ANNUAL FINANCIAL STATEMENTS (Privately administered funds)

Transcription

1 ANNUAL FINANCIAL STATEMENTS (Privately administered funds) NAME OF ETIEMENT FUND: G.A.M UMBELLA PENSION FUND FSB EGISTATION NUMBE: SAS APPOVAL NUMBE: For the period: 1 MAY 2011 to 30 APIL 2012 CONTENTS Schedule Page A * egulatory information 2 B * Statement of responsibility by the board of trustees 4 C * Statement of responsibility by the principal officer 5 D * eport of the independent auditors 6 E eport of the board of trustees 7 F Statement of net assets and funds 10 G Statement of changes in net assets and funds 11 HA Notes to the financial statements 12 HB eport of the valuator 18 I eport by the independent auditors to the egistrar of Pension Funds on factual findings IA Schedule pertaining to annual financial statements 24 IB Assets held in compliance with egulation Assurance report of the independent auditors to the egistrar of Pension Funds 26 * (Not subject to audit) 19

2 SCHEDULE A EGULATOY INFOMATION FO THE PEIOD ENDED 30 APIL 2012 EGISTEED OFFICE OF THE FUND Postal address: P O Box 829, Wilgeheuwel, 1736 Physical address: A3 Willow Crest Off Estate, 655 Van Hoof Str, oodepoort, 1724 FINANCIAL EPOTING PEIODS Current: 01/05/2011 to 30/04/2012 Previous: 01/05/2010 to 30/04/2011 BOAD OF TUSTEES CHAIMAN Full name Capacity Date appointed Date resigned von Ketelhodt, UCGH Chairman 02/01/2011 Lendrum, K Chairman 01/05/ /01/2011 TUSTEES Full name Capacity Date appointed Date resigned Lendrum, K Independent 01/12/1999 Coomber, A Independent 01/08/2008 Coupé, NS Independent 24/07/ /07/2012 Meintjes, L Independent 21/08/2002 von Ketelhodt, UCGH Independent 01/05/2009 FUND OFFICES PINCIPAL OFFICE Botha, JH MONITOING PESON Botha, JH Postal address: Physical address: Tel no: c/o Brefco (Pty) Ltd, P O A3 Willow Crest Off Estate, 655 Van Hoof (011) Box 829, Wilgeheuwel, Str, oodepoort, Postal address: Physical address: Tel no: c/o Brefco (Pty) Ltd, P O A3 Willow Crest Off Estate, 655 Van Hoof (011) Box 829, Wilgeheuwel, Str, oodepoort, POFESSIONAL SEVICE POVIDES BENEFIT ADMINISTATO Postal address: Physical address: Tel no: FSB no: Brefco (Pty) Ltd PO Box 829, A3 Willow Crest Off Estate, (011) /218 Wilgeheuwel, Van Hoof Str, oodepoort, 1724 AUDITO Jacqueline Proudfoot CA (SA) Postal address: Physical address: Tel no: P O Box 16300, 66 1st Avenue, Dunvegan, Edenvale, 1609 (011) Dowerglen, 1612 ACTUAY/VALUATO Postal address: Physical address: Tel no: Welham, H P O Box 53, Wendywood, 2144 Unit B, Morningside Office Park, 222 ivonia oad, Morningside, 2196 (011) Page 2 of 26

3 EGULATOY INFOMATION - CONTINUED FO THE PEIOD ENDED 30 APIL 2012 FUND CONSULTANT Global Asset Management and Financial Services (Pty) Ltd INVESTMENT ADVISO Global Asset Management and Financial Services (Pty) Ltd Postal address: Physical address: Tel no: FAIS no: P O Box 73614, Fairland, Block E, uimsig Country Off (011) Park, 193 Hole In One Ave, oodepoort. Postal address: Physical address: Tel no: FAIS no: P O Box 73614, Fairland, uimsig Country Off Park, 193 (011) Hole In One Ave, oodepoort INVESTMENT MANAGE(S) Allan Gray Limited Postal address: Physical address: Tel no: FSB no: PO Box 51318, V&A Granger Bay Court, Beach d, (021) /437 Waterfront, Cape Town, V&A Waterfront, Cape Town 8002 Coronation Fund Managers Ltd P O Box 993, Cape Town, th Floor, MontClare Place, Cnr Campground & Main oads, Claremont, Cape Town (021) /31 Sanlam Collective Investments Ltd P O Box 30, Sanlamhof, 7532, South Africa 2 Strand oad, Bellville, 7530, South Africa (021) Old Mutual Investment Group Pty Ltd PO Box 878, Cape Town, 8000 Mutualpark, Jan Smuts Drive, Pinelands, Cape Town (021) /126 Prudential Portfolio Managers (Pty) Ltd P O Box 44813, Claremont, th Floor Protea Place 40 Dreyer Street Claremont (021) /67 MB Asset Management (Pty) Ltd PO Box Sandton th Floor, 4 Merchant Place, 1 Fredman Drive, Sandton (011) /34 ISK INSUE Sanlam Life Insurance Limited Postal address: Physical address: Tel no: FSB no: P O Box 1, Sanlamhof, 2 Strand oad, Bellville (021) Capital Alliance Life Limited P O Box 31750, Braamfontein, th Floor ennie House, 19 Ameshoff Street, Braamfontein (011) PATICIPATING EMPLOYES The following employer(s) participate in the fund in terms of the rules of the fund. A list of the Participating Employers is available from the Administrator. Page 3 of 26

