Rand Merchant Insurance Holdings Limited ( formerly Main Street 796 Limited)

Transcription

1 Rand Merchant Insurance Holdings Limited ( formerly Main Street 796 Limited) Incorporated in the Republic of South Africa (Registration number 2010/005770/06) Share code: RMI ISIN: ZAE ( RMI Holdings or Company ) Pre-listing statement of RMI Holdings relating to the listing of RMI Holdings on the JSE with effect from the commencement of business on 7 March February 2011 This pre-listing statement is not an invitation to subscribe for RMI Holdings ordinary shares, but is issued in compliance with the Listings Requirements of the JSE for the purpose of providing information to the public with regard to RMI Holdings. An abridged version is intended for release on SENS on 21 February 2011 and publication in the press on 22 February This pre-listing statement has been posted together with the circular to RMB Holdings Limited ordinary shareholders, dated 3 February 2011, which sets out the details relating to the RMBH restructuring. This pre-listing statement has been prepared on the assumption that the RMBH restructuring will be implemented as set out in the aforementioned circular. Merchant bank and sponsor Independent reporting accountants and auditors Independent expert Legal advisors Competition law advisors Independent sponsor

2 CORPORATE INFORMATION AND ADVISORS RMI Holdings registered office 3rd Floor, 2 Merchant Place Corner Fredman Drive and Rivonia Road Sandton, 2196 South Africa (PO Box , Sandton, 2146) Legal advisors Webber Wentzel Attorneys 10 Fricker Road Illovo Boulevard, Illovo Johannesburg, 2196 South Africa (PO Box 61771, Marshalltown, Johannesburg, 2010) Transfer secretaries Computershare Investor Services (Proprietary) Limited (Registration number 2004/003647/07) Ground Floor, 70 Marshall Street Johannesburg, 2001 South Africa (PO Box 61051, Marshalltown, 2107) Merchant bank and sponsor Rand Merchant Bank (A division of FirstRand Bank Limited) (Registration number 1929/001225/06) 1 Merchant Place Corner Fredman Drive and Rivonia Road Sandton, 2196 South Africa (PO Box , Sandton, 2146) Date of incorporation of RMI Holdings 24 March 2010 Company secretary Anthony Maher (BCompt (Hons), CA(SA)) 3rd Floor, 2 Merchant Place Corner Fredman Drive and Rivonia Road Sandton, 2196 South Africa (PO Box , Sandton, 2146) Independent sponsor PricewaterhouseCoopers Corporate Finance (Proprietary) Limited (Registration number 1970/003711/07) 2 Eglin Road Sunninghill, 2157 South Africa (Private Bag X36, Sunninghill, 2157) Independent reporting accountants and auditor PricewaterhouseCoopers Inc. Chartered Accountants (SA) Registered Accountants and Auditors (Registration number 1998/012055/21) 2 Eglin Road Sunninghill, 2157 South Africa (Private Bag X36, Sunninghill, 2157) Independent expert KPMG Services (Proprietary) Limited (Registration number 1999/012876/07) KPMG Crescent, 85 Empire Road Parktown, 2193 Johannesburg South Africa (Private Bag 9, Parkview, 2122) Place of incorporation of RMI Holdings Republic of South Africa

3 IMPORTANT INFORMATION The definitions and interpretations commencing on page 4 of this pre-listing statement apply mutatis mutandis to this important information. This pre-listing statement is important and requires your immediate attention. This pre-listing statement has been prepared on the assumption that the ordinary resolutions set out in the notice of general meeting forming part of the RMBH circular, which is enclosed in the envelope together with this pre-listing statement, will be passed at the RMBH general meeting to be held on 18 February 2011 and that the RMBH restructuring will be implemented. The Issuer Services Division of the JSE has agreed, subject to the fulfilment of the conditions precedent as reflected in the RMBH circular, to the listing of the entire issued ordinary share capital of RMI Holdings in the Investment Instruments sub-sector of the Financials sector of the JSE under the name Rand Merchant Insurance Holdings Limited with effect from the commencement of business on 7 March On the commencement of listing, the authorised share capital of RMI Holdings will comprise ordinary shares with a par value of R each and cumulative redeemable preference shares with a par value of R each. The issued share capital will comprise approximately ordinary shares. All RMI Holdings ordinary shares will rank pari passu. RMBH will unbundle its RMI Holdings ordinary shares to RMBH ordinary shareholders, who will receive one RMI Holdings ordinary share for every RMBH ordinary share held on the record date to participate in the RMI Holdings unbundling. The RMI Holdings ordinary shares will only be traded in electronic form on the JSE and, accordingly, all RMI Holdings shareholders who hold RMI Holdings ordinary shares in certificated form will have to dematerialise their certificated RMI Holdings shares should they wish to trade on the JSE. This pre-listing statement is available in English only. Additional copies may be obtained during normal business hours from 3 February 2011 to 7 March 2011, both days inclusive, from RMI Holdings registered office, and the offices of the independent sponsor and the transfer secretaries, the addresses of which are set out in the Corporate information and advisors section of this pre-listing statement. 1

