ANNUAL REPORT 2004/05

9 SEPTEMBER 2005

Presentation to Portfolio Committee on Finance

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Contents

1.Highlights of the year: 2004/05

2. Progress on Corporatisation

3.Addressing Concerns Raised by AG in Past

Financial Years

4.Total assets under management

5. PIC Clients

6. Performance

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Highlights of the year: 2004/05

• Positioning the Corporation to become a modern asset

management Company

• Growth of assets under management from R377 billion

to R461 billion

• Upgrading of IT infrastructure

• Increased pace in BEE funding

• Upgrading of retail properties at a cost of R157 million

• Increased impetus on shareholder activism

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Progress on Corporatisation

• Corporation launched on 1 April 2005

• Memorandum and Articles of Association signed by

shareholder

• Registered in terms of Companies Act

• Completing registration as a Financial Service

Provider in terms of FAIS Act

• Interim Board appointed• All former National Treasury employees transferred

to the Corporation

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Addressing Concerns Raised By The AG In Past Financial Statements

Emphasis of Matter Remedial Steps taken

• Non-compliance with GAAP and valuation of properties i.t.o. AC 135 not performed

• Systems put in place to ensure GAAP compliance as well as AC133 and AC 135 compliance

• No Internal Audit function • Internal Audit Manager appointed and Internal Audit section established

• No Compliance function • Compliance Officer has been appointed

• Non-compliance with PFMA • All issues have been addressed. Frequent monitoring by Internal Audit Division

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Addressing Concerns Raised By The AG In Past Financial Statements

Emphasis of matter Remedial Steps Taken

• Risk Management Framework had not been implemented

• Framework has been developed• Continuous monitoring.

• Issues relating to ownership of properties

• All the matters have been resolved

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Total PIC Assets Under Management

EXPOSURE R billion

ASSET CLASS 31/03/2004 31/03/2005 30/06/2005

BONDS 194.0 217.8 234.22

EQUITIES 130.5 175.4 192.33

CASH 31.1 45.1 43.94

ISIBAYA 6.0 16.4 12.52

SIPS 12.7 1.3 1.30

PROPERTIES 3.2 3.6 3.73

Grand Total 377.5 459.7 488.05

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Total PIC Assets Under Management (Weights)

ASSET CLASS 31/03/2004 31/03/2005 30/06/2005

BONDS 51.37% 47.39% 47.99%

EQUITIES 34.48% 38.15% 39.41%

CASH 8.30% 9.81% 9.00%

ISIBAYA 1.57% 3.57% 2.57%

PROPERTIES 0.85% 0.79% 0.76%

SIPS 3.43% 0.28% 0.27%

OPTIONS 0.00% 0.00% 0.00%

Grand Total 100.00% 100.00% 100.00%

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PORTFOLIO NAME 31/03/04 31/03/05 30/06/05 %AUM

1 GEPF (Government Employees Pension Fund) 344.7 420.3 446.89 91.56%

2 Associated Institution Pension Fund 10.0 10.7 10.89 2.23%

3 Unemployment Insurance Fund 6.3 9.9 11.24 2.30%

4 Compensation Commissioner : Pension Fund 5.9 6.7 6.89 1.41%

5 Compensation Commissioner : Compensation Fund 4.5 5.5 5.72 1.17%

6 Guardian Funds 2.4 2.8 3.01 0.62%

7 Department of Labour: NSF- Levies 1.2 1.2 1.22 0.25%

8 RDP Funds 0.9 0.9 0.75 0.15%

9 Period Loans: University Redemption Funds 0.6 0.6 0.50 0.10%

10 Temporary Employees Pension Fund 0.5 0.3 0.29 0.06%

  TOTAL 376.9 458.9 487.4 99.85

PIC Clients: Top 10 Funds

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Consolidated Fund Performance

