Nedbank Group-Interim Results

Old Mutual PLC
04 August 2005

NEDBANK GROUP LIMITED
Registration number          1966/010630/06
Share code                   NED
ISIN code                    ZAE000004875


INTERIM RESULTS 2005
Reviewed financial results for the six months ended 30 June 2005


COMMENTARY


Highlights



*   Benefits of recovery programme gain momentum
*   Headline earnings increase 74,3% to R1 398 million
*   Headline earnings per share up 44,5% to 354 cents
*   Return on ordinary shareholders' equity increases from 11,7% to 14,6%
*   Efficiency ratio (excluding foreign currency translation gains/losses)
    improves from 77,9% to 68,6%
*   Broad-based black economic empowerment scheme approved
*   Interim dividend per share up 139% from 44 cents to 105 cents



Nedbank Group's recovery programme is gaining momentum and the
benefits are increasingly being reflected in our financial performance.
Income is growing at a faster rate than expenses, with the efficiency ratio
improving steadily and return on equity increasing. We continue to deliver
on the commitments we have made to our shareholders and have
reaffirmed our stated financial targets for 2007.



Tom Boardman
Chief Executive



Overview



Headline earnings per share increased by 44,5% to 354 cents (2004: 245 cents)
in line with the revised forecast provided to the market on 21 July 2005.
Fully diluted headline earnings per share increased from 243 cents to 354 cents.



Basic earnings (previously known as attributable earnings) also grew strongly,
rising from 247 cents per share to 356 cents per share for the period. The
directors have resolved, in line with the circular to shareholders on the black
economic empowerment (BEE) scheme, to offer a capitalisation award with a cash
dividend alternative amounting to 105 cents per share, up from the dividend of
44 cents per share announced in August 2004.



The group's return on ordinary shareholders' equity (ROE) continued to improve,
increasing from 11,7% for the period to June 2004 to 14,6% for the six months
to June 2005.



The improved performance for the six months was driven mainly by:

*   the continued realisation of benefits from the recovery programme, which
    are reflected in the growth in operating income and the containment of
    expenses, resulting in the efficiency ratio (excluding foreign exchange
    translation gains/losses) improving from 77,9% for the period to June 2004
    to 68,6% for the six months to June 2005;
*   significantly improved performance from Nedbank Retail, with headline
    earnings growing 105,1% to R439 million and return on average equity
    improving from 9,2% to 18,3%;
*   a strong performance from Nedbank Capital, with headline earnings
    growing 25,9% to R447 million;
*   a 5,9% growth in advances, compared with December 2004;
*   a continuation of the good credit environment, resulting in an improvement
    in the overall quality of advances; and
*   the weakening of the rand, resulting in a foreign currency translation gain
    of R165 million, compared with a loss of R98 million for the period to June
    2004.



Nedbank Group is reporting in accordance with International Financial Reporting
Standards (IFRS) with effect from 1 January 2005. The group's 2004 results have
been restated to reflect the requirements of reporting under IFRS.



Progress against three-year plan



In the 2004 year-end results announced in February 2005, Nedbank Group outlined
five major action plans that form the foundation of the group's three-year
plan. To provide shareholders with an update on the group's progress
delivery against each of these actions is detailed below:
 *  Ensure that income growth is at least 9% higher than expense growth (on a
    three year compound annual growth rate (CAGR) basis with 2004 as the base)
    Good progress has been made towards achieving this target, with total
    income (excluding foreign currency translation gains) growing by 9,2%,while
    total expenses declined by 3,9% for the period. The group anticipates that
    although income is expected to continue to grow ahead of expenses, the
    difference will not be as large in future reporting periods as in the
    current period.
*   Maintain market share from the second half of 2005
    There has been a slowdown in the rate at which the group has been losing
    market share, particularly in the key area of home loans in Nedbank Retail.
    Market shares are still expected to stabilise in the second half of the
    year.
*   Grow non-interest revenue through a focus on transactional revenue
    To grow transactional revenue the group has created focused teams
    and started to implement a range of initiatives to improve cross- selling,
    upselling, client service, pricing and bancassurance. The group recognises,
    however, that this is only a longer-term goal and the full benefits are
    expected to be realised from 2006.
*   Build Nedbank Retail
    Nedbank Retail has historically generated ROEs significantly below those
    of its retail banking peers. A key focus of the group is to deliver the
    financial turnaround of Nedbank Retail, while improving client service.
    Following the restructuring of Nedbank Retail in 2004, good progress has
    been made in growing revenue and containing expenses, resulting in headline
    earnings increasing by 105% and return on average equity increasing from
    9,2% to 18,3%. The integration of Nedbank and Peoples Bank is progressing
    according to plan and remains on track for completion by the end of 2005.
    The restructuring and a focus on staff training will deliver improved
    client service.
*   Transform the business beyond the Financial Sector Charter (FSC)
    targets
    Nedbank Group's groundbreaking BEE transaction announced in April will see
    a broad range of black stakeholders acquire direct ownership worth 11,5% of
    the value of Nedbank Group's South African businesses. The transaction,
    worth more than R3 billion, was approved by an overwhelming majority of
    shareholders on 22 July 2005. The scheme shares are due to be issued to the
    respective BEE trusts on 8 August 2005. The group will then focus on
    implementing the schemes for employees, retail and corporate clients and
    community groups, as well as developing its working relationship with the
    strategic black business partners, based on their performance agreements.
    Appropriate emphasis still remains on other areas of transformation such as
    employment equity, skills development, procurement, access to financial
    services, empowerment financing and social responsibility.


Strategy
Nedbank Group remains committed to its strategy of:
-     focusing on the basics of banking to meet the financial services
      needs of clients;
-     being a full-spectrum bank, providing a comprehensive range of banking
      and related services to investment banking, corporate and retail clients
      across all client segments; and
-     adopting a Southern African focus, while also meeting the international
      banking needs of our Southern African clients and servicing multinational
      clients doing business in South Africa.


The key strategic focus areas remain:
-     continuing to drive growth in transactional banking;
-     building a high-performance culture through the empowerment of employees
      and ensuring accountability throughout the organisation;
-     optimising the business mix by growing Nedbank Retail and improving the
      product and client mix;
-     moving beyond transformation as a business imperative and demonstrating
      the group's commitment to South Africa; and
-     instilling a client-driven business model by creating a client-focused
      structure and simplifying processes to speed up delivery to clients.

By listening, understanding client needs and delivering to our stakeholders,
the group strives to become Southern Africa's most highly rated and respected
bank by employees, clients, shareholders, regulators and communities.


Business environment
The environment for the banking sector remained positive throughout the period.
Stable, low interest rates and low inflation continued to drive consumer
spending and retail advances growth. The positive economic conditions also
stimulated equity markets and ensured a continuation of the positive credit
environment. While the demand for credit in business banking and commercial
property finance remains steady, and the initial signs of an increase in
infrastructure spend are being noted, the demand for large corporate debt has
been muted. The investment banking markets continued to experience strong deal
flows, driven primarily by BEE transactions.


