ANNUAL REPORT

GEPF OFFICE LOCATIONS

Please visit one of our offices or Website;www.gepf.or.tz

E-mail us at: info@gepf.or.tz

REGIONAL OFFICESDodoma Post Office house First FloorP.O. Box 1517, Dodoma.Tel: +255 26 2320151

Tanga Regional Postal buildingIndependence AvenueP.O Box 5071 Tanga.Tel: +255 27 2645218

Mtwara CWT Building First FloorTANURoadP.O Box 1287MtwaraTel: +255 23 2334550

Mwanza Alfa Building Second FloorNyerere roadP.o Box 2104MwanzaTel: +255 28 2540660

Iringa Labor Office(Adjacent to District Commisioner’s Office)Iringa-Mbeya HighwayP.O. Box 359MafingaTel: +255 26 2772491

Ilala Kariakoo AreaSikukuu / Omary Londo StreetP.o box 11492Dar Es SalaamTel: +255 22 2181612

Kinondoni Kinondoni Manyanya AreaTogo Tower, Second FloorP.o Box 11492Dar Es SalaamTel: +255 22 2664790

Temeke Mtoni Kwa Azizi AliKilwa Road (Near Oilcom Petrol StationP. O Box 11492 Dar Es SalaamTel: +255 22 2856296

BANKERS National Bank of Commerce LimitedP.O. Box 9062Dar-es-Salaam

CRDB Bank PlcP.O. Box 71960Dar-es-Salaam

NMB Bank PLcP.O. Box 9213Dar-es-Salaam

AUDITORSMEKONSULT LimitedCertified Public Accountants P.O. Box 14950Dar es Salaam

REGISTERED OFFICE (HEAD OFFICE)

GEPF House 8th & 9th Floor Plot No. 37 Regent Estate Ally Hassan Mwinyi Road

P. O. Box 11492 Dar-es-SalaamTel: +255 22 2927668 Fax: +255 22 2927672

CORPORATE INFORMATION

The Board of Management

Mrs. J. M.Shaidi Chairperson Mr. A. S. Kilima Member Mr A. L. Mapunda Member Mr D. L. Chamlesile Member Mrs F. S. Kiongosya Member Mr. O. M. Urassa MemberMr. C.W. Samanyi MemberMr. R.E. Chalamila MemberMr. D.M. Msangi Secretary

The Audit Committee

Mr. O. M. Urassa Chairperson Mrs. F. S. Kiongosya Member Mr. D. L. Chamulesile MemberMr. A. S. Kilima Member

To be the leading Social Security Fund with widest membership coverage in Tanzania.

To timely provide quality and customer oriented social security benefits to members.

Work in an environment where we foster accountability, transparency, integrity, customer focused and result oriented.

Our Vision

Our Mission

Our Core Values

To timely provide quality and customer oriented social security benefits to members.

Work in an environment where we foster accountability, transparency, integrity, customer focused and result oriented.

Our Mission

Our Core Values

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2 CHAIRPERSON’S STATEMENT

3 BOARD OF MANAGEMENT

4 MANAGEMENT TEAM

5 STATEMENT BY THE DIRECTOR GENERAL

14 BOARD STATEMENT ON CORPORATE GOVERNANCE ON 30 JUNE 2013

17 STATEMENT OF BOARD OF MANAGEMENT RESPONSIBILITIES

18 REPORT OF THE CONTROLLER AND AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF GOVERNMENT EMPLOYEES

PROVIDENT FUND

20 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE

FOR BENEFITS FOR THE YEAR ENDED 30 JUNE 2013

21 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS

AS AT 30 JUNE 2013

22 STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2013

23 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30

JUNE 2013

CONTENTS

1

LETTER OF TRANSMITTAL

Hon. Ms. Saada Mkuya Salum (MP)

Ministry of Finance

P. O Box 9111

DAR ES SALAAM.

Honourable Minister,

RE: ANNUAL REPORT OF THE GOVERNMENT EMPLOYEES PROVIDENT FUND FOR FINANCIAL YEAR 2012/2013

I am pleased to submit the Annual Operations Report for the year ending 30th June 2013 pursuant to section

3 of GEPF Act. The Report is comprised of three parts namely:-

1. Statement of the Chairperson of the Board;

2. Statement of the Director General;

3. Report of the Board of Trustees and Audit account for the year 2012/13

Yours Sincerely,

Joyce M. Shaidi CHAIRPERSON

2

CHAIRPERSON’S STATEMENT

On behalf of the Board of Trustees of GEPF, Its my pleasure to present Annual Report and Financial Statement for the year ended 30th June 2013.

During the year under review, the Tanzanian economy as measured by real GDP growth grew by 6.9 percent in year 2012 against 6.4 percent experienced in 2011. This growth was largely contributed by good weather and timely supply of subsized

inputs by Government that boosted agricultural production. Other important factors is normalization of power generation which increased industrial production. The

annual headline inflation eased to 8.5 percent from 18.1 percent in year 2011 due to slow down in the rise of food prices following improvement in food supply. These factors had a positive impact on the operations of the Fund.

Financial market development during the year was generally good and in support of the Fund’s operations. Commercial banks deposits and lending rates exhibited mixed development when compared to rates recorded in year 2011/12. Overall 12 months deposit averaged to 11.37 pecent down from 11.75 percent in 2011/12. Negotiated 12-months deposits averaged to 13.15 percent in 2012/13 down from 16.19 percent in year 2011/12. In all cases there were fall in expected earning as such mixed strategies were used to ensure revenue projections remained as planned.

I am very pleased to report that the Fund registered significant growth in terms of the number of its members, member’s contributions and investment income which together led to 28.5 percent growth in the assets of the Fund. The net assets of the Fund grew from TZS. 154,557.99 million in June 2012 to TZS 198,384.50 million in June 2013.

During the year under review, number of members increase to 59,042 which is equivalent to 12.10 percent increase compared to

52,670 in year 2011/12. Contributions from members increase from TZS 30,149.13 million in year 2011/12 to TZS 36,816.18 million in year

2012/13. Investment income increased from TZS11.54 billion in June 2012 to TZS 18.30 billion in June 2013. The increase is attributed to increase in interest rate in the money market, appreciation of share values in the

companies where the Fund has invested and the growth in membership contributions.

There has been continued strengthening of our operational efficiency, improved customer service levels and delivery of key result areas. Further is the resolve to ensure that members and employers continue to receive the best services through adherence to the requirements of the Client Service Charter.

The process of writing the new GEPF Act continued during the year with the support of stakeholders as such the draft Bill was submitted to the Cabinet Secretariat in May 2013 and discussed by the Cabinet on 25th June 2013. The same was presented before the Parliament for 1st reading on 28th June 2013 and for second and third time on 5th and 6th November 2013 respectively. As a result GEPF Retirement Benefits Act was enacted. I wish to thank all stakeholders who took part in the process.

On behalf of the GEPF Board I wish to express my utmost appreciation to our members and stakeholders for their continued support during the year. Further appreciation goes to the management and staff for their hard work and commitment in fulfilling their responsibilities. It is my expectation that they will continue to deliver high quality services to our members, customers and stakeholders.

Last but not least, I would like to reiterate commitment of the Board to ensure that the interest of the members remained its priority as it conducts its responsibilities and that high standards and efficient service delivery is maintained.

Thank you.

…………………………………….Joyce M. ShaidiCHAIRPERSONBOARD OF TRUSTEES

3

BOARD OF TRUSTEES

SEATED FROM LEFT:

1. Mr. Deonis Chamulesile - Member

2. Mr. Oswald Urassa - Member

3. Mrs Joyce Shaidi - Chairperson

4. Mr. Daud Msangi - Secretary

FROM LEFT STANDING:

1. Mr. Ahmed Kilima - Member

2. Mr. Renatus Chalamila - Member

3. Mr. Charles Samanyi - Member

4. Mrs. Fatma Kiongosya - Member

5. Mr. Alfred Mapunda - Member

1

2 34

12 3 4

5

4

Mr. Daud MsangiDirector General

Late Mr Philemon P. MingaDirector of Finance &

Administration

Mr. Anselim K. PeterDirector of Marketing &

Operations

Mr Festo L. Fute Director of Planning &

Operations Investments

Mr Hussein I. Kinduu Chief Internal Auditor

Ms Anna ShayoHead Legal Unit

Mr Charles MnyetiHead Procurement Unit

Mr Edgar R. Shumbusho Chief Information and

Technology Officer

MANAGEMENT TEAM

55

STATEMENT BY THE DIRECTOR GENERAL

On behalf of Management, it is my pleasure to present performance review of the Fund for the year ended 30th June 2013. The Fund continued to perform well during the year and achieved most of its targets as it was the case in the preceding year. Moreover this year was very important to the Fund’s history since it was rewriting its Act which resulted in changing the operations of the Fund from the Provident Fund to a Pension Fund.

The conversion of the Fund from Provident to Pension scheme will enable members to benefit from both long term and short term benefits. The conversion will see the Fund administering more benefits including retirement pension, survivor pension, invalidity pension, death gratuity, education grants and funeral grants. The Fund will also provide housing loans to its members through mortigage arrangement.

