Upload
matthew-le-cordeur
View
61.884
Download
1
Embed Size (px)
Citation preview
Slide 1
THE VALUE OF BEE DEALS
Results presentation
25 June 2015
Stuart Theobald CFA
www.intellidex.co.za
Slide 2
THE VALUE OF BEE DEALS
READY
BACKGROUND
• Recognised there is a lack of proper research to inform debates over BEE deals
• Ambition to calculate the total amount of net value created from BEE deals by the largest 100 JSE-listed companies
• In January 2015 began the research process • Developed independent model of each deal to estimate NAV at end
December 2014 based on company circulars and announcements • Presented our results to companies for comment • Companies provided feedback including missing data • Developed estimates in light of data to finalise results • Various assumptions had to be made in some cases
Slide 3
THE VALUE OF BEE DEALS
READY
KEY RESULT
R317bn
Total value generated in the 20 years to end 2014 from both matured deals and deals that were live at that stage
Slide 4
THE VALUE OF BEE DEALS
READY
MAKING SENSE OF R317bn
R 179.5
R 317.0
R 0.0
R 50.0
R 100.0
R 150.0
R 200.0
R 250.0
R 300.0
R 350.0
Tax take Deal value
1.8 times the total amount of corporate income tax paid in 2014
R 285.0
R 317.0
R 0.0
R 50.0
R 100.0
R 150.0
R 200.0
R 250.0
R 300.0
R 350.0
Value of agri land &equip
Deal value
1.1 times the total value of agricultural land and equipment in SA
Sources: Sars, department of agriculture, Intellidex
Slide 5
THE VALUE OF BEE DEALS
READY
THE TIMING OF DEALS
0
5
10
15
20
25
30
35
≤2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of deals launched/matured per year
Deals launched Deals matured
2004/5 was the peak period for the signing of deals (50 deals) Maturity periods range from seven to 10 years.
Slide 6
THE VALUE OF BEE DEALS
THE TIMING OF MATURING DEALS
2014 was a record year for maturing deals with R59.8bn of value delivered to beneficiaries
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Value generated by maturing deals per year (Rbn)
Slide 7
THE VALUE OF BEE DEALS
THE BREAKDOWN OF LIVE VS MATURING DEALS
Live deals still face market risk as share prices can fluctuate
R107 839
R209 203
Value by matured vs live deals (Rm)
Matured
Live
Slide 8
THE VALUE OF BEE DEALS
TYPES OF BENEFICIARIES
Contrary to recent comments, staff and community schemes have accrued substantial value
16%
62%
22%
Value by beneficiary type
Staff schemes (R52bn)
Strategic investors (R196bn)
Community schemes (R69bn)
Slide 9
THE VALUE OF BEE DEALS
EVOLUTION OF BENEFICIARY TYPES This illustrates
how different beneficiary groups have evolved over time. It indicates the cumulative value attributable to each beneficiary type as a percentage of the total, according to the date of deal initiation.
