annual report 2013 / 2014 - gepfgepf.or.tz/files/annual report_english version-2013-2014.pdf ·...

ANNUAL REPORT

GEPF RETIREMENT BENEFITS FUND

2013 / 2014

ANNUAL REPORT 2013 / 20142


CORPORATE INFORMATION

The Board of Trustees

Mrs. J. M.Shaidi Chairperson Mr. A. S. Kilima

Mr A. L. Mapunda Eng. D. L. Chamulesile Mrs F. S. Kiongosya Mr. O. M. UrassaMr. C.W. SamanyiMr. R.E. ChalamilaMr. D.M. Msangi Secretary

The Audit Committee

Mr. O. M. Urassa Chairperson Mrs. F. S. Kiongosya Mr. D. L. ChamulesileMr. A. S. Kilima

Registered Office (Head office) GEPF House 8th & 9th Floor Plot no. 37 Regent Estate

Ally Hassan Mwinyi roadP. O. Box 11492Dar-es-SalaamTel: +255 22 2927668/9Fax: +255 22 2927672

Regional Offices

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

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

Mtwara CWT Building First FloorTANU Road P.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 4th Floor, Ushirika BuildingLumumba StreetP.O Box 11492Dar Es SalaamTel: +255 22 2181612

Kinondoni 1st Floor, Ubungo PlazaMorogoro RoadP.O Box 11492Dar Es SalaamTel: +255 22 2461233

Temeke 4th Floor, Mek One PlazaNyerere Road, Industrial AreaP.O Box 11492Dar Es SalaamTel/Fax: +255 22 2866296

Arusha Summit Centre Building Block A Sokoine Road, P.O Box 10729 Arusha Tel/fax: +255 27 2507007

Mbeya 1st Floor, Delha House Lupaway/Jamatin JCT P.O Box 2423 Mbeya Tel/Fax: +255 25 2503666

Please visit one of our offices or Website;

www.gepf.or.tz

Email at: [email protected]


Bankers

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

CRDB Bank Plc (Holand House)P.O. Box 71960Dar-es-Salaam

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

Tanzania Postal Bank Ali Hassan Mwinyi Road-Millenium Tower

P.O. Box 9300Dar-es-Salaam

Auditors

HLB MEKONSULT LimitedCertified Public Accountants P.O. Box 14950Dar -es-salaam


To be number one choice Social Security Fund.

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

Work in an environment where we foster

accountability, teamwork, integrity, customer

focused and innovation.

Our Vision

Our Mission

Core Values

GEPF RETIREMENT BENEFITS FUND


TABLE OF CONTENTS

LETTER OF TRANSMITTAL 7

CHAIRPERSON’S STATEMENT 8

STATEMENT BY THE DIRECTOR GENERAL 12

REVIEW OF OPERATIONS 14

Recruitment of Members and Collections of Contribution 14

Benefit Payments 17

Investments and Investment Income 18

Investment in Fixed Income Assets. 19

Investment in Real Estate. 20

Investment in Equities. 20

NET ASSETS OF THE FUND 21

Interest credited to members 21

SERVICES TO MEMBERS 22

PUBLIC EDUCATION AND AWARENESS 23

HUMAN CAPITAL MANAGEMENT 23

CORPORATE SOCIAL RESPONSIBILITY 23

FUTURE PROSPECTS 24

BOARD STATEMENT ON CORPORATE GOVERNANCE ON 30JUNE 2014 25

STATEMENT OF BOARD OF TRUSTEES RESPONSIBILITIES 29

REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH JUNE 2014 30

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR

ENDED 30 JUNE 2014 32

STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS AT 30 JUNE 2014 33

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30JUNE 2014 34

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30JUNE 2014 35


LETTER OF TRANSMITTAL

Hon. Ms. Saada Mkuya Salum (MP)

Minister for Finance

1 Madaraka Street,

P.O Box 9111

11468 DAR ES SALAAM.

Honourable Minister,

RE: ANNUAL REPORT OF THE GEPF RETIREMENT BENEFITS FUND

FOR FINANCIAL YEAR 2013/2014

In accordance with section 36(4) of the GEPF Retirement Benefits Fund Act no. 8 of 2013 I hereby

submit on behalf of the Board of Trustees, a report on the Fund’s operational performance for the

financial year ended 30th June 2014, together with audited accounts of the same period.

Yours Sincerely,

Joyce M. Shaidi

CHAIRPERSON


CHAIRPERSON’S STATEMENT

On behalf of the Board of Trustees of GEPF, its my pleasure to present

Annual Report and Financial Statements for the year ended 30th June

2014.

During the year, the Fund changed its operations from provident system

to pension system. Given these changes and according to the new Act,

the former members of Government Employees Provident Fund becomes

members of the new Fund named GEPF Retirement Benefits Fund which

came to operation in February 2014. Under the new scheme, the number

of benefits has increased from three to six benefits namely: retirement

benefits, survivors benefits, invalidity benefits, death gratuity, funeral and

education grants. The Act permits introduction of more short term benefits

as such it is our intention to do so depending on the needs of the members

and the performance of the Fund.

As we join other Fund’s that started issuing pension benefits long before

GEPF, I want to assure the members of our dedicated services. We will

continue to demostrate our ability to be the leader in timely provision of

services especially where it comes for benefits payment and response to

members’ querries. The Fund is geared up to improve further its service

delivery by investing more in information technology, training of our staff,

establishing customer service centres and strengthening the use of agents.

More regional offices will also be opened consistent with the need of the

members and the performance of the Fund. The ultimate goal is to make

GEPF the Number One Choice Social Security Fund.

I am happy to announce that this year the Fund registered significant

growth in terms of the number of its members, member’s contributions and

investment income which together contributed to 33.77 per cent growth

in the assets of the Fund. The net assets of the Fund grew from TZS.

198,384.50 million in June 2013 to TZS 265,438.12 million in June 2014.

The number of members increased to 76,045 which is equivalent to 28.80

per cent increase compared to 59,042 in year 2012/13 while contributions

from members increase from TZS 37,299.76 million in year 2012/13 to

TZS 52,169.48 million in year 2013/14. Other notable performance was

realised in respect of investment income whereby collections increased

from TZS 18.30 billion in June 2013 to TZS 24.90 billion in June 2014.