The Fund has maintained stead growth in terms of membership and its overall assets. We have steadily improved the quality of our customer services and delivered against the key targets we set for the year. For five years in a row we have maintained a very good momentum, thanks to the commitment of the Board, the management, staff and more important the support we received from members and all stakeholders across the country. Membership recruitment and collection of contribution have increased considerably. For the year ending June 2013, membership to the Fund increased by 12.10% from 52,670 members to 59,042 members. The increase in membership is due to increasing visibility of the Fund as a result of intensive campaigns and good services provided to the members. The reported increase in membership is net of 1,955 members who left the Fund during the year due to retirement and transfer to the Public Service Pensions Fund. Transfer to PSPF is expected to end soon following the conversion of the Fund from Provident to Pension.

Like in the case of membership growth contributions also increased by 22.11 percent from TZS 30,149.13 million collected in June 2012 to TZS 36,816.18 million collected in June 2013. This large increase was attributed by the growth in the numbers of members who joined the Fund. The other contributing factor is increase in salaries of members.

As we embark on yet another years of operations, I have all the reasons to assure our members and the would be members of the bright future ahead. The Fund is set to improve further its services through the use of modern information technology, efficient work mechanisms and skilled staffs to timely deliver our services. We have lived to understand that to the members what matters more is attention and the Fund is set to give our members the attention they require.

On behalf of the Board, the Management and the staff, I wish to record my thanks and appreciation to members and stakeholders for their continued support and confidence in the Fund. The achievements we have realised so far should not have happened had it not been for their support.

Further thanks go to the Board of Trustees for their guidance that made it easy for us to discharge our duties with efficiency. Last but not least are the staffs for hard work, commitment and safe guarding our values. All the year round, we have maintained an environment where we fostered accountability, transparency, integrity, customer focus and result oriented.

……………………………Daud M MsangiDIRECTOR GENERAL

6

Recruitment of Members and Collection of Contribution (Mandatory Scheme)

The year saw a fall in the rate of growth in number of members joining the Fund however contributions collected surpassed the preceding year by 4.85% increasing from 17.26% to 22.11%. This growth in contributions received is a result of improvement in public service salaries and timely payment by the members. The number of members joining the Fund has been increasing consistently from 2008/09 to 2011/12 before falling down in 2012/13. The fall in the rate of increase in members joining the Fund is a result of competition among Funds which started while GEPF had small outreach as our presence are only in five regions of the country. The other disadvantage was that at the time GEPF was a Provident Fund hence had few benefits. The situation is set to change with conversion to pension and introduction of long term benefits. Plans are under way to open offices in all zones hence expanding visibility.

Table 1: Trend in Total Membership and collection

Year Membership Growth Collection (millions) Growth2008/09 30,227 13,792.50 2009/10 35,279 16.71% 16,321.46 18.34%2010/11 41,879 18.71% 25,711.90 57.39%2011/12 52,670 25.77% 30,149.13 17.26%2012/13 59,042 12.10% 36,816.18 22.11%

Recruitment of Members and collection of Contributions (Voluntary Scheme) The Fund continued with implementation of the Voluntary Savings Retirement Scheme which was implemented for the third year in 2012/13. The scheme services to its members were expanded and more Tanzanians reached through recruitment of 18 new staff and opening of three regional offices. The Fund introduced VSRS customer service and benefits processing desks to ensure services to members is improved with emphasis on efficient and customized services. A series of seminars and different marketing communication initiatives were used to sensitize members and would be members. As a result, the number of members joining the voluntary scheme has increased consistently from 2009/10 to 2012/13. The total recruitment during the year was 5,656 members which brought a total recruitment since inception to 18,050 members. The same trend is witnessed on savings collection with collection of TZS 1,839 million during the year and cumulative collection reaching TZS 3,050.80 million. The year to year collection is shown in chart 1 below.

Chart 1: VSRS Annual Collection from 2009-2010 to 2012-2013 (TZS. Million)

7

Ms. Janet Mbene (MP) (left), Deputy Minister for Finance filling a form to join Voluntary Savings Retirement Scheme during exhibitions at Mwalimu Julius K. Nyerere International Trade Fair.

Benefit Payments

Benefit payments forms the main expenses from dealing with members. A total of TZS 9,161.62 million were paid to 1,955 members who left the Fund for reasons including retirement and graduating to pension status. The trend in annual payment starting 2008/09 is shown in Table 2 with year 2012/13 benefits payments amounting to 24.88% of the total contributions received. Such level of benefits is considered good as the Fund was left with over 75% of the collections for investment.

Table 2: Benefit Payment Trend (TZS. Mill)

Year 2008/09 2009/10 2010/11 2011/12 2012/13Benefits Paid 1,575.98 3,323.66 3,675.46 5,247.25 9,161.62Annual Growth 110.89% 10.58% 42.76% 74.60%Percentage of Benefit 20.36% 14.31% 17.97% 24.88%to Contributions

The Fund will continue to ensure that members’ contribution surpasses benefits paid so as to maintain a reasonable level of funds to be invested. This will be achieved through continued search for new members and maintaining good relationship with employers to ensure prompt payments of members’ contributions. The Chart below depicts the trend in benefits paid.

Chart 2: Tend of Benefits Payments (figures in millions)

8

Investments and Investment Income

The Fund’s investment portfolio remained within four categories of fixed income assets, real estate, equities and collective investment scheme. Total Investments up to June 2013 was TZS 179,552.60 million which produced net income of TZS 18,253.99 million. This level of income is equivalent to 10.17% of the amount invested, hence considered a very good performance in terms of returns. The Fund’s average returns on investments for the last five years were 10.55%. It can be noted from table 3 that the investment portfolio grew by 30.0% in year 2012/13.

Table 3: Investment Portfolio Structure (TZS 000’000)

Portfolio 2008/09 2009/10 2010/11 2011/12 2012/13Government Securities 36,348.30 33,334.69 36,570.65 64,994.03 80,788.96Fixed deposit 20,040.00 37,864.90 44,446.90 41,595.00 57,316.00Equity 3,320.90 4,120.94 4,266.13 6,846.46 10,308.45Corporate bond 1,600.00 1,400.00 5,300.00 5,100.00 4,583.33Loans to corporate and society 2,000.00 4,100.00 3,450.00 2,550.00 1,650.00Direct Loan to Government 0.00 0.00 0.00 5,040.00 10,029.35Licensed collective investment schemes 799.99 799.99 988.86 1,017.38 1,011.72Real Estate 826.00 853.00 6,250.00 10,603.88 13,864.62Total 64,935.19 82,473.52 101,272.54 137,746.75 179,552.60Annual Growth 27.0% 22.8% 36.0% 30.3%

Investment in Fixed Income Assets

This group of investments comprise of placements in commercial banks (fixed deposits), treasury bills, treasury bonds, corporate bonds and loans. During the year 2012/13 investments in fixed income amounted to TZS 154,367.64 million compared to TZS 119,279.03 million the previous year. This amount is equivalent to 85.97 percent of total invested funds which was TZS 179,552.60 million. The remaining 14.03 percent were invested in other areas including equity participation and real estate development. From Table 3 it can be revealed that TZS 80,788.96 million were invested in Government securities, TZS 57,316.00 million in fixed deposits, TZS 4,583.33 million in corporate bonds and TZS 11,679.35 in loans. The leading placements are Government securities and fixed deposits which together formed 76.92% of total investments.

Income received from fixed income assets was TZS 17,510.37 million equivalents to an increase of 60.09 percent from TZS 10,938.13 million received during 2011/12. Out of total income received 46.08 percent arose from investment in treasury debt instruments, 43.42 percent from fixed deposits with commercial banks

Table 4: Income from Investments (TZS 000’000)

Portfolio 2008/09 2009/210 2010/11 2011/12 2012/13Government Securities 3,299.41 4,268.51 4,301.72 5,891.25 8,410.99Fixed deposits 1,591.56 2,525.21 3,355.07 3,952.36 7,926.32Dividends/C. Gain 171.96 296.75 292.4 553.42 633.80Corporate Bonds 95.26 226.47 411.31 615.38 586.53Loan 316.9 376.67 265.3 278.81 340.76Loan from Government 0.00 0.00 0.00 200.33 245.77Collective Investment Scheme 0 0 1,183.30 46.60 109.05Total 5,475.10 7,693.62 9,809.30 11,538.15 18,253.99Annual Growth 40.5% 27.5% 17.65% 58.21%

9

Chart 3: Percentage distribution of income from investments

Investment in Real Estate

Investment in properties and real estate as at 30th June 2013 stood at TZS 13,864.62 million indicating an increase of 30.75 percent from TZS 10,603.88 million at the end of June 2012. The increase is associated with the payments made to contractors on the ongoing construction of GEPF House which is at final stage of completion. As at end of June 2013, investment in properties constituted 6.99 percent of the total assets of the Fund. Other investment in real estates is acquisition of 50 acres of land at Kijaka – Kimbiji at Kigamboni in Dar-es-salaam and 40.54 acres at Njedengwa in Dodoma for the purpose of constructing low cost houses for members. The idea is to sell such houses to members by cash or mortgage financing.