4 TABLE OF CONTENTS The definitions and interpretations commencing on page 4 of this pre-listing statement apply, mutatis mutandis, to this table of contents. Page Corporate information and advisors Inside front cover Important information 1 Important dates 3 Definitions and interpretations 4 Pre-listing statement 1. Introduction Rationale for the listing Information relating to RMI Holdings Financial information Pro forma financial information Directors and senior management Share capital Information on shareholders Acquisitions and disposals General Advisors consents and interests Expenses relating to the RMBH restructuring Interests of promoters and directors Commission Directors responsibility statement Working capital statement Documents available for inspection 28 Annexure 1 Report of historical financial information of RMI Holdings 29 Annexure 2 Report of historical financial information on Discovery 32 Annexure 3 Report of historical financial information on OUTsurance 38 Annexure 4 Report on historical financial information of RMB-SI 100 Annexure 5 Report of historical financial information on Momentum 161 Annexure 6 Report of historical financial information on Metropolitan 168 Annexure 7 Report on interim historical financial information on Metropolitan 174 Annexure 8 Independent reporting accountants report on the historical financial information of RMI Holdings 179 Annexure 9 Independent reporting accountants report on the historical financial information of OUTsurance 181 Annexure 10 Independent reporting accountants report on the historical financial information of RMB-SI 183 Annexure 11 Unaudited pro forma financial information of RMI Holdings 185 Annexure 12 Unaudited pro forma financial information of MMI Holdings 190 Annexure 13 Independent reporting accountants limited assurance report on the unaudited pro forma financial information of RMI Holdings 201 Annexure 14 Independent reporting accountants limited assurance report on the unaudited pro forma financial information of MMI Holdings 203 Annexure 15 Extracts from the new Memorandum of Association and Articles of Association 205 Annexure 16 Information on directors and past directorships 238 Annexure 17 Corporate Governance and King Code 256 2

5 IMPORTANT DATES The definitions and interpretations commencing on page 4 of this pre-listing statement apply mutatis mutandis to this section. Listing of the new RMBH ordinary shares to be issued in terms of the Royal Bafokeng placement on Subscription date in terms of the Royal Bafokeng placement on Last day to lodge forms of proxy for the RMBH general meeting by 10:00 on General meeting of RMBH ordinary shareholders at 10:00 on Results of the RMBH general meeting released on SENS on Expected date of fulfilment or waiver (where applicable) of the conditions precedent to the first FSL sale on Results of the RMBH general meeting published in the press on Release of the abridged RMI Holdings pre-listing statement on SENS on Issue and listing of new RMBH ordinary shares in terms of the first FSL sale on Expected date of fulfilment or waiver (where applicable) of the conditions precedent to the RMI Holdings unbundling on Last day to trade in dematerialised RMBH ordinary shares on the JSE in order to participate in the RMI Holdings unbundling on RMBH ordinary shares trade ex the entitlement to the unbundled RMI Holdings ordinary shares on Listing of unbundled RMI Holdings ordinary shares with effect from the commencement of business under the JSE code: RMI, ISIN: ZAE and abbreviated name RMIH on Commencement of trade in RMI Holdings ordinary shares on Record date for RMBH ordinary shareholders to participate in the RMI Holdings unbundling on Expected date of fulfilment or waiver (where applicable) of the conditions precedent to the second FSL sale and the third FSL sale on RMI Holdings share certificates posted by registered post to certificated RMBH ordinary shareholders on or about Dematerialised RMBH ordinary shareholders have their accounts at their CSDP or brokers updated with their unbundled RMI Holdings ordinary shares on Listing of new RMBH ordinary shares to be issued in terms of the second FSL sale on Listing of new RMI Holdings ordinary shares to be issued in terms of the third FSL sale on Operative date for the second FSL sale and third FSL sale on Announcement of specified ratio in respect of the apportionment of the cost / base cost for taxation / CGT purposes on or about Expected date of fulfilment or waiver (where applicable) of the conditions precedent to the OUTsurance acquisition on Operative date for the OUTsurance acquisition on 2011 Wednesday, 9 February Wednesday, 9 February Thursday, 17 February Friday, 18 February Friday, 18 February Friday, 18 February Monday, 21 February Monday, 21 February Monday, 21 February Tuesday, 22 February Friday, 4 March Monday, 7 March Monday, 7 March Monday, 7 March Friday, 11 March Monday, 14 March Monday, 14 March Monday, 14 March Tuesday, 15 March Tuesday, 15 March Tuesday, 15 March Wednesday, 16 March Friday, 15 April Friday, 29 April Notes: 1. All times referred to in this pre-listing statement are local times in South Africa. 2. Any material change to the above dates and times will be approved by the JSE, released on SENS and published in the press. 3

