annual report 2004/05 9 september 2005 presentation to portfolio committee on finance
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ANNUAL REPORT 2004/05
9 SEPTEMBER 2005
Presentation to Portfolio Committee on Finance
2
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
3
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
4
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
5
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
6
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
7
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%
15
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
19
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
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