ANNUAL REPORT 2004/05

9 SEPTEMBER 2005

Presentation to Portfolio Committee on Finance

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Contents

1.Highlights of the year: 2004/05

2. Progress on Corporatisation

3.Addressing Concerns Raised by AG in Past

Financial Years

4.Total assets under management

5. PIC Clients

6. Performance

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Highlights of the year: 2004/05

• Positioning the Corporation to become a modern asset

management Company

• Growth of assets under management from R377 billion

to R461 billion

• Upgrading of IT infrastructure

• Increased pace in BEE funding

• Upgrading of retail properties at a cost of R157 million

• Increased impetus on shareholder activism

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Progress on Corporatisation

• Corporation launched on 1 April 2005

• Memorandum and Articles of Association

signed by shareholder

• Registered in terms of Companies Act

• Completing registration as a Financial Service

Provider in terms of FAIS Act

• Interim Board appointed• All former National Treasury employees

transferred to the Corporation

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Addressing Concerns Raised By The AG In Past Financial Statements

• All issues have been addressed. Frequent monitoring by Internal Audit Division

• Non-compliance with PFMA

• Internal Audit Manager appointed and Internal Audit section established

• No Internal Audit function

• Compliance Officer has been appointed

• No Compliance function

• Systems put in place to ensure GAAP compliance as well as AC133 and AC 135 compliance

• Non-compliance with GAAP and valuation of properties i.t.o. AC 135 not performed

Remedial Steps taken

Emphasis of Matter

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Addressing Concerns Raised By The AG In Past Financial Statements

• All the matters have been resolved

• Issues relating to ownership of properties

• Framework has been developed• Continuous monitoring.

• Risk Management Framework had not been implemented

Remedial Steps TakenEmphasis of matter

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Total PIC Assets Under Management

488.05459.7377.5Grand Total

3.733.63.2PROPERTIES

1.301.312.7SIPS

12.5216.46.0ISIBAYA

43.9445.131.1CASH

192.33175.4130.5EQUITIES

234.22217.8194.0BONDS

30/06/200531/03/200531/03/2004ASSET CLASS

EXPOSURE R billion

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Total PIC Assets Under Management (Weights)

100.00%100.00%100.00%Grand Total

0.00%0.00%0.00%OPTIONS

0.27%0.28%3.43%SIPS

0.76%0.79%0.85%PROPERTIES

2.57%3.57%1.57%ISIBAYA

9.00%9.81%8.30%CASH

39.41%38.15%34.48%EQUITIES

47.99%47.39%51.37%BONDS

30/06/200531/03/200531/03/2004ASSET CLASS

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99.85487.4458.9376.9 TOTAL

0.06%0.290.30.5Temporary Employees Pension Fund10

0.10%0.500.60.6Period Loans: University Redemption Funds

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0.15%0.750.90.9RDP Funds8

0.25%1.221.21.2Department of Labour: NSF- Levies7

0.62%3.012.82.4Guardian Funds6

1.17%5.725.54.5Compensation Commissioner : Compensation Fund

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1.41%6.896.75.9Compensation Commissioner : Pension Fund

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2.30%11.249.96.3Unemployment Insurance Fund3

2.23%10.8910.710.0Associated Institution Pension Fund2

91.56%446.89420.3344.7GEPF (Government Employees Pension Fund)

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%AUM30/06/0531/03/0531/03/04 PORTFOLIO NAME

PIC Clients: Top 10 Funds

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Consolidated Fund Performance

4.05.2%20.6%Total Fund

2.05.6%10.7%Structured Investment Products

64.30.1%7.8%Money Markets

1.610.1%15.7%Properties

3.011.5%33.9%Equities

4.92.9%14.1%Capital Market

Risk/Return RatioRiskReturn

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GEPF Performance

3.46.3%21.6%Total Fund

2.05.3%10.7%Structured Investment Products

25.80.3%7.7%Money Markets

1.510.1%15.7%Properties

3.011.5%33.9%Equities

3.14.5%14.1%Capital Market

Risk/Return RatioRiskReturn

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GEPF Cumulative Returns: Total Fund & Asset Classes

Cumulative Returns

80.00

100.00

120.00

140.00

160.00

180.00

200.00

TOTAL FUND CAPITAL MARKET INFLATION LINKED BONDS

EQUITIES PROPERTIES MONEY MARKET

SIPS

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Equities Returns vs. Benchmark

TE: 1.02%12.21%11.98%Total Risk

1.85%32.03%33.87%Returns

Excess Returns

Benchmark Returns

GEPF Equities

01/04/04 – 31/03/0512 Months

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Bonds vs. Benchmark 80% ALBI + 20% Inflation Linked Bonds

TE: 0.78%5.41%4.75%Volatility

0.12%14.00%14.12%Annualised returns

Excess ReturnsBenchmark Returns

Capital Market12 Months

01/04/04 - 31/03/05

TE: 0.70%4.43%4.13%Volatility

0.35%12.21%12.55%Annualised returns

Excess ReturnsBenchmark Returns

Capital Market24 Months

01/04/03 - 31/03/05

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Money Markets vs Benchmark

Benchmark Is the Alexander Forbes STEFI 3 Months, 6 Months and 12 Months.

15%20%65%PIC BMK

9-12 Months3-9 Months0-3 Months

TE: 0.35%0.11%0.31%Total Risk

0.16%7.59%7.75%Returns

Excess ReturnsBenchmark Returns

Cash & Money

01/04/04 – 31/03/0512 Months

TE: 2.06%0.63%2.05%Total Risk

0.60%9.13%9.73%Returns

Excess ReturnsBenchmark Returns

Cash & Money

01/04/03 – 31/03/0524 Months

This reflects the average PIC exposures over time.

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Property Investments Returns

Performance (%)R’Million

21.603,285.8TOTAL

61.52 412.0Listed Property Investments

18.871,831.9Pareto (40%)

10.621,041.9Direct Property Investments

Current Holdings

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Industrial5.14%

Infrastructure5.80%

SME2.49%

Financial16.65%

Tourism3.10%

Telecoms59.36%

Mining7.46%

Isibaya Fund Investments

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23.13%Volatility

40.89%Return

Isibaya Fund Performance

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Structured Investment Products

5.57%Volatility

9.00%10.70%TOTAL

Performance Period:01/04/04 - 31/03/05 (Unaudited)

5.66%Volatility

6.41%6.94%TOTAL

Performance Period:01/04/03 - 31/03/04

5.51%Volatility

15.99%18.38%TOTAL

CPI + 6%SIPS

Performance Period : 01/04/03 - 31/03/05

SIPS have outperformed Cash albeit at higher risk, and CPI + 6%

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WAY FORWARD• Client Focus

- Continue provide exceptional service to our clients• Consolidation of the Corporatisation process

- Refinement of investment processes- Continue recruitment of suitably qualified and skilled staff- Refinement of IT systems

• Champion transformation in the asset management industry- Champion SRI, sound corporate governance, charters and

applicable Nedlac agreements,• Positioning of PIC in asset management industry

- Consolidate the establishment of the PIC’s as the leading asset management company in SA

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THANK YOU