Financial performance
Nedbank Group continued to show a turnaround in performance, with headline
earnings growing by 74,3% from R802 million to R1 398 million.
Basic earnings grew by 73,3% from R810 million to R1 404 million.


Net interest income
Net interest income (NII) increased by 21,2% from R3 319 million to R4 024
million. The group's net interest margin for the period was 3,45%, up from
2,99% for the period to June 2004 and 3,18% for the 12 months to December 2004.


To reflect more accurately the banking margin on banking assets by
excluding trading activities and to facilitate easier peer group comparison,
the group has reclassified certain trading revenues from NII to non-interest
revenue (NIR). As a result, the previously reported NII of R3 595 million for
the period to June 2004 has decreased by R276 million to R3 319 million.
The previously reported comparative for NIR has consequently increased by R276
million from R3 495 million to R3 771 million.


The margin increase can be attributed to:
*   the uplift created from a full six months of the rights offer proceeds
    received in May 2004;
*   reduced funding drag as a result of the low levels of interest rate risk in
    the banking book following the hedging strategy implemented last year;
*   income on the proceeds from the sale of non-core investments;
*   the repatriation of certain foreign capital during 2004; and
*   the settlement of the expensive empowerment funding for Peoples Bank in
    April 2005.


However, margin was negatively impacted by the 1% reduction in the taxation
rate for companies, which resulted in a R54 million reduction in margin arising
from the treatment of structured finance deals. This reduction is offset by a
corresponding reduction in the taxation line and will reverse over time.


Margins have also been compressed by the impact of the lower interest rate
environment and resulting drop in the endowment income earned on capital and
the net of non-interest-paying liabilities and non-interest-earning assets.



% of daily average interest-earning assets - unaudited          %        Rm
December 2004 reported                                       3,13     7 582
Trading revenue and assets excluded from margin              0,05     (437)
Adjusted 2004 margin                                         3,18     7 145
H1 2005 asset growth                                                    719
Net endowment effect                                         0,18       166
- Rights issue                                               0,13       122
- Other                                                      0,05        44
Current and savings accounts margin compression            (0,10)      (93)
Market margin compression                                  (0,16)     (151)
Expensive funding drag                                       0,11       100
Foreign capital repatriated                                  0,06        56
Subordinated debt hedge                                      0,05        46
Expensive empowerment funding for Peoples Bank               0,07        70
Tax structured deals impact                                  0,06        64
Other                                                                   (7)
June 2005 annualised                                         3,45     8 115


Non-interest revenue
NIR, excluding foreign currency translation gains/losses, decreased by
1,5% from R3771 million for the period to June 2004 to R3 716 million for
the six months to June 2005.


NIR growth was negatively impacted by the sale of subsidiaries during 2004.
In the six months to June 2004 the group generated R228 million of NIR from
these subsidiaries. Commission and fee income in the remaining businesses
continued to grow steadily, increasing by 11,1%. Trading revenue increased from
R554 million for first half of 2004 to R657 million for the first half 2005.
Exchange and non-interest dealings income is R216m down on the June 2004
comparative, of which R153m relates to fair value adjustments.


Other factors that contributed to the movement in NIR are set out below:
Major changes to NIR (Rm) - unaudited               June 2005     June 2004

                                                           Rm            Rm
BondChoice                                                138            63
Realisation of endowment policies                           3            32
Subsidiaries sold during 2004                                           228
First-time and pro rata consolidations                     68             6


Taking the above factors into account, on a directly comparable basis, NIR
increased by 1,0%.


Foreign currency translation gains
In line with the strategy of focusing on the basics of banking and reducing
earnings volatility the group reduced its exposure to foreign currency
movements during 2004, retaining sufficient capital to support the offshore
businesses. Owing to the 18% decline in the value of the rand, which weakened
from R5,63:US$1,00 on 31 December 2004 to R6,67:US$1,00 on 30 June 2005, the
group benefited from translation gains of R165 million on the remaining capital
held in its foreign subsidiaries and treated as rand functional currency for
accounting purposes under IFRS.


The adoption of IFRS has led to an increased portion of the foreign currency
translation gains/losses being treated as movements in the balance sheet
foreign currency translation reserve rather than being taken through the income
statement. During the period, the group recorded balance sheet translation
gains of R48 million.



After further planned restructuring of offshore subsidiaries in the next six
months and the associated repatriation of capital, the relative proportion of
translation movements flowing through the balance sheet, as opposed to the
income statement, is anticipated to increase further. This will further reduce
the volatility of earnings resulting from exchange rate movements.



Impairment losses on loans and advances
The introduction of IFRS means that all banks now provide for credit
impairments on an 'incurred loss' basis, as opposed to an 'expected loss' basis.
In addition, the discount rate used to calculate the recoverable amount now
excludes any allowance for a credit spread. This will create more volatility in
the reporting of impairment losses on loans and advances in the income
statement charge.



As reported in May 2005, the impact of IFRS requirements on the impairments
charge for the period to June 2004 was a reduction from the previously reported
R719 million to R409 million. A major portion of the change to the June 2004
impairment charge for reporting in terms of IFRS was due to the improving
credit environment at that time, combined with the move from reporting on an
'expected' to an 'incurred' loss basis. This improved environment was sustained
throughout 2004 and in the first half of 2005, with the resulting impairment
charge for the six months to June 2005 of R620 million.


Non-performing loans and properties in possession improved, as reflected in the
table below.
Non-performing advances (Rm) - unaudited
                                        June 2005     Dec 2004     % change
                                               Rm           Rm
Non-performing loans                        5 820        6 729       (13,5)
Properties in possession                      528          761       (30,6)
Total non-performing advances               6 348        7 490       (15,2)



These non-performing advances represent 2,7% of gross advances (December 2004:
3,3%). The group's gross coverage ratio improved from 89% at 31 December 2004
to 97% at 30 June 2005 and the net coverage ratio improved from 149% at 31
December 2004 to 157% at 30 June 2005.


Expenses
Expenses were well-controlled and declined by 3,9% from R5 524 million to R5
311 million, with the efficiency ratio (excluding foreign currency translation
gains / losses) improving from 77,9% to 68,6%.


This decline in expenses is mainly attributable to the following:
Factors resulting in an increase/(decrease) in expenses - unaudited      Rm
First time consolidation of subsidiaries                                 35
Subsidiaries disposed in 2004                                         (168)
Reduction in fees due to the buy-out of alliance partners              (53)
Reduction in one-off recovery and merger costs                        (275)
Increase in fees (largely in BondChoice)                                 56
Other movements, mainly due to inflation                                192
Total decrease in expenses                                            (213)


Excluding the one-off merger and recovery expenses from 2004, base expense
growth was held at 1,2%.


