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New structure for Almanij / KBC Group
Joint presentation by Almanij and KBC
23 December 2004
Visit www.kbc.com or www.almanij.be
2
Legal disclaimer
This presentation is intended for information purposes only.
Neither the presentation nor any of the transactions referred to herein constitutes an offer of securities for sale or an offer to acquire or exchange securities.
The distribution of this presentation in certain jurisdictions may be restricted by law, and persons into whose possession this presentation comes should inform themselves about, and observe, any such restrictions.
3
Conference guidelines This conference is being held on 23 December 2004 at 10.30 am
CET. The presentation will be followed by a Q&A session for the press. The conference will be held in Dutch and simultaneously translated.
Participants who are present in the conference room may use channel 1 for the translation into French, 2 for the translation into English.
The live Webcast of this conference (audio or video broadcast) in Dutch, English and French may be accessed at www.kbc.com. Replay facility until 2 March 2005.
Alternatively, you can listen in on the conference (in Dutch, English or French) by dialling +32 2 290 1411, +44 207 162 0185 or +1 888 222 0364. Replay facility until 2 March 2005.
An additional conference call with a Q&A session for analysts and investors (in English) is scheduled for 1.30 pm CET (dial-ins: +32 2 290 1411, +44 207 162 0185 or +1 888 222 0364). Replay until 2 March 2005.
W. BreeschKBCChairman
J. HuyghebaertAlmanijChairman
L. PhilipsAlmanijManaging Director
W. DuronKBCChief Executive
A. BergenKBCDeputy CEO
E. Verwilghen KBLChief Executive
5
Today’s agenda
I. Introduction and transaction highlights Willy Breesch
II. Transaction rationale and corporate governance Jan Huyghebaert
III. Strategic vision and unified management Willy Duron
IV. Timetable and transaction structure Luc Philips
V. Value-drivers for the KBC Group André Bergen
Appendices
Willy BreeschChairman of the Board of Directors, KBC Bank and Insurance Holding Company
I. Introduction andtransaction highlights
7
Proposed transaction Streamlining of Almanij / KBC Group structure:
1. Unconditional public cash tender offer by Almanij for KBL shares (not yet owned by the Group)
2. Merger of Almanij and KBC (legal merger by way of the acquisition of Almanij by KBC)
3. Unified strategy and management
* Ticker code: KBC
The newly created company will be called 'KBC Group NV' and will continue to be listed on Euronext * Mr. J. Huyghebaert will be nominated as Chairman of the Board. Mr. W. Duron will be nominated as CEO.
8
Proposed transaction Current:
Post-transaction:
Free float(approx. 30%) Core shareholders
Almanij
KBCBank & Insurance
KBLEuropean Private Bankers
GevaertPrivate Equity
KBC Bank KBC Insurance KBCAsset Management
Free float(approx. 47%) Core shareholders
KBC Group NV
KBCBank
KBCInsurance
KBCAsset Management
KBL European Private Bankers
Gevaert Private Equity
Merger exchange ratio: 1.35 new KBC shares per Almanij shareOffer price per KBL share : 150 (ordinary) and 135 euros (preference)
9
Key figures for the new KBC Group
Important financial Group in Euroland (top-10 in banking) with combined market capitalization of approx. 21 bn euros (and free float of 47%)
Combined shareholders’ equity of 12 bn euros and total assets of 277 bn euros (pro forma 30-Sep-04)
Combined consolidated net profit for the first nine months of 2004 of 1 210 m euros (pro forma)
Jan HuyghebaertChairman and Managing Director, Almanij
Foto
II. Transaction rationaleand corporate governance
11
Anticipated transaction benefits
Increased transparency through simplified Group structure and governance
Unity of strategy, capital and management Flexibility maintained to fully implement current strategy Enhanced efficiency, with business synergies within the Group
