ANNUAL REPORT 2004/05 9 SEPTEMBER 2005
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Transcript of ANNUAL REPORT 2004/05 9 SEPTEMBER 2005
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
• All issues have been addressed. Frequent monitoring by Internal Audit Division
• Non-compliance with PFMA
• Internal Audit Manager appointed and Internal Audit section established
• No Internal Audit function
• Compliance Officer has been appointed
• No Compliance function
• Systems put in place to ensure GAAP compliance as well as AC133 and AC 135 compliance
• Non-compliance with GAAP and valuation of properties i.t.o. AC 135 not performed
Remedial Steps taken
Emphasis of Matter
6
Addressing Concerns Raised By The AG In Past Financial Statements
• All the matters have been resolved
• Issues relating to ownership of properties
• Framework has been developed• Continuous monitoring.
• Risk Management Framework had not been implemented
Remedial Steps TakenEmphasis of matter
7
Total PIC Assets Under Management
488.05459.7377.5Grand Total
3.733.63.2PROPERTIES
1.301.312.7SIPS
12.5216.46.0ISIBAYA
43.9445.131.1CASH
192.33175.4130.5EQUITIES
234.22217.8194.0BONDS
30/06/200531/03/200531/03/2004ASSET CLASS
EXPOSURE R billion
8
Total PIC Assets Under Management (Weights)
100.00%100.00%100.00%Grand Total
0.00%0.00%0.00%OPTIONS
0.27%0.28%3.43%SIPS
0.76%0.79%0.85%PROPERTIES
2.57%3.57%1.57%ISIBAYA
9.00%9.81%8.30%CASH
39.41%38.15%34.48%EQUITIES
47.99%47.39%51.37%BONDS
30/06/200531/03/200531/03/2004ASSET CLASS
9
99.85487.4458.9376.9 TOTAL
0.06%0.290.30.5Temporary Employees Pension Fund10
0.10%0.500.60.6Period Loans: University Redemption Funds
9
0.15%0.750.90.9RDP Funds8
0.25%1.221.21.2Department of Labour: NSF- Levies7
0.62%3.012.82.4Guardian Funds6
1.17%5.725.54.5Compensation Commissioner : Compensation Fund
5
1.41%6.896.75.9Compensation Commissioner : Pension Fund
4
2.30%11.249.96.3Unemployment Insurance Fund3
2.23%10.8910.710.0Associated Institution Pension Fund2
91.56%446.89420.3344.7GEPF (Government Employees Pension Fund)
1
%AUM30/06/0531/03/0531/03/04 PORTFOLIO NAME
PIC Clients: Top 10 Funds
10
Consolidated Fund Performance
4.05.2%20.6%Total Fund
2.05.6%10.7%Structured Investment Products
64.30.1%7.8%Money Markets
1.610.1%15.7%Properties
3.011.5%33.9%Equities
4.92.9%14.1%Capital Market
Risk/Return RatioRiskReturn
11
GEPF Performance
3.46.3%21.6%Total Fund
2.05.3%10.7%Structured Investment Products
25.80.3%7.7%Money Markets
1.510.1%15.7%Properties
3.011.5%33.9%Equities
3.14.5%14.1%Capital Market
Risk/Return RatioRiskReturn
12
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
13
Equities Returns vs. Benchmark
TE: 1.02%12.21%11.98%Total Risk
1.85%32.03%33.87%Returns
Excess Returns
Benchmark Returns
GEPF Equities
01/04/04 – 31/03/0512 Months
14
Bonds vs. Benchmark 80% ALBI + 20% Inflation Linked Bonds
TE: 0.78%5.41%4.75%Volatility
0.12%14.00%14.12%Annualised returns
Excess ReturnsBenchmark Returns
Capital Market12 Months
01/04/04 - 31/03/05
TE: 0.70%4.43%4.13%Volatility
0.35%12.21%12.55%Annualised returns
Excess ReturnsBenchmark Returns
Capital Market24 Months
01/04/03 - 31/03/05
15
Money Markets vs Benchmark
Benchmark Is the Alexander Forbes STEFI 3 Months, 6 Months and 12 Months.
15%20%65%PIC BMK
9-12 Months3-9 Months0-3 Months
TE: 0.35%0.11%0.31%Total Risk
0.16%7.59%7.75%Returns
Excess ReturnsBenchmark Returns
Cash & Money
01/04/04 – 31/03/0512 Months
TE: 2.06%0.63%2.05%Total Risk
0.60%9.13%9.73%Returns
Excess ReturnsBenchmark Returns
Cash & Money
01/04/03 – 31/03/0524 Months
This reflects the average PIC exposures over time.
16
Property Investments Returns
Performance (%)R’Million
21.603,285.8TOTAL
61.52 412.0Listed Property Investments
18.871,831.9Pareto (40%)
10.621,041.9Direct Property Investments
Current Holdings
17
Industrial5.14%
Infrastructure5.80%
SME2.49%
Financial16.65%
Tourism3.10%
Telecoms59.36%
Mining7.46%
Isibaya Fund Investments
18
23.13%Volatility
40.89%Return
Isibaya Fund Performance
19
Structured Investment Products
5.57%Volatility
9.00%10.70%TOTAL
Performance Period:01/04/04 - 31/03/05 (Unaudited)
5.66%Volatility
6.41%6.94%TOTAL
Performance Period:01/04/03 - 31/03/04
5.51%Volatility
15.99%18.38%TOTAL
CPI + 6%SIPS
Performance Period : 01/04/03 - 31/03/05
SIPS have outperformed Cash albeit at higher risk, and CPI + 6%
20
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
21
THANK YOU