Approximately R48 million of recovery programme expenses have been deferred
from the first half of 2005 to the second half of the year. Combined recovery
programme and merger expenses are expected to be about R150 million for the
year ending December 2005.


Taxation
The tax rate for companies was reduced from 30% to 29% during the reporting
period. While tax on earnings decreased as a result, the downward revaluation
of the deferred taxation and structured finance assets has resulted in the
reduction of headline earnings by approximately R80 million. R54 million of
this decrease was reflected as a reduction in NII, as outlined above.
The balance of R26 million increased the taxation charge. This, together with a
smaller relative impact on taxation from structured deals and an increase in
secondary tax on companies (STC), has resulted in the effective taxation rate
increasing from 14% to 22%.



Balance sheet
Capital


The group's capital position continues to strengthen, with the Tier 1 group
capital adequacy ratio increasing from 8,1% in December 2004 to 8,5% in June
2005. The total group capital adequacy ratio has remained stable at 12,2%
(December 2004: 12,1%).


Advances
Although asset growth rates are behind those of the rest of the market, advances
increased by 5,9% to R228 billion on an annualised basis, compared with December
2004. Residential home loan advances grew by 22,3%, with home loans in Nedbank
Retail growing at 19%, narrowing the gap between Nedbank's growth and that of
its competitors in this sector.



The breakdown of the advances growth is as follows:
Loans and advances - unaudited        June 2005     Dec 2004    Annualised
                                             Rm           Rm    increase(%)
Nedbank Retail                           73 252       69 736          10,2
Nedbank Corporate                        98 085       93 123          10,7
Nedbank Capital                          34 395       32 606          11,1
Other                                    22 010       25 810         (29,7)
Total                                   227 742      221 275           5,9


Deposits
Deposits have remained stable and the group has maintained a strong liquidity
position.



Divisional performance
Management information systems and reporting continue to be enhanced, with
matched-maturity funds transfer pricing now operational and activity-
justified funds transfer pricing refined to allocate additional costs from the
centre to the respective operating divisions. The segmental reports have been
adjusted to reflect these changes as well as other changes as a result of the
group reorganisation completed in late 2004. Good progress has also been made
in implementing economic capital measurement, which is currently being run in
parallel with the existing reporting systems, with a view to full
implementation for 2006.


Nedbank Capital
Nedbank Capital increased headline earnings by 25,9% from R355 million to R447
Million, and ROE improved from 23,5% to 28,2%. This was driven by 18,6% growth
in trading revenue in Treasury due to favourable market conditions as well as
good deal flow and a strong performance from Debt Capital Markets, Equity
Capital Markets, Nedcor Securities, Investment Banking and Specialised Finance.



Expenses have reduced despite higher joint-venture fees paid to Macquarie as a
result of higher earnings. The expense reduction was aided by the sale of
Edward Nathan & Friedland and lower rental costs following the relocation of
the London offices to premises shared with Old Mutual plc.



The benefits of an integrated investment bank with a strong focus on specific
sectors are becoming evident and the transaction pipeline remains strong.


Nedbank Corporate
Nedbank Corporate increased headline earnings by 14,2% from R812 million to
R927 million, while ROE increased from 17,7% to 19,1%. NII was negatively
impacted by lower endowment levels, while margins (excluding endowment) were
unchanged. Corporate loan growth is muted as clients remain cash flush, and the
market is highly competitive. Growth in Business Banking assets in KwaZulu-
Natal and the Western Cape is below average and some market share has been lost
in these regions following the merger integration process. Property Finance
continues to perform strongly and Nedbank Africa performed in line with
expectations.


NIR was boosted by the consolidation of Fasic (not included in the comparative
period for 2004), a strong performance from BondChoice and growth in
transactional banking. Fee generation on foreign exchange commission was lower
than expected and there is increasing pressure on specialised fees.


The impairment environment continues to be favourable, reflecting the current
positive economic cycle.


Operating expenses remain well-controlled. However, the expected appointment of
further sales staff to improve client service is expected to result in a slight
increase in staff expenses in the second half of 2005.


New managing directors were appointed in Corporate Banking, Business Banking
and Nedbank Africa at the start of the year. In addition, five divisional
directors were appointed to head geographically based business units
established in Business Banking to enhance client service, accountability and
performance through decentralised and empowered management. Our commitment to
going 'beyond transformation' is reflected through five of the eight
appointments being either black or female executives.


Pressure on margins in the current low-interest-rate environment, competitive
pricing, disintermediation and corporate clients being cash flush will continue
to impact earnings growth, particularly within Corporate Banking.


Nedbank Corporate continues to build strong relationships with its core clients
and to work closely with both Nedbank Retail (card acquiring and schemes) and
Nedbank Capital to leverage client relationships and broaden the range of
products and services to add greater value for clients.


Nedbank Retail
Nedbank Retail increased headline earnings by 105,1% from R214 million to R439
million, and ROE increased from 9,2% to 18,3%. Despite the negative endowment
impact from the interest rate cut in April, NII was driven by strong advances
growth primarily due to the 19% year-on-year growth in home loans.
NIR benefited from increased volumes, insurance commissions and increased
stockbroking activity in BoE Private Clients.


The growth in credit impairments is distorted by the prior year IAS39
restatements that caused a R206 million reduction in the restated first
half of 2004.After adjusting for this restatement, impairments reduced by 2,5%
year on year.



Expense growth, on a comparable basis, has remained flat, due to operational
efficiencies and delays in marketing spend. Marketing spend is planned to
increase in the second half of 2005.



The rate of market share losses continues to slow, particularly in the key
home loans sector. This has been driven by improved channel management and
process and structural changes made in Nedbank Retail.


The Nedbank / Peoples Bank integration is progressing well. The Peoples Bank
and Nedbank branches are operating on a common IT platform and Peoples Bank is
scheduled to convert fully to the Nedbank systems in August 2005. It is
anticipated that 146 branches will be rebranded to Nedbank, 56 closed and 24
new branches opened. 11 branches have been closed to date, with the remaining
45 earmarked for closure by the end of 2005. The rationalisation and rebranding
costs will amount to approximately R52 million, ,of which R10 million has
already been incurred. Following this integration Nedbank Retail will have 
443 Nedbank branches, 46 Old Mutual Bank branches, 1 119 Nedbank ATMs and 55 
Old Mutual Bank ATMs.



Nedbank Retail is currently replacing and upgrading all ATMs and self-service
terminals at a capital cost of approximately R160 million. This is planned for
completion by the second half of 2006.


Good progress has been made in the first half of 2005 towards setting the
foundation for the turnaround of Nedbank Retail. The key future focus areas in
Nedbank Retail are client service, advances growth, reduction in impairments,
bancassurance and staff morale.


