Principal activities

Standard Bank Group Limited is the holding company for the interests of the Standard Bank Group.

Group results

A general review of the business and operations of major subsidiaries is given in the 2005 chairman and chief executive’s review and operational reviews respectively.

A financial review on the results of the Standard Bank Group for the year is given in this annual report.

Property and equipment

There was no change in the nature of the fixed assets of the group or in the policy regarding their use during the year.

Share capital

Ordinary shares

During the year, 10 439 067 ordinary shares (2004: 13 378 700 ordinary shares) were issued in terms of the equity compensation plans. Surplus capital was utilised to repurchase 10 164 515 ordinary shares to counteract the impact of the shares issued under the equity compensation plans.

Directors’ interest in shares

At the date of this report, the directors held, directly and indirectly, interests in the company’s ordinary issued share capital as reflected in the tables that follow:

Ordinary shares

Direct beneficial1

Indirect beneficial1

Indirect non-beneficial1

Director

2005

2004

2005

2004

2005

2004

DDB Band

11 017

11 017

–

–

–

–

E Bradley

–

–

274 494

262 258

351 962

391 467

DE Cooper

–

–

–

–

13 243

13 243

T Evans

–

–

6 773

4 273

–

–

TS Gcabashe2

–

–

125 000

125 000

–

–

DA Hawton

11 977

11 977

–

–

–

–

SE Jonah KBE

–

N/A

–

N/A

–

N/A

Sir Paul Judge

–

–

–

–

–

–

SJ Macozoma3

–

–

4 826 582

4 826 582

–

–

JH Maree

299 001

174 001

–

–

–

–

RP Menell

–

–

–

–

–

–

Adv KD Moroka2

554

554

125 000

125 000

–

–

AC Nissen2

–

–

125 000

125 000

–

–

MC Ramaphosa4

2 495

2 495

5 775 810

5 775 810

–

–

Dr MA Ramphele2

–

N/A

125 000

N/A

–

N/A

MJD Ruck

420 647

340 647

–

–

–

–

MJ Shaw

–

–

–

–

–

–

Sir Robert Smith

–

–

–

–

–

–

Dr CB Strauss

1 567

1 567

112 150

112 150

–

–

Total

747 258

542 258

11 495 809

11 356 073

365 205

404 710

1	Defined as per requirements of the JSE Limited.
2	Includes an allocation of 125 000 shares in terms of the Tutuwa Management Trust – special conditions apply for qualifying black non-executive directors.
3	SJ Macozoma has a 20% interest in Safika Holdings (Proprietary) Limited (Safika) which acquired 24 132 911 shares in terms of the Tutuwa initiative.
4	MC Ramaphosa has a 35,9% interest in Shanduka Group (Proprietary) Limited (Shanduka) which acquired 16 088 608 shares in terms of the Tutuwa initiative.
N/A Not yet appointed.

6,5% first cumulative preference shares

									Indirect non-beneficial1
Director									2005		2004
E Bradley									47 000		47 000
Non-redeemable, non-cumulative, non-participating preference shares2
	Direct beneficial1				Indirect beneficial1				Indirect non-beneficial1
Director	2005		2004		2005		2004		2005		2004
DDB Band	–		–		9 406		9 406		–		–
E Bradley	–		–		1 559		1 559		30 000		30 000
DE Cooper	–		–		–		–		1 140		1 140
T Evans	–		7 817		–		–		–		–
TS Gcabashe	863		–		–		–		–		–
SJ Macozoma	1 140		1 140		–		–		–		–
JH Maree	1 559		1 559		–		–		1 279		1 279
Adv KD Moroka	1 000		1 000		–		–		–		–
MJD Ruck	1 559		1 559		–		–		–		–
Total	6 121		13 075		10 965		10 965		32 419		32 419

1	Defined as per requirements of the JSE Limited.
2	Second preference shares.

No directors, other than disclosed above, have preference share holdings.

No director owns, directly or indirectly more than 1% of the total issued share capital of the company. The company has not been informed of any changes in these holdings at the date of this report.

Equity compensation plans

Information on options granted to executive directors under the equity compensation plans is given in the remuneration review. Details of options granted to all employees under the equity compensation plans are given in Annexure E.

