Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — Merger or Acquisition (April 2014)
44 slides from Bank Of Queensland's merger presentation, Apr 11, 2014
Slide 1: Acquisition of Investec Bank (Australia) Specialist Finance and Leasing Businesses and A$400 million Entitlement Offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Bank of Queensland Acquisition of Investec Bank (Australia) Limited’s Specialist Finance and Leasing Businesses and A$400 million Entitlement Offer 11 April 2014 Stuart Grimshaw Managing Director and Chief Executive Officer Anthony Rose Chief Fina
Slide 2: Important notice and disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer Important notice This presentation (Presentation) has been prepared by Bank of Queensland Limited, ABN 32 009 656 740 (BOQ). This presentation has been prepared in relation to an accelerated renounceable entitlement
Slide 3: Important notice and disclaimer (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer (cont) U.S. restrictions This Presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States of America (United States) or to any person in the United St
Slide 4: Important notice and disclaimer (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer (cont) Financial amounts All dollar values are in Australian dollars (A$) and financial data is presented as at the date stated. Past performance Investors should note that past performance, including past trading o
Slide 5: Important notice and disclaimer (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer (cont) Non-GAAP financial measures Investors should also be aware that certain financial data included in this presentation are "non-GAAP financial measures" under Regulation G of the U.S. Securities Exchange Act of
Slide 6: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda I. Acquisition Overview Stuart Grimshaw Managing Director and II. Overview of Acquired Businesses Chief Executive Officer III. Financial Impact and Acquisition Funding Anthony Rose Chief Financial Officer IV. Offer Summary V. Basis of Prepa
Slide 7: I. Acquisition Overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES I. ACQUISITION OVERVIEW
Slide 8: Acquisition summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition summary Acquisition of the Professional Finance business, Asset Finance & Leasing business and deposit book of Investec Bank (Australia) Limited (the “Acquired Businesses”)(1) Purchase consideration of $440m, including estimated ca
Slide 9: Overview of businesses acquired
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of businesses acquired Specialist provider of practice and personal finance to medical, dental and veterinary practitioners (82% of outstanding loans) and accounting and other professionals (18% of outstanding loans) $2.2bn of Professio
Slide 10: A compelling transaction for BOQ shareholders
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES A compelling transaction for BOQ shareholders ► Addition of a $2.4bn high quality loan portfolio with attractive margins High Quality Loan ► High income client base with a relatively low-risk profile Portfolio ► Attractive industry segments charac
Slide 11: Diversification of business mix
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Diversification of business mix The acquired loan portfolio will continue the diversification of BOQ’s existing loan portfolio 1H14A BOQ Loans Pro-Forma BOQ Loans¹ BOQ Finance BOQ Finance ► Improves BOQ’s portfolio diversification 10% 10% Comme
Slide 12: Transaction consistent with BOQ's strategy
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction consistent with BOQ’s strategy BOQ’s strategic focus How do the Acquired Businesses deliver against strategy? ► Represents investment in Commercial lending capability 1. Multi-Channel Optimisation ► Increases geographic and customer
Slide 13: II. Overview of Acquired Businesses
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES II. OVERVIEW OF ACQUIRED BUSINESSES
Slide 14: Professional Finance – Overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Professional Finance – Overview Established Track ► Market leading provider of specialised banking solutions to the broad medical and accounting professions Record ► Owned by Investec since 2007 Attractive ► Primarily services medical professions
Slide 15: Professional Finance – Diversification
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Professional Finance – Diversification Diversified Product Mix Broad Geographic Exposure (by Loans) (by Loans) Other SA 7% 6% Motor vehicle WA 10% 13% Fixtures & Comm / resi NSW fittings property 40% 12% 42% QLD 20% Medical / dental equip
Slide 16: Professional Finance – Financial Profile
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Professional Finance – Financial Profile Loan Book Growth Asset Spread(1) $bn % 2.2 1.9 4.97% 1.7 4.61% 4.67% Mar-12 Mar-13 Mar-14 Mar-12 Mar-13 Mar-14 Non-Interest Income as a % of Gross Lending Assets(2) Bad & Doubtful Debts Expense as a % of Gr
Slide 17: Asset Finance & Leasing
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Asset Finance & Leasing Business Overview On-Balance Sheet Loans by Asset Category Provider of specialist asset finance and leasing solutions via a mix of vendors, intermediaries and direct client relationships 8% Imaging 6% Plant & equipment ► Le
Slide 18: Current funding arrangements
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Current funding arrangements Overall Funding Split¹ Overall Deposit Split by Channel² Wholesale Subordinated debt funding 3% Wholesale 5% 15% Wholesale 15% Retail HNW Securitised Online liabilities 32% 10% 21% Professional Deposits Finance
Slide 19: III. Financial Impact and Acquisition Funding
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES III. FINANCIAL IMPACT AND ACQUISITION FUNDING
Slide 20: Financial impact
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Financial impact ► Purchase consideration of $440m, including estimated capitalisation of Acquired Businesses at completion of Purchase Consideration $230m ► Transaction expected to be approximately 2% cash EPS accretive in the first full year fol
Slide 21: Acquisition funding