Increased share liquidity, thanks to pooling of two listed entities and higher free float
Elimination of holding-company discount Improved visibility on capital markets
12
Shareholder stability
Stake of core shareholders at a level slightly upwards
of 50% Shareholder agreement (MRBB will become a party)
Desire of Almanij’s current majority shareholders to maintain anchor of stability: Committed to support long-term strategic
development of the Group
13
Corporate governance principles Ensuring that company is run in best long-term interests of all
shareholders Compliance with good market practice, guided by new Belgian
‘Corporate Governance Code’ (in force as of 2005) ‘One share, one vote’ principle Non-executive chairman Board sub-committees (Nomination / Remuneration / Audit)
with significant role of independent directors Protocol of ‘Executive Committee’ autonomy (within the
framework of the general strategy defined by the Board)
Performing internal control and risk management
Regular and accurate disclosure to market on strategy and financials
High ethical standards, commitment to socio-environmental concerns
Willy DuronManaging Director and CEO,KBC Bank and Insurance Holding Company
III. Strategic vision andunified management
15
Unified strategy Tie private banking/private equity expertise into successful
bancassurance model
Maintenance of core geographic focus on Belgium, CEE and private banking throughout Europe
CEE and European private banking network expected to remain long-term earnings drivers
Revenue and cost synergies through closer intra-group co-operation
Balanced risk profile through diversified business portfolio
Optimal capital allocation to support higher growth/profitability by activity/geographic area
Solid solvency levels and credit ratings
Maintenance of anchor of stable shareholders, guaranteeing continued independence and future strategic development
16
Geographical presence in Europe
Top-3 bank/insurance player in CEE-5Czech RepublicHungarySlovakiaPolandSlovenia
Top-3-player in BelgiumRetail bancassurancePrivate bankingCorporate banking
European private banking network:>100 locations across 9 other countriesFrance and MonacoGermanyItalyLuxembourgNetherlandsSpainSwitzerlandUK
Selective corporate banking network:selective presence in 6 countries outside Belgium and CEEFranceGermanyIrelandNetherlandsSpainUK
17
[ 12 ]
Impla ntati ons
Le groupe KBL en Europe : 110 implantations répart ies dans 11 pays européens
GRANDE-BRETAGNE
Brown, Shipley & Co.Fil iale (s iège) : B rown Shipley P ri vate Bank (Jersey)
FRANCE
KBL FranceFil iales (s iège) : Europe Egi de Finance (Paris),Kempf (Nancy), Michaux Gesti on (Lyon)
SUISSE
Kredietbank (Suisse)Succursal es à Lausanne, Lugano et Z uri ch
Fil iale (s iège) : P rivagest (Genève)
GRAND-DUCHÉ DE LUXEMBOURG
Kredietbank LuxembourgFil iales à Luxem bourg : Banque Conti nentale
du Luxem bourg, K redietrust Luxem bourg
ALLEMAGNE
Merck Finck & Co,Privatbankiers
ITALIE
Fumagalli Soldan SIM spa
PRINCIPAUTÉ DE MONACO
KB Luxembourg (Monaco)
PAYS-BAS
Theodoor Gilissen Bankiers
IRLANDE
KBL Bank Ireland
ESPAGNE
Banco Urquijo
BELGIQUE
Puilaetco Bankers
Activities of KBL european private bankers
18
Unified management team Appointment of Executive Committee at KBC Group level:
Main responsibilities: Overseeing unity of strategic vision and execution Group-wide risk and capital management Financial planning and reporting Shareholder relations
Supported by limited number of corporate functions
In start-up/transition phase, focus on: Organization of central risk and capital management Development of unified strategy on private banking,
private equity and real estate activities Group synergy projects
19
Unified management team
Composition of ‘Group Executive Committee’:
Appointment of 3 Executive Directors:
Willy Duron (President and Group CEO)
André Bergen
Etienne Verwilghen
Additional members along business lines (appointment after start-up/transition period)