Imperial Bank
Imperial Bank increased headline earnings by 19,1% from R47 million to R56
million. NII grew by 17,0%, despite the negative endowment impact of the
interest rate cut. This was driven by strong growth of Motor Vehicle Finance,
while advances growth in Property Finance slowed due to a more conservative
approach to this sector of the business. Impairments declined by 12,5% due to a
more favourable credit environment and to a reduction in provisioning
requirements in both Property Finance and Aviation.


Nedbank Group and Imperial Holdings each contributed R70 million of additional
capital to Imperial Bank in March 2005. This has resulted in an initial
dilution of ROE (measured on Nedbank Group's investment) from 14,2% to 10,3%,
but will support future growth.


During the six months to June 2005, a new Chief Executive, Chief Financial
Officer and Chief Risk Officer were appointed. This new management team has
settled down well and staff morale is good. The outlook for the remainder of
the year remains robust, with continued strong advances growth in the motor
sector and a good credit environment expected to continue.


Central Services
Costs in central services divisions in 2004 have been restated to reflect the
Reorganisation, which saw a number of previously centralised functions moving to
the operating divisions, including the move of all branch operations to Nedbank
Retail. Overall the headline loss from shared services has reduced from R128
million (R432 million pre-IFRS and prior to the above-mentioned restatements)
to R94 million.


The headline loss of R377 million (June 2004: R498 million or R987 million pre-
IFRS and prior to the above-mentioned restatements) from Capital Management and
Central Funding comprises primarily the preference share dividend, the funding
of the group's goodwill, the cost of the expensive empowerment funding for
Peoples Bank, the excess cost of the subordinated debt and the deferred tax
rate adjustment, offset by the foreign currency translation gain.


Sustainability
Nedbank Group continues to focus on sustainable development for the long- term
benefit of the company and the communities it serves. The group has again been
included in the JSE Socially Responsible Investment (SRI) Index for 2005 and
was rated among the top three companies in its category.


Prospects
Nedbank Group reaffirms its targets of achieving a return on average ordinary
shareholders' equity of 20% and an efficiency ratio of 55% for 2007.


Assuming a stable interest rate environment, the performance in the second
half of the year is likely to be impacted by the following:
*   margin will benefit from the settlement of the expensive empowerment
    funding for Peoples Bank in the first half, but could be negatively
    influenced by the continued industry pressure on margins; and
*   expense growth will continue to be contained as the group focuses on
    extracting operational efficiencies, but will increase as a result of the
    branch rationalisation and rebranding costs of Peoples Bank
    (approximately R42 million), increased second-half marketing expenditure
    (approximately R100 million), the share-based payment cost of the BEE
    transaction (approximately R156 million) and one-off merger and recovery
    costs (approximately R150 million for 2005).


The group continues to invest in technologies and infrastructure-related
projects. Strategic initiatives are in progress to upgrade several legacy
systems while at the same time preparing for the Basel ll systems requirements.
Projects to upgrade transactional banking systems and consolidate multiple
Corporate Banking channels are in progress. New financial processing systems
and client information projects have been approved to support the client-
centric strategy of the bank. All data and voice networks in the group have
been outsourced, in conjunction with Old Mutual (SA), to a Telkom/CSC
consortium, which will replace all existing network infrastructure with
up-to-date technology. This outsourcing contract will save Nedbank
approximately R700 million over the next five years, with savings of
R60 million in 2005. The group is in the process of centralising
information technology in the Group Technology and Support Services Cluster.


As previously reported, the detailed three-year plan envisages:
*   The group maintaining its advances market share from the second
    half of 2005., expecting this to be achieved particularly in the key
    category of residential home loans, although categories such as credit
    cards may take longer;
*   continued growth in revenue ahead of growth in expenses;
*   a focus on growing transactional revenue;
*   Nedbank Retail being a major growth area for the group; and
*   Continued transformation of the group.


Full-year earnings forecast
As a result of the improved performance to date and expected earnings for the
balance of the year - and assuming that exchange rates remain constant - the
group forecasts  headline earnings of between 58% and 78% higher than the
R1 742 million restated results under IFRS for 2004.
Headline earnings per share are estimated to be between 44% and 62% greater
than the IFRS-restated 483 cents per share reported for December 2004. Basic
earnings per share for the full year will be between 65% and 85% higher than
the IFRS-restated 423 cents per share reported for December 2004.


These forecasts have not been audited or reviewed by the company's auditors.

Post balance sheet event - BEE transaction
On 19 April 2005 the group announced its intention to implement a BEE ownership
Transaction, which would increase black shareholding by 11,5% of the value of
Nedbank's South African businesses.


The proposals involve the issue of new ordinary shares in Nedbank Group to
various share trusts for the benefit of black employees within the group, black
clients and black business partners in South Africa. The proposals were
approved by shareholders at a general meeting held on 22 July 2005.


Implementation of the proposals will take place during August 2005, resulting
in the listing of 41 268 130 new ordinary shares. Of these, 39 843 139 ordinary
shares are to be accounted for as treasury shares.
The total economic cost of this transaction is expected to be R968 million.
Share-based payment costs in accordance with IFRS 2, which are required to be
recognised on issue of the company's shares, are estimated at R933 million, of
which R156 million is expected to be incurred in the second half of 2005.


Changes to board of directors
During the period under review, the following changes were made to the board of
Nedbank Group:
*  Bob Head was appointed as a non-executive director (1 January 2005);
*  Hixonia Nyasulu resigned as an independent non-executive director and
   Vice-chairman (26 January 2005);
*  Phuthuma Nhleko resigned as a non-executive director (21 April 2005); and
*  Lot Ndlovu changed status from an executive director to non-executive
   director (1 May 2005).


Accounting policies
The Nedbank Group financial results have been prepared in accordance with
International Financial Reporting Standards (IFRS), as expected to be effective
for the year ending 31 December 2005. These standards are subject to ongoing
review and possible amendment in terms of interpretive guidance from the
International Financial Reporting Interpretations Committee (IFRIC).
The results may therefore be subject to change at future reporting dates.


Restatement of comparatives:
1.The group's results for the June and December 2004 reporting dates have been
restated to reflect the requirements of reporting under IFRS. These restated
results for 2004 were disclosed in an announcement on 3 May 2005.
The material adjustments for reporting under IFRS are noted in the
reconciliation of results, as reported below.


2. Income reclassification - during the period under review the group changed
its disclosure in respect of income and the 2004 results have been restated
accordingly. The components of net interest income (NII) and non-interest
revenue (NIR) were analysed and the nature and classification of interest
income and non-interest revenue was refined. In essence, all income earned in
respect of banking activities (i.e. transactions entered into for the
purpose of earning a margin between interest earned and interest paid) is
classified as either interest income or interest expense and included in
NII. By the same token all transactions entered into for the purpose of
trading activities are classified as part of NIR. The effect of this change
in disclosure is to decrease NII by R276m for the period ended 30 June 2004
and R437m for the year ended 31 December 2004, with a simultaneous increase
in NIR in the relevant periods.


