| Wed 9 Mar 2005, 9:39 | | Audited results and divdend announcement |
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Standard Bank Group Limited - Audited results and divdend announcement for the
year ended 31 December 2004
STANDARD BANK GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Reg No 1969/017128/06)
JSE Securities Exchange
Share code: SBK
ISIN: ZAE000057378;
Share code SBKP
ISIN: ZAE000038881; and
Share code SBPP
ISIN: ZAE000056339
Namibian Stock Exchange
Share code: STB
ISIN: ZAE000057378
Audited results and dividend announcement for the year ended 31 December 2004
Headline earnings up 22% (21% normalised*)
Headline earnings per share 23% higher (20% normalised*)
ROE increased to 26,4% (24,5% normalised*)
Dividend cover reduced to 2,5 times
Dividends per share up by 53%
* Results normalised to reflect legal substance of black ownership initiative.
Refer Black Ownership Initiative below.
Overview of financial results
Standard Bank Group once again met its primary financial objectives of strong
real earnings growth and an attractive return on shareholder equity. Headline
earnings increased by 22% to R7 648 million and a return on equity of 26,4% was
achieved. The accounting treatment of the group`s Black Ownership Initiative
implemented in 2004 impacts favourably on these financial measures. Excluding
this effect, headline EPS increased by 20% and return on equity was 24,5%.
These results were achieved in a positive economic environment in most markets
in which we operate. The global economy grew at its quickest pace in almost two
decades in 2004. Emerging markets flourished and Africa`s economies expanded at
twice the annual average rate of the last 20 years. In 2004, the South African
economy, which represents the group`s most important market, continued to
benefit from 10 years of sound economic and political policy: Inflation
(measured by CPIX) reduced to an average of 4,3% (2003: 6,8%), interest rates
reduced by a further 50 basis points and the rand continued to strengthen
against the currencies of our main trading partners. The consumer sector
benefited from lower interest rates and buoyant spending patterns persisted
throughout 2004. The rand`s appreciation has had a mixed effect across the
different sectors of the South African economy. Importers and the general public
are benefiting from reduced prices on imported goods whilst many exporters
continue to find it difficult to maintain earnings levels.
Within the domestic operations of the group, Retail Banking`s 28% increase in
headline earnings resulted from good all-round operational performance and
enhanced customer focus, coupled with the buoyant economic conditions. The lower
average prime rate resulted in lower net interest income generated from deposit
balances, but this impact was offset by strong advances growth. A 600 basis
point reduction in interest rates over the past two years has resulted in
strengthening demand for credit together with continued improvements in domestic
credit loss experience. Furthermore, a significant increase in retail
transaction volumes boosted growth in non-interest revenue.
Corporate and Investment Banking increased headline earnings by 24%. This
performance was achieved through exceptional growth in advisory and
transactional revenue, improved trading performances and a strong increase in
investment revenues as a maturing private equity portfolio continued to produce
results. Net interest income was negatively impacted by lower interest rates,
which reduced interest income earned on allocated capital and corporate
transactional balances. The lower interest rate cycle did however assist the
financial recovery of clients previously in default, resulting in high levels of
credit recoveries and further improvement in the credit loss ratio.
International`s headline earnings was 7% lower in US dollars following the
exceptional performance of the prior year, and was marginally below
expectations. Most principal product areas and all major regions performed well,
benefiting from strong customer flows and increased product delivery. The
adverse impact of the stronger rand contributed to consolidated rand earnings
from this entity being down by 21%.
The group`s presence in Africa is expanding. Earnings from Africa, excluding
South Africa, grew by 30% to R634 million. This result was supported by
increased activity levels off a larger customer base assisted by the
acquisitions of operations in Mozambique and Botswana.
Liberty Life increased headline earnings by 32%, with headline earnings
attributable to Standard Bank Group increasing by 30%. Highlights of Liberty
Life`s results were improved investment returns and strong growth in new
business.
The group`s key financial highlights were:
- return on equity increased from 22,9% to 26,4% (24,5% normalised);
- headline earnings grew by 22% to R7 648 million (21% normalised);
- headline earnings per share of 578,7 cents per share, 23% higher (20%
normalised);
- the cost-to-income ratio deteriorated from 56,2% to 57,5%;
- the credit loss ratio improved from 0,91% to 0,43%;
- dividend cover reduced from 3,1 to 2,5 times; and
- total dividends declared grew by 53% to 231,5 cents per share.
