China Resources Beer (holdings) Co. Ltd. · HKEX:291
China Resources Beer (holdings) — China Resources Enterprise — Merger or Acquisition (July 2015)
34 slides from China Resources Beer (holdings)'s merger presentation, July 2015
Slide 1: Investor Presentation
Investor Presentation July 2015 1
Slide 2: Overview of Transaction
Overview of Transaction The New CRE 2
Slide 3: Key Transaction Terms
Key Transaction Terms CRH and the Company have entered into the Sale and Purchase Agreement1, pursuant to Disposal of which the Company agreed to sell the Non-Beer Businesses of the Company to CRH for a Non-Beer consideration of HK$30.0bn (the “Disposal”) Businesses Completion of the Disposal is
Slide 4: What will Shareholders receive?
What will Shareholders receive? Shareholders will receive a Special Cash Dividend of HK$12.30 per share and either retain their remaining shares in CRE or tender into the Partial Offer to receive HK$12.70 per share in cash to the extent accepted 2 Ongoing ownership in Beer Market Position / Volume #
Slide 5: Binding Proposal represents a 64.5% Premium for each share accepted in the Partial Offer
Binding Proposal represents a 64.5% Premium for each share accepted in the Partial Offer HK$ per share 64.5% premium 80.9% of CRE's Closing Share Price as of Last 12.70 Trading Date (HK$15.201) 25.00 15.20 12.30 Special Dividend per Offer Price per share Total cash consideration CRE's Closing Share
Slide 6: Proposed Transaction Structure
Proposed Transaction Structure Today Post Disposal Post Completion of Partial Offer CRH Public CRH Public CRH Public 52% 48% 52% 48% 52 - 72%1 28 - 48%1 SABMiller CRE SABMiller CRE SABMiller CRE Special Cash 49% 51% 49% 51% Dividend 49% 51% (HK$12.30 per share) 80% 60% 100% To be distributed CR Snow
Slide 7: Key Benefits of the Transaction to Shareholders
Key Benefits of the Transaction to Shareholders Transaction delivers immediate cash realization – Shareholders can realise cash proceeds of HK$25.00 in cash for each share that is tendered and accepted into the Partial Offer, which represents an approximate 64.5% premium to the Last Trading Date1
Slide 8: Indicative Transaction Timetable
Indicative Transaction Timetable The Board and Management are supportive of the proposed transaction and recommend shareholders vote to support at the EGM 20 April 17 June 9 July 8 September End of October Announcement Second Dispatch of Completion of Payment of of receipt of announcement transactio
Slide 9: The New CRE
Overview of Transaction The New CRE 9
Slide 10: New CRE at a Glance
New CRE at a Glance #1 Global beer brand Underpinned by a by volume1 with over successful 21-year 200m hectolitres of partnership with total nominal SABMiller capacity in 2014 Track record of over #1 Brewer in China, 20 acquisitions since the world's largest 2006 beer market1 2014 EBITDA of Nationwi
Slide 11: New CRE: The "Must Own" Investment in China Consumer Today
New CRE: The “Must Own” Investment in China Consumer Today The Undisputed Leader in World’s Most Attractive Beer Market 1 • China is the largest1 and most attractive beer market globally valued at US$79bn in 2014 with expected next 5 year CAGR of 10% • CRE is the #1 brewer in China for the past 9 ye
Slide 12: The Undisputed Leader in China Beer
1 The Undisputed Leader in China Beer CR Snow is the #1 brewer in China by volume with 23% market share vs. 18% for the next player in 2014 Beer Market Share by Volume in 2014 (%) 23.2% 18.4% 14.0% 10.7% 4.6% CR Snow Tsingtao Anheuser- Beijing Carlsberg Brewery Busch InBev Yanjing Brewery Source:
Slide 13: China is the largest beer market globally with highly attractive growth prospects
1 China is the largest beer market globally with highly attractive growth prospects China's ongoing economic growth, increasing disposable income and urbanization will continue to support robust double digit growth China beer market size and growth by value Top ten beer markets in the world 60.0 200
Slide 14: Snow is the most consumed beer brand globally and in China
2 Snow is the most consumed beer brand globally and in China CR Snow's #1 market position is supported by Snow, the leading beer brand in China since 2005 and the largest globally since 2008 2014 China beer market competitive landscape by volume Volume share of top 5 beer brands in China 2014 Top fi
Slide 15: Well established brewery network with close proximity to key markets
2 Well established brewery network with close proximity to key markets and early mover advantages Operating 98 breweries in 25 out of 34 provinces in China, with total nominal capacity of over 200 million hectoliters as of the end of 2014 5(11mhl) Heilongjiang Early mover advantage 3(6mhl) Jilin to
Slide 16: Differentiated sales channel strategy with unique on-the-ground capabilities
2 Differentiated sales channel strategy with unique on- the-ground capabilities Distribution strategy focused on professionalism, exclusivity and flatness of network Urban markets Regional markets1 Specific sales force to target on-trade customers such as High end on- high-end restaurants and nigh
Slide 17: Successful 21 Year Strategic Partnership with the Second Largest Global Brewer
3 Successful 21 Year Strategic Partnership with the Second Largest Global Brewer Partnership bringing together local knowledge and international expertise CR Snow has a highly experienced management team with an average of over 20 years of experience in the beer industry Many members have been w
Slide 18: Proven Track Record of Double-Digit Growth
4 Proven Track Record of Double-Digit Growth Sales and net income CAGR of 26% and 23%, respectively since inception in 1994 Evolution of Sales and Net Profit Growth Turnover (HK$m) Net Profit (HK$m) 40,000 1,200 CAGR (from 1994 to 2014) Turnover: +26%; Net Profit: +23% 30,000 900 20,000 600 10,000 3
Slide 19: Long term growth driven by both volume and premiumization
4 Long term growth driven by both volume and premiumization China continues to have strong volume growth Clear trend of premiumization driving increase in potential with low per capita consumption unit price and demand 2014 Top ten beer markets per capita volume consumption China beer market volume
Slide 20: Diverse product portfolio and innovation across brands and price points
4 Diverse product portfolio and innovation across brands and price points addressing premiumization trend Developed mainstream, mid and high-end products across different retail price points ranging from RMB3 to RMB25 per bottle to cater for a full spectrum of consumers Driving of mid to high-en
Slide 21: The Leading Platform for Industry Consolidation
5 The Leading Platform for Industry Consolidation Since establishment of the joint venture in 1994, CR Snow has had a strong track record of M&A, including the HK$6.6bn acquisition of Kingway in 2013 Feb-06 Dec-06 Mar-09 Apr-10 Jun-11 Acquisition of Acquired Shanxi Acquired 90% stake in Acqu
Slide 22: Historical Track Record of Capturing Market Share
5 Historical Track Record of Capturing Market Share China beer market competitive landscape by volume 2005 Top five market share = 47.3% 2014 Top five market share = 70.9% Tsingtao Brewery CR Snow 13.4% 23.2% Others 29.1% CR Snow 13.0% Others 52.7% Beijing Yanjing Carlsberg Brewery 4.6% Tsingtao 10.