The 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 together contributed to this good performance.

Detailed information on the performance of the Fund is given in this report.

On behalf of the 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. My call to the latter is to

continue to deliver high quality services to the members, customers and

other stakeholders.

Last but not least, I would like to reiterate commitment of the Board to

ensure that interest of the members remains our priority.

Thank you.

Joyce M. Shaidi

CHAIRPERSON


BOARD OF TRUSTEES

Mrs Joyce ShaidiCHAIRPERSON

Mrs. Fatma KiongosyaMEMBER

Mr. Oswald UrassaMEMBER

Eng. Deonis ChamulesileMEMBER

Mr. Renatus ChalamilaMEMBER

Mr. Ahmed KilimaMEMBER

Mr Alfred MapundaMEMBER

Mr Charles SamanyiMEMBER

Mr. Daud MsangiSECRETARY


MANAGEMENT TEAM

Mr Daud M. MsangiDIRECTOR GENERAL

Mr Coster O. MpagikeDIRECTOR OF FINANCE

AND ADMINISTRATION

Mr Hussein I. Kinduu DIRECTOR OF INTERNAL AUDIT

Mr Anselim K. PeterDIRECTOR OF OPERATIONS

Mr Festo L. FuteDIRECTOR OF PLANNING &

INVESTMENTS

Ms Anna T. ShayoHEAD LEGAL UNIT

Mr Edgar R. ShumbushoCHIEF INFORMATION AND TECHNOLOGY OFFICER

Mr Charles G. MnyetiHEAD PROCUREMENT MANAGEMENT UNIT

Mr Aloyce B. NtukamazinaMARKETING MANAGER


STATEMENT BY THE DIRECTOR GENERAL

The year 2013/14 marked the birth of GEPF Retirement Benefits Fund

which signifies the introduction of the pension system. Prior to that GEPF

operated as a Provident Fund catering mainly for contract and other non

pensionable employees. The change came into operation after a lenghthy

process of consultations and rewriting of the new Act which was finally

passed by the Parliament in November 2013. The new Act, GEPF

Retirement Benefits Fund Act no. 8 of 2013 was then assented by the

President in January 2014 and Gazetted in February 2014. At the close

of the year 2013/14 which this report refers, the new born GEPF was only

five years old.

As I present this report to you I feel obliged to explain the benefits that the

new Act brings to the members. It allows them to benefit from continuous

stream of cash paid on monthly basis. This stream of cash flow, which

was not there under Provident System is referred to as pension. As such,

with the new Act in place retired members will be supported by the Fund

throughout their life after retirement. In addition the Act allows the Fund

to provide both long term and short term benefits to its members. It is

our intention and determination therefore, to introduce more short term

benefits in line with the provisions of the Act to help the members meet

their immediate demands while still at work.

Our performance during the year have remained impressive as the Fund

recorded growth in all aspects. Membership as well as overall assets

of the Fund grew significantly. The numbers as presented in the report

and summarized in the Chairperson’s Statement speaks it all. We have

improved the quality of customer services and delivered against the key

targets we set for the year.

As we start operating as a pension scheme our first task was to prepared a

three years Corporate Plan to guide the resource allocations based on the

set priorities and objectives. The exercise was completed in July 2014. The

focus of the Plan is to improve services to members, expand membership

coverage, increase returns from investments and increasing efficiency in

delivering services to the members. I have all the reasons to assure our

members and those ready to join GEPF of a bright future under the new

Act. It is therefore time to make GEPF your number one choice.


On behalf of the Board, the Management and staff, I wish once again to

thank the members and all stakeholders who have continued to support us.

We bank on this support as without them all what was achieved during the

year would not have happened. .

I further wish to thank the Board of Trustees for their guidance and

dedication to make GEPF your number one choice. To the staff, I wish to

extend my call for continued hard work, commitment and dedication to our

values. I wish to thank them for their contributions that led to the attainment

of the achievements made.

Daud M Msangi

DIRECTOR GENERAL


REVIEW OF OPERATIONS

Recruitment of Members and Collections of Contribution Mandatory Scheme

The Fund performed very well in terms of registration of new members and collecting member’s

contributions. The growth in registration was 28.8% while for contributions was 39.90%. Such good

performance was a result of intensive marketing which attracted many members to join the Fund. The

increase in the public service salaries also contributed to the noted growth in the contributions collected.

Table 1 show the trend since 2009/10.

Table 1: Trend in Membership Recruitment and Contribution Collection

Year Membership Growth Contributions (TZS mil.) Growth2009/10 35,279 16,321.462010/11 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% 37,299.76 23.70%2013/14 76,045 28.80% 52,169.48 39.90%

Chart 1: Growth in total membership and contributions


Voluntary Scheme

The Fund continued with implementation of the Voluntary Savings Retirement Scheme (VSRS) for the

fourth year in 2013/14. A series of seminars and other marketing communication mix were used to

sensitize members and the would be members. As a result, the number of members joining the voluntary

scheme increased consistently from 2010/11 to 2013/14. The total recruitment during the year under

review was 15,204 members which brought a total recruitment since inception to 33,003 members. The

same trend is witnessed in respect of contribution collection which reached TZS 3,101.25 million per

year during the year 2013/14. Chart 2 provides the trend of contribution collected under the Voluntary

Scheme during the last five years.

Chart 2: VSRS Annual Collection from 2009/2010 to 2013/2014 (TZS 000,000)

Benefit Payments

A total of TZS 13,586.29 million were paid as benefit to members who left the Fund for reasons including

retirement and transfer to the Public Service Pension Fund. The transfers were in respect of the members

who had graduated to pension before the Fund converted to a pension scheme. There has been an

increase in benefits payments over the period however; the level has remained within acceptable ranges.

It can be seen from Table 2 that during the year 2013/14, 26.0% of the total contributions received was

paid out as benefits leaving over 74.0% for investment. This is a good measure of a healthy Fund

which guarantees future payments with guaranteed sources from both income from investments and

contributions collected.