6 DEFINITIONS AND INTERPRETATIONS In this pre-listing statement and its annexures, unless otherwise stated or the context otherwise indicates, the words and expressions in the first column shall have the meanings stated opposite them in the second column and words and expressions in the singular shall include the plural and vice versa, words importing natural persons shall include corporations and associations of persons and vice versa and any reference to one gender shall include the other genders: articles the articles of association of RMI Holdings ; associate an associate as defined in the JSE Listings Requirements; BEE black economic empowerment, as contemplated in the Broad-Based Black Economic Empowerment Act (Act 53 of 2003), as amended; board or directors the board of directors of RMI Holdings on the listing date whose names appear on page 12 of this pre-listing statement; broker any person registered as a broking member equities in terms of the Rules of the JSE made in accordance with the provisions of the Securities Services Act; business day any day other than a Saturday, Sunday or official public holiday in South Africa; CEO and FD the chief executive officer and financial director of RMI Holdings for the time being; certificated RMBH ordinary RMBH ordinary shareholders who hold certificated RMBH ordinary shareholders shares; certificated RMBH ordinary shares RMBH ordinary shares which are certificated securities as defined in section 29 of the Securities Services Act, such RMI Holdings ordinary shares being evidenced by a certificate or written instrument; certificated RMI Holdings RMI Holdings shareholders who hold certificated RMI Holdings shareholders ordinary shares; certificated RMI Holdings ordinary RMI Holdings ordinary shares which are certificated securities as shares defined in section 29 of the Securities Services Act, such shares being evidenced by a certificate or written instrument; Companies Act the Companies Act (Act 61 of 1973), as amended; conditions precedent the conditions precedent to the RMBH restructuring as set out in the RMBH circular; CSDP a person that holds in custody and administers securities or an interest in securities and that has been accepted by a central securities depository as a participant in terms of the Securities Services Act; date of incorporation 24 March 2010; dematerialisation the process by which certificated securities are converted to or held in electronic form as uncertificated securities and recorded as such in a sub-register of members maintained by a CSDP; dematerialised RMBH ordinary RMBH ordinary shareholders who hold dematerialised RMBH shareholders ordinary shares; dematerialised RMBH ordinary RMBH ordinary shares that have been through the dematerialisation shares process; directors of RMBH the board of directors of RMBH as set out in the RMBH circular; Discovery Discovery Holdings Limited (registration number 1999/007789/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa, the ordinary share capital of which is listed on the JSE; Discovery interest EPS the ordinary shares held by RMBH in Discovery; earnings per share; 4

7 executive directors first FSL consideration shares first FSL sale first FSL sale agreement first FSL sale shares directors involved in the day-to-day running of RMI Holdings as full time salaried employees; the RMBH ordinary shares to be issued in consideration for the first FSL sale shares acquired pursuant to the first FSL sale, which number of shares will after the implementation of such acquisition and the third FSL sale result in FSL holding 34.9% of the ordinary shares in RMI, as determined in accordance with the following formula: RS REM1 = (34.9% RS+34.9% RS RBH ) (65.1% RS REM3 ) RS REM 65.1% Where: RS REM1 = the first FSL consideration shares; RS = the RMBH ordinary shares in issue; RS RBH = the Royal Bafokeng subscription shares; RS REM3 = the third FSL consideration shares; and RS REM = number of ordinary shares in RMBH held by FSL as at the pricing date which number is expected to be ; the acquisition by RMBH, prior to the RMI Holdings unbundling, of the first FSL sale shares from FSL in exchange for the issue by RMBH of the first FSL consideration shares to FSL in terms of the first FSL sale agreement; the agreement concluded between FSL and RMBH for the purchase by RMBH of additional ordinary shares in FirstRand in consideration for the issue to FSL of new fully paid ordinary shares in RMBH; the FirstRand ordinary shares to be acquired by RMBH from FSL pursuant to the first FSL sale as determined in accordance with the following formula: FS REMPRE = RS REM1 RMH PRE 15F Where: FS REMPRE = the first FSL sale shares; RS REM1 = the first FSL consideration shares; RMH PRE = value per share of RMBH as at and including the pricing date as determined by the following formula: (FS R 15F) + (DS R 15D) + (MS R 15M) + Sub+Other FirstRand the FirstRand acquisitions RS+RS RBH FS R = the FirstRand shares held by RMBH; 15F = the 15-day VWAP of FirstRand as at the pricing date; DS R = the Discovery shares held by RMBH; 15D = the 15-day VWAP of Discovery as at the pricing date; MS R = the MMI Holdings shares held by RMBH; 15M = the 15-day VWAP of MMI Holdings as at the pricing date; Sub = the Royal Bafokeng subscription amount; and Other = R the change in other balance sheet items from 30 November 2010 until the pricing date; FirstRand Limited (registration number 1966/010753/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa, the issued share capital of which is listed on the JSE and the Namibian Stock Exchange, including its subsidiaries from time to time; collectively, the first FSL sale and the second FSL sale; 5

8 FirstRand Bank FirstRand Bank Limited (registration number 1929/001225/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa and a wholly-owned subsidiary of FirstRand; FirstRand Bank preference shares variable rate cumulative redeemable preference shares of R each in the issued share capital of FirstRand Bank; FirstRand ordinary shareholders holders of FirstRand ordinary shares; FirstRand ordinary shares ordinary shares with a par value of 1 cent each in the issued ordinary share capital of FirstRand; FirstRand transaction collectively, the merger and the FirstRand unbundling; FirstRand unbundling the distribution by FirstRand of MMI Holdings ordinary shares, equating to approximately 59.3% of the entire issued ordinary share capital of MMI Holdings, to FirstRand ordinary shareholders, in compliance with section 90 of the Companies Act; FNB First National Bank, a division of FirstRand Bank Limited; FSL Financial Securities Limited (registration number 1972/004504/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa and a wholly-owned subsidiary of Remgro; HEPS headline earnings per share; IFRS the International Financial Reporting Standards; I-Net I-Net Bridge (Proprietary) Limited (registration number 1998/005987/07), a private company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; Income Tax Act the Income Tax Act (Act 58 of 1962), as amended; Independent expert or KPMG KPMG Services Proprietary Limited (registration number 1999/012876/07), a private company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; independent reporting accountants PricewaterhouseCoopers Inc, registered accountants and auditors (registration number 1998/012055/21), a private company duly registered and incorporated in accordance with company laws of South Africa; independent sponsor PricewaterhouseCoopers Corporate Finance (Proprietary) Limited (registration number 1970/003711/07), a private company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; JSE the exchange, licensed under the Securities Services Act, operated by the JSE Limited (registration number 2005/022939/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; JSE Listings Requirements or the listings requirements of the JSE, as amended; Listings Requirements KTI Kagiso Trust Investments (Proprietary) Limited (registration number 1993/007845/07), a private company duly registered and incorporated with limited liability in accordance with the company laws of South Africa, 51% of the ordinary shares of which are held by Kagiso Trust and 42.5% of the ordinary shares of which are held by Remgro; King II Report the King II Report on Corporate Governance for South Africa, as amended; King III Report the King III Report on Corporate Governance for South Africa, as amended; 6

