Absa Group Limited (ABG) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and a very warm welcome to the extraordinary general meeting of the shareholders, which we are holding in hybrid format. Today's purpose is to engage with regards to the proposed broad-based BEE transaction. I would just like to start with some opening remarks, but what is clear at Absa is our commitment to being an effective cause for good and creating long-term real cradle for all our stakeholders. It is in this spirit that I'm list proposed for you, for your vote our new broad-based black economic empowerment transaction. The details of the transaction are contained in the shareholder circular, which we issued on the second of May so I will only touch on the key highlights. The transaction will make up 7% of Absa's issued share capital, comprising a 4% corporate social investment trust, which will be a capital ownership scheme and a 3% staff trust, which will invest after 5 years. The beneficiaries of the broad-based BEE transaction will be brought. The CSI Trust will provide education and youth and employability benefits. This will provide a broad range of beneficiaries from previously disadvantages -- disadvantaged communities across South Africa. The staff trust will benefit all of approximately 26,000 employees in South Africa with approximately 20,500 previously disadvantaged colleagues receiving a 20% higher allocation. Our transaction will benefit Absa sustainably enhancing our broad-based BEE credentials. And this will [indiscernible] by increasing our flat equity ownership from the current 17.4% to above the 25% threshold set out in South Africa's financial sector code. And also, it will contribute approximately 6.75 additional points to our broad-based BEE scorecard, living Absa sustainably with a Level 1 BEE rating -- we're excited about the long-term economic and social benefits of this transaction. And what is all it brings to achieve shared prosperity and also inclusive growth for the benefit of all our stakeholders. Now I would like to outline the following process. in case any shareholders have any questions to ask. So the circular to upstart shareholders regarding the proposed 7% BEE structure equating to a transaction value of approximately 11.6%. The notice of the Extraordinary General Meeting or any other meta tabled at this meeting. So to the extent that there are any question if any questions, if you're attending in person today and you're in the room, please raise your hand to ask your question. If you're attending virtually and wish to ask webinar questions, please read your hand on teams. And if attending via the shareholder platform, please send your questions now by selecting the Q&A icon at the top of the screen and then typing in your message with the chatbox -- within the chatbox at the bottom of the messaging screen and then follow up with a send -- pressing send. Shareholders require an invitation code to access the shareholder platform. And this would have been provided in advance, upon online registration through the Computershare virtual meeting services platform. So -- and this will do by clicking on the Absa logo. And so I shall either respond to the question post or direct the question to the appropriate respondent. Shareholders are also referred to the virtual hybrid settings as meetings sorry. Shareholders are referred to the virtual hybrid meting shareholder user guide, which is available in the documents folder once the meeting has been accessed from the Absa AGM 2023 shareholder portal to participating shareholders. The user guide would have been e-mailed to shareholders after they have received their access credentials. So with that process in place, I don't know at this point, maybe I should start with just highlighting that these proceedings are recorded and are broadcast via live cast. And with me in attendance, the Chairman of the Social Sustainability and Ethics Committee, Francis Okomo-Okello; The China Group Audit and Compliance Committee, Tasneem Abdool-Samad; the Chairman of the Group Remuneration Committee Rose Keanly, our lead Independent Director, Nonhlanhla Mjoli-Mncube; our Group Chief Executive Officer, Arrie Rautenbach; our Group Financial Director, Jason Quinn and the group company secretary Nadine Drutman. Arrie and Jason are available to answer any questions pertaining to the broad-based BEE transaction. Other Board members are also available to answer any questions pertaining to the topic that we discussed today. We also have members of the transaction team in attendance to answer any questions pertaining to the BEE transaction then we have [indiscernible] who is our lead transactor. -- and also our legal representative Jason Janse van Vuuren. So, we got 2 Jasons in the room here. Members of the media will be attending the AGM via live webcast. They will be attending, I guess, capacity as opposed to shareholder capacity, and will therefore need to be able to post questions during the course of -- well might be able to post questions during the course of the AGM. However, the Absa media relations team will facilitate any responses to questions following the formal conclusion of the AGM. It is important to allow us to finalize the voting and have the results [ polited ] before the outcomes are communicated. So In terms of our notification to shareholders, we notified them of this proposed broad-based BEE transaction via SENS 31st of March 2023. Some of us were also notified of the positive circular postulate proposed the transaction together with the salient date and times of the AGM via SENS on the 2nd of May 2023. We'll see a review that will pursue the circular guiding the proposed BEE transaction and notice of EGM. These were all available on the website from 2 May '23. In addition, shareholders were notified by way of SENS -- further SENS on the 25th of May by reminding shareholders of the details as to how to join the AGM using the virtual channel. So we have 6 resolution I might ask to be voted on before the shareholders meeting today. These are 4 special resolutions, which require a 75% vote to ordinary resolutions, one of which requires 75% vote whilst the other requires a 15% route. So now I shall turn to the business of the meeting to consider the level solutions that I've mentioned. I would just like to repeat that the notice of the Extraordinary General Meeting and was sent to all the shareholders within the prescribed [indiscernible] as required by the Companies act. So I take the notice of the meeting as read. And I would like to confirm that we have a quorum with 70 -- over 78% of the shareholders are represented at this meeting. So it is at this point that I'm happy to welcome any questions. But shareholders go back to posting. Are there any questions in the room? Are there any questions online, anything?

