NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER

1	Operating expenses
					2009	2008
					Rm	Rm
	Audit fees – current year				6	5
	BEE transaction share-based payments expenses				2	5
	Directors’ fees				7	7
	Other				3	3
					18	20
2	Direct taxation
	2.1	Charge for the year			%	%
		SA normal taxation – current taxation				1
		Deferred taxation			(4)
		Secondary tax on companies			56	15
					52	16
	2.2	Taxation rate reconciliation			%	%
		Standard rate of SA normal taxation			28	28
		Non-taxable income			(28)	(28)
		Secondary tax on companies			1	1
		Effective taxation rate			1	1
3	Sundry debtors
	Sundry debtors and accrued interest				91	28
	These assets are repayable on demand or at short notice and are all owed within South Africa.
4	Share capital
					2009	2008
					Rm	Rm
	Ordinary share capital
	Authorised
	600 000 000 (2008: 600 000 000) ordinary shares of R1 each				600	600
	Issued ordinary share capital
	498 671 016 (2008: 468 939 397) fully paid ordinary shares of R1 each				499	469
5	Sundry creditors
	Creditors and other accounts				20	14
6	Impairment of intergroup loans and advances
	Specific impairment has been raised on intergroup loans and advances made by Nedbank  Limited to fellow subsidiary companies. Nedbank Group Limited has guaranteed these intergroup  advances, for which a provision against these guarantees has been recognised.
					2009	2008
					Rm	Rm
	Balance at the beginning of the year				185	183
	Statement of comprehensive income charge				(112)	2
	Balance at the end of the year				73	185
7	Cash generated by operations
	Reconciliation of profit before taxation to cash generated by operations
	Profit before taxation				2 742	2 981
	Adjusted for:
		– BEE transaction share-based payments expenses			2	5
		– Impairment of advances			(112)	2
		– Impairment of investments			106	44
		– Capital profit on sale of investment			(6)
	Cash generated by operations				2 732	3 032
8	Taxation paid
	Amounts prepaid at the beginning of the year				(8)	(5)
	Statement of comprehensive income charge – current taxation					1
	Statement of comprehensive income charge – secondary tax on companies				56	15
	Amounts prepaid at the end of the year				9	8
					57	19
9	Share-based payments
	Equity instruments are granted to business partners and non-executive directors as an incentive to retain business and develop growth within the group. The share-based payment expenses and reserve balances in respect of the Black Business Partner Scheme and the Non-executive Directors’ Scheme, implemented in 2005, were accounted for in the Nedbank Group Limited consolidated financial statements and in the Nedbank Group Limited standalone financial statements. Both of these schemes will be equity-settled. As the company cannot estimate reliably the fair value of services received nor the value of additional business received, the company rebuts the presumption that such services and business can be measured reliably. The company therefore measures their fair value by reference to the fair value of the equity instruments granted, in line with the group’s accounting policy. The fair value of such equity instruments is measured at the grant date utilising the Black-Scholes valuation model.
	9.1	Description of arrangements
		Click to enlarge
	9.2	Effect on profit and financial position
			Share-based payments expense		Share-based payments reserve
			2009	2008	2009	2008
			Rm	Rm	Rm	Rm
		Black Business Partner Scheme	2	5	215	215
		Non-executive Directors’ Scheme	2	5	22	20
					237	235
	9.3	Movements in number of instruments
			2009		2008
			Number of instruments	Weighted average exercise price Rm	Number of instruments	Weighted average exercise price Rm
		Black Business Partner Scheme
		Outstanding at the beginning of the year	7 891 300	171,82	7 891 300	171,82
		Outstanding at the end of the year	7 891 300	171,82	7 891 300	171,82
		Exercisable at the end of the year	–	–	–	–
		Non-executive Directors’ Scheme
		Outstanding at the beginning of the year	575 021	103,88	493 206
		Granted	46 722	105,99	81 815	78,81
		Outstanding at the end of the year	621 743	104,04	575 021	103,88
		Exercisable at the end of the year		–	–	–
	9.4	Instruments outstanding at the end of the year by exercise price
			2009		2008
			Number of instruments	Weighted average remaining contractual life (years)	Number of instruments	Weighted average remaining contractual life (years)
		Black Business Partner Scheme
		171,82	7 891 300	5,6	7 891 300	6,6
			7 891 300	5,6	7 891 300	6,6
		Non-executive Director Scheme
		78,81	81 815	1,6	81 815	2,6
		105,99	46 722	1,6
		108,04	493 206	1,6	493 206	2,6
			621 743	1,6	575 021	2,6
	9.5	Instruments granted during the year
		The weighted average fair value of instruments granted during the year has been calculated using the Black-Scholes option pricing model, using the following inputs and assumptions
		Non-executive Directors’ Scheme			2009	2008
		Number of instruments granted			46 722	81 815
		Weighted average fair value per instrument granted (R)			8,22	48,52
		Weighted average share price (R)			70,00	112,00
		Weighted average exercise price (R)			105,99	78,81
		Weighted average expected volatility (%)			52,0	27,0
		Weighted average life (years)			1,2	1,9
		Weighted average expected dividends (%)			0,0	0,0
		Weighted average risk-free interest rate (%)			7,7	10,9
		Number of participants			1	1
		Weighted average vesting period (years)				0,5
		Possibility of not vesting (%)			0,0	0,0
		Expectation of meeting performance criteria (%)			100	100
10	Related parties
	10.1	Relationship with parent, ultimate controlling party and investees
		The company’s parent company is Old Mutual (South Africa) Limited (OMSA), which through its subsidiaries holds 52,21% (2008: 54,30%) of Nedbank Group Limited’s ordinary shares. The ultimate controlling party is Old Mutual plc, incorporated in the United Kingdom. Material subsidiaries of the company are identified here and associates and joint ventures of the company are identified here.