Directors’ emoluments

Directors’ emoluments are disclosed in note 24. Information relating to the determination of directors’ emoluments, share option allocations and related matters are contained in the remuneration review.

Shareholder analysis

The analysis of ordinary shareholders is given under Shareholders' analysis.

Shareholders at the close of the financial year, holding beneficial interests in excess of 5% of the issued share capital, determined from the share register and investigations conducted on our behalf, were as follows:

		% held
Public Investment Corporation		12,95
Old Mutual Group		11,15

Distribution to ordinary shareholders

Interim

On 17 August 2005, an interim dividend of 122,0 cents per share (2004: 50,5 cents) was declared to shareholders recorded at the close of business on 16 September 2005 and paid on 19 September 2005.

Final

On 8 March 2006, a final dividend of 145,0 cents per share (2004: 181,0 cents) was declared to shareholders recorded at the close of business on 13 April 2006 and to be paid on 18 April 2006.

Distribution to preference shareholders

6,5% first cumulative preference shares

On 17 August 2005, a dividend of 3,25 cents per share (2004: 3,25 cents) was declared to shareholders recorded at the close of business on 9 September 2005 and paid on 12 September 2005.

On 8 March 2006, a dividend of 3,25 cents per share (2004: 3,25 cents) was declared to shareholders recorded at the close of business on 7 April 2006 and to be paid on 10 April 2006.

Non-redeemable, non-cumulative, non-participating preference shares

On 17 August 2005, a dividend of 374,74 cents per share was declared to shareholders recorded at the close of business on 9 September 2005 and paid on 12 September 2005.

On 8 March 2006, a dividend of 370,52 cents per share (2004: 379,34 cents) was declared to shareholders recorded at the close of business on 7 April 2006 and to be paid on 10 April 2006.

Directorate

The directorate is listed in this annual report.
The following changes in directorate have taken place since the last annual report:
Standard Bank Group Limited
Appointments
Dr MA Ramphele		as director		17 March 2005
SE Jonah KBE		as director		1 February 2006
Retirements
RA Plumbridge		as director		25 May 2005
Dr CL Stals		as director		25 May 2005
Resignation
T Evans		as director		8 March 2006
The Standard Bank of South Africa Limited
Appointments
Dr MA Ramphele		as director		17 March 2005
SP Ridley		as director		5 August 2005
SE Jonah KBE		as director		1 February 2006
Retirements
RA Plumbridge		as director		25 May 2005
Dr CL Stals		as director		25 May 2005
Resignations
MJD Ruck		as director		5 August 2005
T Evans		as director		8 March 2006
Standard Bank Plc
Appointments
ME Austen		as director		4 November 2005
BJ Kruger1		as deputy chairman		10 November 2005
HE Staunton		as director		1 December 2005
1 Previously alternate to MJD Ruck.
Resignations
RM Mansell-Jones		as director		5 May 2005
WS Dorson		as director		1 June 2005
D Feld		as director		1 June 2005
IG Gibson		as director		1 June 2005
NJ Holden		as director		1 June 2005
JMK Pearson		as director		1 June 2005
MJ Wilde		as director		1 June 2005
Liberty Holdings Limited
Resignations
MJD Ruck		as chief executive and director		12 December 2005
AWB Band		as director		12 December 2005
Prof L Patel		as director		12 December 2005
Dr SP Sibisi		as director		12 December 2005
Liberty Group Limited
Resignation
MJD Ruck		as chief executive and director		with effect from 31 May 2006

Group secretary and registered office

The group secretary is Loren Wulfsohn. The address of the group secretary is that of the registered office, 9th floor, Standard Bank Centre, 5 Simmonds Street, Johannesburg, 2001.

Restructurings and acquisitions during the year

Capital Alliance Holdings Limited (CAHL)

On 1 December 2004, Liberty Group Limited (Liberty Life) announced its proposed acquisition of CAHL, a South African life insurance group listed on the JSE Limited. In terms of the proposal, Liberty Life made an offer to acquire, for an amount of R3 billion, 98% of the issued share capital of CAHL. This deal was completed in April 2005. On 30 January 2006, Liberty Life announced the sale of Prefsure Holdings Limited (Prefsure), CAHL’s Australian life insurance business to Tower Limited for AUS$145 million. The decision to dispose of Prefsure is in line with Liberty Life’s stated intention of focusing on the domestic life assurance market for the foreseeable future. The agreement is subject to certain conditions precedent including, inter alia, regulatory approval from the South African Reserve Bank. Should the conditions precedent be met, it is expected that the net amount to be received by Liberty Life will be approximately AUS$84 million.

