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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER
NATURE OF BUSINESS
Nedbank Group Limited (‘Nedbank Group’ or ‘the company’) is a widely held company and a registered bank-controlling company that, through its subsidiaries, provides a wide range of banking and financial services. Nedbank Group maintains a primary listing under ‘Banks’ on JSE Limited (‘the JSE’), with a secondary listing on the Namibian Stock Exchange.
INTEGRATED REPORT
Full details of the financial results are set out on pages here of these annual financial statements. The board of directors acknowledges its responsibility to ensure the integrity of the integrated report. The board has accordingly applied its mind to the integrated report and in the opinion of the board the integrated report addresses all material issues, and presents fairly the integrated performance of the organisation and its impacts. The integrated report has been prepared in line with best practice pursuant to the recommendations of the King III Code (principle 9.1).
YEAR UNDER REVIEW
The year under review is fully covered in the Chairman’s Report, Chief Executive’s Report, operational reviews, Chief Operating Officer’s Report and the Financial Report, which are set out here.
SHARE CAPITAL
Details of the authorised and issued share capital, together with details of shares issued and options granted during the year, appear in note 38 to the annual financial statements.
OWNERSHIP
The holding company of Nedbank Group is Old Mutual Life Assurance Company (SA) Limited and associates, which holds 51,37% of the issued ordinary shares of the company. The ultimate holding company is Old Mutual plc, incorporated in England and Wales. Further details of shareholders appear on pages 90 and 91.
DIVIDENDS
Details of the dividends appear in note 20 to the annual financial statements.
DIRECTORS
Biographical details of the current directors appear here. Details of directors’ remuneration and shareholdings appear on here.
During the period under review, and also subsequent to year-end, the following changes occurred to the Nedbank Group Board:
- RM Head resigned as a non-executive director (19 February 2010).
- PJ Moleketi resigned as an independent non-executive director
(1 March 2010).
- JK Netshitenzhe was appointed as an independent non-executive
director (5 August 2010).
- TA Boardman retired as Chief Executive Officer, remaining on the
board as a non-executive director (1 March 2010).
- MWT Brown was appointed as Chief Executive (1 March 2010).
The directors, who, in terms of the articles of association, are required to seek reelection at the annual general meeting are Messrs MWT Brown, MA Enus-Brey, A de VC Knott-Craig and Prof B de L Figaji. Being eligible, they make themselves available for reelection. JK Netshitenzhe was appointed by the board of directors during 2010 and TA Boardman retired as Chief Executive and, as approved by the board of directors, remained a non-executive director. In terms of the articles of association their appointments terminate at the close of the annual general meeting. They are available for election and separate resolutions to seek their election as directors will be submitted for approval at the annual general meeting to be held on 6 May 2011.
In terms of Nedbank Group policy non-executive directors and
independent non-executive directors of Nedbank Group who have served
on the board for a period longer than nine years are now required to
retire from the board. At 31 December 2010 none of the directors on
the Nedbank Group Board have been in office for a period longer than
nine years.
Details of the members of the board who served during the year are given below:
| Name | Position as director | Date appointed as director | Date resigned/retired as director (where applicable) |
| CJW Ball | Senior independent director | 1 November 2002 | |
| TA Boardman | Non-executive director | 1 November 2002 | |
| MWT Brown | Chief Executive | 17 June 2004 | |
| TCP Chikane | Independent non-executive director | 1 November 2006 | |
| A de VC Knott-Craig | Independent non-executive director | 1 January 2009 | |
| GW Dempster | Chief Operating Officer and executive director | 5 August 2009 | |
| MA Enus-Brey | Non-executive director | 16 August 2005 | |
| B de L Figaji | Independent non-executive director | 25 November 2002 | |
| RM Head (British) | Non-executive director | 1 January 2005 | 19 February 2010 |
| DI Hope (New Zealand) | Non-executive director | 1 December 2009 | |
| RJ Khoza | Chairman and non-executive director | 16 August 2005 | |
| WE Lucas-Bull | Independent non-executive director | 1 August 2009 | |
| NP Mnxasana | Independent non-executive director | 1 October 2008 | |
| PJ Moleketi | Independent non-executive director | 1 August 2009 | 1 March 2010 |
| RK Morathi | Chief Financial Officer and executive director | 1 September 2009 | |
| JK Netshitenzhe | Independent non-executive director | 5 August 2010 | |
| JVF Roberts (British) | Non-executive director | 1 December 2009 | |
| GT Serobe | Non-executive director | 16 August 2005 | |
| MI Wyman (British) | Independent non-executive director | 1 August 2009 |
DIRECTORS’ INTERESTS
The directors’ interests in ordinary shares in Nedbank Group and non-redeemable, non-cumulative preference shares in Nedbank Limited at 31 December 2010 are set out in the Remuneration Report here.