3. Balance sheet reclassifications - certain provisions for leave pay and
onerous leases totalling R425m have been reclassified, for the reporting
period ended 30 June 2004, from the 'Amounts owed to depositors' category to
'Other liabilities' category.


4. Segmental reporting comparative results for 2004 have been restated to take
into account the changes in improved profitability measurement and group
restructures implemented late in 2004. The restatements include the new
internal funds transfer pricing system, improved activity-justified transfer
pricing process, and a risk-weighted capital allocation and charging
methodology, while liquid assets and cash reserving costs are no longer held
at the centre, but are charged to the operating segments.


Operating lease costs - the historical accounting and interpretation in South
Africa of AC105/IAS17 has not been in line with international interpretation
and application. Interpretive guidance by the Accounting Practices Committee of
the South African Institute of Chartered Accountants - Circular 7/2005 issued
on 2 August 2005- required minimum lease payments, which are subject to a fixed
rate escalation, to be spread over the life of the lease and the escalation not
to be accounted for in the year of occurrence. The group has assessed the
materiality of any adjustment in terms of this requirement, and does not expect
this adjustment materially to affect the current reported results. The impact on
opening shareholders' equity is presently being assessed and, should this be
material, the group will inform the market of any prior year adjustment
required.


Reviewed results - auditors' opinion
The group's auditors, KPMG Inc and Deloitte & Touche, have reviewed these
results and the review opinion is available for inspection at the company's
registered office.


Capitalisation award with a cash dividend alternative
Notice is hereby given that the directors of the company have resolved to issue
fully paid ordinary shares in the company as a capitalisation award to ordinary
shareholders. Ordinary shareholders will be entitled, in respect of all or part
of their shareholding, to elect to receive new fully paid ordinary shares, which
shares will be issued only to those ordinary shareholders who elect in respect
of all or part of their shareholding, on or before 12:00, Friday, 9 September
2005, to receive the capitalisation award shares. Shareholders not electing to
receive new fully paid ordinary shares in respect of all or part of their
shareholding will be entitled to receive a cash dividend alternative of 105
cents per ordinary share (the cash dividend alternative).


In accordance with the provisions of STRATE, the electronic statement and
custody system used by JSE Limited, the relevant dates for the capitalisation
award election and the cash dividend alternative are as follows:


                                                                       2005
Last day to trade to participate in the
capitalisation award or the
cash dividend alternative                               Friday, 2 September
Shares trade ex the capitalisation award election
and the cash dividend alternative on                    Monday, 5 September
Listing of the maximum number of new ordinary shares
that could
be taken up in terms of the capitalisation award on     Monday, 5 September
Last day to elect to receive capitalisation award
shares, failing which
the cash dividend alternative, to be received
by 12:00                                                Friday, 9 September
Record date to participate in the capitalisation
award or receive the cash dividend
alternative                                             Friday, 9 September
Payment of the cash dividend alternative to
shareholders who have elected not to
participate in the capitalisation award or have
participated in the capitalisation award in
respect of only part of their shareholding             Monday, 12 September
New shares issued and posted or
central securities depository participant (CSDP)
or broker accounts credited regarding the
shares to be issued to shareholders participating
in the capitalisation award in respect of all or part
of their shareholding on                                Monday, 12 September
The maximum number of new shares listed in terms of
the capitalisation award adjusted to reflect
the actual number of shares issued in terms of the
capitalisation award on or about                      Thursday, 15 September


Shares may not be dematerialised or rematerialised between Monday, 5 September,
and Friday, 9 September 2005, both days inclusive. The above dates and times
are subject to change. Any changes will be published on SENS and in the press.


The number of capitalisation shares to which shareholders are entitled will be
determined in the ratio that 105 cents per ordinary share bears to the 30-day
volume-weighted average price for the company's share, to be determined by no
later than Friday, 26 August 2005. Details of the ratio will be published on
SENS no later than Friday, 26 August 2005, and in the financial press the
following business day. Trading in the STRATE environment does not permit
fractions and fractional entitlements.


Accordingly, where a shareholder's entitlement to new ordinary shares
calculated in accordance with the above formula gives rise to a fraction of a
new ordinary share, such fraction will be rounded up to the nearest whole
number where the fraction is greater than or equal to 0,5 and rounded down to
the nearest whole number where the fraction is less than 0,5.


A circular relating to the capitalisation award and the cash dividend
alternative will be posted to shareholders on or about Monday, 22 August 2005.


Note:
Dematerialised shareholders are required to notify their duly appointed
CSDP or broker of his/her election in
terms of the capitalisation award in the manner and at the time stipulated in
the agreement governing the relationship between the shareholder and his/her
CSDP or broker.


For and on behalf of the board


WAM Clewlow                               TA Boardman
Chairman                                  Chief Executive


4 August 2005


Registered office
Nedbank Group Limited
Nedbank Sandton
135 Rivonia Road
Sandown, 2196
PO Box 1144
Johannesburg, 2000



Transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd,
70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown, 2107


Directors
WAM Clewlow (Chairman), Prof MM Katz (Vice-chairman),
ML Ndlovu (Vice-chairman), TA Boardman (Chief Executive), CJW Ball,
MWT Brown (Chief Financial Officer), RG Cottrell, BE Davison,
N Dennis (British), Prof B Figaji, RM Head (British), JB Magwaza, ME Mkwanazi,
JVF Roberts (British), CML Savage, JH Sutcliffe (British)


Company Secretary: GS Nienaber
Reg No: 1966/010630/06
Share code: NED
ISIN code: ZAE000004875


SPONSORS
Merrill Lynch South Africa (Pty) Ltd
Nedbank Capital


This announcement is available on the group's website - www.nedbankgroup.co.za
- together with the following additional information:


*   detailed financial information in HTML, PDF and Excel formats;
*   financial results presentation to analysts; and
*   link to a webcast of the presentation to analysts.


For further information kindly contact Nedbank Group Investor Relations by
e-mail at [e-mail].



