Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — Merger or Acquisition (July 2020)
28 slides from Hindustan Unilever's merger presentation, Jul 22, 2020
Slide 1: Stock exchange cover letter: Investor Presentation
22nd July, 2020 Stock Code BSE: 500696 NSE: HINDUNILVR ISIN: INE030A01027 BSE Limited, National Stock Exchange of India Ltd Corporate Relationship Department, Exchange Plaza, 5th Floor, 2nd Floor, New Trading Wing, Plot No. C/1, G Block, Rotunda Building, P.J. Towers, Bandra Kurla Complex, Dalal Str
Slide 2: HUL + GSK CH Merger Update: 22 July 2020
Hindustan Unilever Limited HUL + GSK CH Merger Update : 22" July 2020 ; 3 Ce Cae i 4 VANILLA Faxvoue 500g
Slide 3: Safe Harbor Statement
Safe Harbor Statement This Release / Communication, except for the historical information, may contain statements, including the words or phrases such as ‘expects, anticipates, intends, will, would, undertakes, aims, estimates, contemplates, seeks to, objective, goal, projects, should’ and similar e
Slide 4: Agenda
Agenda OQ) Deal Re-cap and recent results OQ Strategy and Synergies Q Key financial and reporting aspects Sensitivity: Public
Slide 5: tnd
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Slide 6: Dec 2018: Announced merger of GSK CH India with HUL
Dec 2018 : Announced merger of GSK CH India with HUL #1 HED portfolio in largest HFD market Strategic Rationale Q Market development opportunity ey x £ | Q__Low penetration \? if 3 3 Q = Opportunity to drive premiumization a. . Q Leverage HUL distribution capabilities Nourishing Malt-based Drinks Q
Slide 7: FY 2020: Resilient underlying performance
FY 2020 : Resilient underlying performance Growth EBITDA PBT Net Profit Turnover Growth% i * ° Underlying EBITDA PBT Growth PAT Growth Turnover Underlying Margin PBT PAT Improvement* Competitive growth - ahead of the market * Underlying EBITDA = Reported EBITDA - One offs Sensitivity: Public Reporte
Slide 8: JQ 2020: Seamless virtual integration
JQ 2020 : Seamless virtual integration Competitive growth Value-added innovations Enhancing accessibility Domestic Sales Growth Everybody &] needs strong : : eS) immunity Horlicks cont Witamin © vieernitn Gaining Market Share* *Market share basis volume for L3M May 2020 as per Kantar HH Panel 7 Sens
Slide 9: Strategy and Synergies
Ge) \’ 4 Strategy and ul Synergies ww _—~ | =
Slide 10: GROWTH: Strong structural drivers intact
GROWTH : Strong structural drivers intact 25%+ of India’s population is under 14 years "") Opportunity to grow by purposefully serving a young population with nutrition needs “e VITAMINS 1in3 1in4 9in 10 Indian children are too Indian adolescents are Indian children’s* diets are short for their age
Slide 11: Rural India offers significant growth potential
Rural India offers significant growth potential xT SOUTH EAST SACHET PACK Urban Rural Urban Rural Volume penetration penetration™ penetration™ penetration™ Contribution @¢ a wo. $ 69% Cine Sensitivity: Public 1. Kantar HH panel data MAT Dec’1? 10
Slide 12: Building demand by increasing relevance and affordability
Building demand by increasing relevance and affordability Reinforcing Horlicks Health credentials Launch of pouch pack @ 20% discount ON THE NEW NAYA =m Everybody | needs strong | immunity Horlicks contains immunity-supporting nutrients like Vitamin C, Vitamin D and Zinc.* Sensitivity: Public
Slide 13: GTM ramp-up offers sizeable coverage & growth opportunity
GTM ramp-up offers sizeable coverage & growth opportunity Opportunity to improve physical reach by covering more stores Gods, Beast & . ue HUL - F&R 1.75X 2.25X Sensitivity: Public Leveraging HUL Channel Expertise MT & E-Commerce iY AL p_ a 12
Slide 14: Medium term opportunity: Expand the Nutrition category
Medium term opportunity : Expand the Nutrition category Opportunity in underserved adult nutrition market | «a &é v Driving access Maternal é 9 nutrition 4 ~0.5Mn ==> ~18 Mn v Building relevance Women’s “1. ~84 M nutrition L7Mn m= ~84Mn v New Product development Adult deficiency & Wellness <1Mn = ~8
Slide 15: Margins realization on track