The group`s published medium-term objectives were:
- headline earnings growth of inflation (CPIX) plus 10%, equating to 14,3%;
- return on equity of 20%;
- a cost-to-income ratio of 56%; and
- a credit loss ratio below 1%.
The cost-to-income ratio objective was not achieved while the other three
objectives were well exceeded. Unchanged net interest income coupled with 12%
cost growth were the primary reasons for the increased cost-to-income ratio.
Cost growth was impacted by a variety of factors including business volumes,
continued enhancement of the group`s IT systems capability and staff
incentivisation.
*Black Ownership Initiative
The group concluded its black ownership initiative, termed Tutuwa, which was
approved by shareholders in September 2004. In terms of the accounting
treatment, the preference share capital provided to the empowerment participants
is not recognised as an asset and consequently no income is accrued. The Tier I
preference share capital raised to help fund the transaction is classified as
equity, with the associated preference dividends only accounted for in 2005,
when declared. The funding cost of these preference shares is therefore also not
accounted for in 2004.
Normalised headline earnings
The unaudited calculation reflecting `normalised` headline earnings, adjusts
headline earnings for preference dividends receivable and payable currently
excluded.
The elimination of the preference share capital provided to empowerment
participants against equity reduced the net asset value of the group by R4 246
million. Adding back this elimination, return on equity on a normalised basis is
24,5%. For purposes of calculating normalised headline earnings per share, the
number of shares held by the black participants is added back to the weighted
number of shares in issue.
Normalised headline earnings
% growth
Rm on 2003
Headline earnings disclosed 7 648 22%
Dividend receivable on 8,5% preference shares 87
Dividend payable on perpetual preference shares (114)
Headline earnings normalised 7 621 21%
Headline earnings per share as disclosed (cents) 578,7 23%
Normalised headline earnings per share with 566,3 20%
empowerment shares added back (cents)
Income statement analysis
Net interest income - unchanged
As mentioned in the group`s 2003 prospects statement, significant domestic
margin compression was expected to occur as a result of the 387 basis point
reduction in the average prime interest rate from that of the comparative
period. Lower interest was earned on shareholders` funds, and reduced interest
margins on transactional deposits such as current account credit balances.
Further margin compression was caused by increased reliance on wholesale funding
as retail deposits grew at a slower pace than retail assets. Strong asset growth
in all domestic retail lending categories helped offset this margin reduction.
The reduction in net interest income was also impacted by the scaling down of
International`s bond portfolio previously held as a banking asset and its
transfer in late 2003 to the trading book.
Provisions for credit losses - reduced 43%
The group`s credit loss experience and associated ratios have all improved
significantly over the past six years. The reduction in the overall charge for
credit losses for 2004 reflects the effect of a 26% decrease in the charge for
non-performing loans and a minimal charge for performing loans.
Given the decline in both historical and expected future default rates,
provisioning levels for domestic performing loans were generally lower despite
the strong growth in the retail lending book. Consistent with emerging market
practices and evolving market data, the parameters used in International to
estimate the potential losses inherent in its performing portfolio were re-
assessed and this resulted in a reduction in its provision requirements.
With respect to non-performing loans, the provisioning charge in Domestic
Banking reduced by R255 million or 27% as a result of lower levels of non-
performing loans following enhanced collection strategies, recoveries of retail
and corporate loans previously impaired and higher property security values. Non
performing loans to total advances in Domestic Banking reduced from 2,3% in 2003
to 1,5% in 2004. In International, provisions for non-performing loans were
increased to cover emerging market exposures in mining and energy. Africa`s
credit losses were reduced by recoveries of amounts written off in previous
years.
The gross coverage ratio for the group, calculated as provisions against non-
performing loans as a percentage of these loans before deducting security,
increased from 42% to 54%. The group`s total credit loss ratio improved from
0,91% to 0,43%, and non-performing loans reduced from 2,1% of loans and advances
to 1,5% at year end. These ratios are to some degree flattered by the strong
growth in the underlying loan books, but they nevertheless reflect the continued
efforts of management to improve credit risk processes across the group.
