ING Direct 2008 Annual Report Download - page 10

ING Group Annual Report 2008
8
1.1 Who we are
Information for shareholders (continued)
PROFIT RETENTION AND DISTRIBUTION POLICY
ING Group’s profit retention and distribution policy is determined
by its internal financing requirements and its growth opportunities
on the one hand and the capital providers’ dividend expectations
on the other. ING Group’s internal funding needs are determined
partly by statutory solvency requirements and capital ratios,
compliance with which is essential to its existence. Credit ratings
are just as important to ING Group, because they directly affect
the company’s financing costs and hence profitability. For their
part, the capital providers expect a dividend which reflects ING
Group’s financial results and is relatively predictable. Following the
capital injection from the Dutch State, ING maintains full discretion
to determine its dividend on ordinary shares.
ING Group has announced that it will not pay a final dividend in
May 2009 over the year 2008. Given the intensity of the crisis, it
is difficult to foresee whether ING Group will be in a position to
pay a dividend in 2009. The interim dividend for 2009 will not
automatically be half of the total dividend of 2008.
ING Group will continue to pay dividends in relation to underlying
cash earnings, and will take a balanced approach to dividends in
a careful and conservative manner in the next few years.
Core Tier-1 securities
In October 2008, ING Group took advantage of previously
announced capital support facilities by the Dutch Government by
issuing EUR 10 billion of core Tier-1 (‘Securities’) to the Dutch State
with a coupon of 8.5%. This capital injection significantly
enhanced the capital position of ING Group. The Securities are pari
passu with common equity (there is no claim, even in liquidation).
When a dividend is paid, however small, the coupon on the
Securities is also payable, albeit only with the permission of DNB
(the Dutch central bank). More information on the Securities and
the relation between dividend on common shares and the coupon
on the Securities is available in the Capital management section,
starting on page 16.
Share buy-back programme
On 16 May 2007, ING announced a share buy-back programme
to purchase ordinary shares (or depositary receipts for such shares),
with a total value of EUR 5 billion over a period of 12 months,
beginning in June 2007. On 23 May 2008, ING Group announced
that it had completed the share buy-back programme. Under the
programme, ING has repurchased 183,158,017 ordinary shares
(or the depositary receipts therefor) in the market for a total
consideration of EUR 4,903,355,838.50, bringing the average
purchase price for the total programme to EUR 26.77. The
repurchased shares were cancelled in accordance with approval
obtained at the 2008 annual General Meeting.
Preference A shares
On 5 March 2008, ING announced the tender offer for the
6,012,839 issued and outstanding preference A shares (or the
depositary receipts therefor) of ING Groep N.V., with a nominal
value of EUR 1.20 each. The purchase price for each share offered
in accordance with the Tender Offer was EUR 3.60, or EUR 21.6
million in total. The purpose of the buy-back of the preference
A shares was to simplify the corporate ownership and capital
structure of ING on a one-share-one-vote basis and to optimise its
capital structure. The tender period ended on 26 June 2008 and
all preference A shares (or the depositary receipts therefor) were
cancelled in accordance with the resolution of ING’s General
Meeting held on 22 April 2008.
LISTINGS
In November 2008, ING Group announced its intention to
concentrate the trading of its shares (or the depositary receipts
therefor) on the stock exchanges in Amsterdam, Brussels and
New York (NYSE). Accordingly, ING has sought voluntary delisting
of shares from the stock exchanges in Frankfurt, Paris and
Switzerland. All relevant authorities and exchanges have approved
the applications to delist and trading was halted as of 20 January
2009 in Paris, as of 26 February 2009 in Frankfurt and as of
3 March 2009 in Switzerland. Options on ordinary shares
ING Group (or the depositary receipts therefor) are traded at
the NYSE Euronext Amsterdam Derivative Markets and the
Chicago Board Options Exchange.
Authorised and issued capital
in millions
Year-end
2008
Year-end
2007
Ordinary shares
– authorised 1,080 720
– issued 495 534
Preference shares
– authorised 360
– issued 19
Cumulative preference shares
– authorised 1,080 1,080
– issued ––
Shares in issue and shares outstanding in the market
in millions
Year-end
2008
Year-end
2007
(Depositary receipts for) ordinary shares
of EUR 0.24 nominal value 2,063.1 2,226.4
(Depositary receipts for) own ordinary shares
held by ING Group and its subsidiaries 36.5 126.8
(Depositary receipts for) ordinary shares
outstanding in the market 2,026.6 2,099.6
(Depositary receipts for) preference shares
of EUR 1.20 nominal value 16
(Depositary receipts for) own preference shares
held by ING Group and its subsidiaries 10
(Depositary receipts for) preference shares
outstanding in the market 6
Prices depositary receipts for ordinary shares
Euronext Amsterdam by NYSE Euronext
in EUR 2008 2007 2006
Price – high 26.21 34.69 35.95
Price – low 5.33 24.38 27. 82
Price – year end 7.33 26.75 33.59
Price/earnings ratio* n.a.** 6.2 9.4
* Based on the share price at year-end and underlying net profit per ordinary
share for the financial year.
** Not applicable.