4 SCHEDULE B STATEMENT OF ESPONSIBILITY BY THE BOAD OF TUSTEES FO THE PEIOD ENDED 30 APIL ESPONSIBILITIES The board of trustees hereby certify to the best of their knowledge and belief that, during the period under review, in the execution of their duties they: ensured that proper registers, books and records of the operations of the fund were kept, inclusive of proper minutes of all resolutions passed by the board of trustees; ensured that proper internal control systems were employed by or on behalf of the fund; ensured that adequate and appropriate information was communicated to the members of the fund, informing them of their rights, benefits and duties in terms of the rules of the fund; took all reasonable steps to ensure that contributions, where applicable, were paid timeously to the fund or reported where necessary in accordance with section 13A and regulation 33 of the Pension Funds Act in South Africa; obtained expert advice on matters where they lacked sufficient expertise; ensured that the rules and the operation and administration of the fund complied with the Pension Funds Act in South Africa, the Financial Institutions (Protection of Funds) Act and all other applicable laws; ensured that fidelity cover was maintained. This cover was deemed adequate and in compliance with the rules of the fund; and ensured that investments of the fund were implemented and maintained in accordance with the fund s investment strategy. APPOVAL OF THE ANNUAL FINANCIAL STATEMENTS The annual financial statements of G.A.M UMBELLA PENSION FUND are the responsibility of the board of trustees. The board of trustees fulfils this responsibility by ensuring the implementation and maintenance of accounting systems and practices adequately supported by internal financial controls. These controls, which are implemented and executed by the fund and/or its benefit administrators, provide reasonable assurance that: the fund s assets are safeguarded; transactions are properly authorised and executed; and the financial records are reliable. The annual financial statements set out on pages 10 to 17 have been prepared for regulatory purposes in accordance with: The basis of accounting applicable to retirement funds in South Africa as indicated in the principal accounting policies contained in the notes to the financial statements on page 12; the financial rules of the fund; and the provisions of the Pension Funds Act in South Africa. These financial statements have been reported on by the independent auditors, Jacqueline Proudfoot CA (SA), who was given unrestricted access to all financial records and related data, including minutes of all relevant meetings. The board of trustees believes that all representations made to the independent auditors during their audit were valid and appropriate. The report of the independent auditors is presented on page 6. These financial statements: were approved by the board of trustees on 25/10/2012 are certified by them to the best of their knowledge and belief to be correct; fairly represent the net assets of the fund at 30 April 2012 as well as the results of its activities for the period then ended; and are signed on the board of trustees behalf by: Page 4 of 26

5 SCHEDULE C STATEMENT OF ESPONSIBILITY BY THE PINCIPAL OFFICE I to the best of my knowledge confirm that for the period under review the G.A.M Umbrella Pension Fund has lodged with the egistrar of Pension Funds all such returns, statements, documents and any other information required in terms of the Pension Funds Act in South Africa. Page 5 of 26

6 SCHEDULE D INDEPENDENT AUDITO S EPOT TO THE BOAD OF TUSTEES OF THE G.A.M UMBELLA PENSION FUND AND THE EGISTA OF PENSION FUNDS eport of the Annual Financial Statements We have audited the annual financial statements of G.A.M Umbrella Pension Fund, which comprise the report of the board of trustees, and the statement of net assets and funds as at 30 April 2012, and the statement of changes in net assets and funds for the year then ended, and the notes to the financial statements, which include the principal accounting policies and other explanatory notes, as set out on pages 7 to 17. Board of Trustees esponsibility for the Financial Statements The board of trustees is responsible for the preparation and presentation of these financial statements for regulatory purposes, in accordance with the basis of preparation applicable to retirement funds in South Africa, as set out in the notes to the financial statements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and presentation of 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. Auditor s esponsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and 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 entity s internal control. 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements of G.A.M Umbrella Pension Fund for the year ended 30 April 2012 have been prepared, in all material respects, in accordance with the basis of preparation applicable to retirement funds in South Africa as set out in the notes to the financial statements. Other Matters estriction on use The financial statements are prepared for regulatory purposes in accordance with the basis of preparation indicated above. Consequently, the financial statements and related auditor s report may not be suitable for another purpose. Page 6 of 26

7 SCHEDULE E EPOT OF THE BOAD OF TUSTEES FO THE PEIOD ENDED 30 APIL DESCIPTION OF THE FUND 1.1. TYPE OF FUND In terms of section 1 of the Income Tax Act 1962 the fund is classified as a pension fund. The fund is a defined contribution fund BENEFITS The benefit structure of this fund is based solely on the accumulation of contributions plus investment income earned from the appropriate investments The fund provides lump sum benefits to members of the fund when they retire or resign from their employer as well as death benefits for their dependants should they die in service The benefits provided for are: (a) etirement benefit: Share of Fund (b) Withdrawal benefit: Share of Fund (c) Death benefit: Share of Fund plus a re-insured lump sum 1.3. CONTIBUTIONS Members contribute at various rates as specified in the Special ules of the participating employer The employers contribute at various rates as specified in the Special ules of the participating employer ESEVES The rules do not provide for any reserve account. 2. INVESTMENTS 2.1. INVESTMENT STATEGY The investment strategy of the fund is set by the board of trustees after taking due consideration of the advice of the fund s investment and other professional advisors. This investment strategy complies with the provisions of regulation 28 of the Pension Funds Act in South Africa. The investments are managed according to the following principles: General The general investment principles of the fund in operation at the reporting date, are to achieve a long term investment return in excess of the consumer price index and to limit the risk of capital depreciation through a diversified investment portfolio of investments. The investment principles are conducted through various types of investments, direct and indirect, to minimise the investment risk Individual members choice Where a participating employer requested from the fund it will offer members of that employer an investment choice. The fund offers to the members a variety of risk profiled investment portfolios Unclaimed benefits Complete records are maintained from the date the member exits the fund. Any unclaimed benefit will earn the same return the fund declares unless specifically requested to invest in another investment portfolio. Page 7 of 26