Non-interest revenue - up 18%
The growth in non-interest revenue was a combination of fee and commission
income up 24%, other sources of non-interest income up 36% and trading income
remaining constant.
Higher transaction volumes and asset based fees contributed to fee and
commission growth across all business units. Retail Banking in particular
benefited from increased transaction volumes from existing clients, an increase
in its customer base, higher fee income from insurance broking and financial
consulting and focused pricing strategies. Corporate and Investment Banking
increased fee income through higher business volumes in debt origination,
corporate finance and electronic banking while International benefited from
higher fees from asset management and structured finance activities. Fee income
in Africa gained from a general review of pricing strategies and an increased
customer base.
Trading income grew by 36% in Corporate and Investment Banking following an
improved performance in debt securities and a sustained performance from forex
off an already high base. This was however offset by the impact of the stronger
rand exchange rate on trading income of International and lower growth off an
exceptional performance in 2003. International`s 2004 trading income benefited
from growth in debt securities and forex trading, partly offset by a
disappointing performance in equity derivatives principal trading, which
activity has since been discontinued.
Growth in other income resulted mainly from gains on private equity investments,
increased property income and an improved underwriting result from the group`s
short-term insurance operation.
Operating expenses - up 12%
Operating expenses increased in Domestic Banking by 16%, and 4% elsewhere in the
group.
Staff costs and other operating expenses both increased by 12%. Headcount
increased by 2% to cope with increased business volumes, new products launched,
compliance with new regulations and the consolidation of operations in
Mozambique and Botswana. Staff costs per employee increased by 10%. The group is
gradually increasing the variable component of remuneration to more closely
align remuneration to the performance of the group. The performance-based
element of remuneration was adjusted to reflect the strong domestic results and
improved customer service ratings. The group has also increased provisions for
potential pension obligations by R150 million and staff costs were further
increased by R127 million to finance the general staff scheme within the group`s
Black Ownership Initiative.
IT costs increased due to increased development and a more conservative write-
off policy on desktop computers. In line with the increased business volumes,
most direct operating expense categories increased accordingly.
Taxation
The effective tax rate reduced to 28,2% (2003: 31,0%). The direct tax rate
reduced to 24,4% (2003: 26,6%) following an increase in non-taxable income from
wholesale activities and settlements with revenue authorities in the previous
year not repeated. In terms of new accounting requirements, Secondary Tax on
Companies (STC) credits resulting from dividends received exceeding dividends
paid, are accounted for as a deferred tax asset. The reduction in tax resulting
from this change was R47 million (2003: R32 million).
The higher ratio of non-interest revenue to total income increased the ratio of
taxable VAT supplies to total supplies, resulting in relatively lower
irrecoverable VAT and a reduction in indirect tax to 3,8% (2003: 4,4%) of income
before tax.
Balance sheet
Banking assets
Banking assets increased by R61 billion, 14% on the previous year, and loans and
advances increased by 17%. Loan growth accelerated in the domestic low interest
rate environment and was up 27%, particularly in the following key lending
product categories:
- mortgage loans, which were 40% higher, reflected growth in both volume and
value terms assisted by the improved sales processes and buoyant
residential property market;
- instalment finance, which was 20% up, mainly as a result of volume growth
in motor vehicle sale; and
- card debtor balances which were 40% higher as a result of increased
consumer spending, improved card issuing processes, and better than
expected volumes from the Barclaycard joint venture.
Strong focus continues to be placed on the quality of all new loans granted.
Although not a specific objective of the group, domestic market share was gained
in mortgage lending, 25,8% (2003: 22,9%) and credit card debtors, 32,8% (2003:
28,8%). Instalment finance declined marginally from 22,3% in 2003 to 22,1% in
2004.
Domestic corporate lending remained subdued with growth restricted to 12% in
line with the group`s strategy of not pursuing low-margin corporate lending
business. The rand value of foreign currency lending reduced and the stronger
rand slowed demand for credit by exporters.
Shareholders` funds
Ordinary shareholders` funds grew by 1% to R29 billion. Excluding the impairment
arising from the Black Ownership Initiative of R4 billion, the increase amounted
to 16%.
