DIRECTORS’ REPORT 2009
FOR THE YEAR ENDED 31 DECEMBER
Nature of business
Nedbank Group Limited (‘Nedbank Group’ or ‘the company’) is a controlling-widely held company and a registered bank company that, through its subsidiaries, provides a wide range of banking and financial services. Nedbank Group maintains a primary Banks’ ‘the on JSE Limited ( listing under ‘ JSE’), with a secondary listing on the Namibian Stock Exchange.
Financial results
Full details of the financial results are set out here.
Year under review
The year under review is fully covered in the Chairman’s Statement, Chief Executive’s Report, operational reviews and the Chief Financial Officer’s Report.
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 hold 52,21% 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 here.
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 here.
During the period under review, and also subsequent to year-end, the following changes occurred to the Nedbank Group Board:
- A de VC Knott-Craig was appointed as an independent nonexecutive director (1 January 2009).
- MM Katz and ML Ndlovu were reclassified as independent non-executive directors (20 February 2009).
- R Harris resigned as a non-executive director (31 March 2009)
- MM Katz and ML Ndlovu stepped down from their positions as vice-chairmen (as the role of vice-chairman was no longer considered to be necessary following the creation of the position of senior independent non-executive director) and continued to serve on the boards as independent nonexecutive directors (14 May 2009).
- WE Lucas-Bull, PJ Moleketi and MI Wyman were appointed as independent non-executive directors (1 August 2009).
- GW Dempster was appointed as an executive director and the Chief operating officer (5 August 2009).
- RK Morathi was appointed as an executive director and the Chief Financial officer (1 September 2009).
- MWT Brown was appointed as Chief Executive Designate and remained an executive director (1 September 2009). He will be appointed as Chief Executive Officer on 1 March 2010.
- ML Ndlovu resigned as an independent non-executive director (16 October 2009).
- MM Katz, JB Magwaza and ME Mkwanazi retired as independent non-executive directors (19 November 2009).
- DI Hope and JVF Roberts were appointed as non-executive directors (1 December 2009).
- RM Head resigned as a non-executive director (19 February 2010).
- TA Boardman will step down as Chief Executive (1 March 2010) but will remain on the board as a non-executive director.
The directors who, in terms of the articles of association, are required to seek reelection at the annual general meeting are CJW Ball and TCP Chikane. being eligible, they make themselves available for reelection.
GW Dempster, DI Hope, WE Lucas-Bull, PJ Moleketi, RK Morathi, JVF Roberts and MI Wyman were appointed by the board of directors during 2009, and 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 4 May 2010.
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 2009 none of the non-executive 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 | Chief Executive and executive director, becoming non-executive director on 1 March 2010 | 1 November 2002 | |
| MWT Brown | Chief Executive Designate, becoming Chief Executive Officer on 1 March 2010 | 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 | |
| R Harris (British) | Non-executive director | 10 December 2007 | 31 March 2009 |
| RM Head (British) | Non-executive director | 1 January 2005 | 19 February 2010 |
| DI Hope (New Zealand) | Non-executive director | 1 December 2009 | |
| MM Katz | Independent non-executive director | 4 November 1997 | 19 November 2009 |
| RJ Khoza | Chairman and non-executive director | 16 August 2005 | |
| WE Lucas-Bull | Independent non-executive director | 1 August 2009 | |
| JB Magwaza | Independent non-executive director | 1 October 1996 | 19 November 2009 |
| ME Mkwanazi | Independent non-executive director | 20 April 1999 | 19 November 2009 |
| NP Mnxasana | Independent non-executive director | 1 October 2008 | |
| PJ Moleketi | Independent non-executive director | 1 August 2009 | |
| RK Morathi | Chief Financial Officer and executive director | 1 September 2009 | |
| ML Ndlovu | Independent non-executive director | 5 May 1993 | 16 October 2009 |
| JVF Roberts (British) | Non-executive director | 1 December 2009 | |
| GT Serobe | Non-executive director | 16 August 2005 | |
| MI Wyman | Independent non-executive director | 1 August 2009 |
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 office are as follows:
| Business address | Registered address | Postal address |
| Nedbank Group Limited | 135 Rivonia Road | Nedbank Group Limited |
| Nedbank Sandton | Sandown | PO Box 1144 |
| 135 Rivonia Road | 2196 | Johannesburg, 2000 |
| Sandown, 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
Nedbank Limited (Nedbank) entered into a contract with Group Five Building (Pty) Limited in 2008 for the construction of the second phase of the headoffice campus situated at 135 Rivonia Road in Sandton. the building will comprise 43 258m² of mainly office space and a portion of retail space. The contract is due for completion on 30 April 2010.
Contracts 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. Ms 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 of Brimstone Investment Corporation Limited and a director of various Brimstone subsidiary companies.