Picture: Front view of GEPF House which is on final stage of completion

10

Investment in Equities

Equity investment involves holding subscription to shares in public companies listed at Dar-es-salaam Stock Exchange (DSE). As at 30th June 2013 investment in equities stood at TZS 10,308.45 million compared to TZS 6,846.46 million in the previous year. The increase of 50.57 percent is attributed to appreciation of share values at the Market where the capital gain from shares was 19.52 percent from the cost of buying shares. Table 5 below provide the breakdown of the shares the Fund is holding from different companies as at 30th June 2013.Table 5: Shares from registered companies at DSE as at 30th June 2013

No Name of Company Number of Costs (TZS Mil.) Mkt Value Gain/Loss shares (TZS mil) (TZS mil.)1. Tanzania Cigarette Company 207,674 357.81 1,349.88 992.072. Tanzania Breweries Ltd 900,000 1,650.12 2,898.00 1,247.883. Tanga Cement co. Ltd 221,617 170.9 531.88 360.984. CRDB Bank 6,226,612 1,155.15 1,743.45 588.305. NMB Bank 986,778 795.83 1,598.58 802.756. Swiss port 301,957 168.32 622.03 453.717. Twiga Cement 588,205 397.82 1,564.63 1,166.81 TOTAL 9,432,843 4,695.95 10,308.45 5,612.50

Net Assets

The Fund has recorded spectacular growth in its net asset base. For the year ending June 2013, the net assets increased from TZS 154,410.99 million to TZS 198,433.08 million, representing an increase of 28.48 percent. The growth in net asset is attributed to increase in the contributions collection and investment income. The later points to prudence in investment placement as the Fund continued to aim at high paying and less risk areas. All investments made during the year were within the limit provided by the Regulatory Authority.

Table 6: Investment Structure as per Regulatory Guideline

Portfolio Investment Category Ratio to Total Assets (%) Regulatory Limit (%)Government Securities 80,788.96 40.71 20 - 70Fixed deposit 57,316.00 28.88 35.00Equity 10,308.45 5.19 15.00Corporate bond 4,583.33 2.31 40.00Loans to corporate and society 1,650.00 0.83 10.00Direct Loan to Government 10,029.35 5.05 10.00Licensed collective investment schemes 1,011.72 0.51 30.00Real Estate 13,864.62 6.99 30.00Total Assets as at 30/06/2013 198,433.08

Interest credited to members’

Section 8 of the GEPF Act 1942 (R.E. 2002), requires the Board to approve interest to be credited to the members accounts at the end of every financial year. This is done after the accounts of the Fund have been audited and approved by the Board. As such, for financial year 2012/13 the Board has approved the Fund to credit members’ account with an interest of 6.65%. Interest credited to members in the previous year was 6.50%.

It has always been GEPF objective to add value to the members’ retirement savings each year. The given rate is considered high when compared to gains from other financial institutions. Table 6 shows growth in interest paid to members for the last four years.

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Table 7: interest rate credited to members

Period 2008/09 2009/10 2010/11 2011/12 2012/13Interest rate allocated 4.90% 5.20% 6.00% 6.50% 6.65%

Services to Members

The Fund continued with its endeavour to provide quality and timely services to its members focusing on reducing time used to process claims and time taken to respond to members queries. To achieve these goals, staffing of regional offices has been increased and more working tools provided. Regional offices have also been mandated to process benefit payments, the function that was originally the sole responsibility of the head office. The other important function done by regional offices is information to members including providing members with statements of contribution.

Public Education and Awareness

Programmes aimed at raising the awareness of the members, contributing employers and the general public on the operations of the Fund and matters of interest to different stakeholders were successfully carried out. These include advertisement through radio, television and newspapers. Other means were seminars, press conferences and participation in trade fairs and similar gatherings that attracts large participation. Special awareness targeting specific regions were aired through local radio and television in Mtwara, Iringa, Dodoma and Mwanza.

Students from Secondary schools been informed of the importance of social security by GEPF Staff Ms. Salma Mtaullah at Mwalimu Julius K Nyerere International Trade Fair in July 2013.

Information to Members

Three major approaches were used to disseminate information to the members, these were the customer service desk, the Fund website and the Annual General Meeting. The 5th Annual General Meeting was conducted in Arusha from 27th to 28th June 2013 and was officiated by Honourable Gaudensia Kabaka the Minister responsible for Labour and Employment. A total of 158 stakeholders participated and expressed their views in Funds operations. The management used the occasion to inform the members of the Funds operations during the year and the financial situation of the Fund indicating sources and application of funds. Annual General Meetings have proved to be very important gathering as the Fund has benefited a lot from members’ opinions. The views raised are used to shape the operations of the Fund making it more responsive to the members.

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Sitted Six from left Hon. Gaudensia Kabaka (MP), Minister of Labour and Employment in a group picture with delegates during 5th Annual General Meeting held at Naura Spring Hotel – Arusha. On her left is the Chair of the Board Madam Joyce Shaidi and on the right is the Director General Mr. Daud Msangi.

Human Capital Management

The Fund’s organization structure and establishment was improved to ensure that competent and well skilled human resource is retained. As at 30th June 2013 the Fund had 81 employees compared to 77 in June 2012. The increased number was

necessary to allow for efficient functioning and delivery of quality and timely services. The Fund continued to train its employees locally and internationally and supported individual efforts including providing study time for those on self-sponsorship through part time means. Employees were trained through workshops, seminars, short and long courses at higher learning institutions.

Vincent Simon Joseph an employeee of GEPF who emerged the best CPA graduate for the year 2013 receiving congratulatory award from Ms. Joyce Shaidi, Board Chairperson.

13

Corporate Social Responsibility

The corporate social responsibility forms part of the daily operations of the Fund as it seeks to help different needy groups. The involvement of the Fund in social responsibilities enhances its values and improves its image to the public. During the year the Fund continued to give to the needy ones and the society at large. Areas that benefited from such support are education sector by supporting needy students with tuition fees, donation to Miyuji Centre a home for children with mental disability in Dodoma, contributing to solar power innovation at Ileje district system, donation to disabled society and other areas of national interest.

Group photo depicting GEPF staff (Mr. Jaffari Meraji and Ms. Violeth Nyakunga – in Tshirts) and UWAKE (Umoja wa Wake wa Wanajeshi) leaders and members during handing over of computer donated to the group. Sitted wearing black suit is Lt.Col. Aloyce Mwanjile who is the Commander of 517KJ and patron of the Group.

Future Prospects

During the next three years the Fund intends to continue establishing regional offices as it continues to move services closer to the people. The next financial year (2014/15) will see the Fund opening regional offices in Arusha, Sumbawanga, Mbeya and Geita to move the Funds presence closer to people. Currently, the Fund has offices in Dar Es Salaam, Tanga, Dodoma, Mtwara and Mwanza. With the additional four offices, the services will be further improved. Regional offices will be mandated to service nearby regions. Table 7 shows the intended mandate of each regional office.

Table 8: Mandate of each regional office

S/No Regional Office Mandate

1. Geita Shinyanga, Kagera and Geita

2. Mwanza Mara, Mwanza and Simiyu

3. Arusha Arusha, Manyara and Kilimanjaro

4. Tanga Tanga

5. Dodoma Singida, Dodoma and Iringa

6. Rukwa Rukwa, Katavi and Kigoma

7. Mbeya Njombe, Ruvuma and Mbeya

8. Mtwara Lindi and Mtwara

9. Dar es Salaam Headquarters

10. Temeke Temeke and Pwani

11. Kinondoni Kinondoni and Morogoro

BOARD STATEMENT ON CORPORATE GOVERNANCE ON 30 JUNE 2013

The Board considers Corporate Governance as key to good performance of the Fund. It continued to reviews various policies and procedures used to direct the activities of the Fund. The reason being to provide a reasonable assurance to meet its objectives and that the operations are carried out in an ethical and accountable manner.

BOARD OF MANAGEMENT

The Board comprise 8 non-executive members and secretary who is the Chief Executive Officer of the Fund. All non-executive members are appointed by the Permanent Secretary of the Ministry of Finance for tenure of three years renewable.

During the period 7 Board meetings were held, covering 4 ordinary and 3 special meetings. The ordinary meetings focus on the discussion of quarterly progress reports and provide direction to management on how to improve its operations.While the Board is responsible for approval of the annual plans and budget, audited financial statements, and major investments of the Fund, the management has been delegated authority to make decisions on operational matters, including those relating to placement of funds in commercial banks, investments in government securities, fixed deposit receipts and listed equities, within the framework of approved investment policy.

COMPOSITION OF THE BOARD’S OPERATING COMMITTEE

Audit Committee

Mr. O. M. Urassa Chairperson Mrs. F. S. Kiongosya Member Mr. D. L. Chamulesile MemberMr. A. S. Kilima Member

Finance and Investment Committee

Mr. C. W. Samanyi Chairperson Mr. R. E. Chalamila Member Mr. A.R. Mapunda Member

AUDIT COMMITTEE

The Audit committee comprises of four members with Chief Internal Auditor who serves as Secretary to the committee. The Director General, Directors and Head of units attend the committee meetings to respond to issues raised and receive deliberations. The committee governs the internal audit activities and other governance matters of the Fund.

Responsibilities of the Audit committee are described below:

A. Financial Statements(i) Review significant accounting and reporting issues, including complex or unusual transactions in highly judgmental

areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.

(ii) Review with Management and the External Auditors the results of the audits, including any difficulties encountered.(iii) Review Financial Statements, and consider whether they are complete, consistent with information known to

committee members, and reflect appropriate accounting principles.(iv) Review other sections of the Annual Report and related regulatory filings before release and consider the accuracy

and completeness of the information.(v) Review with management and the External Auditors all matters required to be communicated to the Committee

under Generally Accepted Auditing Standards.(vi) Understand how management develops interim financial information, and the nature and extent of internal and

external auditor involvement.