8 EPOT OF THE BOAD OF TUSTEES - CONTINUED FO THE PEIOD ENDED 30 APIL MANAGEMENT OF INVESTMENTS The fund s investments consist of various types of investments which are managed on unitised principles. These investments were selected with the aim of achieving an optimum return, taking into account associated risks. Overall responsibility for investment and performance lies with the Trustees including the appointment of or changes to the investment manager(s). The board meets from time to time to discuss investment policies and to monitor the asset allocation and performance of the investment manager. The fair value of the fund s investments, administered by the investment administrators at the end of the period was: Current period Previous period Allan Gray Limited 19,444,247 18,438,485 Coronation Fund Managers Ltd 23,706,550 20,744,991 Sanlam Collective Investments Ltd 3,031,308 0 Old Mutual Investment Group Pty Ltd 10,934,950 9,206,464 Prudential Portfolio Managers (Pty) Ltd 3,118,164 2,556,538 MB Asset Management (Pty) Ltd 0 3,715,361 Total value of investments managed 60,235,219 54,661, MEMBESHIP Active members Numbers at beginning of period 163 New members Adjustments (1) Additions 40 Members exit from fund Withdrawals (20) etirements (4) Deaths (1) Numbers at end of period ACTUAIAL VALUATION The fund has not been exempted from the provisions of sections 9A and 16 of the Pension Funds Act. In order for the fund to be exempted, an actuarial report for 2010 will be submitted in terms of regulation 2(e) as well as a request for the fund to be exempted for 3 years in terms of Section 16. The equitable share of each member at the year-end was calculated as required in terms of the rules; the total equitable share of the members did not exceed the net assets of the fund. 5. SUPLUS APPOTIONMENT The fund does not have a surplus apportionment scheme as envisaged by Section 15B (1) of the Act as it has no surplus to be apportioned. 6. HOUSING LOAN FACILITIES The fund has not granted any loans or provided any guarantees for loans granted to members. 7. INVESTMENTS IN PATICIPATING EMPLOYES The fund did not hold any investments in the participating employers. Page 8 of 26

9 EPOT OF THE BOAD OF TUSTEES - CONTINUED FO THE PEIOD ENDED 30 APIL SIGNIFICANT MATTES The fund prepared the schedule in accordance with egulation 28 applicable to pension funds with financial yearends up to 30 June 2011 as opposed to egulation 28 prescribed under GN 183, which is applicable to pension funds with financial year-ends on or after 31 July Such preparation of the Schedule is allowed in terms of the dispensation provided by the egistrar (communication in the SAICA Communique of 26 January 2012) for pension funds with year-ends 31 December Since 31 December 2011 no further communication has been issued by the FSB and SAICA. eporting according to previous legislation has not affected the members negatively or jeopardised any of their minimum benefit expectations. Note to egulation 28 report Coronation Fund Managers Ltd and Sanlam Collective Investments Ltd could not provide egulation 28 compliance certificates for the funds to report in detail as required in terms of egulation 28. Page 9 of 26

10 SCHEDULE F STATEMENT OF NET ASSETS AND FUNDS AT 30 APIL 2012 ASSETS Notes Current period Previous period Non-current assets 60,235,219 54,661,839 Investments (including investment properties) 1 60,235,219 54,661,839 Current assets 781,383 1,823,423 Contributions receivable 5 178, ,190 Cash at bank 603,205 1,597,233 TOTAL ASSETS 61,016,602 56,485,262 FUNDS AND LIABILITIES Members funds and surplus account 60,654,831 55,479,982 Members individual accounts 60,654,831 55,479,982 Total funds and reserves 60,654,831 55,479,982 Non-current liabilities 68,000 39,243 Provisions ,000 39,243 Current liabilities 293, ,037 Benefits payable 3 21, ,326 Accounts payable 4 272, ,711 TOTAL FUNDS AND LIABILITIES 61,016,602 56,485,262 Page 10 of 26

11 SCHEDULE G STATEMENT OF CHANGES IN NET ASSETS AND FUNDS FO THE PEIOD ENDED 30 APIL 2012 Notes Members accounts Total Current period Total Previous period Contributions 7,848,965 7,848,965 6,472,019 Contributions received and accrued 5 7,848,965 7,848,965 6,472,019 Other items 518, , ,840 einsurance proceeds 518, , ,840 Investment income 5,590,160 5,590,160 5,154,525 Net investment income 6 5,590,160 5,590,160 5,154,525 Less: Expenses (2,098,631) (2,098,631) (1,679,971) e-insurance premiums (1,309,771) (1,309,771) (1,108,608) Administration expenses 7 (788,860) (788,860) (571,363) Net income before transfers and benefits 11,859,493 11,859,493 10,250,413 Transfers and benefits (6,684,644) (6,684,644) (3,247,640) Transfers from other funds 2 21,417 21,417 0 Benefits 3 (6,706,061) (6,706,061) (3,247,640) Net income after transfers and benefits 5,174,849 5,174,849 7,002,773 Funds and reserves 55,479,982 55,479,982 48,477,209 Balance at beginning of period 55,479,982 55,479,982 48,477,209 Balance at end of period 60,654,831 60,654,831 55,479,982 Page 11 of 26