Slide 10
THE VALUE OF BEE DEALS
SOURCES OF RETURNS KEY DRIVERS OF RETURNS
• Share price appreciation • Length of deal – compounding effects • Reinvestment of dividends – compounding
effects
R24 369
R291 892
Value by returns type (Rm)
Dividends
Capital appreciation
Slide 11
THE VALUE OF BEE DEALS
VALUE CREATION PER INDUSTRY Value creation per industry sector
Sector Total value (Rm)
Value as % of
mkt cap
Banks R 57,228 6.0%
Financials R 32,358 5.4%
Healthcare R 14,289 7.2%
Industrial R 56,740 2.1%
Investment companies R 10,431 4.2%
Mining R 100,915 11.8%
Pharmaceutical R 9,568 5.0%
Property R 8,872 3.9%
Retail R 7,677 1.8%
Telecoms R 17,246 2.7%
Travel & Leisure R 1,636 3.6%
Mining has been the biggest creator of value in both absolute and relative terms Retail relatively underweight. Reflects voluntary mechanism of BEE
Slide 12
THE VALUE OF BEE DEALS
SHARE PRICES AS MAJOR DRIVERS OF RETURNS
2008 recession left many deals under water. Three fold recovery since. Mining has struggled to recover post 2008 Global equities bull market has been important factor
50
100
200
400
800
De
c 2
00
4
May
20
05
Oct
20
05
Mar
20
06
Au
g 2
00
6
Jan
20
07
Jun
20
07
No
v 2
00
7
Ap
r 2
00
8
Sep
20
08
Feb
20
09
Jul 2
00
9
De
c 2
00
9
May
20
10
Oct
20
10
Mar
20
11
Au
g 2
01
1
Jan
20
12
Jun
20
12
No
v 2
01
2
Ap
r 2
01
3
Sep
20
13
Feb
20
14
Jul 2
01
4
De
c 2
01
4
Financials Industrials Banks Healthcare Mining
Slide 13
THE VALUE OF BEE DEALS
20 LARGEST BEE DEALS
Of the 100 companies studied, 17 had done no deals and eight had deals that were underwater as at end 2014
Company Deal start date Live/
concluded?
Staff
schemes
Strategic
partners
Community
schemes Total Value
FirstRand Jun 2005 Concluded R 5,971 R 2,594 R 14,698 R 23,262
Exxaro Nov 2006 Live R 1,045 R 15,788 R 0 R 16,832
Sanlam Apr 2004 Concluded R 0 R 7,915 R 6,476 R 14,391
Naspers Dec 2006 Live R 0 R 13,884 R 0 R 13,884
MTN Nov 2010 Live R 0 R 12,200 R 0 R 12,200
Impala Platinum Jul 2007 Live R 0 R 0 R 11,339 R 11,339
Standard Bank Oct 2004 Concluded R 4,367 R 4,359 R 2,179 R 10,905
RMH Dec 2011 Live R 0 R 9,878 R 0 R 9,878
SABMiller Jun 2010 Live R 3,882 R 4,076 R 1,747 R 9,705
Aspen Mar 2005 Live R 0 R 8,684 R 0 R 8,684
South32 Jul 2007 Concluded R 0 R 7,949 R 0 R 7,949
RMI Dec 2011 Live R 0 R 7,096 R 0 R 7,096
Mediclinic Jun 2005 Live R 1,383 R 5,321 R 0 R 6,704
Anglo American Platinum Jun 2002 Live R 0 R 0 R 6,652 R 6,652
Old Mutual Aug 2005 Live R 3,716 R 1,696 R 969 R 6,381
Kumba Iron Ore Nov 2006 Live R 646 R 0 R 5,136 R 5,782
Nedbank Jun 2005 Concluded R 2,185 R 1,743 R 1,573 R 5,501
Netcare Jun 2005 Live R 2,547 R 1,329 R 561 R 4,437
Northam Platinum Jan 2008 Concluded R 0 R 3,921 R 0 R3,921
Vodacom Oct 2008 Live R 0 R 3,646 R 0 R3,646
Slide 14
THE VALUE OF BEE DEALS
A NOTE ON THE DIFFERENCE BETWEEN VALUE AND OWNERSHIP • Deals are transitory. Value is created at a moment in time • BEE deals generate balance sheet – equity that can be used by beneficiaries • BEE deals involve concentrated exposures. We should expect rational
investors to want to diversify exposures to balance risk and return • To the extent that beneficiaries are natural persons (staff, strategic investors)
we should expect normal life-cycle asset class distribution • Equity is a long-term savings asset class so suits older savers focused on
retirement funding • In short, should not expect shareholdings to be held by beneficiaries for long • “Normal” racial pattern of share ownership should reflect a normal
distribution of economic resources at large. Individual share ownership is the result of transformation rather than a cause of it.
Slide 15
THE VALUE OF BEE DEALS
QUESTIONS?
A report and spreadsheet with all the deals we analysed are available at www.intellidex.co.za/bee