ANNUAL REPORT 2004/05

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ANNUAL REPORT 2004/05

• 9 SEPTEMBER 2005

Presentation to Portfolio Committee on Finance
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Contents

• Highlights of the year 2004/05
• Progress on Corporatisation
• Addressing Concerns Raised by AG in Past
  Financial Years
• Total assets under management
• PIC Clients
• 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 EXPOSURE R billion EXPOSURE R billion 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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PIC Clients Top 10 Funds
PORTFOLIO NAME 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   TOTAL 376.9 458.9 487.4 99.85
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Consolidated Fund Performance
Return Risk Risk/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 Risk Risk/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
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Equities Returns vs. Benchmark
01/04/04 31/03/05 12 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 01/04/03 - 31/03/05 01/04/03 - 31/03/05 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 01/04/04 - 31/03/05 01/04/04 - 31/03/05 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. This reflects the average PIC exposures over time. This reflects the average PIC exposures over time. This reflects the average PIC exposures over time.
01/04/03 31/03/05 24 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 31/03/05 12 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
RMillion 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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Isibaya Fund Investments
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Isibaya Fund Performance
Return 40.89
Volatility 23.13
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Structured Investment Products
Performance Period 01/04/03 - 31/03/05 Performance Period 01/04/03 - 31/03/05 Performance Period 01/04/03 - 31/03/05
  SIPS CPI 6
TOTAL 18.38 15.99
Volatility 5.51  
Performance Period01/04/03 - 31/03/04 Performance Period01/04/03 - 31/03/04 Performance Period01/04/03 - 31/03/04
TOTAL 6.94 6.41
Volatility 5.66  
Performance Period01/04/04 - 31/03/05 (Unaudited) Performance Period01/04/04 - 31/03/05 (Unaudited) Performance Period01/04/04 - 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 PICs as the
  leading asset management company in SA

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THANK YOU