	10.2	Key management personnel compensation
		Key management personnel are those persons who have authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly, including all directors of the company and its parent, as well as members of the executive committee who are not directors, as well as close members of the family of any of these individuals. Details of the compensation paid to the board of directors are disclosed in the Remuneration Report here and details of their shareholdings in the company are disclosed here. Compensation paid to the board of directors is aggregated below, together with the aggregate compensation paid to the executive directors, as well as the number of share options and instruments held.
				Directors	Key management personnel	Total
		Compensation (Rm)
		2009
		Directors’ fees		11		11
		Remuneration – paid by subsidiaries		31	71	102
		– Short-term employee benefits		27	56	83
		– Gain on exercise of options		4	15	19
				42	71	113
		2008
		Directors’ fees		12		12
		Remuneration – paid by subsidiaries		25	80	105
		Short-term employee benefits		16	68	84
		Gain on exercise of options		9	12	21
				37	80	117
		Number of share options and instruments
		2009
		Outstanding at the beginning of the year		1 256 009	1 489 812	2 745 821
		Granted		463 014	1 024 520	1 487 534
		Forfeited		(8 700)	(438 165)	(446 865)
		Exercised		(108 705)	(450 379)	(559 084)
		Transferred		(5)	555 502	555 497
		Outstanding at the end of the year		1 601 613	2 181 290	3 782 903
		2008
		Outstanding at the beginning of the year		1 412 503	1 380 971	2 793 474
		Granted		209 250	315 507	524 757
		Forfeited			(107 645)	(107 645)
		Exercised		(166 744)	(276 521)	(443 265)
		Expired		(199 000)		(199 000)
		Transferred			177 500	177 500
		Outstanding at the end of the year		1 256 009	1 489 812	2 745 821
	10.3	Related-party transactions
		The following significant transactions were entered into between Nedbank Group Limited and the following related parties. All of these transactions were entered into in the normal course of business.
					Due from/(Owing to)
		Outstanding balances (Rm)			2009	2008
		Subsidiaries
		Loan from BoE Management Limited – interest-free			(3 687)	(3 687)
		Loan from BoE Limited – interest free			(1 069)	(1 070)
		Loan from Cape of Good Hope Financial Services Limited – interest-free				(6)
		Loan from Nedbank Nominees (Pty) Limited			(5)	(5)
		Loan from The Board of Executors 1838			(45)	(45)
		Bank accounts with Nedbank Limited – interest-free			1 417	(305)
		Advance to NEST			22	16
		Advance to BoE (Pty) Limited			139
		Advance to Nedgroup Investments Holdings 101 Limited			60
		Tando AG – dividend			71	71
		Impairment provision in respect of amounts due to Nedbank Limited by its subsidiaries			(53)	(163)
		Impairment provision in respect of amounts due to Nedgroup Investments Limited by its subsidiaries			(2)	(2)
		Impairment provision in respect of amounts due by BoE Limited			(18)	(18)
		Key management personnel
		The Wiphold and Brimstone consortia are related parties since certain key management personnel of the company have significant influence over these entities. These consortia are participants in the Nedbank Eyethu BEE schemes and the share-based payments reserve recognised in respect of these consortia and key management personnel is detailed below:
		Wiphold consortium			(108)	(108)
		Brimstone consortium			(107)	(107)
		Non-executive directors			(22)	(20)
		Share-based payments reserve			(237)	(235)
					Income/(Expense)
		Transactions (Rm)			2009	2008
		Parent
		Dividend declared to OMSA via its subsidiaries			1 321	1 577
		Subsidiaries
		Nedbank Limited			2 070	2 294
		Nedgroup Investment Holdings 101 Limited			253	286
		Syfrets Securities Limited				32
		Nedgroup Investments (Pty) Limited			76
		BoE (Pty) Limited			60
		Fairbairn Private Bank Limited			14
		Nedgroup Life Assurance Company Limited			66
		Nedgroup Insurance Company Limited			30	60
		NedEurope Limited			113	163
		Tando AG				143
		Alliance Investments Limited				16
		BoE Limited			66	53
		Dividends declared by subsidiaries			2 748	3 047
		Key management personnel
		The share-based payments charge in respect of the entities that are participants in the Nedbank Eyethu BEE schemes and key management personnel is detailed below:
		– Non-executive directors			(2)	(5)
		Share-based payments expense			(2)	(5)