Table 2: Benefit Payment Trend (TZS. Mill) Year 2009/10 2010/11 2011/12 2012/13 2013/14

Contributions 16,321.46 25,711.90 30,149.13 37,299.76 52,169.48

Benefits Paid 3,323.66 3,675.46 5,247.25 9,536.60 13,586.29

Percentage (Benefit to Contributions) 20.4% 14.3% 17.4% 25.6%26.0%


The Fund will continue to ensure members’ contributions 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 which will ultimately improve collections and maintaining good relationship with employers

to ensure prompt payments of members’ contributions and therefore making available resources for

investment.

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 2014 was TZS 242,376.80

million which generated net collected income of TZS 24,899.81 million. Taking into account the gain

in the share values (on the equity investments) total income received was TZS 36,511.93 million. This

amount is equivalent to an average return of 15.06% of the total investments made as at June 2014.

Such level of return is considered a very good performance. It can be noted from Table 3 that investment

portfolio grew by 34.99% from June 2013 to June 2014.

Table 3: Investment Portfolio Structure as at June 2014

Portfolio 2012/13 2013/14

TZS (000,000) TZS (000,000) Actual %age at June 2014

Policy requirement %age

Government Securities 80,788.96 101,311.45 38.17 20.0 - 60.00

Fixed deposit 57,316.00 86,953.00 32.76 35.00

Equity 10,308.45 20,848.41 7.72 10.00

Corporate bond 4,583.33 1,000.00 0.38 35.00

Loans to corporate and society

1,650.00 1,100.00 0.41 10.00

Direct Loan to Government 10,029.35 9,439.71 3.56 10.00

Licensed collective investment schemes

1,011.72 1,117.81 0.42 25

Real Estate 13,864.62 20,970.42 7.90 25.00

Total 179,552.60 242,376.80

Total assets at June 2014 265,438.12

Growth 34.99%


Chart 3: Distribution of Investments as at 30th June 2014

38.17%

32.76%

7.85%

0.38%

0.41% 3.56%

0.42%7.90%

Gvt Securites

Bank Deposits

Equity

Corp. bonds

Loans

Loan to Govt

Coll. Scheme

Property

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 investments in fixed income amounted to

TZS 199,804.16 million compared to TZS 154,367.64 million invested the previous year. This amount

is equivalent to 82.44 percent of total invested funds which was TZS 242,376.80 million. The remaining

17.56 percent were invested in other areas including equity participation and real estate development.

Table 3 provide breakdown of investments in all categories as at June 2014.

Income received from fixed income assets was TZS 24,009.44 million equivalents to 96.10 percent of

the total income collected during the year. The remaining TZS 970.37 million equivalent to 3.90 percent

was received from other investment categories including real estates, collective investment schemes

and equities. Table 4 provide breakdown of income received during the year.


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

Portfolio 2009/210 2010/11 2011/12 2012/13 2013/14

Government Securities 4,268.51 4,301.72 5,891.25 8,410.99 13,066.72

Fixed deposits 2,525.21 3,355.07 3,952.36 7,926.32 9,999.21

Dividends/C. Gain 296.75 292.4 553.42 633.80 883.11

Corporate Bonds 226.47 411.31 615.38 586.53 356.55

Loan 376.67 265.3 278.81 340.76 466.74

Collective Investment Scheme 0 1,183.30 46.60 109.05 120.22

Rent 87.26

Total 7,693.62 9,809.30 11,538.15 18,253.99 24,979.81

Annual Growth 27.5% 17.65% 58.21% 36.80%

Investment in Real Estate.

Investment in properties and real estate as at 30th June 2014 stood at TZS 20,970.42 million indicating

an increase of 51.25 percent from TZS 13,864.62 million at the end of June 2013. The increase is

associated with the payments made to contractors on the ongoing construction of GEPF House which

was built to completion and handed over to the Fund in November 2013. The office of the Fund was

therefore moved to the building known as GEPF House located at Plot 37 Alli Hassan Mwinyi in January

2014. As at end of June 2014, investment in properties constituted 7.90 percent of the total assets of the

Fund. Other investments made under this category were acquisition of 50 acres of land at Kijaka – Kimbiji

(Kigamboni in Dar-es-salaam) and 40.54 acres at Njedengwa in Dodoma. The two were purchase for

the purpose of constructing low cost houses for sale to members and the public at large. The idea is to

sell such houses to members through cash or mortgage financing depending the choice of the member.

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 2014 the market value of investments in equity stood at TZS

20,848.41 million from TZS 10,308.45 million. This signifies an increase of 102.25 percent compared

to the previous year and is attributed to appreciation of share values at the Market. The capital gain

realized is TZS 15,550.89 million when compared with the cost of buying. Table 5 provide the breakdown

of the shareholding as at 30th June 2014.


Table 5: Shares from registered companies at DSE as at 30th June 2014

No Name of CompanyNumber of

sharesCosts (TZS

Mil.)Mkt Value (TZS mil)

Gain/Loss (TZS mil.)

1 Tanzania Cigarette Co. 207,674 357.81 2,325.95 1,968.14

2 Tanzania Breweries Ltd 900,000 1,650.12 8,910.00 7,686.00

3 Tanga Cement Co. Ltd 221,617 170.9 531.89 360.99

4 CRDB Bank 6,226,612 1,155.15 1,992.52 837.37

5 NMB Bank 986,778 795.83 3,937.24 3,141.41

6 Swiss port 301,957 168.32 797.16 628.84

7 Twiga Cement 1,014,505 1,425.51 2,353.65 928.14 TOTAL 9,859,143 5,724.00 20,848.41 15,550.89

NET ASSETS OF THE FUND

The Fund recorded spectacular growth in its net asset base. For the year ending June 2014, the net

assets increased from TZS 198,433.08 million to TZS 265,438.12 million, representing an increase of

33.77 percent. The growth in net asset is attributed to increase in members’ contributions collection

and increase in investment income. The later was achieved due to prudence in investment placement.

The Fund continued to aim at high paying and less risk areas as a result achieved the noted growth. All

investments made during the year were within the limit provided by the Regulatory Authority.