Liberty Ermitage Jersey Limited

Liberty Life is currently under negotiations regarding the possible sale of Liberty Ermitage, Liberty Life’s offshore hedge fund asset manager. Further details can be found in Liberty Life’s 2005 annual report.

Integrated Processing Solutions

Given the declining volume of cheques in the market, Standard Bank entered into a joint venture with ABSA during January 2005, in a bid to capitalise on the benefits of economies of scale. Under the terms of the agreement, a new company, Integrated Processing Solutions (Proprietary) Limited (IPS), was formed with the purpose of combining the cheque clearing facilities of both banks. In addition to purchasing 50% of the share capital of IPS, Standard Bank transferred certain assets and resources to the joint venture.

Andisa Capital

On 14 April 2005, Standard Bank announced its intention to acquire a majority interest in Andisa Capital (Proprietary) Limited (Andisa Capital), from a consortium led by Andisa Capital’s former chief executive, Ronnie Ntuli. In terms of the transaction, Standard Bank and Safika increased their respective shareholdings in Andisa Capital while Ntuli (through the Nduna Trust) and Simeka Investment Holdings (Proprietary) Limited (Simeka) reduced their shareholdings in Andisa Capital. At the same time, control of the existing private equity business of Andisa Capital was transferred to the Nduna Trust and Simeka with Standard Bank and Safika retaining a minority stake. Standard Bank’s interest in Andisa Capital increased from 49% to 77%. This transaction was approved by the Competition Tribunal in October 2005.

Safika

On 20 June 2005, Standard Bank acquired a 20% shareholding in Safika, a prominent empowerment company. The acquisition of this holding was strategic in nature. This transaction was approved by the Competition Tribunal on 16 May 2005. On 25 October 2005 Standard Bank sold a 5% shareholding in Safika to Liberty Life.

Argentina ING

On 22 July 2005 an agreement was signed with ING Bank N.V. to acquire the operating infrastructure of its branch in Argentina. To this end, Standard Bank Argentina S.A., with capital of approximately USD25 million, is in the process of being established as a licensed bank, and is expected to become operational in March 2006.

BankBoston

On 15 December 2005, an agreement was signed with Bank of America N.A. to acquire the activities of BankBoston N.A.’s Argentine Branch. This transaction is consistent with the group’s strategy of increasing its emerging market operations, and is subject to fulfilment of provisions of the agreement and obtaining the necessary regulatory approvals. Subject to these, the acquisition is expected to be completed in the second half of 2006.

MTN Mobile Money Holdings

On 10 August 2005, Standard Bank announced its intention to create a joint venture with MTN Group, and MTN Mobile Money Holdings (Proprietary) Limited (MMMH) was formed. The joint venture will leverage the convergence of cellular technology and banking products and services to create accessible low-cost banking, especially to the historically disadvantaged. A cash injection was made by both Standard Bank and MTN Group to the joint venture.

Barclaycard joint venture

Following completion of the acquisition of a majority stake in ABSA Group Limited by Barclays Bank Plc (Barclays), it became necessary to terminate the credit card collaborative venture between Standard Bank and Barclays (acting through its division Barclaycard International), which commenced in August 2003. The early termination was concluded on 18 August 2005, and it was agreed that, amongst other provisions, Standard Bank will increase its participation in the net assets of the collaborative venture (approximately 375 000 credit cards and R1,55 billion outstanding balances) from 50% to 100%, and the existing Barclaycard customers will be re-issued with a Standard Bank branded card.

Edcon

On 23 August 2005, Standard Bank entered into an agreement with Edcon Group Limited (Edcon) to offer eligible Edcon customers an Edgars or Jet branded MasterCard Credit Card. The Edcon Co-Brand Card Programme is run in the Bluebean division of Standard Bank. The bank also manages the programme, with Edcon contributing qualifying customer details on an agreed basis. Eligible customers are those current Edcon store card holders who have a proven history of managing their finances. The initial roll-out of these cards took place in August 2005.