Liberty Life
Liberty Life grew its new business premiums by 15% to R13 440 million while
improving the new business margin to 24%. Net cash inflows from insurance
operations remained strong at R3 640 million. Management expenses increased by
5% to R1 928 million on a comparable basis. Embedded value per share increased
by 17% to R67,25 and the capital position of the group remained strong, with
capital covering the requirement 2,1 times.
Liberty Life has made an offer to purchase the entire issues share capital of
Capital Alliance Holdings Limited for R3 billion. A court hearing to sanction
the scheme of acquisition is set for 12 April 2005.
Capital
The group`s capital adequacy ratio increased to 15,4% from 14,9%, exceeding the
weighted average regulatory requirement of 10,5% for the group. Tier I capital
adequacy remained constant due to strong profit growth, offset by strong risk-
weighted asset growth and a net utilisation of capital for the Black Ownership
Initiative. The increase in total capital adequacy mainly arises from a net
increase in Tier II capital due to a bond maturing in 2005 being refinanced
prior to the year-end to take advantage of favourable market conditions.
Dividends
Sustained high returns on equity over recent years, disciplined focus on risk-
weighted assets and the introduction of secondary and tertiary forms of capital
have resulted in strong group capital adequacy levels. This is despite
substantial domestic asset growth and expansion in International and Africa.
Earnings retention has been gradually reduced over the past three years with
dividend cover declining from 3,3 to an originally planned cover ratio of 3,0
times for 2004. It has however become increasingly evident that a still lower
level of earnings retention is appropriate over the medium term. The recent
circular (19/2004) issued by the South African Reserve Bank which clarifies the
future regulatory approach to Tier I capital has also informed the group`s view
on earnings retention. The group`s dividend policy is accordingly adjusted to a
cover of 2,5 times for the 2004 year, calculated on headline earnings per share.
Depending on business growth, acquisition activity and the projected impact of
Basel II, this cover may potentially be reduced further, but this will be
reviewed annually. The advent of fair value accounting has significantly
increased the likelihood of volatility in reporting earnings. In the case of
extreme volatility the group may adjust the dividend cover to avoid significant
changes in absolute dividends declared.
The above policy will also apply to interim dividends.
As a result of the reduced dividend cover a final dividend of 181 cents has been
declared bringing the total dividend for the year to 231,5 cents, an increase of
53%.
Prospects
Continued focus on operational excellence and customer service, together with
the current positive domestic economic conditions, are expected to sustain
consumer business growth through 2005, albeit at a slower rate. Corporate
business activity is expected to increase given the potential for growth in
infrastructural and empowerment financing business.
The group will continue to increase the contribution from its operations in the
rest of Africa, through extracting efficiencies and the roll-out of retail and
commercial banking products proven in South Africa. Increased economic
development and organic business growth across the African continent should
provide ample opportunities for financial intermediation in the years ahead.
Whilst the markets in which International operates continue to enjoy good
growth, the level of competition in developing economies has increased and
margins remain under pressure. International has made significant strides in
enhancing its franchise and upgrading its IT, support and risk structures,
providing a good platform for growth off a well established network.
The group will be adopting International Financial Reporting Standards (IFRS) in
2005. Accounting standards continue to be subject to vigorous debate and
sometimes changing interpretation. In particular, uncertainties remain around
the interpretation of the basis of credit impairment quantification and
accounting for the equity settled component of empowerment initiatives, both of
which could impact the group`s 2005 results.
We believe economic conditions in the countries in which we operate are unlikely
to repeat the rapid improvement of 2004. Taking the above factors into account
we remain confident that the group`s quality of staff and diverse spread of
businesses should continue to produce returns to shareholders in line with our
published objectives. Standard Bank Group`s principal financial objectives for
2005 are a return on equity of 22,5%, revised upwards from 20%, and headline
earnings growth of inflation (CPIX) plus 10 percentage points.