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition funding Acquisition to be funded by $400m fully underwritten accelerated renounceable entitlement offer (at $10.75 per share) and excess capital Sources Uses Sources A$m Uses A$m Equity issued to market 400 Purchase consideration 440 E
Slide 22: Pro forma statement of net assets
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Pro forma statement of net assets Pro Forma Pro Forma BOQ Equity BOQ IBAL(2) Acquisition Transaction Consolidated $mil 28 Feb 14 Raising(1) 28 Feb 14 28 Feb 14 Adjustments(3) Costs(4) 28 Feb 14 Assets Cash and equivalents 803 394 1,197 1,611 (210)
Slide 23: Capital position
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Capital position Maintenance of BOQ’s current strong capitalisation with a CET1 ratio of 8.58% expected post acquisition Overview BOQ Capital Position (CET1 Ratio) Capital position maintained at industry leading levels Pro-forma CET1 (as at 28
Slide 24: Funding strategy
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Funding strategy Current Balance Sheet Composition of Acquired Businesses BOQ Funding Strategy Over Time Capital $0.1bn ► Deposits have historically been a high cost funding source Additional Wholesale Funding $0.3bn ► Estimated excess liquid asse
Slide 25: IV. Offer Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES IV. OFFER SUMMARY
Slide 26: Entitlement offer summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Entitlement offer summary ► 3 for 26 pro rata accelerated renounceable entitlement offer to raise approximately A$400m — Approximately A$190m institutional component Offer Structure and Size — Approximately A$210m retail component ► Allows non-par
Slide 27: Offer timetable
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Offer timetable Event Date Enter Trading Halt and Launch Institutional Entitlement Offer 11-Apr-2014 Close Institutional Entitlement Offer 14-Apr-2014 Institutional Entitlement Offer Shortfall Bookbuild 15-Apr-2014 Resume Trading, Announce Results
Slide 28: V. Basis of Preparation of Financial Information
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES V. BASIS OF PREPARATION OF FINANCIAL INFORMATION
Slide 29: Basis of preparation of financial information
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Basis of preparation of financial information FY15 Pro forma Financial Information Key assumptions used to estimate the impact of the acquisition on BOQ’s FY15 cash EPS and calculation of FY15 post-tax earnings of the acquired business (including
Slide 30: VI. Key Risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES VI. KEY RISKS
Slide 31: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks Introduction There are a number of factors, both specific to BOQ and of a general nature, which may affect the future operating and financial performance of BOQ, its investment returns and the value of its shares. Many of the circumstanc
Slide 32: Key risks (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont) Bank of Queensland specific risks Market risk: Market risk is the risk that movements in market rates and prices will result in a loss of earnings to BOQ. – Interest rate risk arises from a variety of sources, including mismatch
Slide 33: Key risks (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont) Less favourable economic or business conditions or deterioration in commercial and residential property markets, whether generally or in a specific industry sector or geographic region, could cause customers to experience an adv
Slide 34: Key risks (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont) Reliance on external parties: BOQ's operations depend on performance by a number of external parties under contractual arrangements with BOQ. As at 10 April 2014, approximately 67% of BOQ's branches are Owner Managed. Non-perfor
Slide 35: Key risks (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont) Disputes: In the course of its operations, BOQ may be involved in disputes and possible litigation. There is a risk that any material or costly dispute or litigation could adversely affect the value of the assets or future finan
Slide 36: Key risks (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont) Acquisition analysis: BOQ has undertaken financial and business analyses of IBAL in order to determine its attractiveness to BOQ and whether to pursue the acquisition. To the extent that the actual results achieved by IBAL are w
Slide 37: Key risks (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont) Risks associated with not taking up New Shares under the entitlement offer Entitlements cannot be traded on ASX or privately transferred. However, New Shares equivalent to the number of New Shares not taken up will be offered fo
Slide 38: VII. International Offer Restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES VII. INTERNATIONAL OFFER RESTRICTIONS
Slide 39: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions International Offer Restrictions This document does not constitute an offer of entitlements ("Entitlements") or new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. E
Slide 40: International offer restrictions (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions (cont) The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every purchaser of the Entitlements or the New Shares purchased pursua
Slide 41: International offer restrictions (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions (cont) France This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French
Slide 42: International offer restrictions (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions (cont) Italy The offering of the Entitlements and the New Shares in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Società e la Borsa,
Slide 43: International offer restrictions (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions (cont) Norway This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007. Accordingly, this document shall not be deeme
Slide 44: International offer restrictions (cont)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions (cont) United Arab Emirates Neither this document nor the Entitlements and the New Shares have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates, the Emirates Securi
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