Just checking now. I don't see any questions.

And then on teams?

And there no questions on team.

So in the absence of questions, let's proceed with the business of today, which is to vote the resolutions that are in -- so voting on all resolutions, obviously was opened at the start of the maintain on the shareholder platform. So once the voting is opened, you click on the vote icon at the top of the screen from there, the resolutions and voting choices will be displayed or to simply select our voting direction from their options shown on the screen. The confirmation message will appear to show that your vote has been received. And to change your vote at anytime in the meeting, click on change vote link and simply select another direction. Voting can be performed at any time during the meeting until I have declared at the end of the team that are voting on all resolutions has been closed at this point. Your last choice will have been already submitted. Shareholders are encouraged to capture their votes for resolutions at the earliest opportunity, on voting to ensure that these have been recorded in the event of a technical interruption or breaking or connectivity. voters are asked for each resolution will be displayed after voting has closed. For the purpose of the virtual voting process I appoint scrutineers, the representatives of Computersharee Investor Services (Pty) Ltd, who are the company's transfer secretaries. So we shall now proceed with the business of the meeting, which is voting on the resolutions. So the section on absorbers shareholders regarding the proposed 7% broad-based BEE transaction, equity transaction will of approximately ZAR 11.6 billion of the Absa Group Limited, including the directors' recommendation and report of the independent report reporting our content has been published to shareholders and are available on the company's website, www.absa.africa. If there are no further specific questions from shareholders, I declare that the meeting has noted the circular and proposed BEE transaction, together with the reports aforementioned. So we shall now proceed with the voting and start with the special resolutions. Remember that the percentage of voting rights required to pass any of the special resolutions is 75%. So we shall move on to special resolution #1, which is an increase of last company ordinary share capital. So I think the explanation has been given to the shareholders. So I shall now put the motion that the proposed increase of the authorized ordinary share capital asset of flat. On Page 64 of the shareholders not to be approved accordingly. Will you kindly indicate your vote in respect of special resolution number one. [Voting]

And then special resolution #2 refers to the approval of the amendments to the Absa Memorandum of Incorporation. It is a requirement that the Companies Act, but the amendments to the MOI of the company were approved by way of special resolution. So the reason for this special resolution to amend the Memorandum of Incorporation to [indiscernible] and reflect the increase in authorized shares of the company has contemplated in special resolution number and above. This is subject to a special adoption of the special resolution above. Full particulars of the MOI amendment are included in Page 84, paragraph 8.2 of the circular to shareholders. I shall now put the motion about the MOI amendment As reflected on Pages 64 and 65 of the shareholder notice, we are approved accordingly. Please indicate your vote in respect of special resolution #2. [Voting]