9 last practicable date legal advisors listing or RMI Holdings listing listing date m 14 January 2011, being the last practicable date prior to the finalisation of this pre-listing statement; Webber Wentzel Attorneys; the listing of the unbundled RMI Holdings ordinary shares on the JSE on the listing date; the date the unbundled RMI Holdings ordinary shares will be listed on the JSE, being Monday, 7 March 2011; million; memorandum the memorandum of association of RMI Holdings ; merger Metropolitan the transaction in terms of which MMI Holdings acquired all the Momentum ordinary shares from FirstRand in consideration for which it issued MMI Holdings shares to FirstRand; MMI Holdings name prior to the implementation of the FirstRand transaction; MMI Holdings MMI Holdings Limited (registration number 2000/031756/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa, the issued ordinary share capital of which is listed on the JSE and the Namibian Stock Exchange; MMI Holdings interest MMI Holdings shares the ordinary shares held by RMBH in MMI Holdings post the implementation of the FirstRand transaction; ordinary shares with a par value of cent each, in the issued ordinary share capital of MMI Holdings; Momentum Momentum Group Limited (registration number 1904/002186/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; Momentum ordinary shares Namibia NAV New Seasons Financial Services New Seasons Financial Services Preference Shares NTAV other balance sheet items other RMI Holdings balance sheet items ordinary shares with a par value of 5 cents each in the issued ordinary share capital of Momentum; the Republic of Namibia; net asset value; New Seasons Financial Services (Proprietary) Limited (registration number 2005/001567/07), a private company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; cumulative redeemable preference shares of 1 cent each in the issued share capital of New Seasons Financial Services; net tangible asset value; collectively, the RMB-SI interest, the preference share investments, the RMBH preference shares, debtors, creditors, capitalised head office costs and cash balances, in the balance sheet of RMBH; the preference share investments to be transferred by RMBH to RMI Holdings in terms of the RMBH insurance assets acquisition; OUTsurance FirstRand STI Holdings Limited (registration number 1997/022260/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; OUTsurance acquisition OUTsurance acquisition consideration the acquisition by RMI Holdings of FirstRand s 45% interest in OUTsurance in exchange for the OUTsurance acquisition consideration; the aggregate cash price of R3.75 billion to be paid to FirstRand pursuant to the OUTsurance acquisition; 7

10 OUTsurance Insurance Company OUTsurance Insurance Company Limited (registration number 1994/010719/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa and a wholly-owned subsidiary of OUTsurance; OUTsurance interest RMBH s 45% direct ordinary shareholding in OUTsurance; OUTsurance preference shares variable rate non-cumulative and non-redeemable preference shares having a nominal value of 1 cent each in the issued share capital of OUTsurance; OUTsurance preference share OUTsurance preference shares held by RMBH representing 50% investment of the outstanding OUTsurance preference shares; preference share investments collectively, RMBH s investments in the New Seasons Financial Services preference shares, the FirstRand Bank preference shares and the OUTsurance preference share investment; pre-listing statement this bound document, dated 3 February 2011, relating to the proposed listing of RMI Holdings on the JSE with effect from commencement of business on 7 March 2011; pricing date the date on which the last of the suspensive conditions to the first FSL sale, as detailed in the RMBH circular, is fulfilled; Rand or R or cents South African Rand and cents, being the official currency of South Africa; Rand Merchant Bank Rand Merchant Bank, a division of FirstRand Bank; record date the date upon which an RMBH ordinary shareholder must be recorded as such in the RMBH register of members in order to participate in the RMI Holdings unbundling; register the register as maintained by the transfer secretaries, including any sub-register; Remgro Remgro Limited (registration number 1968/006415/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa, the issued ordinary share capital of which is listed on the JSE and which is the holding company of FSL; RMB-SI RMB-SI Investments (Proprietary) Limited (registration number 1995/002583/07), a private company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; RMB-SI interest RMBH s 76.4% ordinary shareholding in RMB-SI; RMBH RMB Holdings Limited (registration number 1987/005115/06), a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa, the issued ordinary share capital of which is listed on the JSE; RMBH circular the bound document, dated 3 February 2011, relating to the RMBH restructuring, the annexures thereto, the attached notice of the RMBH general meeting and the form of proxy (green), which is enclosed in the envelope together with this pre-listing statement; RMBH fixed rate preference shares fixed rate cumulative redeemable preference shares with a par value of 1 cent each in the share capital of RMBH; RMBH general meeting the meeting of RMBH shareholders convened in terms of the notice of general meeting of RMBH ordinary shareholders attached to and forming part of the RMBH circular to vote on the ordinary resolutions required to approve the RMBH restructuring, which general meeting shall take place at 10:00 on Friday, 18 February 2011 at the Auditorium, 18th Floor, 1 Merchant Place, corner Rivonia Road and Fredman Drive, Sandton, South Africa; RMBH insurance assets acquisition the asset for share swap transaction concluded between RMI Holdings and RMBH in terms of which RMI Holdings will purchase the RMBH insurance interests and the preference share investments, from RMBH in exchange for the issue by RMI Holdings to RMBH of that number of RMI Holdings ordinary shares which after the implementation of such acquisition and the RMBH RMI subscription, will result in RMI Holdings having the same number of issued ordinary shares as RMBH; 8

