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Standard Bank- Selection process for regional business and community groupings Standard Bank Group Limited (Incorporated in the Republic of South Africa) (Registration number 1969/017128/06) JSE share code: SBK Namibian share code: SNB ISIN: ZAE000057378 ("Standard Bank") SELECTION PROCESS FOR REGIONAL BUSINESS AND COMMUNITY GROUPINGS AS PARTICIPANTS IN STANDARD BANK"S BLACK OWNERSHIP INITIATIVE 1. INTRODUCTION On 19 January 2006, Standard Bank announced that a process was being embarked upon to identify and select the regional business and community groupings that would be the beneficiaries of the 20.1 million Standard Bank ordinary shares owned by the Tutuwa Community Trust. The Tutuwa Community Trust is a trust formed for the benefit of regional business and community groupings and is one of the participants in the broad-based grouping of black entities that acquired an effective 10% interest in the South African banking operations of Standard Bank in the black ownership initiative transaction announced on 15 July 2004. The participation rights in the Tutuwa Community Trust were allocated as follows: - 50% to regional businesses that are owned and controlled by black people (as defined in the Financial Sector Charter) operating in the small and medium sized enterprises ("SME") sector ("the regional business component"); and - 50% to community development groupings whose activities benefit black people ("the community development component"). A further announcement on 27 July 2006 stated that although a high number of applications that met the qualifying criteria ("qualifying applications") had been received in total, the provinces of Gauteng, KwaZulu-Natal and Western Cape were oversubscribed ("the oversubscribed provinces") while the number of qualifying applications received from the remaining six provinces was less than the provincial targets set ("the under-represented provinces"). The announcement further stated that the Trustees of the Tutuwa Community Trust ("the Trustees") remained committed to meeting the initial objective of having a broad base of participants from all the nine provinces of South Africa and as such were going to undertake some initiatives ("the further initiatives") to increase the number of applications from the under-represented provinces. In the event that the further initiatives did not result in the number of qualifying applications meeting or exceeding the required provincial targets, it was stated that the Trustees would reserve the right to award the remaining participation rights to those qualifying applications in the oversubscribed provinces that had not been awarded participation rights ("excess qualifying applications"). As far as the community development component was concerned, it was announced that the Trustees were in the process of establishing a community foundation that would be a sustainable independent institution with a secure capital base, long-term cash flow and on-going allocations to specific activities that will benefit primarily black people living in rural areas. Further details on the community development component were to be contained in an announcement at a later date. 2. OUTCOME OF REGIONAL BUSINESS COMPONENT PROCESS The Trustees are pleased to announce that following the opening of the application process relating to the regional business component and the further initiatives in the under-represented provinces, approximately 600 applications were received, of which 270 were qualifying applications. Although the combined number of qualifying applications received from all the provinces exceeded the total target of approximately 250, the number of qualifying applications received from the under-represented provinces remained less than the provincial targets set, although the shortfalls were significantly reduced after new applications were received as a result of the further initiatives. In order to address the remaining shortfall in the under-represented provinces after the further initiatives, excess qualifying applications, ranked in order of the scores they achieved, have been taken into account in increasing the number of successful participants to 250. Those excess qualifying applications that have not been allocated participation rights in the Tutuwa Community Trust have been retained by the Trustees on a reserve list of qualifying applicants from which beneficiaries will be selected should the current successful SMEs fail to comply with the on- going conditions. On-going conditions are that each successful SME must: - continue to be black-owned as defined in the Financial Sector Charter, as amended from time to time; - remain a going concern - it must not be liquidated, deregistered or otherwise cease to exist; - not cede, use for security, mortgage, pledge or otherwise encumber its entitlement to benefit from the Tutuwa Community Trust; - not cease conducting business; and - become an incorporated entity within 6 months of this announcement, if at the time of application, it was a sole proprietorship or a partnership. The table below shows the numbers of SMEs in each province that will receive participation rights in the regional business component of the Tutuwa Community Trust. Province Allocations Eastern Cape 29 Free State 15 Gauteng 77 KwaZulu Natal 54 Limpopo 13 Mpumalanga 13 North West 17 Northern Cape 2 Western Cape 24 Under final review 6 Total 250 The combined turnover of the successful SMEs was approximately R1.7 billion in 2005 and the SMEs have more than 10 000 permanent employees in various sectors of the economy. In this regard, the Trustees are satisfied that the outcome of the regional business component has achieved the objective of identifying and selecting operational SMEs that contribute directly to the alleviation of unemployment on a sustainable basis, as well as the objective of having a broad base of participants from all the nine provinces of South Africa. This therefore marks the completion of the identification and selection of participants in the regional business component of the Tutuwa Community Trust. 3. THE COMMUNITY DEVELOPMENT COMPONENT The final component of the black ownership initiative is the community development component. To this effect, Standard Bank is establishing a community foundation ("the Foundation") which will be an independent, not- for-profit, sustainable organisation that will administer the community development component of the Tutuwa Community Trust. The Foundation is intended to address the needs of primarily black communities in areas that are predominantly rural. The objectives of the Foundation are to: - stimulate economic growth by providing capacity building in rural environments occupied by predominantly poor people; and - create a legacy by being an endowment that lasts into perpetuity, while actively supporting social development programmes. Specific beneficiaries and initial areas to be financed and supported will be identified via a research programme to be embarked upon in 2007-2008. Johannesburg 2 November 2006 Investment bank and joint sponsor Standard Bank Legal adviser Bowman Gilfillan Independent consultant to the Trustees SizweNtsaluba VSP Independent lead sponsor Deutsche Securities (SA) (Pty) Limited Date: 02/11/2006 11:00:08 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