12 SCHEDULE HA NOTES TO THE FINANCIAL STATEMENTS FO THE PEIOD ENDED 30 APIL 2012 PINCIPAL ACCOUNTING POLICIES The following are the principal accounting policies used by the fund, which are consistent with those of the previous period. PUPOSE AND BASIS OF PEPAATION OF FINANCIAL STATEMENTS The annual financial statements are prepared in accordance with egulatory eporting equirements for etirement Funds in South Africa, the rules of the fund and the provisions of the Pension Funds Act in South Africa. The financial statements are prepared on the historical cost and going concern bases, modified by the valuation of financial instruments and investment properties to fair value, and the revaluation of property, plant and equipment to market value. FINANCIAL INSTUMENTS Measurement Financial instruments include cash and bank balances, investments, housing loans, receivables and accounts payable. Financial instruments are initially measured at cost as of trade date, which includes transaction costs. Subsequent to initial recognition, these instruments are measured as set out below. Investments Investments are measured at fair value. The fair value of marketable securities is calculated by reference to the applicable Stock Exchange quoted selling prices at the close of business on the statement of funds and net assets date Collective Investment Schemes Investments are measured at fair value. The fair value of marketable securities is calculated by reference to the applicable insurer, investment manager or the Stock Exchange quoted selling prices at the close of business on the statement of funds and net assets date. Housing loans The fund did not grant any guarantees for loans or any direct housing loans to its members in terms of Section19(5) of the Pension Fund Act. Other loans Not applicable. Insurance policies Insurance policies linked to listed investments are valued at fair value and are therefore equivalent to market value of the underlying assets as certified by the Insurer concerned. Accounts receivable Accounts receivable are stated at realisation value. Cash and cash equivalents Cash and cash equivalents are measured at fair value. Accounts payable Accounts payable are stated at the actual amounts due. POVISIONS Provisions are brought into account for known obligation as a result of past events, for which it will be required to settle the obligation. A reliable estimate has been made of the amount of the obligation. CONTIBUTIONS Contributions are brought to account on the accrual basis. Page 12 of 26

13 NOTES TO THE FINANCIAL STATEMENTS FO THE PEIOD ENDED 30 APIL 2012 PINCIPAL ACCOUNTING POLICIES - CONTINUED DIVIDEND INCOME, INSUANCE POLICY INCOME, INTEEST AND ENTALS Interest is recognised when it is determined that such income will accrue to the fund. Insurance policy income and dividends are recognised when declared by the insurer. Gains and losses on investments are recognised during the period in which the change arises. TANSFES TO AND FOM THE FUND Transfers to or from the fund are recognised on approval being granted by the Financial Services Board as required in terms of Section 14 and 13B of the Pension Funds Act. Individual transfers are recognised when the individual member s transfer is received or paid. Page 13 of 26

14 NOTES TO THE FINANCIAL STATEMENTS - CONTINUED FO THE PEIOD ENDED 30 APIL INVESTMENTS 1.1 INVESTMENT SUMMAY Local Foreign Total Fair Value Total Fair Value Current period Previous period Collective investment schemes 55,908,177 4,327,042 60,235,219 54,661,839 TOTAL INVESTMENTS 55,908,177 4,327,042 60,235,219 54,661, TANSFES FOM OTHE FUNDS Effective date No. of member s At beginning of period Transfers approved Assets transferred At end of period Individual transfers 0 21,417 (21,417) 0 Total 0 21,417 (21,417) 0 Current Period Previous Period Transfers approved 21,417 0 Statement of changes in net assets and funds 21, BENEFITS 3.1 BENEFITS CUENT MEMBES At beginning of period Benefits for current period Payments At end of period Lump sums on retirements 0 4,516,522 (4,516,522) 0 Full benefit 0 4,516,522 (4,516,522) 0 Lump sums before retirement 712,326 2,189,539 (2,880,112) 21,753 Death benefits 312, ,028 (862,389) 0 Withdrawal benefits 399,965 1,639,511 (2,017,723) 21,753 Total benefits awarded 712,326 6,706,061 (7,396,634) 21,753 Current Period Previous Period Benefit awarded 6,706,061 3,247,640 Statement of changes in net assets and funds 6,706,061 3,247,640 Page 14 of 26

15 NOTES TO THE FINANCIAL STATEMENTS CONTINUED FO THE PEIOD ENDED 30 APIL ACCOUNTS PAYABLE Current period Previous period Admin fees due to administrators 17,665 14,190 Auditors fees due 75,240 75,108 Legislation levies due 6,468 8,782 isk premiums due to insurers 172, ,631 TOTAL ACCOUNTS PAYABLE 272, , CONTIBUTIONS eceived and accrued At beginning of period Towards retirement Towards re-insurance and expenses Contributions received At end of period Member contributions 0 634,445 0 (634,445) 0 Employer contributions 226,190 5,477,517 1,737,003 (7,262,532) 178,178 TOTAL CONTIBUTIONS 226,190 6,111,962 1,737,003 (7,896,977) 178,178 Current period Previous period Towards retirement 6,111,962 5,000,688 Toward re-insurance and expenses 1,737,003 1,471,331 Statement of changes in net assets and funds 7,848,965 6,472, NET INVESTMENT INCOME Current period Previous period Income from investments 1,699,754 1,470,382 Dividends 546, ,945 Interest 1,153,080 1,168,437 Adjustment to fair value 4,103,991 3,855,917 Sub total 5,803,745 5,326,299 Less: Expenses incurred in managing investments (213,585) (171,774) TOTAL INVESTMENT INCOME 5,590,160 5,154,525 Page 15 of 26