11 RMBH insurance interests collectively, the Discovery interest, MMI Holdings interest, OUTsurance interest and RMB-SI interest; RMBH ordinary shareholders the holders of RMBH ordinary shares from time to time; RMBH ordinary shares ordinary shares with a par value of 1 cent each in the issued share capital of RMBH; RMBH preference shareholders the holders of RMBH preference shares from time to time; RMBH preference shares collectively, RMBH fixed rate preference shares and RMBH variable rate preference shares; RMBH restructuring collectively: (i) the Royal Bafokeng placement; (ii) the FirstRand acquisitions; (iii) the RMBH insurance assets acquisition; (iv) the RMI Holdings unbundling; (v) the RMI Holdings listing; (vi) the third FSL sale and (vii) the OUTsurance acquisition, as more fully described in the RMBH circular and this pre-listing statement; RMBH RMI Holdings subscription the subscription by RMBH for RMI Holdings ordinary shares for a subscription price equal to the Royal Bafokeng subscription amount; RMBH shares collectively, RMBH ordinary shares and RMBH preference shares; RMBH shareholders collectively, RMBH ordinary shareholders and RMBH preference shareholders; RMBH variable rate preference variable rate cumulative redeemable preference shares with a par shares value of 1 cent each in the issued share capital of RMBH; RMI Holdings or the Company Rand Merchant Insurance Holdings Limited (registration number 2010/005770/06), previously Main Street 796 Limited, a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa and a subsidiary of RMBH; RMI Holding Group or the Group RMI Holdings and its subsidiaries and associates from time to time; RMI Holdings shares RMI Holdings ordinary shares and RMI Holdings preference shares; RMI Holdings ordinary shares or ordinary shares with a par value of R each in the issued share ordinary shares capital of RMI Holdings ; RMI Holdings ordinary holders of RMI Holdings ordinary shares from time to time; shareholders RMI Holdings preference shares or cumulative redeemable preference shares with a par value of R preference shares each in the issued share capital of RMI Holdings ; RMI Holdings unbundling the unbundling by RMBH to the RMBH ordinary shareholders of all the RMI Holdings ordinary shares held by it by way of a distribution in specie in terms of section 90 of the Companies Act and section 46 of the Income Tax Act, whereby RMBH ordinary shareholders recorded in the register on the record date will receive one RMI Holdings ordinary share for every one RMBH ordinary share held; Royal Bafokeng Royal Bafokeng Holdings (Proprietary) Limited (registration number 2006/006906/07), a private company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; Royal Bafokeng placement the issue of the Royal Bafokeng subscription shares to Royal Bafokeng in exchange for the Royal Bafokeng subscription amount; Royal Bafokeng subscription amount the R2.5 billion to be received by RMBH from Royal Bafokeng as consideration for the Royal Bafokeng subscription shares pursuant to the Royal Bafokeng placement, escalated by 6% per annum, less any proportion of dividend paid on RMBH ordinary shares prior to the subscription date, which is expected to be 9 February 2011; Royal Bafokeng subscription shares the RMBH ordinary shares to be issued to Royal Bafokeng pursuant to the Royal Bafokeng placement; second FSL consideration shares the RMBH ordinary shares to be issued in consideration for the second FSL sale shares acquired pursuant to the second FSL sale, which number of shares will after the implementation of such acquisition 9

12 and the first FSL sale result in RMBH holding 33.9% of the ordinary shares in FirstRand or such lesser percentage which will ensure that FSL will hold no more than 34.9% of the ordinary shares in RMBH, as determined in accordance with the following formula: RS REM2 = 15F FS REMPOST RMH POST Where: RS REM2 = the second FSL consideration shares; 15F = the 15-day VWAP of FirstRand as at the pricing date; FS REMPOST = the second FSL sale shares; RMH POST = the value per share of RMBH as at the pricing date as determined by the following formula: (FS R + FS REMPRE ) 15F + Other POST second FSL sale second FSL sale agreement second FSL sale shares Securities Services Act SENS South Africa third FSL consideration shares RS + RS RBH + RS REM1 FS R = the FirstRand shares held by RMBH; FS REMPRE = the first FSL sale shares; Other POST = (R ) + the change in other balance sheet items from 30 November 2010 until the pricing date as determined by RMB; RS = the RMBH shares in issue; RS RBH = the Royal Bafokeng subscription shares; and = the first FSL consideration shares; RS REM1 the acquisition by RMBH, post the RMI Holdings unbundling, of the second FSL sale shares from FSL in exchange for the issue by RMBH of the second FSL consideration shares to FSL in terms of the second FSL sale agreement; the agreement concluded between FSL and RMBH for the purchase by RMBH of additional ordinary shares in FirstRand from FSL in consideration for the issue to FSL of new fully paid ordinary shares in RMBH; the additional FirstRand ordinary shares to be acquired by RMBH from FSL pursuant to the second FSL sale; the Securities Services Act (Act 36 of 2004), as amended; the Securities Exchange News Service of the JSE; the Republic of South Africa; the RMI Holdings ordinary shares to be issued for the MMI Holdings shares acquired pursuant to the third FSL sale as determined in accordance with the following formula: RS REM3 = 15M MS REM RMI Where: RS REM3 = the third FSL consideration shares; 15M = the 15-day VWAP of MMI Holdings as at the pricing date; MS REM = the MMI Holdings shares held by FSL; RMI = the value per share of RMI Holdings as at the pricing date as determined by the following formula: (DSR 15D) + (MS R 15M) + Sub + Other RMI DS R 15D MS R Sub RS + RS RBH + RS REM1 = the Discovery shares held by RMI; = the 15-day VWAP of Discovery as at the pricing date; = the MMI Holdings shares held by RMI; = the Royal Bafokeng subscription amount; 10