Financial highlights
for the period ended                         Reviewed   Restated   Restated
                                                 June       June   December
                                                 2005       2004       2004

Share statistics
Number of shares listed                  m      395,3      392,9      394,2
Weighted average number of shares        m      394,4      327,8      360,9
Fully diluted weighted average
number of shares                         m      394,5      330,1      361,8
Headline earnings per share          cents        354        245        483
Fully diluted headline earnings
per share                            cents        354        243        481
Basic earnings per share
(previously attributable
earnings per share)                  cents        356        247        423
Fully diluted basic earnings
per share                            cents        356        245        422
Dividend declared per share          cents        105         44        120
Dividend paid per share              cents         76         35         79
Dividend cover                       times        3,4        5,6        4,0
Net asset value per share
(Investments at market value)        cents      5 067      4 499      4 692
Tangible net asset
value per share
(Investments at market value)        cents      3 803      3 162      3 400
Closing share price                  cents      7 439      6 170      7 780
Price earnings ratio            historical         21         25         16
Market capitalisation                  Rbn       29,4       24,2       30,7
Key ratios
Return on ordinary
shareholders' equity                     %       14,6       11,7       11,0
Return, excluding foreign
currency translation
  gains/losses, on ordinary
shareholders' equity                     %       12,9       13,1       12,7
Return on total assets                   %       0,85       0,53       0,54
Return, excluding
foreign currency
  translation gains/losses,
on total assets                          %       0,75       0,58       0,62
Net interest income to
interest-earning assets                  %       3,45       2,99       3,18
Non-interest revenue to
total income                             %       49,1       52,5       53,1
Impairments to total loans
and advances                             %        2,6        3,2        2,9
Efficiency ratio                         %       67,2       79,0       74,8
Efficiency ratio (excluding
foreign currency
  translation gains/losses)              %       68,6       77,9       73,5
Effective taxation rate                  %         22         14         24
Group capital adequacy ratio:
  Tier 1                                 %        8,5        7,9        8,1
  Total                                  %       12,2       12,3       12,1
Number of employees                            21 266     23 172     21 103
Balance sheet
Total equity attributable
to equity holders                        Rm    20 028     17 677     18 497
Total shareholders' equity               Rm    23 658     21 112     21 948
Amounts owed to depositors               Rm   262 946    236 193    254 299
Loans and advances to customers          Rm   227 742    206 553    221 275
  Gross                                  Rm   233 913    213 363    227 959
  Impairment of loans and advances       Rm   (6 171)    (6 810)    (6 684)
Total assets                             Rm   336 158    300 801    327 900
Assets under management                  Rm    73 686     87 574     68 982
Total assets administered by the group   Rm   409 844    388 375    396 882
Earnings reconciliation
Income attributable to equity holders    Rm     1 404        810      1 527
Less: Non-headline-earnings items        Rm         6          8      (215)
Non-trading and capital items            Rm         6        (9)      (254)
Taxation on non-trading
and capital items                        Rm                   17         39
Headline earnings                        Rm     1 398        802      1 742
Headline earnings (excluding
foreign currency
  translation gains/losses)              Rm     1 233        900      2 022


Income statement
 for the period ended                         Reviewed   Restated   Restated
                                                  June       June   December
Rm                                                2005       2004       2004
Interest and similar income                     10 818     11 350     22 789
Interest expense and similar charges             6 794      8 031     15 644
Net interest income                              4 024      3 319      7 145
Impairment charge on loans and advances            620        409      1 217
Income from lending activities                   3 404      2 910      5 928
Non-interest revenue                             3 716      3 771      8 373
Foreign currency translation
gains/(losses)                                    165       (98)      (280)
Operating income                                7 285      6 583     14 021
Total expenses                                  5 311      5 524     11 404
  Operating expenses                            5 064      4 943     10 239
  Transaction taxes                               164        170        470
  Fees due to alliance partners                    30         83         70
  Merger expenses                                  53         94        246
  Recovery programme expenses                                234        379
Profit from operations before
non-trading and
capital items                                   1 974      1 059      2 617
Non-trading and capital items                       6        (9)      (254)
  Impairment of goodwill                                    (91)       (87)
  Profit/(Loss) on sale of
subsidiaries, investments
and property and equipment                          6        137       (74)
  Net impairment of investments,
property and equipment and capitalised
development costs                                           (55)       (93)
Profit from operations                          1 980      1 050      2 363
Share of profits of associates
and joint ventures                                 77         80        147
Profit before taxation                          2 057      1 130      2 510
Taxation                                          454        159        668
Taxation on non-trading and capital items                   (17)       (39)
Profit for the period                           1 603        988      1 881
Minority interest income attributable to
  - ordinary shareholders                         (83)       (68)     (125)
  - preference shareholders                      (116)      (110)     (229)
Income attributable to equity holders            1 404       810     1 527


Reconciliation of restated income attributable to equity holders as reported
under IFRS
Reviewed for the period

                                                    30 June      31 December
Rm                                      Note           2004             2004
As previously reported                                  380              974
Adjustments for:
  Credit impairment                        1            215              140
  Revenue recognition and
deferred acquisition costs                 2           (14)             (31)
  Goodwill                                 3            127              281
  Foreign exchange                         4            116               91
  Share-based payments                     5            (4)             (15)
  Post-employment benefits                 6                             131
  Property, plant and equipment            7           (10)             (44)
As reported under IFRS                                  810            1 527



Balance sheet
as at                                    Reviewed     Restated     Restated
                                             June         June     December
Rm                                           2005         2004         2004
Assets
Cash and balances with
central banks                              14 032       11 809       10 050
Other short-term securities                20 776        9 549       16 310
Government and other securities            24 320       22 322       26 224
Derivative financial instruments           22 146       21 509       27 560
Loans and advances to customers           227 742      206 553      221 275
Other assets                                7 447        8 391        6 816
Current taxation receivable                   200          174          196
Investments in associate
companies and joint ventures                1 287        1 464        1 089
Investment securities                       6 618        8 167        6 565
Post-employment assets                        974          506          992
Deferred taxation asset                     1 258        1 245        1 169
Investment property                           174          133          174
Property, plant and equipment               2 745        2 704        2 828
Non-current assets held for sale               48           13           48
Computer software and
capitalised development costs               1 322        1 558        1 419
Goodwill                                    3 673        3 695        3 676
Customers' indebtedness
for acceptances                             1 396        1 009        1 509
Total assets                              336 158      300 801      327 900
Shareholders' equity
and liabilities
Ordinary share capital                        395          393          394
Ordinary share premium                      9 976        9 832        9 892
Reserves                                    9 657        7 452        8 211
Total equity attributable
to equity holders                          20 028       17 677       18 497
Minority shareholders'
equity attributable to
 - ordinary shareholders                      860          665          681
 - preference shareholders                  2 770        2 770        2 770
Total shareholders' equity                 23 658       21 112       21 948
Derivative financial instruments           22 633       19 856       28 055
Amounts owed to depositors                262 946      236 193      254 299
Other liabilities                          12 224        9 413        9 117
Deferred revenue                              246          225          257
Current taxation liabilities                  276          189          193
Deferred taxation liabilities               1 092          864        1 125
Post-employment liabilities                   961          640          979
Investment contract liabilities             3 395        3 803        3 109
Long-term debt instruments                  7 331        7 497        7 309
Liabilities under acceptances               1 396        1 009        1 509
Total liabilities                         312 500      279 689      305 952
Total shareholders' equity
and liabilities                           336 158      300 801      327 900
Guarantees on behalf of
customers excluded