Interest credited to members

Under the new GEPF Act, members are paid monthly pension at their retirement, however members

under the Voluntary Scheme are credited with interest since the scheme is a savings one and therefore

most of the members do not qualify for pension. As such, for financial year 2013/14 the Board approved

the Fund to credit members’ account with an interest of 7.50% which is a higher rate compared to 6.65%

credited during the previous year. The increase in the rate payable to members is a reflection of better

gains realised from investments during the year.

It has always been GEPF objective to add value to the members’ retirement savings each year and the

said 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.

Table 6: interest rate credited to members

Period 2009/10 2010/11 2011/12 2012/13 2013/14Interest rate allocated 5.20% 6.00% 6.50% 6.65% 7.50%


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 was increased during the year and more working tools provided.

Further decentralization was done by mandating the regional managers to process benefit payments.

This function was traditionally the mandate of the head office. In line with the need to improve services to

members, the organization structure was revisited whereby a fully fledged marketing unit was introduced

together with a customer service department.

Members of the Board, Management and staff representatives in a group photo taken during the review of the Corporate

Plan.

PUBLIC EDUCATION AND AWARENESS

During the year pubic and awareness programs were carried out with the aim of raising the awareness

of the members, contributing employers and the general public on the operations of the Fund. Such

programs involved use of communication mix including radio advertisements, television, newspapers

and seminars. Special awareness targeting individual regions were aired through local radios in the

respective regions. These campaigns contributed a lot to the recruitment of the new members.

HUMAN CAPITAL MANAGEMENT

During the year the Fund’s organization structure and establishment was improved further to ensure

smooth implementation of the activities. Two units (Internal Audit and Information Technology) were


elevated to directorates and a fully-fledged Marketing Unit introduced. The former directorate of operations

had its roles redefined by removing marketing aspect and introducing a department responsible for

customer services. Staffs were trained in various fields to sharpen their competencies and enhance their

skills.. The number of employees was also increased from 77 to 84 to allow for efficient functioning and

delivery of quality and timely services. The opening up of more regional offices also necessitated the

increase in the number of staff. 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.

CORPORATE SOCIAL RESPONSIBILITY

The Fund continued to help different needy groups as part of Corporate social responsibility. The

involvement of the Fund in social responsibilities enhances its values and improves its image to the

public. Areas that benefited from such support are education sector by supporting needy students

with tuition fees, donation to various children centres, donation to disabled society and other areas

of national interest.

Mr Aloyce Ntukamazina (GEPF Marketing Manager) donating various items to children with albinism at Matumaini Primary School Kurasini.

FUTURE PROSPECTS

The conversion from provident to pension scheme has opened up competition with giant Funds with wide

network of offices all over the country. GEPF is currently present in 8 regions hence making competition

with such Funds very stiff and mostly effective in only those regions that the Fund is present. During


the coming years the Fund will continue to expand its outreach by opening more offices, put in place a

well-documented marketing strategy and improve service and processes. The later will be addressed

through among others; investing in the people and in Information Communication Technology to reduce

paper work and establishing a Customer Service Centre. In addition the Fund will increase the use of

agents across the country to assist in the collection of contributions and marketing the Fund.

BOARD STATEMENT ON CORPORATE GOVERNANCE ON 30JUNE 2014

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 TRUSTEES

The Board comprises 8 non-executive members and secretary who is the Director General of the Fund. The chairman of the Board is appointed by the President and other non-executive members are appointed by the Minister of Finance for tenure of three years renewable.

During the period 10 Board meetings were held, covering 4 ordinary and 6 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 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 Member Mr. A. S. Kilima Member Finance and Investment Committee Mr. C. W. Samanyi Chairperson Mr. R. E. Chalamila Member Mr. A.R. Mapunda Member

AUDIT COMMITTEEThe 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.

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 Trustees, 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 and 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.

ATTENDANCE INTHE BOARD AND COMMITTEE MEETINGS

During the financial year 2013/14 attendance of individual Board members in the scheduled meetings were as shown below.

Board Audit Committee

Finance & Investment Committee

Disciplinary and Appointment Committee

Scheduled meetings 10 6 1 3

Participants:

Mrs. J. M. Shaidi 10 - - -

Mr. A. S. Kilima 8 5 - -

Mr. D. L. Chamulesile 9 6 - -

Mr. C. W. Samanyi 9 - - -

Mr. O. M. Urassa 9 6 - 3

Mr. A. R. Mapunda 9 - 1 3

Mr. R. E. Chalamila 10 - 1 -

Mrs. F. S. Kiongosya 10 5 - 3

Finance & Investment Committee and Disciplinary & Appointment Committee meet as when required

BY ORDER OF THE BOARD OF TRUSTEES

J. M. ShaidiChairperson

22nd January 2015


STATEMENT OF BOARD OF TRUSTEES RESPONSIBILITIES

GEPF Retirement Benefits Act of 2013, 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 Retirement Benefits Act of 2013 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 certifies 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. ShaidiD. M. Msangi

Chairperson Secretary

22nd January 2015 22nd January 2015


AUDIT REPORT ON THE FINANCIAL STATEMENT

ToChairperson of the Board of Trustees,GEPF Retirement Benefits Fund,P.O. Box 11492,DAR ES SALAAM

REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF GEPF RETIREMENT BENEFITS FUND FOR THE YEAR ENDED 30TH JUNE 2014

I have audited the accompanying financial statements of the GEPF Retirement Benefits Fund which comprise the Statement of Net Assets as at 30th June, 2014, 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 21 to 47 of this report.

Directors’ Responsibility for the financial statements The Board of Trustees 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 GeneralMy 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 OpinionIn my opinion, the financial statements give a true and fair view of the statement of the net assets available for benefits for the GEPF Retirement Benefits Fund as at 30 June 2014, its surplus, cash flows and changes in equity for the year then ended in accordance with International Financial Reporting Standards and comply with GEPF Retirement Benefits Fund Act, No.8 of 2013.

Report on Compliance with Procurement LegislationIn 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 GEPF Retirement Benefits Fund has generally complied with the Public Procurement Act, 2004 and its related Regulations of 2005.