Jacko Maree, Chief Executive
Derek Cooper, Chairman
Declaration of dividends
Notice is hereby given that the following final dividends have been declared:
ordinary dividend No. 71 of 181 cents per ordinary share (share codes: SBK and
STB, ISIN: ZAE000057378), payable on Monday, 18 April 2005, to ordinary
shareholders recorded in the books of the company at the close of business on
the record date, Friday 15 April 2005. The last day to trade to participate in
the dividend is Friday, 8 April 2005. Ordinary shares will commence trading ex-
dividend from Monday, 11 April 2005;
6,5% first cumulative preference shares (first preference shares) dividend No.
71 of 3,25 cents per first preference share (share code: SBKP, ISIN:
ZAE000038881), payable on Monday, 11 April 2005, to holders of first preference
shares recorded in the books of the company at the close of business on the
record date, Friday 8 April 2005. The last day to trade to participate in the
dividend is Friday, 1 April 2005. First preference shares will commence trading
ex-dividend from Monday, 4 April 2005; and
non-redeemable, non-cumulative, non-participating preference shares (second
preference shares) dividend No. 1 of 379,34 cents per second preference share
(share code: SBPP, ISIN: ZAE000056339), payable on Monday, 11 April 2005, to
holders of second preference shares recorded in the books of the company at the
close of business on the record date, Friday 8 April 2005. The last day to trade
to participate in the dividend is Friday, 1 April 2005. Second preference shares
will commence trading ex-dividend from Monday, 4 April 2005.
The relevant dates for the payment of the dividends are as follows:
Ordinary First Second
shares preference preference
shares shares
JSE Securities Exchange SA
Share code SBK SBKP SBPP
ISIN ZAE000057378 ZAE000038881 ZAE000056339
Namibian Stock Exchange(NSX)
Share code STB
ISIN ZAE000057378
Dividend payment dates
Last day to trade `CUM` Friday Friday Friday
dividend 8 April 2005 1 April 2005 1 April 2005
Shares trade `EX` dividend Monday Monday Monday
11 April 2005 4 April 2005 4 April 2005
Record date Friday Friday Friday
15 April 2005 8 April 2005 8 April 2005
Payment date Monday Monday Monday
18 April 2005 11 April 2005 11 April 2005
Ordinary share certificates may not be dematerialised or rematerialised between
Monday, 11 April 2005 and Friday, 15 April 2005, both days inclusive.
Preference share certificates (first and second) may not be dematerialised or
rematerialised between Monday, 4 April 2005 and Friday, 8 April 2005, both days
inclusive.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders` bank accounts on payment date. In
the absence of specific mandates, dividend cheques will be posted to
shareholders. Preference shareholders who have dematerialised their share
certificates will have their accounts at their CSDP or broker credited on 11
April 2005. Ordinary shareholders who have dematerialised their share
certificates will have their accounts at their CSDP or broker credited on 18
April 2005.
By order of the board,
Loren Wulfsohn,
Group Secretary
Financial statistics
% 2004 2003
change R million R million
Audited Audited
Standard Bank Group
Shares in issue (millions)
Number of ordinary shares in issue
- end of period 1 253 1 339
- weighted average 1 322 1 334
Cents per ordinary share
Headline earnings 23 578,7 470,7
Dividends 53 231,5 151,0
Earnings 23 585,7 478,1
Fully diluted earnings 21 569,1 472,2
Net asset value 8 2 322 2 154
Financial performance (%)
Return on equity 26,4 22,9
Capital adequacy (%)
Capital ratio
- primary capital 11,5 11,5
- total capital 15,4 14,9
Standard Bank operations
Financial performance (%)
Return on equity 27,6 24,0
Cost-to-income ratio 57,5 56,2
Effective tax rate (including
indirect taxes) 28,2 31,0
Consolidated balance sheet
% 2004 2003
change R million R million
Audited Audited
Assets
Standard Bank operations 14 505 810 444 371
Cash and balances with banks 42 31 384 22 081
Short-term negotiable securities (4) 21 040 22 018
Derivative assets 19 124 235 104 723
Trading assets (4) 32 130 33 488