IAS39: Balance sheet classification of financial instruments
reviewed as at 30 June 200530 June 200431 December 2004

                                                          Liab-
Rm                                           Assets     ilities      Assets
Fair value                                   59 422      34 399      56 939
Financial assets
and liabilities
at fair value
through
profit and loss                              54 287      34 399      54 369
Available for sale                            5 135                   2 570
Amortised cost                              267 316     276 735     234 340
Loans and
receivables                                 260 509                 232 990
Held to maturity                              6 807                   1 350
Non-trading
liabilities                                             276 735
Other assets and
liabilities                                   9 420       1 367       9 522
Total shareholders'
equity                                                   23 657

                                            336 158     336 158     300 801


                                              Liab-                   Liab-
Rm                                          ilities      Assets     ilities
Fair value                                   27 137      66 438      36 153
Financial assets
and liabilities
at fair value
through
profit and loss                              27 137      63 283      36 153
Available for sale                                        3 155
Amortised cost                              251 499     251 952     268 481
Loans and
receivables                                             244 879
Held to maturity                                          7 073
Non trading
liabilities                                 251 499                 268 481
Other assets and
liabilities                                   1 053       9 510       1 318
Total shareholders'
equity                                       21 112                  21 948

                                            300 801     327 900     327 900



Cash flow statement
for the period ended                     Reviewed     Restated     Restated
                                             June         June     December
Rm                                           2005         2004         2004
Cash flows from operating activities        3 019        2 663        5 723
Change in working funds                     1 688      (6 345)     (11 804)
Cash generated/(utilised) by operating
activities before taxation                  4 707      (3 682)      (6 081)
Taxation paid                               (360)        (285)        (835)


Net cash generated/(utilised)
by operating activities                     4 347      (3 967)      (6 916)
Cash flows from investment activities       (127)        1 228        2 836
Cash flows from financing activities        (238)        2 321        1 903
Net increase/(decrease) in cash and
cash equivalents                            3 982        (418)      (2 177)
Cash and balances with central banks at
beginning of period                        10 050       12 227       12 227
Cash and balances with central banks
at end of period                           14 032       11 809       10 050


Statement of changes in shareholders' equity

                                     Ordinary Minority Preference     Total
                                       share-   share-    share-
                                     holders' holders'  holders'
Rm                                     equity   equity    equity
Balance at
31 December 2003, as
previously reported                    11 647      652     2 802     15 101
IAS transitional
adjustment                              (105)     (30)                (135)
Restated balance at
31 December 2003                       11 542      622     2 802     14 966
Shares issued for
options exercised
under the
Nedcor Group (1994)
Employee Incentive Scheme                  94                            94
Shares issued in terms
of rights offer                         5 151                         5 151
Other share issues                        101                           101
Share issue expenses                    (197)                         (197)
Preference share
cumulative dividend                                         (32)       (32)
Income attributable
to equity holders                         810       68       110        988
Preference share
dividend paid                                              (110)      (110)
Release of reserve
previously not available                 (25)                          (25)
Foreign currency
translation reserve
movements                               (116)                         (116)
Revaluation of property                  (13)                          (13)
Share-based payments
reserve movements                           5                             5
Acquisition of subsidiaries                       (10)                 (10)
Disposals of subsidiaries                          (5)                  (5)
Dividends to shareholders                (97)                          (97)
Available for sale reserve                416                           416
Other                                       6     (10)                  (4)
Balance at 30 June 2004                17 677      665     2 770     21 112
Shares issued for options
exercised under the Nedcor
Group (1994) Employee
Incentive Scheme                           77                            77
Other share issues                          3                             3
Share issue expenses                     (18)                          (18)

Shares held by subsidiaries               (1)                           (1)
Preference share dividend paid                             (119)      (119)
Income attributable to
equity holders                            717       57       119        893
Release of reserve
previously not available                 (23)                          (23)
Foreign currency translation
reserve movements                        (32)                          (32)
Revaluation of property                  (21)                          (21)
Share-based payments
reserve movements                          21                            21
Dividends to shareholders               (172)     (15)                (187)
Available for sale reserve                205                           205
Acquisition of subsidiaries                       (28)                 (28)
Disposals of subsidiaries                            5                    5
Other                                      64      (3)                   61
Balance at 31 December 2004            18 497      681     2 770     21 948
Shares issued for options
exercised under the
Nedcor Group (1994)
Employee Incentive Scheme                  86                            86
Share issue expenses                      (1)                           (1)
Preference share
dividend paid                                              (116)      (116)
Income attributable to
equity holders                          1 404       83       116      1 603
Release of reserve
previously not available                 (28)                          (28)
Foreign currency translation
reserve movements                          48                            48
Foreign currency movements                          23                   23
Share-based payments
reserve movements                          38                            38
Dividends to shareholders               (300)                         (300)
Available for sale reserve                242                           242
Recapitalisation of
Imperial Bank                                       70                   70
Disposals of subsidiaries                         (10)                 (10)
Other                                      42       13                   55
Balance at 30 June 2005                20 028      860     2 770     23 658


Reconciliation of restated statement of changes in shareholders' equity as
reported under IFRS

                                             31 Dec        30 June     1 Jan
Rm                               Note          2004           2004      2004
As previously reported                       21 586         20 932    15 101
Income statement movements:
  Credit impairments                1           107            185      (33)
  Revenue recognition and
deferred acquisition costs          2         (176)          (156)     (135)
  Goodwill                          3           281            127
  Foreign exchange                  4
  Share-based payments              5            18              8         7
  Post-employment benefits          6          (88)          (219)     (219)
  Property, plant and equipment     7           220            235       245
Transfer of reserves
As reported under IFRS                       21 948         21 112    14 966


Segmental analysis

                                      June 2005     June 2004      Dec 2004
                                       Reviewed      Restated      Restated
                                         Actual       Average        Actual
                                         assets        Assets        assets
                                            Rbn           Rbn           Rbn
Nedbank Corporate                           129           124           123
Imperial Bank                                18            14            18
Nedbank Capital                              85            54            70
Nedbank Retail                               86            79            81
Shared Services                               9             9             8
Capital Management
& Central Funding                            49            36            60
Eliminations                               (40)          (26)          (32)
Total                                       336           290           328


Segmental analysis
                                      June 2005     June 2004      Dec 2004
                                       Reviewed      Restated      Restated
                                      Operating     Operating     Operating
                                         income        income        income
                                             Rm            Rm            Rm
Nedbank Corporate                         2 872         2 797         5 944
Imperial Bank                               322           267           482
Nedbank Capital                           1 135         1 065         2 530
Nedbank Retail                            3 346         3 263         6 687
Shared Services                             162            61           506
Capital Management
and Central Funding                       (528)         (726)       (1 859)
Eliminations                               (24)         (144)         (269)
Total                                     7 285         6 583        14 021