PROF. MUSSA J. ASSAD

CONTROLLER AND AUDITOR GENERALNational Audit Office,Dar es Salaam, TANZANIA

DATE: 22nd January 2015


STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED 30 JUNE 2014

Note 2014 2013TZS’000 TZS’000

CONTRIBUTIONS AND BENEFITS

Members contribution 6 52,169,484 37,299,756Benefits expenses 7 13,586,288 9,536,601Net surplus from contribution 38,583,196 27,763,155

INVESTMENT INCOME

Dividend income 8(a) 883,111 719,744Interest income 8(b) 22,811,048 17,529,552Income from UTT 8(c) 120,223 109,052Interest back purchase - NIDA 734,052 - Rental Income 98,691 - Discount income on Treasury bonds 2,144,882 1,203,261Gain/loss on foreign currency fluctuations 163,259 78,259Appreciation in shares and units 20(c) 9,556,665 3,460,435

Other income 9 19,689 12,95075,114,816 50,876,408

Administrative expenses 10 8,497,831 6,865,836

Increase in Net assets for the year 66,616,985 44,010,572

Other comprehensive income

Revaluation reserve 11 388,056 11,510

Balance at the beginning of the year 198,433,075 154,410,993

Carrying value at the end of the year 265,438,116 198,433,075


STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS AT 30 JUNE 2014

2014 2013Note TZS’000 TZS’000

ASSETSInvestmentsInvestment property 12 16,311,968 -

Loan to corporate 13 751,203 1,667,094

Corporate bonds 14 1,041,352 4,752,846

Treasury bonds 15 94,534,474 78,955,657

Treasury bills 16 13,274,865 7,661,874

Loan to Government 17 10,382,454 10,233,409

Quoted shares 18(a) 21,119,405 10,651,452

Unit Trust of Tanzania 18(b) 1,139,461 1,016,003

Short term deposits 19 88,593,243 58,830,697Loan to SACCOS 354,821 - Investment-Watumishi Housing Co Ltd 20 1,231,780 -

248,735,026 173,769,032Other assetsProperty and equipment Held for Sale assets

21 5,965,409125,109

14,904,739-

Intangible assets 22 14,311 49,417

Members and staff loans 23 3,721,896 975,276

Prepayments and other receivables 24 761,962 56,949

Contributions receivable 1,159,916 4,234,378Cash and bank balances 25 7,131,022 2,500,833

18,879,625 6,735,211

TOTAL ASSETS 267,614,651 199,289,128LIABILITIESBenefits payable 208,642 145,693

Other payables and accruals 26 1,967,893 710,3602,176,535 856,053

NET ASSETS 265,438,116 198,433,075REPRESENTED BY:FUND BALANCE 27 265,438,116 198,433,075

The Financial statements on pages 18 to 47 were approved by the Board on 22nd January 2015 and signed on its behalf by:

J. M. Shaidi D. M. MsangiChairperson Secretary


STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30JUNE 2014

2014 2013

TZS’000 TZS’000

Cash flows from Operating Activities

Contributions received 55,242,634 35,531,033

Other income 19,689 122,002

Benefits paid (13,188,477) (9,553,174)

Administrative expenses (7,919,694) (6,370,056)

Net cash generated from operating activities 34,154,152 19,729,805

Cash flows from Investing Activities

Dividend income 883,111 772,985

Interest Income 22,322,482 17,828,803

Purchase of quoted investments (1,034,745) -

Purchase of Treasury bonds (25,923,289) (14,662,213)

Receipts from matured Treasury bonds 12,821,400 4,036,000

Net sale/(purchase) of Treasury bills (5,404,096) (4,335,107)

Loan issued to Government 730,431 (5,000,000)

Receipts from matured part of Corporate Bonds 3,583,333 416,667

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

Receipt from UTT 120,223 -

Rent receipts 98,691 -

Purchase of Collective investment (1,231,780) -

Acquisition of investment property (3,117,298) -

Loan issues to SACCOS (350,000) -

Placement with commercial banks (29,657,858) (15,711,949)

Acquisition of property, equipment & intangible assets (3,827,010) (4,046,572)

Net increase in members loan, staff loans & advances (437,558) (669,956)

Net cash used in investing activities (29,523,963) (20,471,342)

Increase/(decrease) in cash and cash equivalents 4,690,386 (741,537

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

Cash and cash equivalents at end of the year 7,131,022 2,500,833


NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30JUNE 2014

1. FUND INFORMATION

The Fund financial statements for the year ended 31 June 2014 was authorized for issue in accordance with the resolution of the Board on 23/12/2014.GEPF Retirement Benefits Fund operated under GEPF Retirement Benefits Fund, Act no 8 of 2013. It is registered by Social Security Regulatory Authority as a defined benefits 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 2014.

• IFRS 10, Consolidated Financial Statements

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.

• IFRS 11, Joint arrangements

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.

• IFRS 12, Disclosure of interests in other Entities

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.


• IFRS 13, Fair value Measurements

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. The disclosure requirements in IFRS 13 are 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.

• IAS 19, Employee benefits - (Amended in June 2011)

The amendment to IAS 19 changed the accounting for defined benefit plan 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 applied the standard accordingly.

• IAS 27, Separate Financial statements – As revised in 2011

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.

• IAS 28, Investments in associates and Joint ventures - As revised in 2011

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.


3. SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The financial statements have been prepared in accordance with and comply with International Financial Reporting Accounting Standards (IFRS). The financial statements are presented in Tanzania shillings, which is the functional and reporting currency and all values are rounded to the nearest thousand (TZS 000). The accounting policies have been consistently applied to all the years presented.

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. The cash flows statement is prepared using the direct method. The consolidated financial statements are prepared on an accrual basis

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)Office buildings 4 25Intangible assets 25 4Motor vehicles 20 4Motor cycles 33.3 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.

The amortisation period and the amortization method for the intangible assets are reviewed at least at each financial yearend. 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. Investment Property

Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the replacement cost of components of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day maintenance of an investment property. Subsequent to initial recognition, investment properties are measured at its fair value which reflect market condition at the balance sheet date

Investments in Associates Investments in Associates are measured using equity method by which an equity investment is

initially recorded at cost and subsequently adjusted to reflect the investor’s share of the net assets of the associate


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.


