Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Corporate Update (October 2004)
19 slides from Bhp's corporate update, Oct 5, 2004
Slide 1: Capital Management Programme
Capital Management Programme 5 October 2004 Chris Lynch Chief Financial Officer Teleconference 1 : 10.30 am AEST Teleconference 2 : 9.30 am UK
Slide 2: Disclaimer
Disclaimer Important notice This presentation does not constitute, or form part of, any offer or invitation to sell, or any solicitation of any offer to purchase any securities in any jurisdiction, nor shall it or the fact of its distribution be relied on in connection with any contract therefor. Th
Slide 3: Capital management rationale
Capital management rationale • Demonstrates strong capital discipline • Consistent with cash flow priorities – Finance growth opportunities with attractive rates of return – Maintain robust capital structure in line with “A” credit rating – Return excess cash to shareholders • US$2 billion capital m
Slide 4: US$2bn capital return: impact on BHP Billiton
US$2bn capital return: impact on BHP Billiton •BHP Billiton has an extensive project pipeline of identified Strong growth opportunities (including US$8.6bn in feasibility/development) pipeline •Return of capital will not prejudice ability to fund future growth “A” credit rating •BHP Billiton will re
Slide 5: BHP Billiton considered various ways of returning capital
BHP Billiton considered various ways of returning capital •Generally used in the case of asset sales or business re- Capital return organisations (e.g. spin-outs of OneSteel and BlueScope Steel) •DLC structure can make capital returns more complex •Only provides a discrete, one-off benefit Special d
Slide 6: Capital management programme - Phase 1
Capital management programme - Phase 1 Form •Off-market buy-back of BHP Billiton Limited shares Pricing •Minimum of 5% discount to Market Price Amount •A$1.0bn to A$1.5bn (c. US$0.7bn to US$1.1bn) 1 Who •Eligible BHP Billiton Limited shareholders only 2 Timing •To be completed during November 2004 •
Slide 7: Off-market buy-back overview
Off-market buy-back overview •A$1.0bn to A$1.5bn (c. US$0.7bn to US$1.1bn) •Represents 3.2% of BHP Billiton Limited issued share capital (2.0% of DLC) 1 Target size •Flexibility to vary size depending on shareholder participation and final Buy-Back Price •Discount range of 5% to 14% to the Market Pr
Slide 8: Tender range
Tender range •Tenders can be lodged at any Tender discount point Indicative tender price 1 specified discount point from 5% to 14% or as a Final Price 5% A$13.63 Tender 6% A$13.49 •Increments of 1% 7% A$13.35 •Minimum price option 8% A$13.20 9% A$13.06 Final Price Tender 10% A$12.92 •Simplifies choi
Slide 9: Buy-Back Price
Buy-Back Price •Buy-Back Price will be determined according to tenders lodged •Will be based on the largest discount in the 5% – 14% discount range that Calculation enables BHP Billiton to purchase its targeted amount of capital •Discount will be applied to the VWAP over the 5 trading days up to and
Slide 10: Buy-back rules
Buy-back rules •Shares in BHP Billiton Limited acquired on the ASX before Monday 11 Eligibility October 2004 confer an entitlement to participate •US and Canadian shareholders and ADR holders are not eligible •All successful tenderers will receive the Buy-Back Price •Shares tendered at or below the
Slide 11: Australian tax implications
Australian tax implications Capital component Composition •Shareholders will generally be deemed, for Australian CGT purposes, to have sold their shares for A$2.10 plus any excess of the Tax Value1 over the Buy-Back Price (Australian •Cost base of shareholders is relevant in determining any capital
Slide 12: Worked Australian tax examples – Australian Residents
Worked Australian tax examples – Australian Residents 1 Super Fund Individuals $0+ $0-$6,000 $6,001 - $21,600 $21,601 - $58,000 $58,001 - $70,000 $70,000+ 0% marginal 18.5% marginal 31.5% marginal 43.5% marginal 48.5% marginal Per share A$ 15.0% tax rate tax rate tax rate tax rate tax rate tax rate
Slide 13: Key dates for off-market buy-back
Key dates for off-market buy-back Event Date (2004) 1 Announcement of proposed Buy-Back Tuesday, 5 October Cut-off date for franking credit entitlement under 45- Thursday, 7 October day rule 2 Ex-date for buy-back entitlement Monday, 11 October Buy-back record date Friday, 15 October Commence mail-o
Slide 14: Capital management programme – Phase 2
Capital management programme – Phase 2 •Further share buy-backs in either BHP Billiton Limited or Form BHP Billiton Plc, and/or enhanced dividends Amount •Balance of US$2bn •During the next 12 months (but not until completion of off-market Timing buy-back in November 2004) Slide 14
Slide 15: Ohpodilliton
Pf Ohpodilliton
Slide 16: Appendix: Footnotes to worked Australian tax examples
Appendix: Footnotes to worked Australian tax examples (1) The marginal tax rate includes the Medicare Levy of 1.5%. The Medicare Levy will depend on an individual’s own circumstances. (2) A Buy-Back Price of A$12.34 is used for illustrative purposes only. You should not rely on this as being the act
Slide 17: Appendix: Worked examples Comparison of tax outcomes for shareholders in net A$
Appendix: Worked examples Comparison of tax outcomes for shareholders in net A$ Assumptions (Slides 17 and 18): General Australian tax specific Share price (5 day VWAP)… $14.35 Capital component… $2.10 Buy-back price (14% discount)… $12.34 Fully franked dividend… $10.24 Cost Base… $8.00 Tax Value… $
Slide 18: Appendix: Worked examples Comparison of tax outcomes for shareholders in net A$
Appendix: Worked examples Comparison of tax outcomes for shareholders in net A$ Australian Residents US Residents UK Residents Individual Individual Super Fund Individual Individual (A$6k – A$21.6k) (A$70k plus) (Capital gain rate) (£31.4k plus) Marginal tax rate: 18.5% 48.5% 15% 15% 40% Share price
Slide 19: Appendix: Discounts achieved in recent comparable Australian off-market buy-backs
Appendix: Discounts achieved in recent comparable Australian off-market buy-backs Discount to Company Date Buy-back size closing price IAG June 2004 A$414m 12.2% Westpac June 2004 A$559m 16.1% Commonwealth March 2004 A$532m 17.2% Bank Fosters December 2003 A$669m 7.8% Telstra November 2003 A$1,000m