Beyond Boundaries UMW Holdings Berhad 19 March 2018 GAME CHANGER - PowerPoint PPT Presentation

Beyond Boundaries UMW Holdings Berhad 19 March 2018 GAME CHANGER Consolidation of equity stake in MBM Resources and PERODUA 1

AGENDA 1. TRANSACTION RATIONALE 2. THE VALUE PROPOSITION 3. PROPOSED RIGHTS ISSUE 4. MOVING FORWARD 2 UMW HOLDINGS BERHAD

Transaction Rationale 3

CONTINUED EXPANSION OF OUR BUSINESS Our Strategy Towards Growth AUTOMOTIVE EQUIPMENT M&E Enhancing and Strengthening of Continued expansion optimizing profitability heavy and industrial of core business and equipment segment HVM GAME CHANGER – Mergers & Acquisition strategy 4 UMW HOLDINGS BERHAD

TRANSACTION OVERVIEW The proposals :- MBM Resources Perodua 49.93% 3% 50.07% 10.0% + (1) (2) (3) 50.07% stake in MBM Mandatory general offer 10% stake in Perusahaan Resources Berhad (“the (MO) will be made to the Automobil Kedua Sdn Bhd Company” or “MBMR”) for a (“PERODUA”) for a purchase remaining shareholders of purchase consideration of the Company of RM 499m consideration of RM 418m RM 501m from PNB Equity Resources Corporation (“PERC” ) 5

GROUP STRUCTURE BEFORE AND AFTER THE PROPOSALS Increasing our strategic stake in Perodua As at 6 March 2018 (1) After the Proposals PERC UMWH MBMR UMWH (3) 10.0% 38.0% (2) 51.5% 100.0% (4) 20.0% DMSB* MBMR 48.0% 51.5% 5.0% DMSB* 20.0% 5.0% Perodua Perodua *DMSB – Daihatsu (M) Sdn Bhd Notes: (1) Being the latest practicable date prior to the date of the MBMR offer letter (2) Held through UMW Corporation Sdn Bhd, a wholly-owned subsidiary of UMWH (3) UMWH reserves the right to nominate another affiliate(s) to undertake the Proposed MBMR Acquisition and the Proposed Perodua Acquisition (4) 100% ownership of MBMR is dependent on the outcome of the Proposed MO 6

RATIONALE AND BENEFITS – PROPOSED ACQUISITIONS The Proposed Acquisitions are consistent with our strategy to enhance our core businesses Increase strategic stake in Perodua  Effective interest in Perodua will increase from 38.0% to 60.6% after completion of the 1 Proposed MBMR Acquisition and assuming full acceptance of the Proposed MO  Further increase to 70.6% after the completion of the Proposed Perodua Acquisition Increase exposure in the commercial vehicle segment 2  Assimilating MBMR’s multi -brand dealerships i.e. Daihatsu and Hino vehicles Widen our offerings in the manufacturing segment  I ntegrating MBMR’s auto parts manufacturing business – wheels 3 manufacturing, safety products and noise, vibration and harshness products Improve prospects in the automotive segment  Leveraging on Perodua’s strength in the national car segment, coupled with the 4 Company’s existing presence in the non -national car segment via the Toyota marque  Benefit from economies of scale and create synergies 7

The Value Proposition 8

THE OFFER PRICE FOR PERODUA AND MBMR Valuation Build-up RM million  Offer price for Perodua reflects a c.9.0x earnings multiple over Perodua’s 2016 audited net income of RM463.6 million 57 (1) 1,001 944 418 10.0% stake 22.6% stake MBMR MBMR in Perodua in Perodua ex-Perodua Offer Price Exposed to holding company debt and business risks of MBMR Group RM million  Equity value of remaining businesses at MBMR 91 (ex-Perodua) estimated at RM148 million 148 ‒ Includes the loss-making alloy wheels 57 segment MBMR Net debt at Adj. equity Value ex-Perodua MBMR company of level MBMR ex-Perodua Note: (1) Rounded from the offer price of RM2.56 per MBMR Share Financials in this section are based on MBMR’s and Perodua’s audited 2016 financials, including the net debt at MBMR company level Source: Bloomberg as at 14 March 2018 9

MBMR OFFER PRICE IS A PREMIUM TO HISTORICAL PRICES Close to Last 2 Years Historical High MBMR Volume Historical Prices (1) Premium (units ‘ mn) Share Price (RM) 5-day VWAP RM2.26 13.3% 3.00 10.0 1-month VWAP RM2.28 12.3% Submission of offer 7 March 2018 9.0 3-month VWAP RM2.30 11.3% 2.80 8.0 Offer Price of 2.60 7.0 2.40 6.0 2.20 5.0 4.0 2.00 3.0 1.80 2.0 1.60 1.0 1.40 - Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 Note: (1) VWAP up to and including 6 March 2018, being the last trading day prior to the date of the MBMR Offer Source: Bloomberg as at 14 March 2018 10