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 judgment. In making this judgment, the Fund 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 Trustees.

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 Trustees 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 Trustees, 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 2014 is given below:

Fully Performing Past due Impaired2014

TZS’0002014

TZS’0002014

TZS’000

TANESCO loan 750,000 - -Corporate bonds 1,000,000 - -Treasury bonds 91,655,509 - -Treasury bills 12,998,973 - -Loan to Government 10,352,492 - -Loan to Saccos 350,000 - -Interest receivable 4,834,292Short term deposit 86,991,143 - -Members and staff loans 3,703,155 - -Contributions receivable 1,114,644Bank balance 7,131,022 - -

Total credit exposure 220,881,230 - -

The amount that represents the Fund’s maximum exposure to credit risk at 30 June 2013 is shown below:

Fully Performing Past due Impaired2013

TZS’0002013

TZS’0002013

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 57,321,155Rent receivable - - -Members and staff loans 3,773,779 - -Contributions receivable 4,234,378 - -Bank balances 2,500,833 - -Total credit exposure 172,610,565 - -


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).

30 June 2014 Note Level 1 Level 2 Level 3 TotalFair value through profit or loss: TZS’000 TZS’000 TZS’000 TZS’000

Corporate bonds 16 1,000,000 - - 1,000,000Government securities - 91,655,509 - 91,655,509Equity shares 20(a) 21,119,405 - - 21,119,405

22,119,405 91,655,509 - 113,774,914

Note Level 1 Level 2 Level 3 Total

TZS’000 TZS’000 TZS’000 TZS’00030 June 2013Fair value on profit or loss:Corporate bonds 16 4,583,333 - - 4,583,333 Government securities - 76,408,738 - 76,408,738 Equity shares 10,651,452 - - 10,651,452

15,234,785 76,408,738 - 91,643,523

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 from 2 to 15 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 2014, 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 TZS1,112,943,313(2013: TZS590,722,693) 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 30June 2014 are:

2014TZS’000

2013TZS’000

Quoted shares 21,119,405 10,651,452

UTT units 1,139,461 1,017,57122,258,866 11,667,456

(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.

(iii) 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 Trustees 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.

2014 2013TZS’000 TZS’000

LiabilitiesBenefits payable 208,644 145,693Other payables and accruals 1,967,893 710,360

2,176,537 856,053


6. MEMBERS CONTRIBUTION 2014 2013 TZS’000 TZS’000

Employers – Normal 25,355,804 20,339,044 – Gratuity 6,276,498 1,416,331Employees 17,416,297 13,691,653Voluntary Savings Retirement Scheme Contributions from PSPF

3,101,25219,633

1,839,01813,710

52,169,484 37,299,756

7. BENEFITS TO MEMBERS 2014 2013 TZS’000 TZS’000

Transfers to PSPF 6,385,330 4,502,122Mandatory scheme terminal benefitsVSRS WithdrawalVSRS terminal benefits

6,341,091527,327332,541

4,659,500298,622

76,357

13,586,289 9,536,601

8 (a) DIVIDEND INCOME 2014 2013

TZS’000 TZS’000

Swiss port(T)Ltd 50,218 45,031Tanzania Cigarettes Company Ltd 147,968 159,547Tanzania Portland Cement Company Ltd 108,965 123,273Tanzania Breweries Ltd 385,739 257,160National Microfinance Bank PLC 84,243 63,746CRDB Bank PLCTangaCement Co Ltd

82,81923,159

70,988 -

883,111 719,744

8(b) INTEREST INCOME

2014 2013TZS’000 TZS’000

Interest on Fixed deposits 10,524,503

7,281,445Income from Treasury bonds 10,313,478 8,134,655Income from Treasury bills 1,281,940 665,525

Income from Corporate bonds 228,394 566,665

Interest on TANESCO loan 200,642 324,840

Income from loan to Government 221,926 556,422

Income from SACCOS Loan 40,165 -

22,811,048 17,529,552


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.The Fund earned TZS 120.22 million(2013:TZS 109.05 million) for the year ended 30th June 2014 9. OTHER INCOME

2014 2013

TZS’000 TZS’000Gain on sale of fixed assets - 7,100Tender fees 1,050 850Compensation of piece of land taken for Bagamoyo road expansion 18,639 -Donation from Azania Bank LTD - 5,000

19,689 12,950

10.ADMINISTRATIVE EXPENSES 2014 2013

TZS’000 TZS’000

Staff costs: Note 10(a) 4,210,260 3,755,756Management expenses 91,193 37,010Audit fees 129,041 109,374Tender board expenses 38,065 57,789Trustee fees 16,500 16,500Board expenses 267,207 309,008Annual General Meeting - 113,428Awareness and advertisement 540,908 526,320Depreciation and amortization 429,835 336,148Other administrative expenses (note 10 (c)) 2,774,822 1,604,503

8,497,831 6,865,83610(a).STAFF COSTS

2014 2013

TZS’000 TZS’000Salaries and wages 2,072,924 1,809,067Social security costs-defined contribution plan 96,872 74,323

Social Security costs-defined retirement plan 219,286 194,222

Other statutory remittances 136,805 143,349

Housing allowance 452,354 393,866

Other staff cost (note 10(b)) 1,232,126 1,140,929 4,210,367 3,755,756


10(b) Other staff costs

2014 2013 TZS’000 TZS’000

Workers Council Expenses 10,775 6,074Staff uniforms 8,416 10,046Extra duty 11,295 6,360Staff Welfare 101,428 105,396Medical Expenses 90,509 78,062Recruitment 2,430 17,115Staff Training 383,500 470,920Seminars & Conferences 209,378 120,810Entertainment 2,895 1,894Funeral and Condolence 23,296 7,373Travelling on Leave 175,683 124,992Transport and Fuel allowance 212,521 188,000Staff termination - 3,887

