Ctf Services Limited · HKEX:659
Ctf Services — NWS Holdings — Merger or Acquisition (November 2002)
32 slides from Ctf Services's merger presentation, Nov 18, 2002
Slide 1: New World Group
New World Group November 2002 Please refer to Shareholders’ Circulars for full details All terms in this presentation are the same as defined in the PPC shareholders’ circular, unless otherwise noted
Slide 2: Shareholders’ Circular Highlights
Shareholders’ Circular Highlights
Slide 3: S&P Issues Investment Grade Credit Rating
S&P Issues Investment Grade Credit Rating BBB-, stable outlook BBB Range Companies Hong Kong, BBB- rated BBB Range • CITIC Pacific Hong Kong Global • Kerry Properties • Swire Pacific • Ford Motor • Wharf Company Holdings • General Motors • Hongkong • Renault Land • Lockheed Martin The PRC • Sinopec
Slide 4: HK$7 Bn Committed Bank Financing
HK$7 Bn Committed Bank Financing • Bank of America • Bank of China • Development Bank of Singapore • Hang Seng Bank • Hong Kong Shanghai Banking Corporation • Industrial and Commercial Bank of China 2
Slide 5: Fair Value Confirmed
Fair Value Confirmed PPC NWI (1) NWD (NWS (2)) Independent Business Chesterton Petty Sallmanns American Appraisal Valuers Independent Commerzbank Anglo Chinese N.M. Rothschild Financial “Fair, reasonable and are “We are of the view that… “We consider the terms… to Advisors based on normal commercial
Slide 6: Valuation Analysis
Valuation Analysis NWI NWS PPC Valuation HK$10,227MM HK$10,913MM HK$4,900MM (aggregate value) (equity value) (equity value) Valuation (1) Equity Discount Rate of WACC (6) of 9%-10% (3) 13.9x P/E Parameter ≈ 15% (2) Benchmark EV/Adjusted EBITDA P/E Issue Premium - CKI 6.9x - HSCII 14.4x 119% Premium
Slide 7: Introducing NWS Holdings
Introducing NWS Holdings
Slide 8: Reorganization Announced Oct. 21, 2002
Reorganization Announced Oct. 21, 2002 Current Group Structure (1) Group Structure at Closing (1) NWD NWD (17.HK) (17.HK) 54.4% 52.4% 54.4% 52.0% NWI NWI NWS Holdings (2) (301.HK) NWS (301.HK) Ltd. (659.HK) Traditional 100.0% Infrastructure Services TMT TMT 100.0% of NWS Traditional Infrastructure P
Slide 9: Window of Opportunity
Window of Opportunity PPC: Before the NWS Holdings: After the Reorganization Reorganization 6
Slide 10: Enlarged Entity is Substantial
Enlarged Entity is Substantial Pro Forma NWS Holdings HK$MM (5) NWS PPC–Before Holdings Increase Reorganization Turnover 12,409 9,827.2% HK$MM (5) PPC Adjusted EBITDA (1) 3,053 576.9% Turnover 125 Cash Earnings (2) 2,136 465.1% Adjusted EBITDA (1) 451 Cash Earnings/share (HK$) 0.120 66.7% Cash Earni
Slide 11: Significant Increase in Cash and Cash Flow
Significant Increase in Cash and Cash Flow PPC Increase by PPC after HK$MM before Reorganization Reorganization (1) Cash on hand 349 + 1,902 2,251 Increased by 545% Adjusted EBITDA (2) 451 + 2,602 3,053 Increased by 577% Cash Earnings 378 + 1,758 2,136 Increased by 465% Notes 1. Figures based on pro
Slide 12: Diversified Sources of Cash Flows
Diversified Sources of Cash Flows 2002 Segment EBITDA (adjusted) (1) Others Ports 2.3% Roads and Bridges 15.3% 20.2% Transportation 13.9% Energy and Water 14.3% Facilities Management 13.8% Contracting 20.3% Note 1. Segment EBITDA (adjusted) equals segment results plus share of results of jointly-con
Slide 13: Healthy Credit Profile…Investment Grade Rating
Healthy Credit Profile…Investment Grade Rating Credit Profile Fiscal Year Ended June 30 Pro Forma 2002 Key Financials Adjusted EBITDA (1) 3,053 Interest (5) 493 Total Debt (2) 11,373 Net Debt (3) 9,122 Total Capitalization (4) 26,777 Credit Ratios Adjusted EBITDA (1) / Interest 6.2x Total Debt (2) /
Slide 14: Strong Contribution from Services Businesses…
Strong Contribution from Services Businesses… Hong Kong Hip Hing New World First Convention and New World First Bus Construction Ferry Exhibition Centre 11
Slide 15: …Backed by NWS’ Solid Earnings…
…Backed by NWS’ Solid Earnings… Turnover Adjusted EBITDA (1) HK$MM HK$MM =16.3% 3 Year CAGR 12,000 11,788 2,000 1,511 1,608 11,713 11,666 1,500 1,188 11,500 1,000 500 11,000 0 2000 2001 2002 2000 2001 2002 Net Income Cash Earnings (2) HK$MM HK$MM 3 Year CAGR=11.5% 900 3Y ear CAGR=14.9% 849 1,500 1,2
Slide 16: …NWS’ Strong Segmental Cash Flows and Earnings…
…NWS’ Strong Segmental Cash Flows and Earnings… Segment Data HK$MM 2000 2001 2002 Segment EBITDA (adjusted) (1) Contracting 526 487 651 Facilities Management (3) 274 349 336 Transportation 264 355 430 Others (4) 56 181 130 Segment Profit Before Tax (2) Contracting 435 391 522 Facilities Management (