Investment securities (2) 19 640 20 057
Loans and advances 17 257 154 220 375
Other assets (6) 16 494 17 540
Interest in associates and joint
ventures (47) 286 541
Goodwill and other intangible assets (6) 479 508
Property and equipment (2) 2 968 3 040
Liberty Life 14 109 767 96 195
Current assets 25 4 616 3 687
Investments 14 104 442 91 868
Goodwill and other intangible assets 32 366 277
Equipment and furniture (6) 343 363
Total assets 14 615 577 540 566
Equity and liabilities
Liabilities 14 577 013 505 302
Standard Bank operations 14 475 900 417 518
Derivative liabilities 18 116 214 98 634
Trading liabilities (21) 14 410 18 162
Deposit and current accounts 16 316 516 272 677
Other liabilities and provisions (8) 19 267 20 989
Subordinated bonds 35 9 493 7 056
Liberty Life 15 101 113 87 784
Other liabilities 25 3 064 2 444
Convertible bonds (100) - 1 500
Policyholder liabilities 17 98 049 83 840
Capital and reserves 11 32 078 28 843
Ordinary shareholders` funds 1 29 087 28 835
Preference share capital and premium >100 2 991 8
Minority interest 1 6 486 6 421
Total equity and liabilities 14 615 577 540 566
Consolidated income statement
% 2004 2003
change R million R million
Audited Audited
Standard Bank operations
Interest income (4) 35 206 36 796
Interest expense (6) 23 755 25 359
Net interest income before provisions
for credit losses 0 11 451 11 437
Provisions for credit losses (43) 1 048 1 848
Net interest income 8 10 403 9 589
Non-interest revenue 18 15 048 12 790
Income from operations 14 25 451 22 379
Operating expenses 12 15 242 13 608
Staff costs 12 8 499 7 581
Other operating expenses 12 6 743 6 027
Net income from operations 16 10 209 8 771
Goodwill amortisation (43) (98) (173) 144
Exceptional items (92) 12 102
Income from associates and joint (5) 97
ventures
Income before tax 16 10 220 8 844
Indirect tax expense 0 389 388
Income before direct tax 16 9 831 8 456
Direct income tax expense 6 2 489 2 353
Income after tax 20 7 342 6 103
Attributable to minorities 22 127 104
Standard Bank profit for the year 20 7 215 5 999
Liberty Life
Net income from operations 22 2 097 1 713
Realised investment gains
attributable to shareholders` assets 27 598 471
Goodwill amortisation and impairment (85) (12) (78)
Income before tax 27 2 683 2 106
Direct income tax expense 9 900 823
Income after tax 39 1 783 1 283
Attributable to minorities 39 1 257 904
Liberty Life profit for the year 39 526 379
Group profit for the year 21 7 741 6 378
Headline earnings
% 2004 2003
change R million R million
Audited Audited
Group profit for the year 21 7 741 6 378
Standard Bank profit adjusted for:
Goodwill amortisation 98 173
Exceptional items (15) (162)
Exceptional items before tax (12) (144)
Profit on sale of properties and
equipment (44) (238)
Impairment of properties and
equipment 15 41
- Impairment of intangibles 12 116
Loss/(profit) on sale of
businesses 5 (57)
- Other capital profits - (6)
Tax on the above items (3) (18)
Liberty Life profit adjusted for: (176) (109)
Goodwill amortisation and impairment 12 78
Realised investment gains
attributable to shareholders` assets (598) (471)
Capital gains tax 10 25
Attributable to minorities 400 259
Headline earnings 22 7 648 6280
Segmental report
% 2004 2003
change R million R million
Audited Audited
Headline earnings
Domestic Banking 27 5 842 4 602
Retail Banking 28 3 158 2 476
Corporate and Investment Banking 24 2 656 2 140
Other domestic operations 28 (14)
International (21) 685 866
International (USD million) (7) 107 115
Africa 30 634 489
Stanlib 48 59 40
Central funding and eliminations 78 13
Standard Bank operations 21 7 298 6 010
Liberty Life 30 350 270
Standard Bank Group 22 7 648 6 280
Consolidated statement of changes in shareholders` funds
2004 2003
R million R million
Audited Audited
Balance at beginning of the year 28 843 25 828
Change in accounting policy - 144
Restated balance at beginning of the year 28 843 25 972
Profit for the year 7 741 6 378
Dividends paid (2 150) (1 753)
Net translation reversal (1 308) (1 866)
Issue of share capital and share premium 3 195 133
Other reserve movements, net of tax and
minorities 3 (21)