13 third FSL sale third FSL sale agreement transfer secretaries unbundled RMI Holdings ordinary shares Other RMI = R ; RS = the RMI shares in issue; RS RBH = the Royal Bafokeng subscription shares; and = the first FSL consideration shares; RS REM1 the acquisition by RMI Holdings of MMI Holdings shares from FSL in exchange for the issue by RMI Holdings of the third FSL consideration shares to FSL in terms of the third FSL sale agreement; the agreement concluded between FSL and RMI Holdings for the purchase by RMI Holdings of MMI Holdings shares in consideration for the issue to FSL of new fully paid ordinary shares in RMI Holdings; Computershare Investor Services (Proprietary) Limited (registration number 2004/003647/07), a private company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; the RMI Holdings ordinary shares held by RMBH, which will be unbundled to RMBH ordinary shareholders in terms of the RMI Holdings unbundling; VAT value-added tax levied in terms of the Value-Added Tax Act (Act 89 of 1991), as amended; and VWAP volume weighted average price as determined by I-Net from time to time. 11

14 Rand Merchant Insurance Holdings Limited ( formerly Main Street 796 Limited) Incorporated in the Republic of South Africa (Registration number 2010/005770/06) Share code: RMI ISIN: ZAE ( RMI Holdings or Company ) DIRECTORS OF RMBH Executive P Cooper (CEO and FD) Non-executive G T Ferreira (Chairman) L L Dippenaar J W Dreyer J J Durand P M Goss # P K Harris S E N Sebotsa # K C Shubane # M H Visser # Independent PRE-LISTING STATEMENT 1. INTRODUCTION Pursuant to the FirstRand transaction, RMBH is proposing a restructuring to re-align RMBH s investment portfolio and to enhance shareholder value. Full details of the RMBH restructuring are contained in the RMBH circular. The RMBH restructuring is subject to the fulfilment of the conditions precedent as set out in the RMBH circular. Subject to the conditions precedent as set out in the RMBH circular, the Issuer Services Division of the JSE has approved the listing of approximately RMI Holdings ordinary shares in the Investment Instruments sub-sector of the Financials sector of the JSE. RMI Holdings will list under the name Rand Merchant Insurance Holdings Limited, JSE code: RMI, abbreviated name: RMIH and with ISIN: ZAE with effect from the commencement of business on or about 7 March RMI Holdings share capital will consist of issued JSE-listed RMI Holdings ordinary shares. The ordinary shares will rank pari passu. 2. RATIONALE FOR THE LISTING The proposed RMBH restructuring will result in the creation of separate focused insurance and banking entities. The two separately listed entry points will provide investors with greater flexibility in terms of their investment choices: RMBH investors will have access to a strategic investment in a premier Southern African banking group, owning pre-eminent banking brands that control significant elements of the profit pools of their segments; while investors in RMI Holdings will have access to a strategic portfolio of insurance investments with significant shares in the profits of various segments of the insurance market. All the companies which will form part of the RMI Holdings portfolio are quality investments that excel in their own segments of the insurance market. 12

15 3. INFORMATION RELATING TO RMI HOLDINGS 3.1 History Main Street 796 (Proprietary) Limited was incorporated and registered in South Africa on 24 March 2010 as a private company under registration number 2010/005770/07 and converted to a public company on 14 June A special resolution to change Main Street 796 Limited s name to Rand Merchant Insurance Holdings Limited was passed on 7 December 2010 and lodged for registration with the Registrar of Companies. RMI Holdings is a subsidiary of RMBH and was incorporated for the specific purpose of holding RMBH s insurance assets pursuant to the proposed RMBH restructuring. The ordinary share capital structure of RMI Holdings (other than for the par value per share of RMI Holdings ordinary shares) mirrors that of RMBH to facilitate the RMI Holdings unbundling. 3.2 Nature of business RMI Holdings will be an investment entity with shareholdings in the insurance sector. There is currently no government protection or any investment encouragement law affecting the business of RMI Holdings. 3.3 Investment policy The main investment criteria for RMI Holdings for new investments can be described as classical value investing principles, namely: RMI Holdings will seek to invest in established businesses with demonstrated, consistent earning power, mainly in the financial services sector. It is unlikely that RMI Holdings will invest in turnaround or greenfield situations; RMI Holdings intends to invest in businesses with first class management teams, who should also hold a significant stake in the business, as RMI Holdings aims to enter into long-term partnerships with the management groups. It is intended that RMI Holdings will fund its investments through a combination of debt and equity. RMI Holdings does not believe that it would be appropriate for it to have insignificant stakes in listed South African entities where a shareholder would be able to invest directly. 3.4 Group structure Subject to the fulfilment of the conditions precedent to the RMBH restructuring, as described in the RMBH circular, RMI Holdings will be a listed insurance investment entity holding interests in Discovery, MMI, OUTsurance and RMB-SI, as set out in the diagram below: (a) Discovery Discovery is an integrated financial services organisation that operates in health insurance, life assurance, investment and health and wellness markets. Discovery operates in South Africa, the United Kingdom, China and the United States in the following key markets: Consumer-engaged health insurance Discovery offers health insurance products in South Africa, the United Kingdom and China through Discovery Health, PruHealth and Ping An Health. Discovery Health is wholly-owned and the Discovery group has a 75% share in PruHealth with Prudential plc. Discovery group has a 20% stake in Ping An Health in China. Consumer-engaged life assurance In South Africa, Discovery offers life assurance products through Discovery Life and in the United Kingdom through PruProtect. Discovery Life is wholly-owned, while at financial year end our share in the joint venture with Prudential plc was 50%. Effective 1 August 2010, Discovery has increased its share in PruHealth and PruProtect to 75%. 13