BOARD STATEMENT ON CORPORATE GOVERNANCE ON 30 JUNE 2013

The Board considers Corporate Governance as key to good performance of the Fund. It continued to reviews various policies and procedures used to direct the activities of the Fund. The reason being to provide a reasonable assurance to meet its objectives and that the operations are carried out in an ethical and accountable manner.

BOARD OF MANAGEMENT

The Board comprise 8 non-executive members and secretary who is the Chief Executive Officer of the Fund. All non-executive members are appointed by the Permanent Secretary of the Ministry of Finance for tenure of three years renewable.

During the period 7 Board meetings were held, covering 4 ordinary and 3 special meetings. The ordinary meetings focus on the discussion of quarterly progress reports and provide direction to management on how to improve its operations.While the Board is responsible for approval of the annual plans and budget, audited financial statements, and major investments of the Fund, the management has been delegated authority to make decisions on operational matters, including those relating to placement of funds in commercial banks, investments in government securities, fixed deposit receipts and listed equities, within the framework of approved investment policy.

COMPOSITION OF THE BOARD’S OPERATING COMMITTEE

Audit Committee

Mr. O. M. Urassa Chairperson Mrs. F. S. Kiongosya Member Mr. D. L. Chamulesile MemberMr. A. S. Kilima Member Member Member

Finance and Investment Committee

Mr. C. W. Samanyi Chairperson Mr. R. E. Chalamila Member Mr. A.R. Mapunda Member

AUDIT COMMITTEE

The Audit committee comprises of four members with Chief Internal Auditor who serves as Secretary to the committee. The Director General, Directors and Head of units attend the committee meetings to respond to issues raised and receive deliberations. The committee governs the internal audit activities and other governance matters of the Fund.

Responsibilities of the Audit committee are described below:

A. Financial Statements(i) Review significant accounting and reporting issues, including complex or unusual transactions in highly judgmental

areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.

(ii) Review with Management and the External Auditors the results of the audits, including any difficulties encountered.(iii) Review Financial Statements, and consider whether they are complete, consistent with information known to

committee members, and reflect appropriate accounting principles.(iv) Review other sections of the Annual Report and related regulatory filings before release and consider the accuracy

and completeness of the information.(v) Review with management and the External Auditors all matters required to be communicated to the Committee

under Generally Accepted Auditing Standards.(vi) Understand how management develops interim financial information, and the nature and extent of internal and

external auditor involvement.

14

15

B. Internal Controls(i) Consider the effectiveness of the Fund’s internal controls over the financial statements, performance indicators and

other related information and reports on the operations of the Fund.(ii) Understand the scope of internal and external auditors’ review of internal controls over financial reporting, and

obtain reports on significant findings and recommendations, together with management’s responses.

C. Internal Audit(i) Review with management and the Head of Internal Audit, the Internal Audit Charter, plans, activities, staffing and

structure of the Internal audit unit.(ii) Ensure that there are no unjustified restrictions or limitations, and review and concur in the appointment, replacement

or dismissal of the Head of Internal Audit.(iii) Review the effectiveness of the internal audit function, including compliance with Standards for the Professional

Practice of Internal Auditing of the Fund of Internal Auditors and those of the National Board of Accountants and Auditors.

(iv) On a regular basis, meet separately with the Head of Internal Audit to discuss any matters the Committee or the Head of Internal Audit believes should be discussed privately.

D. External Audit(i) Review the External Auditors’ proposed audit scope and approach, including coordination of audit efforts with

internal audit.(ii) Review the performance of the External Auditors. (iii) Review and confirm the independence of the External Auditors by obtaining statements from the Auditors on

relationships between the Auditors and the Fund, including non-audit services, and discussing the relationships with the Auditors.

(iv) On a regular basis, meet separately with the Controller and Auditor General or his representative to discuss any matters that the Committee or Auditors believe should be discussed privately.

E. Compliance(i) Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of

management’s investigation and follow-up (including disciplinary action) of any instances of noncompliance.(ii) Review the findings of the auditor observations.(iii) Obtain regular updates from management. (iv) Advice regarding compliance matters.

F. Reporting(i) Regularly report to the Board of management, the Committee activities, issues and related recommendations.(ii) Provide an open avenue of communication between the Head of Internal Audit, the External Auditors and the Board.(iii) Review any other reports the Fund issues that relate to Committee responsibilities.

G. Other Responsibilities(i) Perform other activities related to the committee Charter as required by the Board.(ii) Institute and oversee special investigations as needed.(iii) Review and assess the adequacy of the Committee Charter annually, and propose changes deemed necessary for

Board approval.(iv) Confirm annually that all responsibilities outlined in the committee Charter have been carried out.(v) Evaluate the Committee and individual members’ performance on a regular basis.

During the period, the Committee received reports from management and held discussion with management and auditors. In discharging its duties the committee reviewed the financial statements, annual plan and budget in order to ensure the quality and acceptability in line with accounting policies, practices and financial reporting disclosures. It also reviewed the scope of work of the Fund’s internal audit unit, reports from external auditors on their findings and internal controls.

INDUCTION AND TRAINING

The training programme was executed, which allowed Board members to be trained on their roles in assessing and managing risk. The course equipped them with risk assessment and management skills. As a result of the exposure, the Fund has strengthened its risk management practices. The Board intends to have its performance evaluated annually to ascertain their contribution to the Fund.

16

ATTENDANCE IN THE BOARD AND COMMITTEE MEETINGS

During the financial year 2012/13 attendance of individual Board members in the scheduled meetings were as shown below.

Board Audit Finance & Investment Committee Committee

Scheduled meetings 10 3 2 Participants: Mrs. J. M. Shaidi 10 N/A N/AMr. A. S. Kilima 7 0 N/AMr. D. L. Chamulesile 10 3 N/AMr. C. W. Samanyi 10 N/A 2Mr. O. M. Urassa 10 3 N/AMr. A. R. Mapunda 10 N/A 2Mr. R. E. Chalamila 10 N/A 2Mrs. F. S. Kiongosya 9 3 N/A

BY ORDER OF THE BOARD OF MANAGEMENT

_____________________J. M. ShaidiChairperson27/12/2013

17

STATEMENT OF BOARD OF MANAGEMENT RESPONSIBILITIES

GEPF Act of 1942 CAP 51, RE: 2002, Public Finance Act 2001 RE: 2004 and Social Security Regulatory Act of 2008 requires the Fund to prepare the financial statements for each financial year and keep proper accounting records of its income, expenditure, assets and liabilities.

The Board is responsible for the preparation and fair presentation of the financial statements in accordance with the International Financial Reporting Standards (IFRS). Such responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or errors, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

The Board accepts responsibility for the financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with IFRS, GEPF Act of 1942 and the Public Finance Act 2001 (revised 2004). The Board is of the opinion that the financial statements give a true and fair view of the financial transactions of the Fund and of the disposition of its assets and liabilities, other than liabilities to pay benefits falling due after the end of the year. The Board further accept responsibility for the maintenance of accounting records which may be relied upon in the preparation of Financial Statements, as well as for safeguarding the assets of the Fund and hence for taking reasonable steps for the prevention of fraud and other irregularities.

The Board certify that, to the best of their knowledge and belief, the information furnished to the Auditors for the purpose of the audit was correct and complete in every respect.

J. M. Shaidi D. M. Msangi Chairperson Secretary 27/12/2013 27/12/2013

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AUDIT REPORT ON THE FINANCIAL STATEMENT

ToChairperson of the Board of Management,Government Employees Provident Fund,P.O. Box 11492,DAR ES SALAAM

REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF GOVERNMENT EMPLOYEES PROVIDENT FUND FOR THE YEAR ENDED 30TH JUNE 2013

I have audited the accompanying financial statements of the Government Employees Provident Fund (GEPF) which comprise the Statement of Net Assets as at 30th June, 2013, Statement of Changes in Net Assets, Statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes set out from pages 19 to 49 of this report.

Directors’ Responsibility for the financial statements

The Board of the Management of the Fund is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. The responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Responsibilities of the Controller and Auditor General

My responsibility as an auditor is to express an independent opinion on the financial statements based on our audit. The audit was conducted in accordance with International Standards on Auditing (ISAs), International Standards of Supreme Audit Institutions (ISSAIs) and such other audit procedures I considered necessary in the circumstances. These standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the Fund and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the financial statements.

In addition, Sect. 10 (2) of the Public Audit Act of 2008 requires me to satisfy myself that the accounts have been prepared in accordance with appropriate accounting standards and that; reasonable precautions have been taken to safeguard the collection of revenue, receipt, custody, disposal, issue and proper use of public property, and that the law, directions, and instructions applicable thereto have been duly observed, expenditures of public monies have been properly authorized.Further, Sect. 44 (2) of the Public Procurement Act No. 21 of 2004 and Reg. No. 31 of the Public Procurement (goods, works, non-consultant services and disposal of public assets by Tender) Regulations issued under G.N. 97 of 2005 requires me to state in my annual audit report whether or not the auditee has complied with the provisions of the law and its regulations.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Unqualified Opinion

In my opinion, the financial statements give a true and fair view of the statement of the net assets available for benefits for the Government Employees Provident Fund as at 30 June 2013, its surplus, cash flows and changes in equity for the year then ended in accordance with International Financial Reporting Standards and comply with GEPF Act, Cap.51 of 1942 R.E. 2002.