AUDIT COMMITTEE
The Audit Committee Report appears here
COMPANY SECRETARY AND REGISTERED OFFICE
The Company Secretary is Mr GS Nienaber and his addresses and the registered address are as follows:
| Business address | Registered address | Postal address |
| Nedbank Group Limited | 135 Rivonia Road | Nedbank Group Limited |
| Nedbank Sandton | Sandown, Sandton | PO Box 1144 |
| 135 Rivonia Road | 2196 | Johannesburg, 2000 |
| Sandown, Sandton, 2196 | South Africa | |
| South Africa |
PROPERTY AND EQUIPMENT
There was no material change in the nature of the fixed assets of Nedbank Group or its subsidiaries or in the policy regarding their use during the year.
CONTRACTS AND MATTERS IN WHICH DIRECTORS AND OFFICERS OF THE COMPANY HAVE AN INTEREST
No contracts in which directors and officers of the company had an
interest and that significantly affected the affairs or business of the
company or any of its subsidiaries were entered into during the year.
In 2005 the Wiphold Consortium and the Brimstone Consortium
were chosen as active black business partners to assist in growing and
repositioning the Nedbank Group business and driving its internal
transformation. Aka Capital (Pty) Limited (Aka Capital) fulfils the role of
business development partner. Consequently, performance agreements
were entered into between Nedbank Group and the aforementioned
parties, which govern, inter alia, the setting of the performance criteria,
their evaluation and the resultant performance fees in respect of the
black business partners. Dr RJ Khoza is a director and 27% shareholder
of Aka Capital. Mrs GT Serobe is founder, executive director and
10% shareholder of Women Investment Portfolio Holdings Limited
(WIPHOLD) and Chief Executive of Wipcapital (Pty) Limited, a wholly
owned subsidiary of WIPHOLD. Mr MA Enus-Brey is Chief Executive and
an 8,95% shareholder of Brimstone Investment Corporation Limited and
a director of various Brimstone subsidiary companies.
The AKA-Nedbank Eyethu Trust matured on 1 January 2011.
DIRECTORS’ SERVICE CONTRACTS
There are no service contracts with the directors of the company, other than for the Chairman and executive directors as set out below. The directors who entered into these service contracts remain subject to retirement by rotation in terms of Nedbank Group’s articles of association.
The key responsibilities relating to Dr RJ Khoza’s position as Chairman of Nedbank Group are encapsulated in a contract.
Service contracts have been entered into for Messrs MWT Brown and
GW Dempster and
Ms RK Morathi. These service contracts are effective
until the executive directors reach the normal retirement age and
stipulate a maximum notice period of six months (12 months for
Mr Brown) under most circumstances.
INSURANCE
The group has placed cover in the London traditional insurance market of up to R1,85 billion for losses in excess of R50 million. Group captive insurers provide cover for losses that may occur below the R50 million level, retaining R100 million. Selected insurance covers are placed with the Old Mutual Group.
SUBSIDIARY COMPANIES
Details of principal subsidiary companies are reflected here of the annual financial statements.
SPECIAL RESOLUTIONS BY SUBSIDIARIES
On 17 February 2010 a special resolution was registered for Nedbank (Malawi) Limited for the issue of shares to comply with capital requirements.