Slide 23: Future Growth Strategy
Future Growth Strategy Our vision going forward is to continue to capture market share and improve efficiency Further penetrate the high-end on-trade and modern retail channels well suited for 1 premium brands Focus on premiumization to drive sales and profitability growth Grow higher-priced and
Slide 24: Financial Overview
Overview of Transaction The New CRE Financial Overview 24
Slide 25: CR Snow Turnover
CR Snow Turnover CR Snow has shown consistent growth in both volume and ASP over the past few years, resulting in double digit sales growth Turnover1 (HK$bn) Sales volume1 (m hectolitre) Implied ASP (RMB/L)2 34.5 33.0 2.54 117.22 118.42 2.41 28.1 2.25 2.31 106.39 2.15 7.9 8.5 25.75 26.49 2012 2013 2
Slide 26: CR Snow Profitability
CR Snow Profitability 1Q 2015 has shown strong improvement in profitability EBITDA1 and margin (HK$m, %) EBIT1 and margin (HK$m, %) Net profit1,2 and margin (HK$m) 13.6%13.4% 8.4% 7.8% 6.4% 5.8% 5.6% 12.6% 4.3% 3.4% 1,850 2,581 2.2% 1.2% 10.2% 0.2% 4,415 4,353 2,362 1,614 8.5% 2,200 3,824 1,492 865
Slide 27: CR Snow Capex and D&A
CR Snow Capex and D&A Capex as a % of sales has been relatively high due to acquisitions and related integration spending Capex1 and % of sales (HK$m, %) D&A1 and % of sales (HK$m, %) 28.3% 6.8% 6.2% 6.3% 9,343 5.6% 5.2% 2,153 13.8% 1,834 8.9% 1,462 3,859 3,079 575 500 2012 2013 2014 2012 2013 2014
Slide 28: CR Snow Credit Profile
CR Snow Credit Profile The Remaining Group has a strong balance sheet with sustainable levels of debt, HK$19.5bn of cash and bank balances1 and HK$10.0bn of available shareholder loans provided by CRH Debt and Cash position as of 31 Mar 20151 Credit Metrics as of 31 Mar 20152 Net cash position: HK$1
Slide 29: Appendix
Appendix 29
Slide 30: Unaudited PF consolidated Balance Sheet of the Remaining Group
Unaudited PF consolidated Balance Sheet of the Remaining Group The Remaining Group has a strong balance sheet with sustainable levels of debt and HK$19.5bn of cash and bank balances1 (HK$m) 31 Dec 2014 31 Mar 2015 Fixed assets 26,389 26,608 Goodwill 10,444 10,409 Others 2,263 2,173 Non-current asset
Slide 31: Unaudited PF consolidated Profit and Loss Account of the Remaining Group
Unaudited PF consolidated Profit and Loss Account of the Remaining Group (FYE Dec, HK$m) FY 2014 Turnover 34,482 Gross profit 11,952 % margin 34.7% Other income 967 Selling and distribution expenses (6,931) General and administrative expenses (3,515) Operating income2 2,473 % margin 7.2% Finance cos
Slide 32: Unaudited PF consolidated Cash Flow Statement of the Remaining Group
Unaudited PF consolidated Cash Flow Statement of the Remaining Group (FYE Dec, HK$m) FY 2014 Cash generated from operations 4,480 Chinese Mainland income tax paid (1,061) Hong Kong Profits Tax refunded 4 Net cash from operating activities 3,423 Disposal of subsidiaries/business (net of cash and cash
Slide 33: Responsibility Statement and Disclaimer
Responsibility Statement and Disclaimer This document has been prepared by China Resources Enterprise, Limited (“CRE”) for information purposes only. The reproduction of this document, in whole or in part, or disclosure of any of its contents, without prior consent of CRE, is prohibited. This docume
Slide 34: Notice to US Holders of Company Shares
Notice to US Holders of Company Shares The revised partial offer is being made for the securities of a Hong Kong company and is subject to Hong Kong disclosure requirements, which are different from those of the United States. The financial information included in this document has been prepared in
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