20
Key financials Balance sheet total: 277 bn euros (pro forma 30-Sep-04):
Capital: 12 bn - total risk equity: 21 bn Customer deposits: 164 bn – customer loans: 104 bn Technical provisions, insurance: 16 bn
Net profit: Pro forma 2003: 1 304 m euros (ROE: 12%) Pro forma 9M04: 1 210 m euros (ROE: 14%)
Solvency levels (pro forma 30-Sep-04): Tier 1, banking: 9.5% Solvency margin, insurance: 341%
Headcount: ca. 52 000 - customers: ca. 11 000 000
Credit ratings expected to remain at current levels
Luc PhilipsManaging Director, Almanij
IV. Timetable and transaction structure
22
Expected transaction timetable *
Step 1 Approval by supervisory authority and publication of prospectus for bid for KBL
Expectedearly Jan-05
Step 2 Almanij’s bid for KBL shares not yet owned by the Group
Starting31-Jan-05
Step 3 Publication of result of Almanij’s bid for KBL shares (followed by request for delisting)
14-Feb-05
Step 4 Final approval by supervisory authority and publication of KBC Group listing prospectus
Expected early Feb-05
Step 5 Merger of Almanij and KBC (EGMs) 02-Mar-05
* Indicative calendar
23
Rationale behind tender offer for KBL
Logical step in streamlining Group: operational entities to be held by integrated listed company
‘Liquidity window’ for KBL shareholders to exit prior to the creation of the new Group (delisting of KBL will be applied for)
Prior to the merger, Almanij will make an unconditional cash offer for KBL shares
24
Legal highlights Almanij’s cash bid for KBL shares:
Public tender offer (Luxemburg-issued prospectus) Aim to acquire as many shares as possible
(N.B.: a delisting will be applied for) Offer for both the ordinary and preference shares No additional external funding required
(activation of existing Commercial Paper programme)
Merger of Almanij and KBC: Merger by way of acquisition of Almanij by KBC Almanij shareholders will receive new 'KBC Group shares'
(no cash consideration), entitled to dividend as of 01-Jan-04 Merger report is available as of 1 month prior to the EGMs Relevant EGM voting procedure: 50% of share capital
represented and 75% approval by the attending shareholders of the two companies
25
Valuation highlights Market practice methodology, based on 30-Sep-04 figures
Bid price for KBL: Ordinary shares: 150 euros/share (premium of 10.3% to
average market price of last 3 months to 20-Dec-04*) Preference shares: 135 euros/share (premium of 16.3% to
average market price of last 3 months to 20-Dec-04*)
Merger considerations: Exchange ratio: 1.35 (27 KBC shares for 20 Almanij shares,
bringing the no. of KBC shares from 310 710 645 to 366 284 665)
For comparison:
* For practical reasons, closing prices of 20-Dec have been used for comparison purposes** Last trading day before announcement of examination of Group structure on 22-Nov-04 ** KBC at market price and Almanij at intrinsic value calculated as the “roll-up” of the underlying stakes using market prices for quoted ones
Situation at19-Nov-04**
Situation at 20-Dec-04*
Avg. 6 monthsto 20-Dec-04
Avg. 3 months to 20-Dec-04
Market exchange ratio 1.06 1.27 1.10 1.07
Intrinsic value exchange ratio *** 1.35 1.37 1.37 1.38
26
Change in group structure
* Excluding intragroup cross holdings and possible ATO conversion
Current situation:
67.2%* 100%71.9% *
CERA/Almancora37.9%
Almanij NV
Other committed shareholders 15.8%
MRBB16.6%
Free float28.7%
KBC KBL Gevaert
27
Change in group structure
* Including 1.5% ESOP hedge in KBC Group NV** Directly and indirectly
CERA/Almancora27.3%
KBC Group(Own shares : 2.5%*)
MRBB12.0%
Other committed shareholders 11.4%
Free float46.6%
KBC Insurance KBC AM KBL
Post-transaction:
KBC Bank Gevaert
100% 100% 100%** to 100% 100%
28
Other shareholder information
Transactions subject to final approval of supervisory authorities in Belgium and Luxemburg (expected Jan/Feb-05)
Merger reports are available as of one month before EGM’s (the latter are expected for 02-Mar-05)