Equity impact of empowerment transactions (4 246) -
Balance at end of the year 32 078 28 843
Consolidated cash flow information
2004 2003
R million R million
Audited Audited
Net cash from operating activities 15 990 16 598
Net cash from/(used in) operating 906 (7 753)
funds
Net cash from/(used in) investing 1 014 (5 812)
activities
Net cash used in financing activities (4 037) (1 759)
Third party funds under management
2004 2003
R million R million
Audited Audited
Asset management 81 927 70 354
Wealth management 196 018 136 479
277 945 206 833
Contingent liabilities and capital commitments
2004 2003
R million R million
Audited Audited
Contingent liabilities
Letters of credit 4 827 4 920
Guarantees 17 520 16 562
Unutilised facilities 18 497 14 887
40 844 36 369
Capital commitments
Capital Alliance Holdings Limited 3 094 -
acquisition
Contracted capital expenditure 664 215
Capital expenditure authorised but 438 505
not yet contracted
4 196 720
Accounting policies
Basis of preparation
The financial statements have been prepared under the historical cost basis, as
modified by the revaluation of financial instruments classified as instruments
available-for-sale, held at fair value, held for trading or derivative
instruments as well as investment and owner occupied properties in the group`s
insurance operations.
The accounting policies comply in all material respects with South African
Statements of Generally Accepted Accounting Practice (SA GAAP) as well as with
the South African Companies Act of 1973.
Changes in accounting policies
These accounting policies are consistent with those applied in 2003 except for
the adoption of AC 501, Accounting for Secondary Tax on Companies (STC), with
effect from 1 January 2004. As required by this new interpretation, a deferred
tax asset is recognised for unused STC credits to the extent that the group
expects that it will utilise the credits to reduce its STC liability in future.
No deferred tax asset was previously recognised on unused STC credits. The
impact of adopting AC 501 is as follows:
2004 2003
R million R million
Audited Audited
Income statement
Reduction in tax and increase in earnings 47 32
Balance sheet
Increase in retained earnings and increase in
deferred tax asset included in other assets 223 176
There was no impact on minorities` interest. The 2003 amounts have been restated
accordingly.
Auditors` report
The auditors, PricewaterhouseCoopers Inc. and KPMG Inc., have issued their
opinion on the group financial statements for the year ended 31 December 2004.
A copy of the auditors` unqualified report is available for inspection at the
company`s registered office.
Board of Directors
DE Cooper (Chairman)
JH Maree* (Chief Executive)
DDB Band
E Bradley
T Evans
TS Gcabashe
DA Hawton
Sir Paul Judge#
SJ Macozoma
RP Menell
Adv KD Moroka
AC Nissen
RA Plumbridge
MC Ramaphosa
MJD Ruck*
MJ Shaw
Sir Robert Smith#
Dr CL Stals
Dr CB Strauss
* Executive directors # British
Group Secretary
L Wulfsohn
Standard Bank Group Limited
Registered office
9th Floor, Standard Bank Centre, 5 Simmonds Street, Johannesburg, 2001
PO Box 7725, Johannesburg, 2000
Share transfer secretaries in:
South Africa
Computershare Investor Services 2004 (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001, PO Box 61051, Marshalltown,
Johannesburg, 2107
Namibia
Transfer Secretaries (Proprietary) Limited
Shop 12, Kaiserkrone Centre, Post Street Mall, Windhoek, PO Box 2401, Windhoek
Website disclosure
The Standard Bank Group Limited results for the year ended 31 December 2004 will
be published on the Standard Bank group website at 08h05 South African time.
http://www.standardbank.co.za
Live broadcast on Summit TV
A live results broadcast will be available to Southern African viewers via
Summit, DStv Channel 55 at 16h00.
Live teleconference
Dial in numbers are:
South Africa 16h00 0800 200 648
United Kingdom 14h00, GMT 0800 917 7042
Europe 15h00,Central European Time +800 246 78700
USA 09h00, Eastern Standard Time 1 800 860 2442
Canada 09h00, Eastern Standard Time 1 866 519 5086
A delayed audio webcast will be available from 17h00 on www.standardbank.co.za.
