of less than R2 billion,

SARB 5%

5,790,464 3.88%

(b)

Preference and ordinary shares in companies, excluding shares in property companies, not listed on an exchange

10% 2.5% 100,495 0.07%

4

IMMOVABLE PROPERTY

9,643,558 6.45%

4.1

Inside the Republic

25%

9,467,460 6.34%%

(a)

Preference shares, ordinary shares and linked units comprising shares linked to debentures in property companies, or units in a Collective Investment Scheme in Property, listed on an exchange

25%

9,464,814 6.33%

(a)(i)


25% 15% 6,173,417 4.13%


Page 37 of 39


ASSETS HELD IN COMPLIANCE WITH REGULATION 28 As at 31/08/2014 (a)(ii)

Issuer market capitalisation of between R3 billion and R10 billion, or an amount or conditions as prescribed

25% 10% 2,827,327 1.89%

(a)(iii)

Issuer market capitalisation of less than R3 billion or an amount or conditions as prescribed

25% 5% 464,070 0.31%

(b)

Immovable property, preference and ordinary shares in property companies, and linked unis comprising shares linked to debentures in property companies, not listed on an exchange

2,646 0.00%

4.2

Foreign 25%

176,098 0.12%

(a)

Preference shares, ordinary shares and linked units comprising shares linked to debentures in property companies, or units in a Collective Investment Scheme in Property, listed on an exchange

25%

171,995 0.12%

(a)(i)


25% 15% 158,065 0.11%

(a)(iii)

Issuer market capitalisation of less than R3 billion or an amount or conditions as prescribed

25% 5% 13,930 0.01%

(b)

Immovable property, preference and ordinary shares in property companies, and linked units comprising shares linked to debentures in property companies, not listed on an exchange

15% 5% 4,103 0.00%

5

COMMODITIES

10%

6,798,474 4.55%

5.1

Inside the Republic

10%

6,798,474 4.55%

(a)

Kruger Rands and other commodities on an exchange, including exchange traded commodities

10%

6,798,474 4.55%

(a)(i)

Gold (including Kruger Rands) 10%

6,798,474 4.55%

TOTAL (equal to the fair value of assets) 149,421,964 100%

o O – O o End of Reg28


Page 38 of 39

SCHEDULE IB – CONTINUED ASSETS HELD IN COMPLIANCE WITH REGULATION 28

As at 31/08/2014 INVESTMENT SUMMARY (REGULATION 28)

Local % of Fair

value

Foreign (Excluding

Africa) % of Fair value Total

% of Fair

value

R % R % R %

1

Balances or deposits, money market instruments issued by a bank including Islamic liquidity management financial instruments

18,574,455 12.43% 406,721 0.27% 18,981,176 12.71%

2 Debt instruments including Islamic debt instruments

20,865,341 13.96% 4,521,617 3.03% 25,386,958 16.99%

3 Equities 58,794,570 39.35% 29,817,228 19.96% 88,611,798 59.30%

4 Immovable property 9,467,460 6.34% 176,098 0.12% 9,643,558 6.45%

5 Commodities 6,798,474 4.55% 0 0.00% 6,798,474 4.55%

TOTAL 114,500,300 76.63% 34,921,664 23.38% 149,421,964 100.%

BREACHES IN TERMS OF SUB REGULATION 3 OF REGULATION 28

Total (Inside &

Foreign) Percentage of

Fair value Regulation

28 limits

R %

Asset Limits in terms of sub regulation 3(f)

Other debt instruments not listed 249,152 0.17%

Equities not listed 200,823 0.13%

Immovable properties not listed 6,749 0.00%

TOTAL 456,724 0.30% 35%

Asset Limits in terms of sub regulation 3(g)

Equities not listed 200,823 0.13%

TOTAL 200,823 0.13% 15%

Asset Limits in terms of sub-regulation 3(h)

Cash and deposits with a South African Bank 18,553,827 12.42%

Debt instruments guaranteed by a South African Bank

5,197,862 3.48%

TOTAL 23,751,689 15.90% 25%


Page 39 of 39

SCHEDULE IB – INDEPENDENT AUDITOR’S REPORT ON ASSETS HELD IN COMPLIANCE WITH REGULATION 28 TO THE BOARD OF ABACUS UMBRELLA PENSION FUND We have audited Schedule IB “Assets held in compliance with Regulation 28” of Abacus Umbrella Pension Fund (the Fund) at 31 August 2014 (the Schedule) for compliance with the requirements of Regulation 28 of the Pension Funds Act of South Africa (the Regulation), as set out on pages 34 to 38. Our engagement arises from our appointment as auditor of the Fund and is for the purpose of assisting the Board of Fund to report to the Registrar of Pension Funds (the ‘Registrar’). The information contained in Schedule IB has been extracted from the Fund’s underlying accounting records that were the subject of our audit engagement on the annual financial statements and forms the subject matter of this engagement. Our audit of the annual financial statements of the Abacus Umbrella Pension Fund for the year ended 31 August 2014 was conducted in accordance with International Standards on Auditing and in our report of 23 February 2015 we expressed an unmodified opinion on the financial statements, prepared, in all material respects, with the Regulatory Reporting Requirements for Retirement Funds in South Africa.

The Board of Fund’s Responsibility for the Schedule

The Board of Fund is responsible for the preparation of the Schedule in accordance with the Regulatory Reporting Requirements for Retirement Funds in South Africa and in compliance with the Regulation, and for such internal control as the Board of Fund determines is necessary to enable the preparation of the Schedule that is free from material misstatements, whether due to fraud or error. Auditor’s Responsibility

Our responsibility is to express an opinion based on our audit of the Schedule. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Schedule is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Schedule. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Schedule, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the Schedule in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, Schedule IB “Assets held in compliance with Regulation 28” at 31 August 2014 by Abacus Umbrella Pension Fund has been prepared in all material respects in accordance with the Regulatory Reporting Requirements for Retirement Funds in South Africa and in compliance with the Regulation. Restriction on Use

annual financial statements in terms section ...abacus.devee.co.za/archivefiles/auditreports/afs...

Documents