ANNUAL REPORT 2004/05
9 SEPTEMBER 2005
Presentation to Portfolio
Committee on Finance
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
2
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
3
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
4
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
5
monitoring by Internal Audit
Division
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
6
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
377.5
459.7
488.05
Grand Total
7
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%
100.00%
100.00%
100.00%
Grand Total
8
PIC Clients: Top 10 Funds
PORTFOLIO NAME
1
31/03/04
31/03/05
30/06/05
%AUM
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%
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%
Temporary Employees Pension Fund
0.5
0.3
0.29
0.06%
376.9
458.9
487.4
99.85
5
10
TOTAL
9
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
10
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
11
GEPF Cumulative Returns: Total Fund & Asset
Classes
12
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%
13
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%
14
Money Markets vs Benchmark
Benchmark Is the Alexander Forbes STEFI 3 Months, 6 Months and
12 Months.
PIC BMK
0-3 Months
3-9 Months
9-12 Months
65%
20%
15%
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%
Benchmark
Returns
Excess Returns
01/04/04 – 31/03/05
12 Months
Cash &
Money
Returns
7.75%
7.59%
0.16%
Total Risk
0.31%
0.11%
TE: 0.35%
15
Property Investments Returns
R’Million
Performance (%)
Direct Property
Investments
Pareto (40%)
1,041.9
10.62
1,831.9
18.87
Listed Property
Investments
TOTAL
412.0
61.52
3,285.8
21.60
Current Holdings
16
Isibaya Fund Investments
Infrastructure
5.80%
SME
2.49%
Industrial
5.14%
Mining
7.46%
Financial
16.65%
Tourism
3.10%
Telecoms
59.36%
17
Isibaya Fund Performance
Return
40.89%
Volatility
23.13%
18
Structured Investment Products
Performance 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%
Volatility
5.66%
6.41%
Performance Period:01/04/04 - 31/03/05 (Unaudited)
TOTAL
10.70%
Volatility
5.57%
9.00%
SIPS have outperformed Cash albeit at higher risk, and CPI + 6%
19
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
20
THANK YOU
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