16 NOTES TO THE FINANCIAL STATEMENTS CONTINUED FO THE PEIOD ENDED 30 APIL ADMINISTATION EXPENSES Previous Current period Notes period Actuarial fees 135,524 5,016 Administration fees 346, ,998 Audit fees 68,532 75,108 Audit services 68,532 75,108 Consultancy fees 122,414 95,943 Fidelity Insurance 14,587 29,667 Levies 4,244 9,065 Other (Specify if material) 2,316 2,816 Bank Charges 2,316 2,816 Trustee fees and remuneration ,760 57,750 TOTAL ADMINISTATION EXPENSES 788, , TUSTEE EXPENSES Current period Previous period emuneration 93,936 57,750 Meeting allowances Total trustee expenses 94,760 57, FINANCIAL LIABILITIES AND POVISIONS 8.1 POVISIONS Current period Previous period Provision for actuarial fees 68,000 9,576 Provision for insurance cost 0 29,667 TOTAL 68,000 39, ISK MANAGEMENT POLICIES SOLVENCY ISK Continuous monitoring by the Board takes place to ensure that appropriate assets are held where the funds obligation to members is dependent upon the performance of specific portfolio assets and that a suitable match of assets exists for all other liabilities. CEDIT ISK The Board monitors receivable balances on an on-going basis with the result that the fund s exposure to bad debts is not significant. An appropriate level of provision is maintained. LEGAL ISK Legal risk is the risk that the fund will be exposed to contractual obligations which have not been provided for. Legal representatives of the fund monitor the drafting of contracts to ensure that rights and obligations of all parties are clearly set out. CASH FLOW ISK The board of trustees agreed an amount with the administrators that should be kept in the bank account to meet the fund s cash flows requirements. If the agreed amount is insufficient, the administrator must disinvest to meet the required cash flow. Page 16 of 26

17 NOTES TO THE FINANCIAL STATEMENTS CONTINUED FO THE PEIOD ENDED 30 APIL 2012 CUENCY ISK The fund s exposure to currency risk is mainly in respect of foreign investments made on behalf of members of the fund for the purpose of seeking desirable international diversification of investments. LIQUIDITY ISK The fund s liabilities are backed by appropriate assets and it has significant liquid resources. MAKET ISK Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices of market interest rates. INVESTMENTS Investments in insurance policies are valued at fair value as certified by the insurer. Investments are managed with the aim of maximising the fund s returns while limiting risk to acceptable levels within the framework of statutory requirements. Continuous monitoring takes place to ensure that appropriate assets are held where the liabilities are dependent upon the performance of specific portfolios of assets and that a suitable match of assets exists for all non market related liabilities. 10. POMISED ETIEMENT BENEFITS As a defined contribution fund, the fund in association with the principal and participating employers provides the members a course to save towards retirement. The fund liability to the promised retirement benefit is limited to the member s equitable share of his/her share of fund. The member s share of fund is the member s retirement contributions plus the net return earned from the appropriate investment. 11. ELATED PATY TANSACTIONS The following transactions between the principal employer and the fund occurred: The participating employers made contributions to the fund - for members retirement to the value of 5,477,517 - towards the fund s expenses to the value of 1,737,003 - o O o - End of Schedule HA Page 17 of 26

18 SCHEDULE HB EPOT OF THE VALUATO Page 18 of 26

19 SCHEDULE I EPOT OF THE INDEPENDENT AUDITOS OF GAM UMBELLA PENSION FUND TO THE EGISTA OF PENSION FUNDS ON FACTUAL FINDINGS Scope We have performed the procedures agreed with you and enumerated below with respect to the accounting records of GAM Umbrella Pension Fund for the year ended 30 April 2012 as required by you in terms of section 15 of the Pension Funds Act of South Africa, (the Act). Our engagement was undertaken in accordance with the International Standard on elated Services (4400) Engagements to perform agreed-upon procedures regarding financial information. The responsibility for determining the adequacy or otherwise of the procedures agreed to be performed is that of the egistrar of Pension Funds. Procedures and Findings Our procedures and the corresponding findings thereon are set out in the table below. Procedures Findings 1 We selected a sample of the lesser of 50 or 10% of members from the complete listing of participating employers in the umbrella fund and for the following three months: June 2011, November 2011 and April 2012 performed the following procedures: 1.1 We agreed, in total, the data received by the administrator to the cash received by the fund. 1.2 We inspected the bank statements as appropriate, for the date on which the cash was received to determine whether the contributions were deposited with a registered bank in accordance with section 13A of the Act and whether late payment interest has been raised in terms of regulation 33, where applicable. 1.3 We inspected the accounting records of the fund to determine whether amounts disclosed as arrear contributions at period-end have been paid to the fund in accordance with the requirements of section 13A of the Act. 2 We inspected the list of investments held by the fund for any investments prohibited in terms of section 19 (4) of the Act. 2.1 Where investments held in the participating employer exceeded 5%, we inspected the appropriate Financial Services Board approval. 2.2 We obtained written confirmations of investment balances and agreed details of the confirmations received to the investment balances reflected in the general ledger. 3 We obtained the list of housing loans granted to members by the fund in terms of section 19(5) of the Act by the fund as at 30 April 2012 and performed the following procedures: 3.1 We determined by inspection whether both the general rules of the fund and the special rules of the participating employer allow for the granting of housing loans. 3.2 We agreed the loans on the above list to the corresponding account in the general ledger. 3.3 From the above list, we selected a sample of the lesser of 50 or 10% of housing loans and determined whether the selected housing loans were granted in terms of the requirements of section 19(5) of the Act, in terms of the security provided and the interest rates applied to the loans. The data received by the administrator agreed to the cash received by the fund. Contributions were deposited with a registered bank in accordance with section 13A of the Act and late payment interest was not applicable. Amounts disclosed as arrear contributions at period-end have been paid to the fund in accordance with the requirements of section 13A of the Act. The fund does not hold investments prohibited in terms of section 19(4) of the Act. Not applicable. The details of the confirmations received agreed to the investment balances reflected in the general ledger. There were no housing loans in place during the year under review. There were no housing loans in place during the year under review. There were no housing loans in place during the year under review. Page 19 of 26