1,232,126 1,140,929

10 (c). Other administrative expenses 2014 2013

TZS’000 TZS’000Postage 4,499 4,378Printing & Stationeries 207,300 142,111Subscription & Profession Fees 84,626 48,615SSRA Levy 217,683 -Consultancy Fee 150,129 114,635Maintenance of Office Equipment 73,102 48,497Maintenance of Motor Vehicles 75,069 30,338 Fuel & Lubricants 89,611 72,140Insurance premium – GEPF House 18,473 -News Papers 3,647 3,669Office Cleaning 26,238 12,320Students Practical Support 13,000 14,871Office Rent 237,555 192,634Bank Charges 9,294 21,401Maintenance & Support of Soft 51,916 43,666 Collection Commission 10,931 10,182Travelling on Duty 240,648 197,997Sundry expenses 12,601 4,963Security services 5,218 5,079Utility costs 124,623 73,366Donation 95,777 50,583Motorcycles Maintenance 11,234 3,536Members Seminar 99,318 77,591Withholding Tax on fixed depositsLegal feesBad debt expensesLoss on Assets Disposal

786,157-

76,27949,894

390,69934,151

5,4001,681

2,774,822 1,604,503


11 (a) REVALUATION RESERVE

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

(b) REVALUATION OF FIXED ASSETS

The revaluation of fixed assets was completed as at 30 June 2013 by Prolaty Consult Limited, an independent firm, using Modern Equivalent Asset Price (MEAV), Index Historical Cost (IHC) and Depreciated Replacement Cost (DRC) valuation methods. According to the valuation as at the date, the valuation depicts the following values:

Asset CategoryCarrying Values

Before RevaluationFair value after Revaluation Surplus/(Loss)

Motor Vehicles 216,458 326,634 110,176 Motor Cycles 32,789 32,097 (692)Machinery & Equipment 91,617 194,894 103,319Computers Hardwires 130,937 246,926 115,989Furniture and Fittings 63,050 69,698 6,647Office Partitioning 7,624 59,202 52,617Total 542,475 929451 388056

12. INVESTMENT PROPERTY

The investment property comprise of GEPF House situated at Plot 37 Regent Estate along Ali Hassan Mwinyi road, the building comprises 10 storey office block and 2 storey parking arcade facility. The property accommodate approximately 7,800 square meters of office space and 136 Parking bays, the building was put into use for the first time on November 2013 immediately after its completion. First Investment property valuation will be made on the year 2014/15 following with valuation after every three years to validate the internally determined fair value.

13. 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 syndicated 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.


14. CORPORATE BONDS 2014 2013

TZS’000 TZS’000

TBL medium term BondPRIDE TANZANIA Aluminum Africa Bond (ALAF)

- 500,000500,000

3,000,000 833,333750,000

Accrued interest 41,352 169,5131,041,352 4,752,846

Tanzania Breweries Limited (TBL) medium term Note was purchased on 26 August and 29 September 2010 respectively. The Bond worth TZS. 3,000.00 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 semiannually.

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.

15. TREASURY BONDS2014 2013

TZS’000 TZS’000Held to maturity

- within 1 year 3,160,668 14,252,931- after 1 year but within 2 years 2,964,536 4,273,658- after 2 years but within 5 years 37,014,248 30,302,911- after 5 years Accrued interest

48,516,0572,878,965

27,579,239 2,546,918

94,534,474 78,955,657

16. TREASURY BILLS HELD TO MATURITY2014 2013

TZS’000 TZS’000

Treasury bills 12,998,973 7,594,877Add: Unearned discount 275,892 66,997

13,274,865 7,661,874


The maturity dates for government treasury bills are:

Maturing with six months from date of purchase - -

Add: Unearned discount - -

- -

17. LOAN TO GOVERNMENT 2014

TZS’0002013

TZS’000Loan to Government 10,352,492 10,198,172

Accrued interest 29,963 35,23710,382,455 10,233,409


18(a

) (i)

IN

VEST

MEN

T IN

QU

OTE

D S

HA

RES

UN

ITS

Am

ount

s (T

ZS’0

00)

At 1

Jul

y 20

13A

dditi

ons

Dis

posa

lA

t 30

June

20

14A

t 1 J

uly

2013

Add

ition

sD

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sal

Gai

n/(L

oss)

in

Fai

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t 30

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2014

Mar

ket v

alue

at

30.

06.2

014

Mar

ket v

alue

at

30.

06.2

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SWIS

SPO

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DAH

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)30

1,95

7 -

-

301,

957

622,

031

--

175,

135

797,

166

622,

031

Tang

a C

emen

t CoL

td (S

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)22

1,61

7 -

-

221,

617

531,

881

--

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1,88

153

1,88

1

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ania

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td20

7,67

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- 20

7,67

41,

349,

881

--

976,

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2,32

5,94

91,

349,

881

Tanz

ania

Bre

wer

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Co.

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900,

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-

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900,

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2,89

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8,73

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02,

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Tanz

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Por

tland

Cem

ent C

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Ltd(

Twig

a)58

8,20

542

6,30

0 -

1,01

4,50

51,

564,

626

1,03

4,74

5-

(199

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)2,

399,

381

1,56

4,62

6

NM

B Ba

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6,77

8-

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6,77

81,

598,

580

--

2,33

8,66

43,

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244

1,59

8,58

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6,22

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226,

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1,74

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1-

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311

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4,78

21,

743,

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9,14

310

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1,03

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20,7

76,4

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18 (b

) (ii)

DE-

LIST

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RES

BY

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At 1

Jul

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13Ad

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At 3

0 Ju

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343,

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--

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343,

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26,3

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11,8

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18. (

c)

INVE

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IN U

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Am

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At 1

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Jiki

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Fund

9,

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1,01

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3


18.(d) GAIN/LOSS ON VALUATION OF INVESTMENTS2014

TZS’0002013

TZS’000Net gain on quoted shares 9,433,208 3,462,003Gain/(loss) on valuation of UTT units 123,457 (1,568)

9,556,665 3,460,435

19. SHORT TERM DEPOSITS 2014 2013

TZS’000 TZS’000

Deposits matured within 3 months 11,053,559 1,000,000

Deposits matured after 3 monthsCall deposits in foreign currencyExchange gain

75,937,584-5

56,318,000-

3,156Accrued interest 1,602,095 1,509,541

88,593,243 58,830,697

20. INVESTMENT IN WATUMISHI HOUSING COMPANY

The Fund invested in WATUMISHI HOUSING COMPANY which was established for the purpose of joint undertaking on constructions of houses for public servant which is jointly owned by Social security Funds and National Housing Corporation. As at 30th June 2014, the Fund owned 9.79% of the equity capital of the company.