On 16 April 2010 special resolutions were registered for IBL Asset Finance and Services Limited (previously Imperial Bank Limited) for the creation of two classes of redeemable cumulative preference shares.
On 10 May 2010 a special resolution was registered for Magaliesig Extension 33 (Pty) Limited ratifying the sale of properties constituting a disposal of substantially all the assets of the company.
On 14 June 2010 a special resolution was registered for IBL Asset Finance and Services Limited for the disposal of its business as a going concern in terms of section 228 of the Companies Act to Nedbank Limited.
On 8 June 2010 special resolutions were registered for Sunderland Ridge Uitbreiding Een (Pty) Limited to change its name to Sunderland Ridge Extension One (Pty) Limited.
On 2 July 2010 a special resolution was registered for Northants Property Enterprises (Pty) Limited to dispose of properties constituting the greater assets of the company.
On 26 July 2010 a special resolution was registered for Nedbank Namibia
Limited adopting updated articles of association aligned with those of
Nedbank Group and incorporating certain corporate governance practices.
On 2 August 2010 a special resolution was registered for BoE
Developments (Pty) Limited to sell properties and buildings constituting
the greater assets of the company.
On 3 December 2010 a special resolution was registered for Nedgroup Beta Solutions (Pty) Limited amending its articles of association in order to align these with the JSE Listings Requirements.
On 13 December 2010 special resolutions were registered for Finansfin (Pty) Limited to record the authorised and issued redeemable preference shares and the special rights and privileges attached to the redeemable preference shares, and to provide for the redemption of redeemable shares and the distribution and payment to members.
ACQUISITION OF SHARES
No shares in Nedbank Group were acquired by Nedbank Group or by a Nedbank Group subsidiary during the financial year under review, other than those subject to the repurchase of shares from the Nedbank Eyethu Retail Scheme, the terms and conditions of which scheme are detailed in the circular to ordinary shareholders dated 15 June 2005.
On 6 January 2011 Nedbank Group exercised call options that were
granted to it by the AKA-Nedbank Eyethu Trust, the Nedbank Eyethu
Corporate Scheme Trust and the Nedbank Eyethu Non-executive
Directors’ Trust to repurchase Nedbank Group ordinary shares. The total
cost of the repurchase of the shares was R10,5 million [inclusive of
Securities transfer tax (STT) costs and costs of the call option].
Members will be requested to renew the general authority enabling the
company or a subsidiary of the company to repurchase shares.
EVENTS AFTER THE REPORTING PERIOD
In January 2011, in terms of the relevant trust deeds, the Nedbank Non-executive Directors’ Scheme, Nedbank Eyethu Corporate Scheme and AKA-Nedbank Eyethu Scheme (AKA Trust) commenced the process of distribution of shares to the beneficiaries in terms of various black economic empowerment schemes.
On 6 January 2011 the company acquired Nedbank Group ordinary shares from the Nedbank Non-executive Directors’ Trust (621 898 shares), the Nedbank Corporate Scheme Trust (8 006 209 shares) and the AKA Trust (1 321 260 shares). The total cost of the repurchase of the shares was R10,5 million (inclusive of STT costs and costs of the call option). A total of 5,1 million shares will be distributed to the beneficiaries.
In the Corporate Scheme Trust and the Non-executive Directors’
Trust there were unallocated shares. In terms of the trust deeds these
shares should be allocated to various community trusts. The process
of allocation of the 867 509 Nedbank Group shares to the respective
community trusts has not been finalised. As no further services are to be
rendered by the community trust, a charge will be recognised in the 2011
financial year for the distribution of the shares. The anticipated cost to be
recognised in profit and loss as a result is R114 million.
Apart from the costs mentioned above, the effect of the winding-up of
the respective trusts and the distribution of shares to the beneficiaries
would have decreased diluted earnings and diluted headline earnings per
share by 3,7% (based on headline earnings per share of R4,7 million) and
net asset value per share by 1,3% per share.
OTHER EVENTS
The directors are not aware of any other material post-balance-sheet events that have occurred between the balance sheet date and 25 February 2011.
