Full annual report - African Bank - Investoreports

Notes to the group annual financial statements continued
52. Contingent liabilities
The group has deposits with the Standard Bank of South Africa Limited (SBSA) for electronic funds transfer (EFT) and
electricity guarantees totalling R6 million (2011: R7 million).
An indemnity of R0,7 million was issued to SBSA on 29 June 2006 to cover a guarantee made to VISA in respect of credit
card transactions (2010: R0,7 million).
One of the group’s insurance subsidiaries, Stangen, has not provided for outstanding level life claims amounting to
R125 million (2011: R125 million) as, after extensive repeated efforts, the beneficiaries could not be traced. The amount is
made up of 27 433 policies whereof the bulk of the events occurred between five and 10 years ago. In the financial year
2008 an outside party was tasked to trace the next of kin of all unclaimed level life policies and this exercise resulted in
R5,7 million (under 1 200 policies) being paid to beneficiaries. The probability of any claims being subsequently made is,
from prior experience and based on the result of the exercise by the third party, extremely low. Should any claims be made
they will be taken as losses in the relevant period.
Gilt Edged Management Services (Proprietary) Limited (GEMS), a subsidiary of the group via Theta Investments (Proprietary)
Limited, has a contingent liability to customers as a result of a court order issued in 2004, to pay reparations to customers who
might have been prejudiced by actions of the company between 1999 and 2002. The terms of the court order require each
customer to sign an acceptance and waiver form before the settlement can be made. In terms of the court order the maximum
amount of potential reparations was R60,1 million of which in excess of R40,0 million was paid by the end of September 2006.
Subsequent to September 2006, a marginal amount of R0,2 million of reparations was paid to GEMS customers.
The group has a contingent exposure to legal claims of R1,3 million (2011: R1,4 million).
R million 2012 2011
53. Operating lease commitments
Payable within one year 714 672
Property 663 623
Equipment 25 20
Motor vehicles 26 29
Payable between one and five years 1 806 1 599
Property 1 729 1 505
Equipment 33 62
Motor vehicles 44 32
Payable thereafter – property 625 785
Total operating lease commitments 3 145 3 056
54. Long term incentive plan (LTIP) commitments
There is no liability (2011: R4 million) for the converted option instrument. The liability of R154 million (2011: R138 million)
for the LTIPs issued in October 2008, October 2009, October 2010 and October 2011 has been included in other liabilities
(refer note 15). Refer to the remuneration report for a full analysis of the converted option instrument and the LTIP scheme.
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