20 3.4 If the fund issued more than 100 loans or the total principal debt of all outstanding loans exceeded , we determined whether the fund was registered as a credit provider under the National Credit Act, 2005 (the NCA) and whether an assurance report had been issued to the National Credit egulator in terms of section 16(1)(b) of the NCA and regulations 67 and 68 to the NCA. 4 We obtained the list of housing loan guarantees granted to members by the fund in terms of section 19(5) of the Act as at 30 April We selected a sample of the lesser of 50 or 10% of housing guarantees from the list. For the sample selected, we compared the total for guarantees issued on behalf of the members to the total of member individual fund credits, to determine whether the total guarantees issued exceeded the total member individual fund credits allowed in terms of the Act and/or the rules of the fund. 5 We obtained a list of other loans as at 30 April 2012 and determined whether these loans were granted in terms of the requirements of section 19(5)B of the Act. 6 We obtained written confirmation from the fund s insurer that fidelity insurance cover was in place throughout the period ended 30 April There were no housing loans in place during the year under review. No guarantees were issued on behalf of members during the year under review. There were no other loans issued during the year under review. Fidelity insurance cover was in place throughout the period ended 30 April We obtained the list of section 14 transfers to and from the fund throughout the period ended 30 April 2012, selected a sample of the lesser of 50 or 10% transfers in and the lesser of 50 or 10% transfers out, and performed the following procedures: 7.1 We agreed the section 14 transfers to and from the fund to the approved section 14 documentation received from the Financial Services Board in respect of each transfer. 7.2 We agreed the above list of section 14 transfers to the corresponding account in the general ledger. 7.3 We determined by inspection whether the transfers were received/paid within 60 days of approval and whether the growth and interest return had been allocated from date of receipt/payment. 7.4 In respect of unitised funds, we selected a sample of the lesser of 50 or 10% of the members transferred and recalculated the purchase of units for the amount received using the unit price per the administration system on the date of receipt. (Where units were purchased after date of receipt investment return was included from the date of receipt to the date of purchase). There were no section 14 transfers into and from the fund during the year under review. There were no section 14 transfers into and from the fund during the year under review. There were no section 14 transfers into and from the fund during the year under review. There were no section 14 transfers into and from the fund during the year under review. 8 We obtained a list of accumulated member credits as reflected on the administrator s member register as at 30 April 2012 and performed the following procedures: 8.1 We agreed the closing balance on the list to the corresponding account in the annual financial statements as at 30 April The closing balance on the list agreed to the corresponding account in the annual financial statements as at 30 April Page 20 of 26

21 8.2 We selected a sample of the lesser of 50 or 10% of the members from the list and performed the following procedures: We agreed the member and employer contributions received for the selected members per the administrator s system to information supplied by the participating employers for a sample of 3 months In respect of unitised investment products, we recalculated the conversion of the selected contributions at the unit price per the administration system on the dates that the contributions were invested and determined whether these units were correctly calculated and added to the existing units for the full period In respect of unitised investment products, we recalculated the conversion of units at the end of the period at the period end unit price and agreed the amount to the member s record on the member register In respect of unitised investment products, we agreed the period end unit price as authorised in terms of the rules of the fund to the unit prices on the administration system used to calculate the member credits In respect of non-unitised investment products, we agreed the return allocated to the member s fund credit on the administrator s records to the return approved in accordance with a resolution of the Board of Trustees or the general rules/special rules of the fund. 8.3 We selected a sample of the lesser of 50 or 10% of members who switched between investment portfolios during the period and determined whether the portfolios were correctly switched and that the correct amount was switched in accordance with notification of the member s election. We inspected whether any fees deducted were approved by the Board of Trustees. 8.4 If a surplus apportionment scheme was approved by the FSB in the current period, we selected a sample of the lesser of 50 or 10% from the surplus schedules and we agreed the allocation of the fund surplus of the scheme to the individual allocation in the member records per the administration system. 8.5 For unitised investment products where member portfolios are backed by specific portfolios, we agreed the values of investments specified by the members investment choice to the members liabilities per product for that choice and inspected the accuracy of reconciling items. 9 We inspected the most recent statutory valuation report to determine whether the fund was under-funded. For under-funded funds we determined whether a scheme, as required in terms of section 18 of Pension Fund Act in South Africa, has been implemented to remedy the shortfall. The member and employer contributions received for the selected member per the administrator s system agreed to information supplied by the participating employers for the 3 months selected. The conversion of contributions into units was correctly calculated and was correctly added to the members existing units. The conversion of the units was correctly calculated and agreed to the amount on the member s record on the member register. The unit price did agree to the unit prices on the administration system. Not applicable. Not applicable, there were no switches during the year under review. Not applicable. The values of investments specified by the members investment choice agreed to the members liabilities per product for that choice and reconciling items amounting to were accurate. In accordance with the valuation report, the fund was not under funded. Page 21 of 26