Slide 17: … and NWS’ Robust Credit Profile
… and NWS’ Robust Credit Profile Credit Profile Fiscal Year Ended June 30 2000 2001 2002 Adjusted EBITDA (1) / Interest 16.8x 13.6x 19.5x Total Debt (2) / Adjusted EBITDA (1) 1.1x 1.2x 1.7x Net Debt (3) / Adjusted EBITDA (1) (0.4)x 0.0x 0.1x Net Debt (3) / Total Capitalization (4) (9.2)% 0.6% 1.6% N
Slide 18: Enhanced by Infrastructure Growth Businesses
Enhanced by Infrastructure Growth Businesses Ports and Cargo Roads and Bridges Power Water Handling 36 roads (1) and 3 5 power plant 17 water projects 10 ports and bridge projects (2) projects cargo handling projects Note 1. Includes one tunnel 15 2. 3 operational bridges and Wuhan Bridge
Slide 19: …Which Also Provide Stable Cash Flow
…Which Also Provide Stable Cash Flow • State Council’s intention in relation to guaranteed investment return –Group has been aware of intention since 1998 –Prudent accounting to reflect only actual returns –No new investments in fixed return projects since 1998 No Specific Impact of the intention on
Slide 20: New Vision and Strategy…
New Vision and Strategy… • Focus on key infrastructure, ports and Leveraging stable cash services businesses flows to capitalize on select • Invest in new projects with high growth growth opportunities potential • Achieve sustainable target debt to Optimizing capital structure total capital ratio th
Slide 21: …Supported by Cash Flow and Earnings…
…Supported by Cash Flow and Earnings… 2002 Cash Flow (1) 2002 Profit (2) Infrastructure Assets PPC PPC Infrastructure Assets HK$1,721MM HK$451MM HK$144MM HK$644MM 11.9% 8.8% 39.3% 45.5% 42.5% 51.9% NWS NWS HK$1,608MM HK$849MM Note 1. Cash Flow here refers to Adjusted EBITDA plus repatriation of shar
Slide 22: …and Strong Cash Flows to Realize Strategy
…and Strong Cash Flows to Realize Strategy HK$MM Indicative Reduce debt by HK$5Bn over Cash on Hand (2) (at June 30, 2002) 2,251 next 3 years (2) Plus Fund Growth: Cash Earnings (1) (2002 Proforma) 2,136 Capex of HK$1.5Bn over next 3 years (2) Plus Repatriation of Shareholders’ Loan (2002A) (3) 650
Slide 23: Reorganization Benefits
Reorganization Benefits
Slide 24: Benefits to NWD Shareholders
Benefits to NWD Shareholders Utilizes assets to reduce debt Streamlines the organization structure Creates greater business focus Unlocks potential of subsidiaries 20
Slide 25: Benefits to NWI Shareholders
Benefits to NWI Shareholders Reduces NWI’s debt and gearing Enables shareholders to hold shares in two separate companies Unlocks value 21
Slide 26: Benefits to PPC Shareholders
Benefits to PPC Shareholders Captures growth opportunities in Greater China Increases recurrent cash flows Improves cash earnings / cash earnings per share substantially Greater scale 22
Slide 27: Substantial Accretion to PPC Shareholders
Substantial Accretion to PPC Shareholders Cash Earnings Per Share (1) Return on Equity Based on Cash Earnings (2) HK$ % 0.14 e 15 0.12 as 0.12 14 13.8 re e as Inc re 0.10 13 % Inc 67 % 0.08 0.07 12 35 0.06 11 10.2 0.04 10 0.02 9 0.00 8 PPC- Before Enlarged PPC PPC- Before Enlarged PPC Note 1. Cash E
Slide 28: Potential Share Price Enhancement
Potential Share Price Enhancement Pro Forma Cash Earnings Per Share HK$0.12 PPC Current Price per Implied Share Price (for illustrative purposes) Share (1) Pro Forma Implied Cash Earnings / Price HK$0.42 P/E (x) Share (HK$) = (HK$) Current 3.0 0.12 = 0.36 Price PPC Cash Earnings per 3.5 0.12 = 0.42
Slide 29: Issue Price at Substantial Premium to Current Price
Issue Price at Substantial Premium to Current Price Share Price Performance - Last Two Years HK$ MM Shares 1.0 80 Issue Price: HK$0.93/share (1) 70 0.8 60 Premium over 2-Year Average Closing Price: 119% 0.6 50 40 0.4 30 20 0.2 10 0.0 0 11/10/00 2/2/01 4/24/01 7/16/01 10/3/01 12/19/01 3/13/02 6/4/02
Slide 30: A Much Stronger NWS Holdings
A Much Stronger NWS Holdings (1) Strengthen and deepen PPC’s business Investment grade credit profile with healthy capital structure Leading services, infrastructure and ports company in the PRC, Macau and Hong Kong Strong cash flow to support target debt reduction program, fund capital expenditure
Slide 31: Timetable
Timetable Lock-up • 6-month lock-up for NWS shareholders Shareholders’ Circular • Dispatched on November 18, 2002 Shareholders’ Vote at EGMs / SGM • PPC, NWI and NWD EGMs / SGM to be held at 10:30 a.m., 11:30 a.m., and 12:00 p.m. respectively on December 12, 2002 • Rooms 403, 405, and 407 of Level 4
Slide 32: New World Group
New World Group November 2002 Please refer to Shareholders’ Circulars for full details