21(a

). F

IXED

ASS

ETS

MO

VEM

ENT

SCH

EDU

LE

Mot

or

Mot

or

Mac

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ry &

Furn

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ompu

ter

Offi

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Fitti

ngs

Har

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on In

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gres

s

TZ

S’00

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At 1

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201

239

7,43

222

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176,

234

71,6

7918

6,92

121

5,71

110

,750

,919

11,8

21,5

14

Addi

tions

191,

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28,0

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24,7

5312

9,18

810

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1,24

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527,

357

48,2

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3,14

595

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301,

912

226,

099

14,3

62,1

6515

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At 1

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201

332

6,63

432

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194,

895

69,6

9824

6,32

622

6,09

914

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15,4

57,9

13

Addi

tions

- 7,

000

348,

731

334,

857

36,1

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6,50

0,50

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227,

241

Dis

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--

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(226

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(226

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Hel

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(1

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--

--

-(1

5,97

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5,97

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At J

une

2014

326,

634

38,5

1646

1,40

539

9,50

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5,22

8-

4,88

7,86

76,

359,

150

DEP

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At 1

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1226

2,45

46,

303

105,

287

24,8

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3,19

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9,64

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- 68

1,77

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109,

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8,49

861

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58,8

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- 29

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)(7

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)(1

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(85,

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At J

une

2013

310,

899

15,4

3014

1,56

931

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170,

974

218,

474

-88

9,32

9


Mot

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Com

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Cap

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Fitti

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Har

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rtitio

n In

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s

TZ

S’00

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S’00

0TZ

S ‘0

00TZ

S ‘0

00TZ

S ‘0

00TZ

S ‘0

00TZ

S ‘0

00TZ

S ‘0

00

At 1

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y 20

13-

--

--

218,

474

-

218

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Cha

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150,

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127,

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(219

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(219

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(581

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At J

une

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150,

001

11,4

3210

1,85

821

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108,

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--

392,

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NET

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VALU

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At 3

0 Ju

ne 2

014

176,

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27,0

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9,54

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8,07

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7,14

3-

4,88

7,86

75,

965,

409

At 3

0 Ju

ne 2

013

216,

458

32,7

8991

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63,0

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0,93

87,

624

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6,63

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194,

895

69,6

9824

6,92

659

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14,3

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Surp

lus/

(loss

)11

0,17

6(6

92)

103,

319

6,64

711

5,98

952

,617

-38

8,05

6


22. INTANGIBLE ASSETS

Computer software WIP TotalTZS’000 TZS’000 TZS’000

CostsAt 1 July 2012 617,995 - 617,995Addition for the yearCapitalized WIP

--

- -

--

At 1 July 2013 617,995 - 617,995Addition for the year - - -

Capitalized WIP - - -

At 30 June 2014 617,995 617,995

AmortizationAt 1 July 2012 525,681 - 525,681Charge for the year 42,896 - 42,896

At 1 July 2013 568,577 - 568,577Charge for the year 35,107 - 35,106

At 30 June 2014 603,684 - 603,684

Net book valueAt 30 June 2014 14,311 - 14,311

At 30 June 2013 49,417 - 49,417

23. MEMBERS PARTIAL WITHDRAW AND STAFF LOAN2014 2013

TZS’000 TZS’000Members partial withdraw

1,851,506 2,112,002

Staff loans 1,870,390 1,661,778

3,721,896 3,773,780

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.


24.PREPAYMENTS AND OTHER RECEIVABLES

2014TZS’000

2013 TZS’000

Staff advances 131,158 26,112Technet LTD - support feesProlaty Consult Ltd

17,25868,530

9,88510,400

Systech LTD -Support fees 14,497 -Software Technologies Ltd 4,993 -VSRS office rent 37,510 10,552Vodacom 1,616 - TTCL 3,000 -AAR Insurance Tanzania Ltd 7,332 -VAT Recoverable 476,068 -

761,962 56,949

25. 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:

2014 2013

Cash in handBank depositsM-PESATigo -PESA

TZS’000142

7,052,93058,31919,631

TZS’000249

2,464,8420,702 15,040

7,131,022 3,242,370


26. OTHER PAYABLES AND ACCRUALS2014 2013

TZS’000 TZS’000

Provision for withholding tax 752,821 418,755

VAT payable 17,782 -

Staff non statutory deductions 1,088 6,077

Sundry creditors 410,938 144,237

Accrued expenses 132,142 135,088

Deferred contribution - 1,312

Tenants security deposits 18,646 -

GEPF House-Retention Money 634,476 -

Statutory deduction payable - 4,891

1,967,893 710,360

27.FUND BALANCE

Fund balance at the beginning of the year

2014TZS’000

198,433,075

2013TZS’000

154,410,993

Increase in net assets for the yearOther comprehensive income

66,616,985388,056

44,010,572 11,510

Fund balance at the end of the year 265,438,116 198,433,075

28. RELATED PARTIES TRANSACTION

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

(a) Due from related parties2014 2013

TZS’000 TZS’000

Loans and advances to senior management - 292,520

Loans to senior management carry3 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:

2014 2013

TZS’000 TZS’000

Salaries for key management staff 470,434 470,434

Trustees members fee 16,500 16,500

486,934 486,934

(c) Receipts from related parties

Repayment of staff loan 164,628 65,108

164,628 65,108

(d) Outstanding balance due to related parties

Staff loans 410,402 575,030

410,402 575,030

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

29. CONTINGENT LIABILITY The Fund had no contingent liabilities as at 30June 2014.

30. EVENTS AFTER REPORTING DATE

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

31. CURRENCYThe Financial statements are presented in Tanzania Shillings (TZS ), 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.


32. APPROVAL OF FINANCIAL STATEMENTS

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

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