Return RiskRisk/Return

Ratio

Capital Market 14.1% 2.9% 4.9

Equities 33.9% 11.5% 3.0

Properties 15.7% 10.1% 1.6

Money Markets 7.8% 0.1% 64.3

Structured Investment Products 10.7% 5.6% 2.0

Total Fund 20.6% 5.2% 4.0

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GEPF Performance

Return RiskRisk/Return

Ratio

Capital Market 14.1% 4.5% 3.1

Equities 33.9% 11.5% 3.0

Properties 15.7% 10.1% 1.5

Money Markets 7.7% 0.3% 25.8

Structured Investment Products 10.7% 5.3% 2.0

Total Fund 21.6% 6.3% 3.4

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GEPF Cumulative Returns: Total Fund & Asset Classes

Cumulative Returns

80.00

100.00

120.00

140.00

160.00

180.00

200.00

TOTAL FUND CAPITAL MARKET INFLATION LINKED BONDS

EQUITIES PROPERTIES MONEY MARKET

SIPS

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Equities Returns vs. Benchmark

01/04/04 – 31/03/0512 Months

GEPF Equities

Benchmark Returns

Excess Returns

Returns 33.87% 32.03% 1.85%

Total Risk 11.98% 12.21% TE: 1.02%

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Bonds vs. Benchmark 80% ALBI + 20% Inflation Linked Bonds

01/04/03 - 31/03/05

24 Months Capital Market Benchmark Returns

Excess Returns

Annualised returns 12.55% 12.21% 0.35%

Volatility 4.13% 4.43% TE: 0.70%

01/04/04 - 31/03/05

12 Months Capital Market Benchmark Returns

Excess Returns

Annualised returns 14.12% 14.00% 0.12%

Volatility 4.75% 5.41% TE: 0.78%

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Money Markets vs Benchmark

Benchmark Is the Alexander Forbes STEFI 3 Months, 6 Months and 12 Months.

0-3 Months 3-9 Months 9-12 Months

PIC BMK 65% 20% 15%

This reflects the average PIC exposures over time.

01/04/03 – 31/03/0524 Months

Cash & Money

Benchmark Returns

Excess Returns

Returns 9.73% 9.13% 0.60%

Total Risk 2.05% 0.63% TE: 2.06%

01/04/04 – 31/03/0512 Months

Cash & Money

Benchmark Returns

Excess Returns

Returns 7.75% 7.59% 0.16%

Total Risk 0.31% 0.11% TE: 0.35%

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Property Investments Returns

R’Million Performance (%)

Current Holdings

Direct Property Investments

1,041.9 10.62

Pareto (40%) 1,831.9 18.87

Listed Property Investments

412.0 61.52

TOTAL 3,285.8 21.60

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Industrial5.14%

Infrastructure5.80%

SME2.49%

Financial16.65%

Tourism3.10%

Telecoms59.36%

Mining7.46%

Isibaya Fund Investments

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Return 40.89%

Volatility 23.13%

Isibaya Fund Performance

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Structured Investment ProductsPerformance Period : 01/04/03 - 31/03/05

  SIPS CPI + 6%

TOTAL 18.38% 15.99%

Volatility 5.51%  

Performance Period:01/04/03 - 31/03/04

TOTAL 6.94% 6.41%

Volatility 5.66%  

Performance Period:01/04/04 - 31/03/05 (Unaudited)

TOTAL 10.70% 9.00%

Volatility 5.57%  

SIPS have outperformed Cash albeit at higher risk, and CPI + 6%

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WAY FORWARD• Client Focus

- Continue provide exceptional service to our clients• Consolidation of the Corporatisation process

- Refinement of investment processes- Continue recruitment of suitably qualified and skilled staff- Refinement of IT systems

• Champion transformation in the asset management industry- Champion SRI, sound corporate governance, charters and

applicable Nedlac agreements,• Positioning of PIC in asset management industry

- Consolidate the establishment of the PIC’s as the leading asset management company in SA

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THANK YOU