16 Investment and long-term savings Discovery Invest operates in the long-term savings and investment market in South Africa and is wholly-owned by Discovery. Discovery operates in the wellness and health market through the Vitality Group operational in South Africa, the United Kingdom and the United States. Vitality is Discovery s science-based wellness programme and is the largest of its kind in the world with more than 1.6 million members worldwide. (b) OUTsurance OUTsurance is the holding company of a group, which conducts short-term and long-term insurance activities. Direct short-term insurance activities are conducted through direct insurers OUTsurance Insurance Company Limited and Youi (Proprietary) Limited (Australian subsidiary) and OUTsurance Namibia Insurance Company Limited (joint venture with FNB Namibia). Intermediated short-term insurance is provided by Momentum Short-Term Insurance Limited, a joint venture with Momentum. The short-term insurance offering includes personal and commercial (South Africa only) products. OUTsurance Life Insurance Company provides long-term insurance products direct to the South African public. The growth of OUTsurance can be attributed to a scientific approach to risk selection together with superior claims management and innovative product design. (c) RMB-SI RMB-SI provides a comprehensive range of tailored solutions to select clients in the short term and long term insurance sector. RMB-SI s business model is based on the following three pillars: Structured business products The structured business products developed by RMB-SI offers self insurance and reinsurance type solutions to corporates and other insurers. The structured business products are unique in that specialised skills are used to develop solutions for corporates through financial engineering. Each structured business product is different and not marketed to the general public in the manner in which a typical insurer would sell pre-designed products. The distribution and marketing of these type structured business products would be directly to corporates by a few specialised transactors within RMB-SI. Underwriting managers RMB-SI provides a mandate to specialist underwriters, who acts as intermediaries for RMB- SI, to underwrite certain specialised lines in the traditional insurance market. Affinity business The affinity business is very small and offers individual self insurance solutions mainly for corporates. (d) MMI Holdings MMI Holdings is the product of the merger of Momentum and Metropolitan. MMI Holdings is a leading insurance-based financial services group conducting business in South Africa and elsewhere in Africa. The business of MMI Holdings consists of life insurance, healthcare administration, asset management, short-term insurance and employee benefits. Following the implementation of the FirstRand transaction, the transfer of RMBH s insurance assets to RMI Holdings and the unbundling of RMI Holdings, RMI Holdings will, amongst other things, own approximately 18% of the ordinary shares in MMI Holdings. RMI Holdings intends to increase its stake in MMI Holdings to over 25% in order to prevent potential structural value traps. For this purpose, RMI Holdings plans to conclude the third FSL sale, which will enable it to increase its interest in MMI Holdings to approximately 24.4%. RMI Holdings will look to acquire additional shares in MMI Holdings in the market to allow RMI Holdings to hold at least 25%. 14

17 3.5 Profile of investments The profile of RMI Holdings investments on the listing date (based on values as at 14 December 2010) will be as follows: Cost of investment and NAV attributable Market Listed/ Shareholding to the value of Investment Unlisted % investment investment (R million) (R million) Discovery JSE-listed (1) MMI Holdings JSE-listed (1) Total OUTsurance ( 2) Unlisted ( 3) RMB-SI Unlisted Other investments ( 4) Unlisted Total Cash balances Total Notes: (1) Based on the closing share price as at 14 December 2010 (as per the RMBH SENS announcement on 15 December 2010). (2) OUTsurance includes 45% OUTsurance ordinary shares and 50% OUTsurance preference shares. ( 3) Based on the valuation of OUTsurance used to determine the OUTsurance acquisition consideration amount and the 50% OUTsurance preference shares held by FirstRand at face value of R401 million. ( 4) Investment in various unlisted preference shares. The profile of investments subsequent to the third FSL sale and OUTsurance acquisition will be as follows: Cost of investment and NAV attributable Market Listed/ Shareholding to the value of Investment Unlisted % investment investment (R million) (R million) Discovery JSE-listed (1) MMI Holdings JSE-listed (1) Total OUTsurance (2) (3) Unlisted ( 4) RMB-SI Unlisted Other investments ( 5) Unlisted Total Cash balances Total Notes: (1) Based on the closing share price as at 14 December 2010 (as per the RMBH SENS announcement on 15 December 2010). (2) OUTsurance includes 90% OUTsurance ordinary shares and 100% OUTsurance preference shares. ( 3) RMI Holdings will fund the OUTsurance acquisition through a combination of cash and the raising of debt as described in the RMBH circular. (4) Based on the valuation of OUTsurance used to determine the OUTsurance acquisition consideration amount and the 50% OUTsurance preference shares held by FirstRand at face value of R401 million. ( 5) Investment in various unlisted preference shares. RMI Holdings has not received any material income from the investments listed above since it acquired the investments from RMBH through the RMBH insurance assets acquisition. RMI Holdings does not intend to increase the number of investments in the short term. 15