FUNDING REQUIREMENTS RM 1,072 million RM 418 million MBM Resources Perodua 100% 10.0% RIGHTS ISSUE* INTERNAL FUNDS + UMW SHARES • Amount raised via the Rights Issue (RI) would depend on the cash or shares option selected by MBMR’s minority shareholders as payment • Pending the RI, UMW undertakes bridging facility to fund the deal • Includes about RM 71m transaction and other costs 11

Proposed Rights Issue 12

DETAILS OF THE PROPOSED RIGHTS ISSUE Illustrative – To be determined at a later date closer to the implementation of the Proposed Rights Issue to enable the price to be more reflective of the prevailing market price at that time  Gross proceeds Subject to fixing of the entitlement basis and issue price at a later date Full Cash Scenario RM1,072 million Full Shares Scenario RM559 million  Issue price To be fixed at a later date but for illustration purposes: Full Cash Scenario RM4.40 per rights share (23.7% discount to TERP) Full Shares Scenario RM4.30 per rights share (26.9% discount to TERP) For this illustration, the TERP is calculated based on the 5-day VWAP of UMWH Shares up to and including 12 March 2018 (1) of RM6.04  Entitlement basis To be fixed at a later date but for illustration purposes: Full Cash Scenario 1 rights share for every 5 UMWH Shares Full Shares Scenario 1 rights share for every 10 UMWH Shares Shareholders’  The Company intends to seek irrevocable undertaking from Permodalan Nasional Berhad (“ PNB ”) and the funds managed by PNB to subscribe in full their respective irrevocable undertaking entitlements  Underwriting The Company intends to procure underwriting arrangement(s) for the remaining rights arrangement shares for which no undertaking has been obtained  Use of proceeds Primarily to repay the Bridging Facility to be obtained by the Company TERP – Theoretical ex-rights price Notes: 13 (1) Being the last trading day prior to the announcement of the Proposed Rights Issue on 13 March 2018

RATIONALE – PROPOSED RIGHTS ISSUE 1 Repayment of the Bridging Facility Improve financial flexibility  Optimise the Company’s capital structure 2  Further strengthen capital base to reflect the enlarged operations following the Proposed Acquisitions Opportunity to further increase equity participation in the Company  Opportunity to further increase equity participation on a pro-rata 3 basis at a discount to the prevailing market price of UMWH Shares  No dilution to equity interest, provided that all entitled shareholders fully subscribe their respective entitlements to the rights shares 14

PROFORMA BALANCE SHEET AND GEARING The Proposed Rights Issue will strengthen our capital base to reflect our enlarged operations following the Proposals Full Cash Scenario Full Shares Scenario Pro forma Pro forma Pro forma Pro forma Pro forma I Pro forma II III(a) IV(a) III(b) IV(b) After Pro After the forma I and After Pro After Pro After Pro After Pro Audited as After the Proposed the Proposed forma II and forma III(a) forma II and forma III(b) at Completed MBMR Perodua the and the the and the Transaction ( Acquisition (2 Acquisition (2)(3 31 Dec Proposed Proposed Proposed Proposed 1) ) ) MO (4) MO (4) 2016 Rights Issue Rights Issue (RM ‘000) (RM ‘000) (RM ‘000) (RM ‘000) (RM ‘000) (RM ‘000) (RM ‘000) (RM ‘000) Shareholders Funds 4,718,562 3,458,395 3,682,529 3,982,529 4,206,036 5,245,484 4,705,671 5,242,467 Non-controlling interests 2,145,713 1,144,679 2,134,405 2,134,405 1,411,263 1,411,263 1,411,263 1,411,263 Total equity 6,864,275 4,603,074 5,816,934 6,116,934 5,617,299 6,656,747 6,116,934 6,653,730 No. of UMWH Shares in issue (‘000) 1,168,294 1,168,294 1,168,294 1,217,555 1,217,555 1,461,066 1,299,526 1,429,479 NA per UMWH Share 4.04 2.96 3.15 3.27 3.45 3.59 3.62 3.67 Total borrowings 6,355,106 2,582,588 3,453,247 3,453,247 3,952,882 2,952,210 3,453,247 2,952,210 Gearing (times) (5) 1.35 0.75 0.94 0.87 0.94 0.56 0.73 0.56 Notes Adjusted to illustrate the effects of the distribution of 1,204,777,400 ordinary shares in UMW Oil & Gas Corporation Berhad (“UMW - OG”), being the entire shareholding of UMWH in UMW-OG. (1) (2) Assuming that the carrying values of MBMR and Perodua are equivalent to its fair value for illustrative purposes. (3) Assuming that Perodua continues to be equity accounted from accounting perspective despite the increased stake for illustrative purposes. (4) Assuming full acceptance under the Proposed MO. (5) Calculated as total borrowings divided by equity attributable to owners of the Company. 15

Moving Forward 16