22 10 We obtained the analysis of the movements in the fund s reserve accounts from the financial statements and performed the following procedures: 10.1 We agreed the opening balance to the prior period financial statements We inspected the rules of the fund to determine whether the movements in the fund s reserve accounts were in terms of the rules of the fund and the Act. 11 We obtained a list of lump sum benefits reflected as expenses in the fund s Statement of Changes in Net Assets and Funds and performed the following procedures: 11.1 We agreed the list to the respective general ledger benefit expense accounts We selected a sample of the lesser of 50 benefits or 10% of the total benefit expenses from the list and performed the following procedures: We agreed the claim to the applicable, authorised supporting documentation For death benefits, where a portion of the benefit was reinsured by the fund, we determined whether the recovery from the insurer was received or accrued for by the fund [For a defined contribution fund] We agreed the opening fund credit for the member to the opening fund credit report and determined whether contributions were added every month until the date of exit. [either by amount or in case of unitised funds, by units] We agreed the balance paid out to member to the fund credit report or administration system as at the date of exit We inspected whether the payments agreed to relevant authorisation. 12 We obtained a copy of the listing of pensioners and performed the following procedures: 12.1 We agreed the total pensions paid to the corresponding account in the general ledger We selected a sample of the lesser of 50 or 10 % of pensions paid from the above list and performed the following procedures: We agreed the pensioner increases to authorisation by the Board of Trustees or other relevant supporting documentation. We agreed the pensioner increases to authorisation by the Board of Trustees or other relevant supporting documentation We inspected evidence supporting the fact that the pensioners selected were still alive. 13 Where the fund has reinsured its pensioners with an insurer, we obtained a written confirmation of the pensions paid from the insurer including asset and liability balances and agreed this to the fund s general ledger pension expense, asset and liability accounts. The opening balance agreed to the prior period financial statements. Not applicable. The list agreed to the respective general ledger benefit expense accounts. The claim agreed to the applicable, authorised supporting documentation. The recovery from the insurer was received or accrued for by the fund. [For a defined contribution fund] The opening fund credit for the member agreed to the opening fund credit report and the contributions were added every month until the date of exit. We found that the balance paid out to member agreed to the fund credit report or administration system as at date of exit. The payments agreed to relevant authorisation. Not applicable, there are no pensions being paid by the fund. Not applicable, there are no pensions being paid by the fund. Not applicable, there are no pensions being paid by the fund. Not applicable, there are no pensions being paid by the fund. Not applicable, there are no pensions being paid by the fund. Page 22 of 26

23 14 We selected a sample of the lesser of 50 or 10% of new participating employers and determined whether initial commissions were paid in terms of the rules of the fund, were limited to the LOA scale. 15 We selected a sample of the lesser of 50 or 10% of existing participating employers and determine whether recurring commissions were paid in terms of the rules of the fund, were limited to the LOA scale. Not applicable. ecurring commissions were paid in terms of the rules of the fund. As the above procedures do not constitute either an audit or a review made in accordance with International Standards on Auditing or International Standards on eview Engagements, we do not express any assurance on the procedures performed. Had we performed additional procedures or had we performed an audit or review of the relevant information, other matters might have come to our attention that would have been reported to you. Our report is solely for regulatory purposes and may not be distributed to, or relied on, by parties other than the egistrar of Pension Funds. Page 23 of 26

24 SCHEDULE IA SCHEDULES PETAINING TO THE ANNUAL FINANCIAL STATEMENTS FO THE PEIOD ENDED 30 APIL 2012 INVESTMENTS Collective investment schemes TOTAL INVESTMENTS Collective investment Total Local Foreign Foreign exposure % K 60,235,219 60,235,219 55,908,177 4,327, ,235,219 60,235,219 55,908,177 4,327, K COLLECTIVE INVESTMENT SCHEMES Fair value Current period Previous period Allan Gray Limited 19,444,247 18,438,485 Coronation Fund Managers Ltd 23,706,550 20,744,991 Old Mutual Investment Group Pty Ltd 10,934,950 9,206,464 Prudential Portfolio Managers (Pty) Ltd 3,118,164 2,556,538 MB Asset Management (Pty) Ltd 0 3,715,361 Sanlam Collective Investments Ltd 3,031,308 0 Total Collective Investment Schemes 60,235,219 54,661,839 J ISK MANAGEMENT Credit / counter party risk Counter party Direct investment in counter party Total per Counter Party Exposure as a % of the fair value % Banks 603, , Standard Bank 603, ,205 Other funds 60,235,219 60,235, Prudential Portfolio Managers (Pty) Ltd 19,444,247 19,444,247 Coronation Fund Managers Ltd 23,706,550 23,706,550 Old Mutual Investment Group Pty Ltd 10,934,950 10,934,950 Prudential Portfolio Managers (Pty) Ltd 3,118,164 3,118,164 Sanlam Collective Investments Ltd 3,031,308 3,031,308 TOTAL 60,838,424 60,838, Investments are reflected at fair value at the end of the financial period. Page 24 of 26