18 3.6 Prospects The directors are positive about RMI Holdings growth prospects in South Africa, Africa and internationally. RMI Holdings anticipates a modest return to growth in the South African economy in 2011, driven by further investment by South African Government and some improvement in consumption levels. Through creating a focused entity with a suite of significant investments in South Africa s pre-eminent insurance brands, the RMBH restructure should provide benefit to RMI Holdings shareholders. 3.7 Experienced management team The directors will initially be the current directors of RMBH. The RMBH directors have significant experience in managing investments of a long-term nature. Over the last 10 years, RMBH s headline earnings have increased from R810 million to R2 636 million (compound growth of 14%), capital and reserves have increased from R5 886 million to R million (compound growth of 15%) and the dividend cover has been consistent at 2.2 times over the last five years. 4. FINANCIAL INFORMATION Extracts of the historical financial information for RMI Holdings for the period ended 31 December 2010 is presented in Annexure 1. Extracts of the historical financial information of Discovery, OUTsurance, RMB-SI and Momentum for the financial years ended 30 June 2008, 30 June 2009 and 30 June 2010 are presented in Annexures 2 to 5 of this pre-listing statement. Extracts of the historical financial information of Metropolitan for the financial periods ended 31 December 2007, 31 December 2008 and 31 December 2009 are presented in Annexure 6 of this pre-listing statement. Extracts of the interim historical financial information of Metropolitan for the financial periods ended 30 June 2010 are presented in Annexure 7 of this pre-listing statement. The historical financial information of Discovery has been extracted from previously published information. The interim and annual historical financial information of Metropolitan has been extracted from previously published information. The historical financial information of Momentum has been extracted from the MMI Holdings revised listing particulars (dated 6 September 2010). The extracted historical financial information included for Discovery, Momentum and Metropolitan in this pre-listing statement has been limited to the statement of financial position, statement of comprehensive income, statement of change in equity and statement of cash flows. The complete set of extracted historical financial information for Discovery, Momentum and Metropolitan is available on the internet at: restructuring.h tm. PricewaterhouseCoopers Inc report on the historical financial information of Momentum is included on the RMBH website. The directors of RMI Holdings assume responsibility for the extraction of the historical financial information relating to Discovery, Momentum and Metropolitan from the respective previously published historical financial information and the MMI Holdings revised listing particulars, but do not accept responsibility for the accuracy and completeness of the historical financial information of Discovery, Momentum and Metropolitan. 4.1 Funding considerations Borrowing powers and borrowings Extracts from the articles reflecting the borrowing powers of the directors and the manner in which such borrowing powers may be varied are set out in Annexure 15 to this pre-listing statement. The borrowing powers of directors of subsidiaries of RMI Holdings are restricted by the limits imposed by RMI Holdings and by the articles of association of those subsidiaries. The directors may exercise all the powers of RMI Holdings to effect borrowings. In terms of the articles, the borrowing powers of RMI Holdings are unlimited Material borrowings RMI Holdings RMI Holdings did not have any material borrowings outstanding as at the last practicable date OUTsurance OUTsurance did not have any material borrowings outstanding as at the last practicable date. 16

19 RMB-SI RMB-SI had the following material borrowings as at the last practicable date: Lender FirstRand Bank Type of borrowings Credit facility Amount outstanding R376 million Interest rate 3-month JIBAR % Security Secured by R400 million guarantee from RMBH Maturity date Rolling maturity Callable/Convertible Not applicable RMB-SI did not have any other material borrowings outstanding as at the last practicable date MMI Holdings MMI Holdings had the following material borrowings as at the last practicable date: Lender Various Various Type of borrowings Senior debt Senior debt Amount outstanding R501 million R927 million Interest rate Fixed interest rate The fixed interest rate is 8.5% of 9.25% per annum per annum, until the first call date on 15 September At the first call date, a step-up of 80% of the initial credit spread will apply and interest will convert from fixed to floating, payable quarterly on 15 March, 15 June, 15 September and 15 December Security Various subordinated Unsecured redeemable debt provided as security Maturity date 15 December September 2020 Callable From 15 December 2014 From 15 September 2015 to to maturity date maturity date Convertible Not applicable Not applicable MMI Holdings did not have any other material borrowings outstanding as at the last practicable date Discovery Discovery had the following material borrowings as at the last practicable date: Lender FirstRand Bank Type of borrowings Senior debt Amount outstanding R400 million Interest rate Fixed rate of % per annum Security Unsecured Maturity date 10 September 2017 Callable/Convertible Not applicable Discovery did not have any other material borrowings outstanding as at the last practicable date Loans receivable, material inter-company finance and other transactions RMI Holdings has not advanced any material loans to its subsidiaries. No material loans were made or security furnished by RMI Holdings and/or any of its subsidiaries to or for the benefit of any director, manager, associate of any director or manager of RMI Holdings as at the last practicable date. 17