ALEXANDER FORBES GROUP HOLDINGS LIMITED - Disposal of Alexander Forbes 60% interest in Lane Clark & Peacock and withdrawal of cautionary announcement

Disposal of Alexander Forbes’ 60% interest in Lane Clark & Peacock and withdrawal of cautionary announcement

Alexander Forbes Group Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/025226/06)
ISIN: ZAE000191516
Share Code: JSE:AFH
(“Alexander Forbes” or “the Company” or “the Group”)

DISPOSAL OF ALEXANDER FORBES’ 60% INTEREST IN LANE CLARK & PEACOCK AND WITHDRAWAL
OF CAUTIONARY ANNOUNCEMENT

1. INTRODUCTION

   Further to the cautionary announcement dated 28 November 2016, shareholders are advised
   that the Company has entered into agreements in relation to the disposal of its 60% interest in
   Lane Clark and Peacock LLP together with its subsidiaries in Ireland and the Netherlands
   (“LCP”) (”the Disposal”) to the LCP individual partners and funds managed by Inflexion Private
   Equity (“Inflexion”) for a total consideration of GBP75.4 million (“Disposal Consideration”).
   The Disposal Consideration includes GBP6.4 million of current year profits which will be
   distributed by LCP in two tranches in the course of 2017/18.

2. THE DISPOSAL

   Background information

   LCP is a consulting business providing advice across pensions, investment, general insurance,
   business analytics, employee benefits and risk benefit advice, and pensions’ administration
   through businesses in the United Kingdom, Ireland and the Netherlands. Alexander Forbes
   originally invested in LCP in 2002 through the purchase of a 60% interest in the partnership for
   GBP28.0 million. LCP has grown steadily since 2002, predominantly organically through
   customer acquisition and the expansion of its consulting actuarial services.

   Rationale for the Disposal

   Whilst LCP is a cash-generative business with continued growth potential, it is no longer
   central to Alexander Forbes’ group strategy, which is to build a globally distinctive, pan-African
   financial services organisation.

   On 15 September 2016, the Company announced it would accelerate the simplification of the
   Group, with a focus on building a pan-African financial services leader. The sale of its interest
   in LCP marks further progress in the simplification of the Group. The Board will consider the
   potential uses of the cash proceeds received by the Company through acquisitions in line with
   the communicated Group strategy, and executing a focused share repurchase programme on
   receipt of shareholder approval. The Company remains committed to a 1.5 times dividend
   cover policy.

   Terms of the Disposal

   Alexander Forbes has entered into agreements to dispose of its 60% interest in LCP, through
   the sale of the intermediate company which holds the corporate member interest in LCP,
   Alexander Forbes Financial Services Holdings (“AFFSH-UK”) of a portion of the interest held by
   AFFSH-UK to the current individual partners of LCP and immediately thereafter the sale of
   AFFSH-UK to Inflexion. The buy-out of the business will be financed by the LCP individual
   partners alongside a minority, non-controlling investment from Inflexion.

   The Group has provided no warranties around the business or trading of LCP but has provided
   limited tax and other warranties around AFFSH-UK, which are normal for a transaction of this
   nature.

   The effective date of the Transaction is 16 December 2016.

   The Disposal Consideration

   The LCP individual partners and Inflexion have purchased Alexander Forbes’ 60% interest in
   LCP for a purchase consideration of GBP69.0 million. In addition, as part of the Disposal, the
   Group will also be entitled to receive GBP6.4 million of profit share, payable in line with the
   normal distribution cycle of LCP.

   Financial effects of the Disposal

   The value of the net assets attributable to AFFSH-UK is R1 366 million (GBP64.5 million) at 31
   March 2016 and R1 100 million (GBP61.6 million) at 30 September 2016 including goodwill and
   intangible assets. The attributable profits for the twelve months ended 31 March 2016 were
   R150 million (GBP7.2 million) and the attributable profits for the six months ended 30
   September 2016 were R74 million (GBP3.7 million).

   Conditions precedent

   The implementation of the Disposal is not subject to any outstanding conditions precedent.

3. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

   Given that all the Disposal terms are contained in this announcement, caution is no longer
   required to be exercised by shareholders when dealing in Alexander Forbes shares.

Johannesburg, 20 December 2016

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Corporate Finance advisor (in relation to the Disposal)
Stephens Europe Limited

Attorney (in relation to the Disposal)
Dickson Minto WS

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