To create and protect shareholder value over the long-term implies that the needs of all our stakeholders are understood and addressed.

It is by virtue of this inclusive approach that we are able to manage our risks and reputation more effectively, that we are better at attracting, motivating and retaining talent, that we can position ourselves more competitively with relevant product and service offerings, and that we retain our “licence” to operate.

Our vision and values, which were revised and relaunched in 2005, form the cultural blueprint we believe is necessary to sustain value growth. They instil a sense of common purpose, an acknowledgement of responsibility for our direct and indirect impact, and a commitment to stay accountable to all stakeholders. Looking ahead we aim to continue to embed our values into our operations at every level.

The executive summary sets out the highlights and challenges in 2005, while also providing key focus areas for 2006. It is, however, worth noting some major issues.

Managing the implementation of the charter is a challenge for the financial sector. We continued to make steady progress towards our charter targets. In 2005 we achieved an audited score of 80,73%. This score would constitute an A rating should the Charter Council accept the externally audited scorecard.

The implementation of our Black Economic Empowerment Ownership (Tutuwa) initiative, continued with a further allocation of shares to black managers and a newly appointed black non-executive director. The next phase of the scheme – the allocation of shares to black small and medium businesses – is now underway.

It is worth commenting on the ownership structure of Liberty Holdings which has given rise to some criticism about its implications for corporate governance. The issue has been properly addressed with the Liberty Holdings and Liberty Life boards conducting their own assessments. As the parent entity, Standard Bank paid a premium for control of Liberty Life, which it wishes to maintain. All the relevant boards have agreed that it is in the best interests of all the shareholders concerned to maintain the current structure.

For the life insurance industry, 2005 could well be regarded as a significant turning point. The unfavourable rulings against life insurance companies, including Liberty Life, by the Pension Fund Adjudicator (PFA) and the associated negative sentiment led to an industrywide rethink of business models. We welcome the multi-lateral solution found with the costs to compensate policyholders agreed.

In December 2005, Standard Bank, with a consortium of local investors, entered into an agreement to buy BankBoston Argentina from Bank of America. This transaction remains subject to fulfilling the provisions of the agreement and obtaining the necessary regulatory approvals in South Africa and Argentina. The acquisition is only expected to be concluded in the third quarter of 2006 and is not anticipated to materially affect the coming year’s results. Although we are well aware of the potential challenges, this acquisition provides us with a relatively low cost opportunity to demonstrate our ability to grow in emerging markets beyond Africa.

As we move ahead, building on the milestones reached and challenges tackled in 2005, we remain committed to continual improvement. To this end, we reiterate the call for feedback from all our stakeholders to improve future sustainability reporting and stakeholder engagement initiatives.

Derek Cooper
Chairman

Jacko Maree
Group chief executive