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Report on Compliance with Procurement Legislation

In view of my responsibility on the procurement legislation, and taking into consideration the procurement transactions and processes I reviewed as part of this audit, I state that the Government Employee Provident Fund has generally complied with the Public Procurement Act, 2004 and its related Regulations of 2005.

LUDOVICK S. L. UTOUH

CONTROLLER AND AUDITOR GENERAL

National Audit Office,Dar es Salaam, TANZANIA DATE: 30/1/2014

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STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED 30 JUNE 2013

Note 2013 2012

TZS’000 TZS’000CONTRIBUTIONS AND BENEFITS

Members contribution 6 37,299,756 30,149,126

Benefits expenses 7 9,536,601 5,247,252

Net surplus from contribution 27,763,155 24,901,874 INVESTMENT INCOME

Dividend income 8(a) 719,744 560,813

Interest income 8(b) 17,529,552 12,862,829

Income from UTT 8(c) 109,052 46,556

Discount income on Treasury bonds 1,203,261 1,042,987

Gain/loss on foreign currency fluctuations 78,259 (230,635)

Appreciation in shares and units 20(c) 3,460,435 883,386

Impairment on unquoted investment - (147,000)

23,100,303 15,018,936

Other income 9 12,950 35,573 50,876,408 39,956,383 Administrative expenses 10 6,865,836 4,953,803 Increase in Net assets for the year 44,010,572 35,002,580

Other comprehensive income

Revaluation reserve 11 11,510 4,000

Balance at the beginning of the year 154,410,993 119,404,413 Carrying value at the end of the year 198,435,075 154,410,993

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STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS AT 30 JUNE 2013

2013 2012 Note TZS’000 TZS’000 ASSETS Non-Current Assets Property and equipments 12 14,904,739 11,139,908 Intangible assets 13 49,417 92,313 Noncurrent loans 14 2,798,504 2,474,819 17,752,660 13,707,040 Investments Loan to corporate 15 1,667,094 2,583,014 Corporate bonds 16 4,752,846 5,189,365 Treasury bonds 17 78,955,657 66,762,040 Treasury bills 18 7,661,874 3,289,122 Loan to Government 19 10,233,409 4,848,781 Quoted shares 20(a) 10,651,452 7,189,449 Unit Trust of Tanzania 20(b) 1,016,003 1,017,571 Short term deposits 21 58,830,697 44,090,382 173,769,032 134,969,726 Current Assets Members and staff loans 14 975,276 635,991 Prepayments and other receivables 22 56,949 49,963 Dividend receivable - 53,241 Contributions receivable 4,234,378 2,464,343 Cash and bank balances 23 2,500,833 3,242,370 7,767,436 6,445,908 TOTAL ASSETS 199,289,128 155,122,674 LIABILITIES Benefits payable 145,693 162,267 Other payables and accruals 24 710,360 549,414 856,053 711,681 NET ASSETS 198,433,075 154,410,993 REPRESENTED BY: FUND BALANCE 25 198,433,075 154,410,993

The Financial statements on pages 19 to 49 were approved by the Board on December 2013 and signed on its behalf by:

-------------------------------------------- ---------------------------------------- J. M. Shaidi D. M. Msangi Chairperson Secretary

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013

2013 2012 TZS’000 TZS’000

Cash flows from Operating Activities

Contributions received 35,531,033 27,835,896

Other income 122,002 82,129

Benefits paid (9,553,174) (5,158,192)

Administrative expenses (6,370,056) (4,489,263)

Net cash generated from operating activities 19,729,805 18,270,570

Cash flows from Investing Activities

Dividend income 772,985 553,425

Interest Income 17,828,803 9,569,871

Purchase of quoted investments - (1,030,000)

Purchase of Treasury bonds (14,662,213) (31,840,664)

Receipts from matured Treasury bonds 4,036,000 6,320,600

Net sale/(purchase) of Treasury bills (4,335,107) (3,259,770)

Loan issued to Government (5,000,000) (5,040,310)

Receipts from matured part of Corporate Bonds 416,667 200,000

Receipts from matured part of TANESCO loan 900,000 900,000

Placement with commercial banks (15,711,949) 2,833,735

Acquisition of property, equipment & intangible assets (4,046,572) (4,548,674)

Net increase in members loan, staff loans & advances (669,956) (782,286)

Net cash used in investing activities (20,471,342) (26,124,072)

Increase/(decrease) in cash and cash equivalents (741,537) (7,853,502)

Cash and cash equivalents at beginning of the year 3,242,370 11,095,872

Cash and cash equivalents at end of the year 2,500,833 3,242,370

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

1. FUND INFORMATION

GEPF is established under Government Employees Provident Fund, Act, Cap.51 of 1942 (RE: 2002). It is registered by Social Security Regulatory Authority as a defined contribution scheme. The address of registered office is given on page 1 while its main functions are given in the report of the Board in page 2.

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

New and amended pronouncements applicable during the year and after 30 June 2013.

• IAS 1, Presentation of financial statements – Amendment to revise the way other comprehensive income ispresented

The amendment to IAS 1 focuses attention on the grouping of other comprehensive income (OCI) items. Items that could be reclassified to profit or loss at a future point in time for example, upon derecognition or settlement would be presented separately from items that will never be reclassified. The amendment becomes effective for annual periods beginning on or after 1 July 2012. The Fund has already adopted the IAS 1.

• IAS12,Incometaxes–Recoveryofunderlyingassets

The amendment to IAS 12 clarifies the determination of the deferred tax on investment property measured at fair value. An introduction of rebuttable presumption come into effect in that deferred tax on investment property which are measured using the fair value model in IAS 40 should now be determined on the basis that its carrying amount will be recovered through sale. In addition, it introduces the requirement that deferred tax on non depreciable assets that are measured using the revaluation model in IAS 16 always be measured on sale basis of the asset. The amendment becomes effective for annual periods beginning on or after 1 January 2013. The Fund take note of the IAS 12 amendment and will adopt when appropriate.

• IAS19,Employeebenefits-(AmendedinJune2011)

The amendment to IAS 19 changed the accounting for defined benefit plans and termination benefits. The major change is on the accounting for changes in defined benefit obligations and plan assets. Such amendment requires that recognition of changes in defined benefits obligations and in fair value of plan assets when they occur, and hence eliminate the ‘corridor approach’ permitted under the previous version of IAS 19 and accelerate the recognition of past service costs.

Further requirement to this amendment is for all gains and losses to be recognized immediately through other comprehensive income in order for the net pension asset or liability recognized in the financial position to reflect the full value of the plan deficit or surplus. The amendment becomes effective for annual periods beginning on or after 1 January 2013. The Fund will apply this standard when appropriate.

• IAS27,SeparateFinancialstatements–Asrevisedin2011

IAS 27 has remained with accounting for subsidiaries, jointly controlled entities and associates in separate financial statements after introduction of new IFRS 10: Consolidated financial statements and IFRS 12: Disclosure of involvement with other entities. The Fund does not keep separate financial statements. The amendment becomes effective for annual periods beginning on or after 1 January 2013. The Fund has currently no such arrangement of subsidiaries and jointly controlled entities and associates hence inapplicability of this amendment.

• IAS28,InvestmentsinassociatesandJointventures-Asrevisedin2011

As result of introduction of new IFRS 11: Joint arrangements and IFRS 12: Disclosure of involvement with other entities, the IAS 28 has been renamed as Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint venture in additional to associates. The amendment becomes effective for annual periods beginning on or after 1 January 2013. Currently the Fund has no such arrangement however will adopt the amendment if entered in such transactions.

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• IFRS7,Financialinstruments:Disclosures–Transfersoffinancialassets

This standard intended to increase the disclosure requirements for transactions which involving transfers of financial assets. Greater transparency is intended to be provided across risk exposures when financial asset is transferred but the transferor retains some level of continuing exposure in the asset. In addition the amendments require disclosures where transfers of financial assets are not evenly distributed throughout the period.

The IFRS 7, which on the other hand focuses on interaction between quantitative and qualitative disclosure on the nature and extent of risks associated with financial instruments, has removed the disclosure requirements of the following: maximum exposure to credit risk if the carrying amount best represents the maximum exposure to credit risk; fair value of collaterals; and renegotiated assets that would otherwise be past due but not impaired. IFRS 7 is effective for annual periods beginning on or after 1 January 2013. The Fund has not yet applied the IFRS 7 until when it meet with the transaction of this nature.

• IFRS9,Financialinstruments:Disclosures–Amendments

IFRS 9 was issued in November 2009 and essentially highlighted new requirements for the classification and measurements of financial liabilities and derecognition.

The first major requirement of the standard was that financial assets that falls within the scope of IAS 39 Financial instruments: recognition and measurements to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cashflows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting period.

The second requirement calls for accounting for changes in the fair value of financial liability (designated as fair value through profit or loss) attributable to changes in the credit risk of that liability. In this case the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effect of changes in the liability’s credit risk in other comprehensive income would create an accounting mismatch in profit or loss. Changes in the fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit and loss. Different from IAS 39, the requirement was to present the entire amount of change in the fair value of the financial liability designated “as at fair value through profit and loss” in profit or loss. IFRS 9 is effective for annual periods beginning on or after 1 January 2013. The Fund has adopted the IFRS 9.