We shall move on to special resolution #3, who [indiscernible] financial assistant pursuant to Section 44 of the Companies Act. This section congratulates the provision of Laws and other financial assistance by a company to persons for a subscription of securities in that company. A reason for this special resolution is to comply with the requirements of section 44. Insofar as any action or step-taken by the company pursuant to the implementation of the proposed BEE transaction, including without limitation, the preferred share funding constitutes financial assistance pursuant to Section 44 of the Companies Act. Full particulars of the provision of financial assistance are included on 35 referring to product of 10.2% of the circular to the shareholders. I shall now put the motion to authorize the company to provide preference share, funding and financial assistance to persons to subscribers in the company in terms of the proposed BEE transaction. Will you kindly indicate your vote in respect of special resolution #3 on your device. [Voting]

And special resolution #4, as to the issue of shares pursuant to section 41 of the Companies Act. Section 41 of the Companies Act regulates the shareholder approval for issuing shares in certain cases to a related company and/or Director and/or prescribed officer or meaning thereof. The reason for this special resolution is that the executive Directors and prescribed officers will participate in the South African Star scheme alongside other staff. Full particulars of the issue are included on Page 34, paragraph 10.1of the circular that was disseminated to shareholders. I shall now put for the motion to authorize the competitive issue. So to issue shares to NS 1405 through each such rights in relation led to our issued Executive Directors and prescribed officers who will participate in the South African staffs team alongside and other staff. So do kindly indicate you vote in respect of special resolution #4 on your device. [Voting]

So I'll move on to ordinary resolutions. Please note, as [indiscernible], ordinary resolution requires 75% of the boat in terms of the GSC listings requirements, that's rule 5.5 1G. And then ordinary resolution #2 requires a 50% plus 1 vote. So let's move on to the ordinary resolution #1, which comprise 75% vote. We still also with a specific issue pursuant to paragraph 5.51G of Jersey, listings requirement. the reason for resolution is to give the board specific authority to a specific issue of 46,626,228 authorized but unissued Absa shares following the adoption of special resolution #1 to NS1405 for cash. In terms of the listings requirement, a specific issue required by way of ordinary resolution, achieving a 75% majority of the votes cast in favor by the exclusive participants in the specific issue of Executive Directors and the associates who are related parties in terms of the listing requirements. Accordingly, the vote of NS-1405 and executive Director being Mr. Arrie Rautenbach and Mr. Jason Quinn will be excluded. Full particulars of the specific issue are included on Page 34, paragraph 10.1 of the circular to shareholders. I shall now put the motion to authorize the company to issue specific shares be approved. So would you kindly indicate your vote in respect of ordinary resolution #1 on your device. [Voting]

So we'll move on to ordinary resolution #2. This is to do with general authorization the reason for the ordinary resolution is to authorize any director or the group companies secretary to clear out execute all documents and do all such things as he or she may in his or her discussion consider necessary or appropriate in connection with and to implement and to give effect to the special and ordinary resolutions set out herein. I shall now put the motion that the general authorization be approved, so kindly indicate your vote in respect of ordinary resolution #2 on your device. All right. That deals with all the resolutions that came into roads indicated earlier, you are able to do some last minute changes. But if you wish to do so, please do so now because the voting will close in the next few minutes. We'll just wait for the outcomes of the votes. [Voting]

It is visible from where I am. So special resolution #1, 98.59%. So the past special resolution #2, 99.4%; Special resolution #3, 98.59%, special resolution #4, 98.54%. And then ordinary resolution #1, 99.36%, then ordinary resolution #2, 98.59%. So all resolutions pass. I just like to take this moment to thank shareholders and the directors for making the time to be present at this meeting. And thank you very much, and all the best and enjoy the rest of your Friday and weekend.