Margins realization on track Deal | on Near effective toorr ren nrnnrn eres > INTEGRATION > UNDERLYING MARGIN =) SCALE, EFFICIENCY SYNERGIES Media and Material buying EXPANSION H Driven by efficiencies & 2) CD Distribution savings programs ! Route To Market Synergies a surrey CHAIN EFFICIENCES : Pha
Slide 16: And poised to deliver significant value
And poised to deliver significant value Baseline Margins EBITDA b scare 28.1% Sy Future Synergy potential in Medium-Term Baseline EBITDA Synergy potential Synergies . Margin* (Dec 2018) already realised Fae PELE | ee Le 31.1% 800-1000 BPS 250-300 BPS 550-700 BPS Underlying EBITDA pre-royalty Sensiti
Slide 17: Business plans well supported
Business plans well supported leverage capabilities and focused organization CLASSIC MALT
Slide 18: Investing for growth: Distinct Business and integration teams
Investing for growth : Distinct Business and integration teams ition Business Head Nutrition a separate CCBT within F&R Division + Business strategy & execution - Unlock the market development opportunity Integration team continues for next 18 months INTEGRATION TEAM * Charting of synergy plans + Bu
Slide 19: With a framework that leverages technology & best practices
With a framework that leverages technology & best practices Overall Integration Business Rewiring process Nutrition transformation (SAP) Go to Market Capacity and Functional Talent and Synergies Cost Synergies Integration Key programs to unlock value creation Anchored end to end by Integration Board
Slide 20: While embracing new capabilities
While embracing new capabilities 4 & Sensitivity: Public BEST - IN CLASS EXPERT MARKETING (EXPAND DOCTORS REACH) HIGH SCIENCE eam R&D EXPERTISE ia ee REGULATORY ms | KNOW-HOW }O | i Potential to create value across HUL categories HEALTH CARE PROFESSIONAL COVERAGE HOSPITAL COVERAGE PHARMA CHANNELS 19
Slide 21: Financial and tax implications from the merger
n® Financial and ll tax implications from the merger
Slide 22: Key Financial Call-Outs
Key Financial Call-Outs Transition Costs (Y1) Exports Reporting Integration costs Sensitivity: Public * Business has an IT Transition Services Agreement with GSK Plc for 12Months: ~ Rs 80 crs * Exports to move to HUL subsidiary UIEL - visible in Consolidated results * Investments to realise synergy
Slide 23: OTC OH Arrangement
OTC OH Arrangement Product Portfolio Distribution arrangement * Consignment Services Agreement signed between both parties with clearly agreed roles & KPIs on both sides « For 5 years, mutually renewable at the end of term « Net Margins protected Sensitivity: Public 22
Slide 24: Accounting for merger
Accounting for merger Consideration paid =o 18.46 Crores Equity Shares n % Share price on Effective date <a INR 2,179.7 S Consideration INR 40,242 Crores Share Capital INR 18.5 Crores + Securities Premium INR 40,223 Crores ( Net Assets acquired Contingent Liability (net) Deferred Tax ' E.g. Various
Slide 25: Intangibles - Accounting & Tax Impact
Intangibles - Accounting & Tax Impact Accounting Books - Balance Sheet Tax Books - Balance Sheet + Infinite life intangibles will be recorded at Fair * All intangibles (including Goodwill) will be added Value and tested for impairment to intangibles tax block + Finite life intangibles will be record
Slide 26: Future reporting
Future reporting Domestic Business g, F&R Segment Sensitivity: Public Exports Business + OTC Others Segment 25
Slide 27: In Summary
In Summary G ~ J . I? Sensitivity: Public Structural opportunity intact, COVID uncertainties in the near-term Seamless cutover completed, Successful first quarter Medium Term - Growth in double digit, Incremental margins of 550-700BPS (250-300BPS synergies already realised) Return on Capital Employe
Slide 28: For more information and updates
For more information and updates Sensitivity: Public Our dedicated section for Investors. Read about our strategy, governance and shares. Visit our website Corporate governance Shareholder & AGM information Share price Quarterly results Annual Reports Financial calendar Understanding HUL Company pre
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