• IFRS10,ConsolidatedFinancialStatements

IFRS 10 replaces the part of IAS 27 Consolidated and Separated Financial Statements that deal with consolidated financial statements. SIC-12 Consolidation-Special Purpose Entities has been withdrawn upon the issuance of IFRS 10. With this standard there is only one basis for consolidation that is control.

The standard has provided new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s returns. Much guidance to this effect has been given in IFRS 10 to deal with complex scenario. IFRS 10 is effective for annual periods beginning on or after 1 January 2013. The Fund has no activities which led to the preparation of consolidation of financial statements. As such did not apply this standard.

• IFRS11,Jointarrangements

IFRS 11 replaces IAS 31 that deals with interest in joint ventures and SIC -13 jointly controlled entities – Non monetary Contributions by Ventures. This standard removes the option to account for jointly controlled entities using proportionate consolidation rather; the jointly controlled entities that meet definition of joint venture must be accounted for using the equity method. This standard will not have impact in the Fund’s financial statements. IFRS 11 is effective for annual periods beginning on or after 1 January 2013. The Fund has no joint arrangement to date. As such did not apply this standard.

25

• IFRS12,DisclosureofinterestsinotherEntities

IFRS 12 is standard which encompasses all the disclosures which were previously in the IAS 27: consolidated financial statements, IAS 31 and IAS 28. These disclosures relates to entity’s interest in subsidiaries, joint arrangements, associates and structured entities. Generally, the disclosure requirements of IFRS 12 are more extensive than those in the current standards. IFRS 9 is effective for annual periods beginning on or after 1 January 2013. The earlier application is permitted. The Fund has no such arrangement to date. As such did not apply this standard.

• IFRS13,FairvalueMeasurements

IFRS 13 is geared towards a single source of guidance and issuing a precise definition of fair value under IFRS 13 for all fair value measurements hence improve consistence and reduce complexity. The scope of IFRS 13 is broad as it applies to both financial and non financial instrument items for which other IFRSs require or permit fair value measurements and disclosures on the fair value measurements, except in specified circumstances. Relatively speaking the disclosure requirements in IFRS 13 is more extensive than current standards. A case in point is on the quantitative and qualitative disclosures based on the three level fair value hierarchy currently required for financial instruments only under IFRS 7 Financial instruments: disclosures will be extended by IFRS 13 to cover all assets and liabilities within its scope. IFRS 13 is effective for annual periods beginning on or after 1 January 2013. The Fund has adopted this standard with effect from 01 Jan 2013.

• IAS32,FinancialInstruments:Presentation

Amendments to IAS 32 prescribe rule for offsetting financial assets and financial liabilities. Specifically it outline that the net amount as result of offsetting should be reported when, an entity has a legally enforceable right to set off the amounts; and secondly it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The amendment becomes effective for annual periods beginning on or after 1 January 2014. The Fund will adopt the IAS 32 when becomes applicable.

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3. SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The Financial Statements have been prepared in accordance with the International Financial Reporting Standards (IFRS). The principal accounting policies adopted in the preparation of the financial statements are stated below:

Basis of PreparationThe financial statements have been prepared on the historical cost basis except for the revaluation of certain assets and financial instruments. A historical cost is generally based on the fair value of the consideration given in exchange for assets.

Property and EquipmentProperty and equipment are stated in the statement of net assets at historical cost or revaluation less accumulated depreciation and accumulated impairment.

Historical cost includes expenditure that is directly attributable to the acquisition of the items and depreciation charge is applied as appropriate.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Fund and the cost of the item can be measured reliably.

All other repairs and maintenance are charged to the Statement of Changes of Net Assets during the financial period in which they are incurred.

Land is not depreciated. Depreciation on other property, plant and equipment is recognised so as to write off the cost of assets (other than properties under construction) less their residual values over their useful lives, using the straight line method. The estimated useful lives, residual values and depreciation method are reviewed at each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The useful lives of assets under different categories are indicated below.

Asset type Rate (%) Useful life (Years)

Intangible assets 25 4Motor vehicles 25 4Motor cycles 25 4Machines and equipment 20 5Furniture and fittings 10 10Computer hardware 25 4Partitioning 20 5

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal.

The gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset less transaction costs and is recognized in the statement of changes in net assets.

Intangible Assets

Intangible assets acquired are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.

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The amortisation period and the amortization method for the intangible assets are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets is recognized in the statement of changes in net assets. The annual rate of amortisation which has been consistently applied is computer software stated at cost less accumulated amortisation. The software is amortised over its expected useful life of 4 years on a straight line.

ImpairmentAt each reporting date, the Fund reviews the carrying amounts of its financial assets, tangible and intangible assets to determine whether there is any indication of impairment losses. If any such indication exists, the asset’s recoverable amount is estimated and an impairment loss is recognized in the statement of changes in net assets whenever the carrying amount of the asset exceeds its recoverable amount.

Contribution IncomeContributions from members are recorded on the accrual basis. Contribution income from mandatory scheme is recognized based on the salary actually paid by the member’s employer to employee while the contribution from Voluntary savings retirement scheme does not necessary based on salary.

Dividend incomeDividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Interest incomeInterest income is recognized when it is probable that the economic benefits will flow to the Fund and amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Benefits payableBenefits payable are accounted for in the period in which they fall due.

Financial instrumentsReceivablesReceivables are financial assets with fixed or determinable payments and are not quoted in an active market. After initial measurement at cost, receivables are subsequently remeasured at amortized cost using the effective interest rate method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate.

Financial assets at fair value through profit or lossFinancial assets through profit or loss are those which were either acquired for generating a profit from short-term fluctuations in price or dealer’s margin, or are securities included in a portfolio in which a pattern of short-term profit-taking exists. Investments held for trading are initially recognised at cost and subsequently re-measured to fair value based on quoted bid prices or dealer price quotations, without any deduction for transaction costs. All related realised and unrealised gains and losses are included in the income statement. Interest earned whilst holding held for trading investments is reported as interest income.

Held to maturity investments These type of investments are loans and receivables (non derivatives on nature) which carry fixed or determinable payments and have fixed maturities. With such investments the Fund has the intention and ability to hold until maturity. After initial measurement, the investments are subsequently measured at amortised cost using the effective interest rate (EIR) method, less allowance for impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate. The amortisation and losses arising from impairment of such investments are recognised in the income statement. Available for sale financial assetsInvestment securities intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity, or changes in interest rates, exchange rates or equity prices are classified as available for sale and are initially recognised at cost. Available for sale investments are subsequently re measured at fair value, based on quoted bid prices or amount derived from cash flow models. Unrealised gains and losses arising from changes in the fair value of securities classified as available for sale are recognised directly in statement of net assets until the asset is derecognized, at which time the cumulative gains or losses previously recognised in statement of net assets shall be recognised in the income statement.

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Investment in Quoted equities Investment in quoted equities are classified as fair value through profit or loss and investment properties are stated at market values as estimated at the end of reporting period.

Investments in quoted stocks and shares are stated at market value and any surplus arising there from is recognized at investment income in the statement of change in net assets.

Investments in Unquoted equitiesInvestments in unquoted companies are measured at cost less any impairment.

Government securitiesGovernment securities comprise treasury bills and treasury bonds, the debt securities of which are issued by the Government of Tanzania. These are investments with fixed maturity that the Fund have the intent and ability to hold to maturity are classified as held-to-maturity and are carried at amortized cost.

Corporate bondsCorporate bonds are classified as financial instruments at fair value through statement of changes in net assets and are stated at fair value.

Loan to corporateLoan to corporate are classified as financial instruments, the loan is stated in the statement of financial position at fair value.

Fair value of financial instruments traded in financial marketThe fair value of financial instruments traded in an organized financial market, is determined using quoted market prices. The fair value for unquoted equity investments is determined by using the market value of similar investment in the market where applicable.

Foreign currency translationIn preparing the financial statements of the Fund, transactions in currencies other than Tanzania shilling (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Cash and cash equivalentsCash and cash equivalents include bank and cash balances and short term liquid investments which are readily convertible to cash and which were within three months to maturity; less advances from banks repayable within three months from the date of the advance.

ComparativesWhere necessary, the comparative figures have been adjusted to conform with changes in presentation in the current year.

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4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING THE FUND’S ACCOUNTING POLICIES

In the process of applying the Fund’s accounting policies, Management has made estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. These are dealt with below:

Held -to-maturity investmentsThe Fund follows the guidance of IAS 39 on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. This classification requires significant judgement. In making this judgement, the bank evaluates its intention and ability to hold such investments to maturity. If the Fund fails to keep these investments to maturity other than for the specific circumstances – for example, selling an insignificant amount close to maturity – it will be required to reclassify the entire class as available-for-sale. The investments would therefore be measured at fair value not amortised cost.

Impairment losses on financial assetsAt the end of each reporting period, the Fund reviews the carrying amounts of its financial assets to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss is recognised in the income statement whenever the carrying amount of the asset exceeds its recoverable amount.

Useful lives of property and equipment and computer softwareAs described in significant account above, the Fund reviews the estimated useful lives of property, equipment and computer software at the end of each annual reporting period. During the financial year, the Trustees determined no significant changes in the useful lives and residual values

5. FINANCIAL RISK MANAGEMENT

The Fund’s operations are exposed to variety of financial risks, including credit risk, foreign currency exchange rates and interest rates. The overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on its financial performance within the options available in Tanzania. Risk management is carried out by the accounting unit under the responsibility of the Board of management.