Proposed legal status of shares of (new) KBC Group same as current KBC shares
On merger, no material changes to be made to articles of association of KBC
After this announcement, the existing (and approved) share repurchase programmes may be reactivated
André BergenManaging Director and Deputy CEO,KBC Bank and Insurance Holding Company
V. Value-drivers forthe KBC Group
30
Value-drivers for KBC group
Continued operational stability
Enhanced efficiency, with business synergies
Greater free float and increased share liquidity
Improved visibility in capital markets
Consistent dividend policy
1
2
3
4
5
31
Continued operational stability Robust value of existing business portfolio on the back of:
KBC’s sound fundamentals: Strong competitive position in Belgium Solid franchise in CEE
KBL’s low-risk revenue stream from private banking activities:
Strong wealth-management expertise Pan-European network
Existing experienced management team and employees to deliver on strategic ambitions and financial targets
Balanced risk profile through diversified business portfolio
Optimal capital allocation to support growth and profitability, while aiming to maintain solid solvency levels and credit ratings
Shareholder stability will guarantee continued independence and future strategic development
32
Enhanced efficiency, with business synergies New structure enabling unified strategy and, where
relevant, integrated operations
Synergy potential: Additional revenue growth based on complementarities of
product ranges, brand names and geographical presence Cost savings based on overlapping functions and
activities
‘Synergy projects’ to be launched in the fields of: Risk and capital management and other relevant
corporate functions Private banking business (activities of KBC Bank and KBL) Private equity management (activities of KBC Bank and
Gevaert) Real-estate activities (activities of KBC Bank and Gevaert) Support functions
33
Greater free float and increased share liquidity
With expected market cap of approx. 21 bn euros, among top 10 banking shares in Euroland
Increased weighting in stock indices due to greater free float
Expected further expansion of (equity) research coverage
* Average of 6 months to 20-Dec-04
KBC (old) Almanij KBC (new)e
Market capitalization (€) 19 bn 15 bn 21 bn
Free float
% of shares outstandingSize (€)Daily traded volume* (€)
31%6 bn19 m
29%4 bn10 m
47%10 bn>30 m
34
Elimination of holding company discount
* Difference (in percentage terms) between market value and intrinsic value based on SOP at market value** Last trading day before announcement of examination of Group structure on 22-Nov-04
31%
25%26%
25%
22%
7%
23%
31-Dec-99 31-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 19-Nov-04** 20-Dec-04
Almanij’s historic holding company discount *
Average: 25%
35
Improved visibility in capital markets
Euroland top-30 banks, ranking by market cap *
* DJ Eurostoxx banks constituents as at 20 December 2004 (estimate for KBC Group)
BSC
HBN
P PA
RIB
AS
BBVA
DEU
TSC
HE
BAN
K
CRED
IT A
GRIC
OLE
ABN
AM
RO
SOCIE
TE
GEN
ERALE
UN
ICRED
IT
FORTIS
INTES
A B
CI
DEX
IA
SP I
MI
AIB
HVB
BIR
POP
BACA
ERST
MED
CO
M
NBG
EUR
CAP
MPS
BCP
AN
AL
PV ANKB
C
KBC Group : approx. 21 bn euros
36
Consistent dividend policy To continue the past policy, and supported by its strong
solvency and enhanced profitability, KBC Group intends to pay out a steadily growing dividend
Historical (gross) cash dividend per share:
1.231.42 1.48 1.52 1.64
1999 2000 2001 2002 2003
KBC (4-yr CAGR: 7%)
EUR
1.081.22 1.31 1.38 1.50
1999 2000 2001 2002 2003
Almanij (4-yr CAGR: 9%)
EUR
New structure for Almanij / KBC Group
The floor is now open for questions from the Press
Reminder: a Q&A session for investors and analysts (conference call in English) will be held later today at 1.30 pm CET. Dial-ins: +32 2 290 1411, +44 207 7162 0185 or + 1 888 222 0364.