Segmental analysis

                                      June 2005     June 2004      Dec 2004
                                       Reviewed      Restated      Restated
                                       Headline      Headline      Headline
                                       earnings      earnings      earnings
                                             Rm            Rm            Rm
Nedbank Corporate                           927           812         1 844
Imperial Bank                                56            47            71
Nedbank Capital                             447           355           906
Nedbank Retail                              439           214           575
Shared Services                            (94)         (128)         (149)
Capital Management
& Central Funding                         (377)         (498)       (1 505)
Eliminations
Total                                     1 398           802         1 742


Geographical segmental analysis
for the period ended                  June 2005     June 2004      Dec 2004
                                       Reviewed      Restated      Restated
                                      Operating     Operating     Operating
Rm                                       income        income        income
South Africa                              6 704         5 646        12 686
Business operations                       6 704         5 646        12 686
Merger and recovery programme expenses
Foreign currency translation losses
Minority interest income
attributable to preference
shareholders
Rest of Africa                              237           206           304
Rest of world                               344           731         1 031
Business operations                         344           731         1 031
Merger and recovery programme expenses
Total                                     7 285         6 583        14 021


Geographical segmental analysis

for the period ended                   June 2005     June 2004     Dec 2004
                                        Reviewed      Restated     Restated
                                        Headline      Headline     Headline
Rm                                      earnings      earnings     earnings
South Africa                               1 210           526        1 513
Business operations                        1 214         1 062        2 647
Merger and recovery programme expenses      (53)         (328)        (625)
Foreign currency translation losses          165          (98)        (280)
Minority interest income
attributable to preference shareholders    (116)         (110)        (229)
Rest of Africa                                79            83           45
Rest of world                                109           193          184
Business operations                          109           193          220
Merger and recovery programme expenses                                 (36)
Total                                      1 398           802        1 742


Material adjustments for IFRS restatements
The basis of the material adjustments, net of the associated tax impact, as
shown in the tables for 'Reconciliation of restated profit attributable to
ordinary shareholders' and 'Reconciliation of restated statement of changes in
shareholders' equity' are noted below:


Note 1: Credit impairment
Previously the group calculated its impairment losses on loans and advances on
an 'expected loss' basis. Credit impairments were calculated using historical
data and trends. The discount rate used to calculate the recoverable amount
included an allowance for a credit spread.


Under IFRS the group has moved to an 'incurred loss' basis. Impairment losses
are incurred only if there is objective evidence of impairment as a result of
one or more past events that have occurred since initial recognition. IFRS
also allows for the creation of a credit impairment for incurred but not
reported (IBNR) losses  to provide for latent losses in a portfolio of loans
that have not yet been individually evidenced. The discount rate used to
calculate the recoverable amount now excludes any allowance for a credit
spread.


Note 2: Revenue recognition and deferred acquisition costs
Previously fees charged and certain related acquisition costs for originating
loans were recognised immediately in the income statement.


In accordance with IFRS fees charged for loans are recognised as revenue as
the services are provided. Initial fees, which relate to the future provision
of services, are deferred and amortised over the anticipated period in which
the services will be provided.


Similarly, costs that are directly attributable to securing a loan are deferred
as an asset and amortised as the related revenue is recognised.


Note 3: Goodwill
Previously the group recognised acquired goodwill at cost and amortised it on
a straight-line basis over its expected useful life. Goodwill was subject to
review for indications of impairment and any impairment losses were recognised
in the income statement.


IFRS requires that goodwill is not amortised, but is subject to impairment
reviews, both annually and when there are indications that the carrying value
may not be recoverable. Negative goodwill is no longer recognised on the
balance sheet, but in the income statement as it arises.


The 2004 goodwill amortisation previously recognised in the income statement
has been reversed, resulting in a corresponding increase in equity. All
goodwill has been tested for impairment at 1 January 2004, 30 June 2004, and
31 December 2004 in accordance with IFRS, with no further impairment being
recognised on transition. Negative goodwill that was previously held on the
balance sheet at the transition date was released to reserves.


Note 4: Foreign exchange
Previously the group classified the assets and liabilities of all foreign
subsidiaries and branches as either foreign entities or integrated operations.
The foreign currency adjustments arising from the translation of foreign
entities were recognised directly in equity in the Foreign Currency
Translation Reserve (FCTR), while those of the integrated operations were
recognised in the income statement.


IFRS requires the group to determine the 'functional currency' for all
entities and the distinction between foreign entities and integrated
operations has been removed. An entity, which has a non-rand functional
currency, is translated at the closing exchange rate and the differences
arising are reported directly to equity, while all other entities classified
as having a rand functional currency report foreign currency translation
differences in the income statement.


The group has elected to apply the exemption afforded to it by IFRS 1 and
reset the balance of the FCTR to zero at the date of transition to IFRS.


Note 5: Share-based payments
The group grants share options to employees under employee share incentive
schemes. Other than costs incurred in administering the schemes, which were
expensed as incurred, the schemes did not result in any expense to the group,
except for a dilution in earnings per share when the shares were issued.
In accordance with the requirements of IFRS the group has recognised an
expense in the income statement, with a corresponding credit to equity,
representing the fair value of outstanding employee share options with regard
to its equity settled schemes. The fair value at the date of granting the
options is charged to income over the relevant option vesting periods,
adjusted to reflect actual and expected levels of vesting.


Note 6: Post-employment benefits
Previously the group elected to use the corridor method for the recognition of
actuarial gains and losses. Only cumulative actuarial gains or losses in
excess of 10% of the surplus or deficit in the fund were amortised in the
income statement. Cumulative gains or losses inside this corridor were carried
on the balance sheet and recognised over the expected remaining working lives
of the employees.


Under IFRS 1 the group has applied the option to eliminate its pension fund
corridor against opening retained income at the date of transition. The asset
has been eliminated, and the adjustment taken to retained earnings as at 1
January 2004. Future actuarial gains or losses will continue to be recognised
using the corridor method.


Note 7: Property, plant and equipment
Previously property, plant and equipment were measured at cost less
accumulated depreciation and impairment losses.


Under IFRS, equipment (principally computer equipment, motor vehicles,
fixtures and furniture), is still stated at cost less accumulated depreciation
and impairment losses.


Owner-occupied property has been recognised at revalued amounts, being the
fair value at the date of revaluation less subsequent accumulated depreciation
and accumulated impairment losses. Increases in valuation of the properties
are taken to a revaluation reserve. This revaluation reserve is amortised over
the remaining useful life of the property.


Land is not depreciated.


Investment properties are stated at revalued amounts, being fair value at the
date of revaluation less accumulated impairment losses. Increases or decreases
in valuation are recognised in the income statement and investment properties
are not depreciated.





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