Management reviews the market trends and information available to evaluate the potential exposures and in the final analysis come up with the strategies to mitigate the market risks. The Board of management provide guidelines for overall risk management, as well as policies covering specific areas such as interest rate risk credit risk and investing excess liquidity.

The most types of risk are credit risk, liquidity risk and market risk (interest and exchange rate risk).

Credit riskCredit risk arises from cash and cash equivalents, fixed deposits, interest bearing investments, deposits with banks, and receivables. The Directorate of planning and Investment and Board of management, monitors and review information on the significant investments to ensure that credit risk management system is functioning properly. Board has approved a larger portfolio investment with the Tanzania government securities and commercial banks which have a low credit risk and no default record. The amount that represents the Fund’s maximum exposure to credit risk at 30 June 2013 is given below:

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Fully Performing Past due Impaired 2013 TZS’000 2013 2013 TZS’000 TZS’000

TANESCO loan 1,650,000 - -Corporate bonds 4,583,333 - -Treasury bonds 76,408,738 - -Treasury bills 7,594,877 - -Loan to Government 10,198,172 - -Interest receivable 4,345,300 - -Short term deposit 57,321,155 Members and staff loans 3,773,779 - -Contributions receivable 4,234,378 - -Bank balances 2,500,833 - -Total credit exposure 172,610,565 - -

The amount that represents the Fund’s maximum exposure to credit risk at 30 June 2012 is shown below:

Fully Performing Past due Impaired 2012 2012 2012 TZS’000 TZS’000 TZS’000 TANESCO loan 2,550,000 - -Corporate bonds 5,000,000 - -Treasury bonds 64,579,263 - -Treasury bills 3,259,770 - -Loan to Government 4,813,533 - -Interest receivable 5,004,172 - -Short term deposit 41,609,206 Rent receivable - 5,400 Members and staff loans 3,110,809 - -Contributions receivable 2,464,343 - -Bank balances 3,242,370 - -Total credit exposure 135,633,466 5,400 -

Fair Value of financial assets and liabilities

The table below shows the analysis of financial instruments at fair value by level of the fair value hierarchy. The financial instruments are grouped into levels 1 to 3 based on the degree to which the fair value is observable:

(i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

(ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as a price) or indirectly (i.e. derived from prices); and;

(iii) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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Level 1 Level 2 Level 3 Total

Note TZS’000 TZS’000 TZS’000 TZS’000

30 June 2013 Fair value through profit or loss: Corporate bonds 16 4,583,333 - - 4,583,333 Government securities - 76,408,738 - 76,408,738 Equity shares 20(a) 10,651,452 - - 10,651,452 15,234,785 76,408,738 91,643,523

Level 1 Level 2 Level 3 Total

Note TZS’000 TZS’000 TZS’000 TZS’00030 June 2012 Fair value on profit or loss: Corporate bonds 16 5,000,000 - - 5,000,000 Government securities - 64,579,265 - 64,579,265 Equity shares 7,189,446 - - 7,189,446 12,189,446 64,579,265 - 76,768,711

Market risk

(i) Price risk

The Fund is exposed to equity securities price risk because of investments in quoted shares classified at fair value through profit and loss. In addition it is exposed to the risk that the value of debt securities will fluctuate due to changes in interest rate. The price risk arising from investing in equity and debt securities is managed by diversifying the portfolio. For equities, the Fund has invested in companies in different sectors of the economy, while for debt securities; the Fund has invested in bonds of varying maturities varying from 1 to 10 years. Diversification of the portfolio is done in accordance with investment policy. All quoted shares held by the Fund are traded on the Dar es Salaam Stock Exchange (DSE).

At 30 June 2013, if the price of shares had weakened/strengthened by 5%, all other variables held constant, the impact on pre-tax profit for the year would have been TZS 590,722,693 (2012: TZS 417,701,050) higher/lower.

The carrying amounts of investment in shares and units that will have an impact on profit or loss when price of shares change as at 30 June 2013 are:

2013 2012

TZS’000 TZS’000

Quoted shares 10,651,452 7,336,450

UTT units 1,016,004 1,017,571

11,667,456 8,354,021

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(ii) Interest rate risk

The Fund’s interest bearing assets are investments in treasury bonds, loan to corporate, corporate bonds, treasury bills and fixed deposits. The instruments are quoted at fixed interest rates except corporate loan to TANESCO which is quoted at floating interest rates which is equal to 182 days treasury bills interest rates plus a margin which ranges from 0.5% to 2% depending on the amount of 182 treasury bills interest rates. There is a remote chance that movement in interest rates of treasury bills will adversely affect the Fund as adverse movement in treasury bills exchange rate is covered by increase in margin that is added to 182 treasury bills interest rates.

Liquidity risk

The Fund is obliged to effect benefits payment when members retire from their employment or leave the scheme by any other reasons, hence exposed to the risk of difficulties in raising funds to effect such payments. To counter the risk, it invests a portion of assets in investments that are readily convertible to cash. The Directorate of Planning and Investment takes responsibility of monitoring the liquidity on a regular basis and the Board of management reviews it on a quarterly basis.

The financial liabilities as at the end of financial year that will be settled on a cash basis are given below. The amounts disclosed below are the undiscounted cash flows. Balances due equals their carrying amounts since the impact of discounting is not significant.

2013 2012 TZS’000 TZS’000Liabilities Benefits payable 145,693 162,267 Other payables and accruals 710,360 549,414 856,053 711,681

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6. MEMBERS CONTRIBUTION 2013 2012 TZS’000 TZS’000

Employers – Normal 20,339,044 16,745,346 – Gratuity 1,416,331 1,148,302Employees 13,691,653 11,375,329Voluntary Savings Retirement Scheme 1,839,018 849,668 Contributions from PSPF 13,710 30,481 37,299,756 30,149,126

7. BENEFITS TO MEMBERS 2013 2012 TZS’000 TZS’000

Transfers to PSPF 4,502,122 2,686,756Mandatory scheme terminal benefits 4,659,500 2,448,415 VSRS Withdrawal 298,622 99,454VSRS terminal benefits 76,357 12,627 9,536,601 5,247,252

8 (a) DIVIDEND INCOME 2013 2012 TZS’000 TZS’000

Swiss port 45,031 47,481 Tanzania Cigarettes Company Limited 159,547 120,941 Tanzania Portland Cement Company 123,273 102,732 Tanzania Breweries Limited 257,160 171,440 National Microfinance Bank Limited 63,746 46,872 CRDB Bank 70,988 53,241Simba Cement - 18,106 719,744 560,813

8 (b) INTEREST INCOME 2013 2012 TZS’000 TZS’000

Interest on Fixed deposits 7,281,445 5,236,318 Income from Treasury bonds 8,134,655 6,061,795 Income from Treasury bills 665,525 462,374 Income from Government stock - - Income from Corporate bonds 566,665 613,441 Interest on TANESCO loan 324,840 556,422Income from loan to Government 284,494 204,407 17,529,552 12,862,829

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8. (c) INCOME FROM JIKIMU FUND

This is an income from the collective investment scheme established by Unit Trust of Tanzania (UTT). The Fund invested in this scheme in financial year 2010/11 by buying 9,678,364 units from UTT and started to earn income in the financial year 2011/12.

9. OTHER INCOME 2013 2012 TZS’ 000 TZS’ 000 Gain on sale of fixed assets 7,100 15Tender fees 850 9,630Participating fee in Government Loan - 25,927Donation from Azania Bank LTD 5,000 - 12,950 35,573

10. ADMINISTRATIVE EXPENSES 2013 2012 TZS’000 TZS’ 000

Staff costs: Note 10(a) 3,755,756 2,571,373

Management expenses 37,010 50,443

Audit fees 109,374 89,579

Tender board expenses 57,789 38,474

Trustee fees 16,500 42,000

Board expenses 309,008 204,600

Annual general meeting 113,428 -

Awareness and advertisement 526,320 416,080

Depreciation and amortization 336,148 265,211

Other administrative expenses (note 10 (c)) 1,604,503 1,276,043

6,865,836 4,953,80310 (a). STAFF COSTS 2013 2012 TZS’000 TZS’000

Salaries and wages 1,809,067 1,141,508

Social security costs-defined contribution plan 74,323 26,061

Social Security costs-defined retirement plan 194,222 142,600

Other statutory remittances 143,349 92,321

Housing allowance 393,866 246,002

Other staff cost (note 10(b)) 1,140,929 922,881

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10(b) Other staff costs 2013 2012 TZS’000 TZS’000Workers Council Expenses 6,074 6,785 Staff uniforms 10,046 2,200 Extra duty 6,360 8,365 Staff Welfare 105,396 96,868 Medical Expenses 78,062 50,999 Recruitment 17,115 15,283 Staff Training 470,920 349,797 Seminars & Conferences 120,810 148,237 Entertainment 1,894 2,234 Funeral and Condolence 7,373 2,000 Travelling on Leave 124,992 91,890 Transport and Fuel allowance 188,000 148,223 Staff termination 3,887 - 1,140,929 922,881

10 (c). Other administrative expenses 2013 2012 TZS’000 TZS’000

Postage 4,378 3,089Printing & Stationeries 142,111 118,347Subscription & Profession Fees 48,615 58,303Consultancy Fee 114,635 22,337Maintenance of Office Equipment 48,497 45,636Maintenance of Motor Vehicles 30,338 44,833 Fuel & Lubricants 72,140 55,679News Papers 3,669 3,053Office Cleaning 12,320 7,464Students Practical Support 14,871 16,419Office Rent 192,634 161,438Bank Charges 21,401 12,375Maintenance & Support of Soft 43,666 38,455 Collection Commission 10,182 8,928Travelling on Duty 197,997 90,359Sundry expenses 4,963 17,424Security services 5,079 1,366Utility costs 73,366 45,320Donation 50,583 15,150Motorcycles Maintenance 3,536 -Members Seminar 77,591 78,563Withholding Tax on fixed deposits 390,699 431,885 Legal fees 34,151 -Bad debt expenses 5,400 -Loss on Assets 1,681 -

1,604,503 1,276,423

11. REVALUATION RESERVE

The disclosure of revaluation reserve was guided by IAS I: Amendment to revise the way other comprehensive income is presented.

