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Share buy-back programme

R2 billion set aside for share buy-back – retail investors’ questions answered

MMI Holdings Limited (MMI) announced at its interim results presentation on 7 March 2018 that it would distribute capital to shareholders by means of a general share buy-back in lieu of cash dividends. MMI is undertaking an open market repurchase programme. This is a voluntary arrangement and ordinary shareholders have full discretion to either hold or sell their shares.

MMI has set aside R2 billion for this share buy-back which will take place over 12 months from 7 March 2018. This share buy-back programme will take the place of the interim and final dividend pay out to shareholders for this period.

Frequently asked questions

These frequently asked questions and the related answers are intended to provide an explanation and implications of the share buy-back programme and do not constitute financial advice. If you are in doubt as to what action to take, please consult your financial adviser or broker.

What is the rationale?
Why has MMI decided to implement the share buy-back programme? Given the current discount to embedded value, we are of the opinion that a share buy-back is the most efficient use of capital and will enhance value to shareholders in the long-term.
What are the benefits of the share buy-back? MMI’s shares are currently trading at a discount to embedded value which is a key measure of the value of insurance companies. Returning capital through the share buy-back will result in an increase of embedded value per share for MMI, i.e. more value over time for MMI shareholders who remain invested. The share buy-back may also provide some support to MMI’s share price.
Should I be concerned about the change to a share buy-back? MMI continues to distribute capital to shareholders but has merely changed the form of this distribution. The share buy-back programme is currently the most efficient use of capital and we continue to actively manage our capital to enhance the value we provide to shareholders and clients alike.
What is the timing of the share buy-back?
When will MMI commence with the share buy-back programme? The share buy-back programme commenced on 7 March 2018, following the SENS announcement. R2 billion has been set aside for the MMI share buy-back programme.
How long will the share buy-back programme continue for? The share buy-back programme will continue for an initial 12 month period or until R2 billion worth of MMI shares have been repurchased, whichever comes sooner.
How will this share buy-back programme work?
Do I have to sell my shares? Shareholders have full discretion on whether or not to sell and the number of shares they would like to sell. The decision to sell, hold or buy shares should be informed by the shareholder’s investment strategy, financial goals and appropriate financial advice. We recommend that you contact your financial adviser in this regard.
What other considerations should be taken into account? As an individual, there may be tax and other implications to you upon disposal of your shares. Shareholders are strongly advised to contact their individual brokers and/or financial advisers for advice in this regard.
How do I buy and sell my shares back to MMI? Buying and selling of shares should continue through normal trading channels i.e. through your own broker, online trading platform, etc. As per usual trading practice, MMI will be one of many buyers in the open market of MMI shares.
What is the tax implication for me if I sell my shares? The tax implication will be dependent on the circumstances of the individual shareholder. Please consult your broker or financial adviser regarding the tax implication for you, should you decide to sell your MMI shares.
What price will shares be bought back at? Given that the share buy-back programme is an open market buy-back arrangement, shares will be bought at the market price on the date of sale. Your broker will be able to confirm the sale/market price on the date you wish to sell.
How is MMI going to fund the share buy-back? MMI will use internal cash resources to buy back its own shares in lieu of a dividend payout.
What are the dividend implications?
What does the share buy-back scheme mean for future dividend payments? No dividends will be paid to shareholders during this initial share buy-back period. The decision to reinstate dividends or continue with the share buy-back programme will be reviewed after the 12 month period and communicated to shareholders accordingly.
Will a dividend be reinstated in the future? The dividend policy is currently under review. In future we will target a dividend cover range centred at 2.5x core headline earnings.
I was expecting a dividend, what can I do now? You may consider selling some of your MMI shares to generate the expected cash flows. If you are in any doubt as to what action to take, please consult your broker or financial adviser.
Contact information
MMI Investor Relations Estee Sevenster
Phone: +27 12 684 4214
Email: estee.sevenster@mmiholdings.co.za

Lesego Godana
Phone: +27 12 671 8863
Email: lesego.godana@mmiholdings.co.za
MMI Company Secretary Maliga Chetty
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