25 SCHEDULE IB ASSETS HELD IN COMPLIANCE WITH EGULATION 28 A Total assets of the fund as per Statement of Net Assets and Funds 61,016,602 B Less: Non-investment items of Statement of Net Assets and Funds: (178,178) B.2 Current Assets (excluding cash at bank) (178,178) C Sub-total (A-B) 60,838,424 Categories of assets % Fair Value % of Fair Value 1. Deposits in banks, mutual banks, Postbank and SAFEX: 100% 11,211, % (a) Deposits and balances in current accounts with a bank 100% 8,934, % (i) Per Bank or mutual bank 20% 8,934, % (b) Deposits in current accounts with a bank outside the epublic 15% 2,276, % 3. Bills, bonds and securities issued or guarantees by SA governments 100% 2,463, % (a) Inside the epublic- 2,463, % (i) Local authorities by law - immovable property 100% 1,869, % (iv) Eskom 20% 524, % (v) Land and Agricultural Bank of South Africa 20% 69, % Limitations in respect of investments in items 6 and 7 90% 20,426, % 6. All investments in immovable properties and property companies: 25% 332, % These investments are subject to the following limitation: (a) Inside the epublic- 25% 303, % (b) Outside the epublic - 10% 28, % 7. Shares in companies and equity unit trust schemes: 75% 20,093, % Subject to the following limitations: (a) Inside the epublic - 75% 18,071, % Investments in companies and debentures (i) All investments listed in the Development Capital Sector 5% 24, % (ii) Shares and debentures listed on the JSE 75% 18,047, % (b) Territories outside the epublic 15% 2,022, % Investments in companies and debentures: (ii) All investments listed on any recognised foreign exchange 15% 2,022, % Limitations for investment in items 6-9, and items 10(a) and (b) 95% 20,426, % 11 Investments in a unit trust scheme to be excluded i.t.o Sub (2)a)(i) 26,737, % TOTAL (equal to the fair value of assets (C) above) 60,838, % Investments outside the epublic % Fair Value of Assets % of Fair Value (a) Deposits with banks outside the epublic 15% 2,276, % (c) Immovable property, units in collective investment schemes in property shares, shares in, loans to and debentures of property 10% 28, % (d) Preference and ordinary shares in companies, convertible debentures outside the epublic. 15% 2,022, % TOTAL 4,327, % (Limited to 15% of fair value of assets in Annexure) - o O o End of Schedule IB Page 25 of 26

26 SCHEDULE IB CONTINUED INDEPENDENT AUDITO'S EPOT ON ASSETS HELD IN COMPLIANCE WITH EGULATION 28 TO THE BOAD OF TUSTEES We have audited Schedule IB "Assets held in compliance with egulation 28" of G.A.M Umbrella Pension Fund (the Fund) at 30 April 2012 (the Schedule) for compliance with the requirements of egulation 28 of the Pension Funds Act of South Africa (the egulation), as set out on page 26. Our engagement arises from our appointment as auditor of the fund and is for the purpose of assisting the Trustees to report to the egistrar of Pension Funds (the 'egistrar'). The information contained in Schedule IB has been extracted from the fund's underlying accounting records that were the subject of our audit engagement on the annual financial statements and forms the subject matter of this engagement. Our audit of the annual financial statements of the G.A.M Umbrella Pension Fund for the year ended 30 April 2012 was conducted in accordance with International Standards on Auditing and in our report of 25 October 2012 we expressed an unmodified opinion on the financial statements, prepared, in all material respects, with the egulatory eporting equirements for etirement Funds in South Africa. The Board of Trustees' esponsibility for the Schedule The Board of Trustees is responsible for the preparation of the Schedule in accordance with the egulatory eporting equirements for etirement Funds in South Africa and in compliance with the egulation, and for such internal control as the Board of Trustees determines is necessary to enable the preparation of the Schedule that is free from material misstatements, whether due to fraud or error. Auditor's esponsibility Our responsibility is to express an opinion based on our audit of the Schedule. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Schedule is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Schedule. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Schedule, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the Schedule 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 entity's internal control. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Disclaimer of Opinion The fund could not obtain the required documentation as prescribed by sub regulation 8(b) (i) of egulation 28 under GN 183 that allows the fund to exclude certain investments from the limits as prescribed by the regulation. The fund could not obtain: Certificates issued by the collective investment schemes at the end of the financial year of the fund, confirming that the assets of the schemes relevant to the fund have complied with the limits as set in the regulation, and The audit reports of the schemes confirming the accuracy of the certificates at the financial year end of the schemes. The fund has not prepared the Schedule IB in terms of the requirements and reporting format of egulation 28 under GN 183. Disclaimer of Opinion Based on the Basis for Disclaimer of Opinion paragraph, no opinion can be expressed with regards to Schedule IB "Assets held in compliance with egulation 28" at 30 April 2012 by G.A.M Umbrella Pension Fund being prepared in all material respects in accordance with the egulatory eporting equirements for etirement Funds in South Africa and in compliance with the egulation. estriction on Use Without modifying our opinion, we draw attention to the purpose of our report as indicated in the introductory paragraph, and the basis of accounting. Consequently, the Schedule and our auditor's report may not be suitable for another purpose. Page 26 of 26