12. FIXED AASSETS ASSETS MOVEMENT SCHEDULE

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13. INTANGIBLE ASSETS

Computer software WIP Total TZS’000 TZS’000 TZS’000

Costs

At 1 July 2011 562,186 48,499 610,685

Addition for the year 55,809 - 55,809

Capitalized WIP - (48,499) (48,499)

At 1 July 2012 617,995 - 617,995

Addition for the year - - -

Capitalized WIP - - -

At 30 June 2013 617,995 - 617,995

Amortization

At 1 July 2011 475,124 - 4 75,124

Charge for the year 50,557 - 50,557

At 1 July 2012 525,681 - 525,681

Charge for the year 42,896 - 42,896

At 30 June 2013 568,577 - 568,577

Net book value

At 30 June 2013 49,418 - 49,418

At 30 June 2012 92,314 - 92,314

14. MEMBERS PARTIAL WITHDRAW AND STAFF LOAN

2013 2012 TZS’000 TZS’000Non current portionMembers partial withdraw 1,137,785 1,393,045Staff loans 1,660,719 1,081,774 2,798,504 2,474,819

Current Portion

Members partial withdraw 974,217 632,991Staff loans 1,059 3,000 975,276 635,991 Total loan 3,773,780 3,110,810

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The Fund provides loans to its staff at an interest rate of 3 percent, the difference between interest rate imposed by the Fund and statutory rate as per sect.27 (1) b of the Income Tax ACT 2004 is compensated from the tax which is charged from the loan benefit received while those issued to the members are subjected to the service charge of 5 percent.

15. TANESCO LOAN

GEPF has issued loan to TANESCO in two trenches, with the first one given in financial year 2007/08. The Fund agreed to contribute TZS 2,000,000,000 to syndicate loan of TZS 200,000,000,000. The six years loan carries floating interest determined at the time of payment as 182 days treasury bills interest rate plus a margin ranging from 0.5% to 2% varying against movement in the treasury bills. Interest is paid after every six months with the portion of principal. The loan was issued on 18th December 2008 and the borrower was given a grace period of 18 months to start payment of principal amount.

The second trench which was issued to TANESCO on 22nd October 2009 amounted to TZS 2,500,000,000 with agreement that the borrower will pay the loan for six years based on the 182 days treasury bills interest rates plus a margin ranging from 0.5% to 2% varying against movement in the treasury bills. The interest is paid on semi-annual basis together with a portion of principal which becomes due. TANESCO was given a grace period of 18 months to start payment of the principal amount.

The two loans given to TANESCO in trench I and II is 100% guaranteed by the Ministry of Finance of the United Republic of Tanzania.

16. CORPORATE BONDS 2013 2012 TZS’000 TZS’000 TBL medium term Bond 3,000,000 3,000,000PRIDE TANZANIA 833,333 1,000,000Aluminum Africa Bond (ALAF) 750,000 1,000,000Accrued interest 169,513 189,365

4,752,846 5,189,365 Tanzania Breweries Limited (TBL) medium term Note was purchased on 26 August and 29 September 2010 respectively. The Bond worth TZS. 3,000,000 million has a repayment period of 3 years and carries an interest rate of 10.75% per annum. The interest will be paid on semi-annual basis.

GEPF purchased a 5 years PRIDE Tanzania bond worth TZS 1,000.00 million on 08th November 2010. The bond provided a grace period of 2 years to the borrower before re-payment of principal amount. The bond carries a fixed interest rate of 11.75% per annum and is due for payment on semi-annual basis. The principal repayment will be effected semi annually.

The ALAF Bond was purchased on 26 January 2009 with the agreed repayment period of 7 years. The bond provided a grace period of 3 years to the borrower before re-payment of principal amount. The bond carries an interest of 17.40% per annum and is due for payment on semi-annual basis.

17. TREASURY BONDS 2013 2012 TZS’000 TZS’000 Held to maturity - within 1 year 14,252,931 3,433,885 - after 1 year but within 2 years 4,273,658 12,842,357 - after 2 years but within 5 years 30,302,911 13,276,488 - after 5 years 27,579,239 35,026,533 Accrued interest 2,546,918 2,182,776 78,955,657 66,762,040

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18. TREASURY BILLS HELD TO MATURITY 2013 2012 TZS’000 TZS’000 Treasury bills 7,594,877 3,259,769 Add: Unearned discount 66,997 29,353 7,661,874 3,289,122 The maturity dates for government treasury bills are: Maturing with six months from date of purchase - - Add: Unearned discount - - 19. LOAN TO GOVERNMENT 2013 2012 TZS’000 TZS’000

Loan to Government 10,198,172 4,813,533 Accrued interest 35,237 35,248 10,233,409 4,848,781

20(a) (i) INVESTMENT IN QUOTED SHARES

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20.(c) GAIN ON VALUATION OF INVESTMENTS 2013 2012 TZS’000 TZS’000 Net gain/(loss) on quoted shares 3,462,003 857,761Loss on valuation of UTT units (1,568) 25,624 3,460,435 883,385

21. SHORT TERM DEPOSITS

2013 2012 TZS’000 TZS’000

Deposits matured within 3 months 1,000,000 17,670,000Deposits matured after 3 months 56,318,000 23,805,000Call deposits in foreign currency - 133,257Exchange gain 3,156 949Accrued interest 1,509,541 2,481,176 58,830,697 44,090,382

Fixed and call deposits represents amounts deposited in fixed and call bank accounts maturing between 01 July 2013 and 30 December 2013.

22. PREPAYMENTS AND OTHER RECEIVABLES 2013 2012 TZS’000 TZS’000

Staff advances 26,112 44,563 Rental on acquired Plot No.37 - Prolaty Consult Limited 10,400 -Technet LTD - support fees 9,885 - VSRS office rent 10,552 - 56,949 49,963

23. CASH AND BANK BALANCES

For the purpose of statement of cash flows, cash and cash equivalents include cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows: 2013 2012 TZS’000 TZS’000Cash in hand 249 698Bank deposits 2,464,842 3,230,000M-PESA 20,702 11,672Tigo -PESA 2,500,833 3,242,370

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24. OTHER PAYABLES AND ACCRUALS

2013 2012 TZS’000 TZS’000

Provision for withholding tax 418,755 332,662Staff non statutory deductions 6,077 2,501Sundry creditors 144,237 121,955 Accrued expenses 135,088 92,242Deferred contribution 1,312 -Statutory deduction payable 4,891 54 710,360 549,414

25. FUND BALANCE 2013 2012 TZS’000 TZS’000

Fund balance at the beginning of the year 154,410,993 119,404,412Increase in net assets for the year 44,010,572 35,002,581 Other comprehensive income 11,510 4,000

Fund balance at the end of the year 198,433,075 154,410,993

26. RELATED PARTIES TRANSACTION

During the year the Fund had several transactions with other related parties

(a) Due from related parties 2013 2012 TZS’000 TZS’000 Loans and advances to senior management 292,520 148,320

Loans to senior management carry 3 percent interest. Difference between interest charged by Fund and the statutory rate as per sect.27 (1) b of the Income Tax Act of 2004 is compensated by taxed loan benefit received. The loans advanced to the senior management are recovered from their salaries within six and fifteen years respectively.

(b) The remuneration of Board members fee and other key management staff during the year is given below: 2013 2012 TZS’000 TZS’000

Salaries for key management staff 470,434 336,776 Board members fee 16,500 42,000 486,934 408,776

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(c) Receipts from related parties

Repayment of staff loan 65,108 56,948 65,108 56,948

(d) Outstanding balance due to related parties

Staff loans 575,030 347,618 575,030 347,618

Key management personnel are described as those persons having authority and responsibility for planning, directing and controlling the Fund, comprising Directors of the Fund.

27. CONTINGENT LIABILITY

The Fund had no contingent liabilities as at 30 June 2013.

28. EVENTS AFTER REPORTING DATE

No material events have occurred which are either to be disclosed or to be adjusted in the financial statements.

29. CURRENCY

The Financial statements are presented in Tanzania Shillings (TZS ‘000), which is the Fund’s functional and presentation currency.

Foreign currency transactions are translated into Tanzanian Shillings using the exchange rates prevailing at the date of the transactions. Foreign exchange gains or losses resulting from settlement of transactions and translation at the year end exchange rates of monetary assets (bid price) and liabilities (offer price) denominated in foreign currencies are recognized in the statement of Changes in net assets.

30. APPROVAL OF FINANCIAL STATEMENTS

The Financial Statements were authorized for issue by the Board of Management on the date shown on page 19.

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