RCSIH

On 29 August 2005, Standard Bank acquired an initial 25% of RCS Investment Holdings (RCSIH) for R358 million with an option to acquire a further 20%. RCSIH is the financial services division of the Foschini Group, a major fashion retailer.

Stanbic Bank Nigeria

The Central Bank of Nigeria implemented new minimum capital requirement regulations, effective 1 January 2006, of N25 billion (USD189 million). In order to comply with the new regulations and maintain a presence in this important market, Standard Bank injected approximately USD185 million capital into Stanbic Bank Nigeria during December 2005.

Management by third parties

None of the businesses of the company or its subsidiaries had, during the financial year, been managed by a third party or a company in which a director had an interest. Up to 31 December 2004, a company in which Doug Band, a director of Standard Bank Group, has a beneficial interest, provided consulting and certain management services to the capital investment division of Standard Bank. In terms of the agreement, he will receive a performance related share of the profit on the sale of equity-related interests in future years. Further details can be found in the directors’ emoluments disclosure.

Subsidiaries, associates and joint ventures

The interests in subsidiaries, and in associates and joint ventures, where considered material in the light of the group’s financial position and results, are set out in Annexure C, and Annexure D respectively.

Special resolutions during the year

Group companies passed the following special resolutions during the year for the purposes indicated:

Amendments to memorandum and articles of association:

Increase in the authorised share capital:
–	Banco Standard de Investimentos S.A.;
–	ZAO Standard Bank;
–	Stanbic Africa Holdings Limited; and
–	Stanbic Bank Nigeria Limited.
Name changes:
–	Standard Bank London Limited to Standard Bank Plc;
–	Standard Resources Limited to Standard Debt Finance Plc;
–	SBIC International Limited to Standard Bank Group International Limited;
–	Main Street 240 (Proprietary) Limited to MTN Mobile Money Holdings (Proprietary) Limited;
–	Mogwele Trading 130 (Proprietary) Limited to Integrated Processing Solutions; and
–	To change the Chinese name of Standard Bank Asia Limited.

Authorise the acquisition of shares by the company or a subsidiary:

–	Standard Bank Group Limited;
–	Liberty Group Limited;
–	Liberty Holdings Limited; and
–	Capital Alliance Investment Holdings (Proprietary) Limited.

Other:

–	Standard Bank Plc: Re-registered as a public company;
–	Standard Bank Asia Limited: Amendment to the articles of association to authorise the company to purchase its own shares (including any redeemable shares);
–	Stanbic Africa Holdings Limited: Amendment to the articles of association to authorise the creation of non-cumulative, redeemable preference shares and the issue of shares to SML Limited;
–	Standard Debt Finance Plc: Amendments to the memorandum and articles of association to allow for the company to re-register as a public company;
–	Stanbic Finance Zimbabwe Limited: To wind up the company in terms of section 242(b) of the Act; and
–	Stanbic Bank Nigeria Limited: Approval of a rights issue.

Contracts

Saki Macozoma, a director of the group, has a shareholding of 20% in Safika, which is a member of three different consortia that were party to the Andisa, Stanlib and Tutuwa transactions. Safika holds effective interests of 23,4% of Andisa Capital, 12,85% of Stanlib, 2,23% of Liberty Group and 1,78% of Standard Bank Group. The group has an effective interest of 16,5% in Safika.

Cyril Ramaphosa, a director of the group, has a 35,9% shareholding in Shanduka, which is a member of the Tutuwa consortium. Shanduka holds an effective interest of 1,48% of Liberty Group and 1,19% of Standard Bank Group. The group holds an effective interest of 15,3% in Shanduka.

In January 2006, Standard Bank advanced a loan to Circle Capital Ventures (Proprietary) Limited (Circle Capital Ventures). A portion of the loan is convertible into 15% of the issued share capital of Circle Capital Ventures. Mamphela Ramphele, chairman of this group, has a 37,45% shareholding in this company.

Insurance

The group protects itself against banker’s comprehensive crime and professional indemnity by maintaining a comprehensive insurance programme.

Events subsequent to balance sheet date

There is no material fact or circumstance that has occurred between the balance sheet date and the date of this report.