PRESENTATION TO STANDING COMMITTEE ON FINANCE

1. PRESENTATION TO STANDING COMMITTEE ON FINANCE 17 NOVEMBER 2009

2. PIC ATTENDEES Non – Executive Board Members Mr. Nhlanhla Nene Chairman Ms. NtombifuthiMtoba Chairman: Investment Committee Mr. ZakheleSithole Chairman: HR & Remuneration Committee Mr. VeliNtombela Member: Investment Committee and Audit and Risk Committee Management Mr. Brian Molefe CEO, PIC Dr. Daniel Matjila CIO, PIC Ms. Albertinah Kekana COO, PIC

3. CONTENT • Organisational Overview • Overview of PIC’s performance • Review of performance of PIC Operations • Review of performance of subsidiaries • Review of performance of Assets Under Management

4. ORGANISATIONAL OVERVIEW

5. Government Public Investment Corporation Limited Advent Asset Management (Advent) Harith Fund Managers (Harith) PIC Structure

6. PIC • PIC was established as a corporation on 1 April 2005 in accordance with the Public Investment Corporation Act, 2004. • In the four years since its corporatisation PIC has been successful in restructuring its investment activities and operations in a manner comparable to that of private sector investment managers. • Apart from pursuing FSB-compliant mandates, PIC benchmarks its investment performance against market driven indices, enabling its clients and shareholder to compare PIC’s returns to those achieved in the marketplace. • PIC is a long-term investor that seeks consistent returns for its clients.

7. Overview of PIC clients • PIC’s clients are 35 public sector pension, provident, social security, development and guardian funds in South Africa. • Collectively, the assets under PIC management as at 31 March 2009 were R739,7 billion. • GEPF is PIC’s largest client and as at 31 March 2009 had entrusted assets worth R659 billion to the Corporation.

8. ADVENT • Advent Asset Management is a property asset management subsidiary owned 100% by the PIC. It focuses on retail property investments in townships and rural areas. • During 2008 PIC Acquired 100% of Advent Asset Management, up from the original 60% shareholding. • The main business of Advent is to manage the Community Property Fund (CPF), which has invested over R2.5 billion in townships and rural areas on behalf of the GEPF and other investors. • These investments in townships and rural properties not only contribute to socio-economic transformation in the country, but also meet the performance requirements of CPF clients.

9. Advent Asset Management Growth of Assets under Management • The value of assets under management increased to R2.5 billion as at 31 March 2009 from R1,96 billion as at 31 March 2008. • Increase is due to the purchase of seven retail centres in Gauteng, Mafikeng and Limpopo.

10. HARITH • Harith is the inaugural fund manager appointed to manage the Pan African Infrastructure Development Fund (PAIDF). • PAIDF, was established in 2007 for investments in infrastructure development projects on the African continent. • The PAIDF was named Infrastructure fund of the year at the 2009 Africa Investor Awards. • Listed below are the investors and their commitments in PAIDF:

11. REVIEW OF PERFORMANCE OF PIC OPERATIONS

12. Highlights of the year • In 2008/09 PIC was named: • African Institutional Investor of the Year at the 2008 Africa Investor Awards. • Empowerment Leader of the Year at the Wits Business School/Barloworld Empowerment Leadership Awards. • Best Asset Management Trading Team at the 2009 JSE Spire Awards. • Ms. N Maila received the Rising Star award and Ms. N Radebe received the Five Star Woman award of the Women’s Property Network. • Corporate Governance - PIC together with University of Stellenbosch and other leading Corporate Governance institutions, developed a unique matrix mechanism to rate the triple bottom line performance of listed companies. • Strengthened risk management through the establishment of a unit to focus on operational risk management.

13. Highlights of the year • Acquired 100% of Advent Asset Management, up from the original 60% shareholding. • Increased staff complement from 105 in 2007/8 to 160 in 2008/9. • PIC graduate/internship programme entered its 3rd year • strengthened through introduction of TOPP programme

14. Financial Sustainability • Revenue increased by 12% from March 08 to March 09. • Operating expenses increased by 35% (2008:34%). • driven by increased staff and IT costs. • Net profit after tax amounted to R158 million (2008: R163 million), 3% lower than in the previous period. • Going forward it is expected that the Net profit will decline as PIC builds up its operations.

15. Advent Financial Sustainability • The revenue for Advent year on year remained constant. • Operating expenses increased by 41% (2008:86%). • driven by increased staff costs. • Net profit after tax amounted to R16 million (2008: R18 million), 11% lower than in the previous period. • due to increase in capacity to manage the growing portfolio

16. Harith Financial Sustainability • The revenue for Harith increased by 20% (cannot be compared to prior year as Harith was established on 1 September 2007). • Operating expenses increased by 54% (cannot be compared to prior year as Harith was established on 1 September 2007). • Net profit after tax amounted to R36 million (2008: R34 million), 6% more than the previous period. • Post year end, PIC entered into a transaction to restructure its shareholding in Harith.

17. Employment Equity at the PIC • PIC is one of the most transformed asset management companies in the country • 72% of our employees are black and 56% are women. • Executive management is 100% black and 60% are women.

18. REVIEW OF PERFORMANCE OF ASSETS UNDER MANAGEMENT

19. CONTENT • Growth in Assets Under Management (AUM) • Performance

20. Highlights of the year • Along with the rest of the asset management community, PIC had a challenging year in the 12 months to 31 March 2009. • Assets under management declined from R786,8billion to R739,7 billion or 5,98%. • Equities tender awarded to 16 external asset managers including 4 upcoming/developing BEE managers. • Supporting economic transformation - Isibaya fund grew by 23% to R30,98 billion. • Property portfolio grew 25,64% in value ending the year at R23,4 billion.

21. Growth in Assets Under Management

22. Percentage of Assets Under Management • Equities accounted for more than 10% of the decline in AUM as a result of the global recession.

23. PERFORMANCE

24. Performance of key client portfolios • PIC’s top four clients account for 97% of the total assets under management, these clients are: • Government Employees Pension Fund (GEPF). • Unemployment Insurance Fund (UIF). • Compensation Commissioner Fund (CC). • Compensation Commissioner Pension Fund (CP).

25. Market Performance as at 31 March 2009 (%)

26. Fund Performance GEPF 12 Months Performance as at 31 March 2009 (%)

27. Fund Performance GEPF Attribution • EQUITIES • The under performance is a reflection of the global financial crisis and overweight position in the strategic portfolio. • Internally Managed tracker funds have outperformed the benchmark. • The new Externally managed equity composite has outperformed the benchmark.

28. Fund Performance GEPF Attribution • FIXED INCOME • This portfolio has outperformed across all the sub classes. • ISIBAYA • The large concentration in Information and Communication Technologies (ICT) has hurt performance in the short term. • General decline in equity values.

29. Fund Performance GEPF Attribution • PROPERTY • Underperformance can be attributed to: • The conservative capitalization rate used in comparison with IPD. • Concentration in high-grade properties which does not match the IPD property mix. • The overweight position in the largest and most liquid listed stocks; Growthpoint and SA Corporate. • Performance of ACSA due to capital expansion and regulatory uncertainty.

30. Fund Performance UIF, CC AND CP

31. THANK YOU