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, which also addresses, inter alia, his remuneration and term for occupying the position as Chairman.
Mr TA Boardman’s employment is governed by a service contract, which has a termination date of 28 February 2010. This service contract stipulates a maximum notice period of six months under most circumstances.
Similar 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. Certain layers of the group insurance programme are shared with Old Mutual Group. These arrangements are unchanged from those entered into in 2007.
Subsidiary companies
Details of principal subsidiary companies are reflected here in the annual financial statements.
Special resolutions by subsidiaries
On 2 March 2009 National Debt Administrators (Pty) Limited passed a special resolution changing its name to Nedgroup Security Services (Pty) Limited and changing its main object and business to that of providing security services.
On 4 May 2009 National Board (PE) Limited passed a special resolution to allow for the acquisition of its own issued ordinary shares.
On 13 May 2009 Upbeatprops 46 (Pty) Limited passed a special resolution changing its main business and object to security holding and investments in all its aspects and also changing its name to BPCC Security Company (Pty) Limited with effect from 4 June 2009.
On 29 May 2009 BoE Private Clients and Trust Company Limited passed a special resolution converting the company into a private company and adopting new Memorandum and Articles of Association.
On 6 July 2009 SNO Security Company (Pty) Limited passed a special resolution changing its name to Neotel Security Company (Pty) Limited with effect from 17 August 2009.
On 15 July 2009 Old Mutual Trust Limited passed a special resolution changing the quorum requirements for general meetings with effect from 20 July 2009.
On 3 August 2009 BoE Limited passed a special resolution changing its name to BoE Investment Holdings Limited with effect from 1 August 2009.
On 11 August 2009 First Venture (Pty) Limited passed a special resolution changing its quorum requirements for general meetings.
On 18 August 2009 Syfrets Trust and Executor (Eastern Cape) Limited passed a special resolution entirely replacing its articles of association (which were in terms of the 1926 Companies Act).
On 15 September 2009 BoE Trust (KZN) Limited passed a special resolution converting the company into a private company and adopting a new memorandum and articles of association.
On 22 September 2009 CoverSure Limited passed a special resolution changing its name to NedNamibia Life Assurance Company Limited with effect from 20 November 2009.
On 28 September 2009 special resolutions were passed by the shareholders of MBCA Bank Limited, MBCA Capital Management (Private) Limited, MBCA Finance (Private) Limited, MBCA Holdings Limited redenominating the companies’ authorised share capital from Zimbabwean dollars to US dollars, and increasing the authorised share capital as part of a rights issue exercise.
On 24 November 2009 Nedbank (Swaziland) Limited passed a special resolution increasing its authorised share capital to facilitate the establishment of an employee share ownership scheme. The share capital increase became effective on 9 December 2009.
In addition, a number of dormant subsidiary companies adopted the prescribed special resolutions to enter into voluntary liquidation as part of the Nedbank Group Rationalisation project, a project with the aim of streamlining the number of subsidiary companies and special-purpose vehicles during the course of the year under review.
A number of subsidiary companies, registered as dormant share block companies, amended their articles of association to incorporate use agreements as part of the articles of association in compliance with the Share Block Control Act.
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. 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: acquisition of remaining stake in Imperial Bank Limited
During 2009 the group announced its intention to acquire the remaining 49,9% shareholding in Imperial Bank Limited (Imperial bank) from non-controlling shareholders. The group held 50,1% of the shares in Imperial Bank before the transaction commenced. On 5 February 2010 (the effective date of the transaction) approval for this transaction was obtained from the SA Reserve Bank.
The entities being merged are Nedbank Limited and Imperial Bank Limited. Imperial Bank’s businesses will be combined, in principle, with the following clusters:
- the Motor Finance Corporation will be included in Nedbank Retail.
- Supplier Asset Finance will be included in Nedbank Business Banking.
- Property Finance will be included in Nedbank Corporate.
- Professional Finance will be included in both Nedbank Wealth Management and Nedbank Retail.
The purchase price is R1 853 million (R1 775 million plus a JIBAR factor applied up to 5 February 2010), which excludes total transaction costs of R5 million that will be recognised in the statement of comprehensive income. These transaction costs exclude costs associated with the integration of the above business units into the group.
The total purchase consideration will be settled in four instalments. The estimated total amount, which will include interest at the three-month JIBAR rate, amounts to R1 889 million and will be settled by 13 August 2010.
Other events
The directors are not aware of any other material post-balance-sheet events that have occurred between balance sheet date and 24 February 2010.
Directors’ interests
The directors’ interests in ordinary shares in Nedbank Group and non-redeemable, non-cumulative preference shares in Nedbank Limited at 31 December 2009 are set out in the Remuneration Report.