…/…
Q & A panel
Appendices
40
Ownership analyses - current situation
N° of shares (000)Holding in
AlmanijHolding in KBC
CERA/Almancora Group 74 192 -
MRBB 32 553 -
Other committed shareholders
30 968 -
Core shareholders 137 712 (70.3%) -
Almanij 265 208 788
KBC 1 415 5 885
KBL 150 679
Gevaert - 329
Intragroup 1 829 (0.9%) 215 681 (69.4%)
Free float 56 282 (28.7%) 95 030 (30.6%)
Total outstanding 195 824 (100%) 310 711 (100%)
41
Ownership analyses - projected situation
N° of shares (000) Holding in KBC Group
CERA/Almancora Group 100 159 27.3%
MRBB 43 946 12.0%
Other committed shareholders 41 807 11.4%
Core shareholders 185 911 50.8%
KBC Group NV (ESOP hedge) 5 647 1.5%
Gevaert 3 716 1.0%
Intragroup 9 362 2.6%
Free float 171 011 46.7%
Total outstanding 366 285 100.0%
42
4 988 773 53 5 814 Revenue
-3 102 -493 -81 -3 677 Expenses
-179 -87 -12 -278 Provisions & value adjustm.
1 707 193 -40 1 859 Profit, ordinary activities
-18 Extraordinary result
-495 Taxes
-135 Minority interests
1 210 Net profit, Group share
Pro forma P&L, KBC Group, 9M 2004Pro forma segments
Bankingbusiness
Insurancebusiness
Holding Co & other
Total (m euros)
30-Sep-04
43
104.1 - - 104.1 Customer loans
79.9 17.0 1.6 98.5 Securities portfolio
73.5 2.1 1.0 76.6 Other (incl. loans to banks)
257.6 19.0 2.6 276.7 Total assets *
20.7 Total risk equity
163.6 - - 163.6 Customer deposits
- 16.2 - 16.2 Techn. provisions, insur.
74.5 1.1 3.0 98.0 Other (incl. funding on market)
238.0 17.2 3.0 276.7 Total liabilities *
Pro forma B/S, KBC Group, 30-Sep-04Pro forma segments
Bankingbusiness
Insurancebusiness
Holding Co & other
Total (bn euros)
30-Sep-04
* B/S total, excl. eliminations
44
6 446 847 161 7 453 Revenue
-4 237 -499 -101 -4 838 Expenses
-739 -38 -31 -809 Provisions & value adjustm.
1 469 310 28 1 807 Profit, ordinary activities
57 Extraordinary result
-494 Taxes
-66 Minority interests
1 304 Net profit, Group share
Pro forma P&L, KBC Group, 2003Pro forma segments
Bankingbusiness
Insurancebusiness
Holding Co & other
Total (m euros)
31-Dec-03
45
6 618 852 102 7 572 Revenue
-4 350 -457 -101 -4 908 Expenses
-737 -3 -96 -836 Provisions & value adjustm.
1 530 393 -94 1 829 Profit, ordinary activities
-81 Extraordinary result
-528 Taxes
-181 Minority interests
1 038 Net profit, Group share
Pro forma segments
Bankingbusiness
Insurancebusiness
Holding Co & other
Total (m euros)
31-Dec-02
Pro forma P&L, KBC Group, 2002
46
Contact information
Press contacts: KBC Press Office:
Tel. +32 2 429 85 45 – [email protected] Almanij Press Office:
Tel. +32 3 202 8714 – [email protected]
Investor relations: KBC Investor Relations Office:
Tel. +32 2 429 4051 – [email protected] Almanij Investor Relations Office:
Tel. +32 3 202 8713 – [email protected]
www.kbc.com or www.almanij.be