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Introducing SG CaPELS Ca pital- P rotected, E quity- L inked S ecurities

Introducing SG CaPELS Ca pital- P rotected, E quity- L inked S ecurities.

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Introducing SG CaPELS Ca pital- P rotected, E quity- L inked S ecurities

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  1. Introducing SG CaPELSCapital-Protected, Equity-Linked Securities Series 1 - “My First Global Portfolio”> 100% capital guarantee at maturity > five-year maturity> indexed to a portfolio of 10 leading international shares> no subscription or annual management fees> AUD exchange rate guarantee> daily liquidity on the ASX> min investment amount of $2,000> maximum redemption amount of $2,488 per CaPELSTM

  2. Disclaimer SG Australia Equities Limited (ACN 090 099 317) ("SGAEL") takes responsibility for publishing this presentation. It is not be be directly or indirectly distributed to any person other than securities licensees, exempt dealers, exempt investment advisers and securities representatives as defined in the Corporations Law. At the time of publication the ASX and ASIC have not approved the issue of the securities the subject of this presentation. SGAEL has not taken into account your investment objectives, financial situation or particular needs and for this reason SGAEL suggests that you seek your own independent financial and taxation advice prior to investing in these securities. SGAEL and its related entities may hold interests in, and may profit from, the trading of warrants and their related securities at any time. No part of this presentation is to be construed as a solicitation, recommendation, offer or invitation to buy or sell any security. The information in this presentation is, to SGAEL’s knowledge, reliable and accurate as at the time of publication but this cannot be guaranteed. The views of SGAEL reflected in this presentation may change without notice. To the maximum extent possible at law, SGAEL and its related entities do not accept any liability whatsoever arising from the use of the material or information contained in this presentation.

  3. Introducing SG SG is a global bank • SG is the investment banking arm of Société Générale • Société Générale is the 11th largest bank in the world with more than AUD 900 billion in assets • Société Générale is a French bank but most of its activities are outside of France • In Australia, SG operates through its Australian subsidiary, SG Australia. • SG Australia is fully guaranteed by Société Générale • Société Générale is rated AA- by Standard & Poors • Your investment is guaranteed by one of the largest banks in the world!

  4. Introducing SG SG is global leader in warrants • “Founding Father” of the covered warrants market with the first issue done in 1989 in France on Alcatel • A major warrant issuer on 17 stock exchanges: Amsterdam, Brussels, Dusseldorf, Frankfurt, Helsinki, Hong Kong, Johannesburg, Lisbon, Luxembourg, Madrid, Milan, Paris, Stockholm, Stuttgart, Sydney, Tokyo and Zurich • Worldwide market share: 22% • Worldwide ranking: 1st, Risk Magazine

  5. Introducing SG SG is a leading warrants issuer in Australia • Entered the market in June 2000 • Introduced the first warrants over international shares in July 2000 • Introduced instalment warrants in October 2000 • Note : Instalment warrants can help reduce your tax bill ! • Introduction of SG CaPELSTM in April 2001 • Overall market share: over 20% Thanks to a simple strategy: educate • Free monthly seminars • Free monthly newsletter, the Navigator • Regular presence at investment fairs • Free call 1 800 TALK SG (1 800 TALK SG) • State-of-the-art website www.warrants.com

  6. Introducing SG CaPELS TM SG is proud to introduce this European favorite to Australia • Popularity brought on by dual economic phenomenon observed during the preparatory phases of the single European currency • Sharp drop in interest rates • Strong performance of the equity market • Financial engineers designed structured investments to help initiate first-time investors to the stock market • Full capital protection at maturity • Yet value of the investment depends on equity performance and not an interest rate • As such, investors accept to forego a fixed interest amount in hopes of earning a higher return based on the performance of the share market. • When the shares perform well, investors can obtain roughly 3 to 4 times the risk-free rate.

  7. Introducing SG CaPELS TM Advantages of Structured Investments • Transparency: you know the driving elements behind the value of your investment (i.e. the underlying shares and interest rates) • No fund manager means no management fees! • Currency hedging removes the impact of currency fluctuations on the value of the investment. • Easy access to a range of stock markets. Possible underlyings range from shares, indices, mutual funds and hedge funds. • SG CaPELSTM are an attractive alternative to term deposits and managed cash accounts

  8. Introducing SG CaPELS TM Advantages of the SG CaPELSTM Structure • Structured investments can be “packaged” as a bond, term deposit, fund and in Australia….. as a warrant! • The warrant structure presents many advantages • ASX-listed • locally traded & settled • daily liquidity • fits easily into wrap accounts • favorable tax treatment (CGT) compared to comparable investments • small investment amounts (min investment $2,000 with increments of $1,000)

  9. Introducing SG CaPELS TM Series 1: “My First Global Portfolio” • 5-year maturity, with sale & purchases possible on a daily basis and weekly overnight limit order facilities • Exposure to a balanced portfolio of leading blue chip shares • The “Accumulated Performance” : the value of the investment will be equal to the Issue Price multiplied by the 5 annual performances, with an annual limit of 20%. • Maximum return of 148% over five years, meaning a $1,000 investment can grow to $2,488 in five years ! = $1,000 x 120% x 120% x 120% x 120% x 120% • Minimum value guaranteed at maturity of $1,000

  10. “My First Global Portfolio” A Balanced Portfolio of Leading Global Shares

  11. “My First Global Portfolio” • An Easy Redemption Formula • On June 22, the initial level of the portfolio is set at $1,000. The investment per stock is $100. The exchange rate used on this date will remain fixed throughout the life of the product. This is the exchange rate guarantee. • At the end of year one, the closing level of the portfolio is observed and the performance of the portfolio is calculated. For the purposes of calculating the final value of the investment, 100% will be added to this performance figure. • Should the performance exceed the cap of 20%, the capped value will be used to determine the final value of the SG CaPELSSM • Steps 1 - 3 are repeated each year. • The final value of the SG CaPELSSM will be equal to the product of each of the five annual performances multiplied by the Issue Price of $1,000.

  12. “My First Global Portfolio” An Example of the Accumulated Performance Suppose the portfolio performed as follows: Year Performance Performance used to Plus determine Final Value 100% 1 + 15 % + 15 % 115% 2 + 30% + 20% (cap reached) 120% 3 + 20% + 20% 120% 4 - 5% - 5% 95% 5 0% 0% 100% The Final Redemption Amount would be equal to 1.15 x 1.20 x 1.20 x .95 x 1.00 x $1,000 = $1,573.20 A return equal to over 10% per annum, which is approximately twice the risk-free rate!

  13. “My First Global Portfolio” An Attractive Backtesting

  14. “My First Global Portfolio” During the life of the product - the value of the SG CaPELSTM • The value of the portfolio and the value of the SG CaPELSTM are different. • Portfolio = the sum of the shares converted into AUD using a fixed exchange rate • SG CaPELSTM = a guaranteed investment offering the accumulated performance of the portfolio • As such, the value of the SG CaPELSTM will be affected by moves in many elements: • a drop in long term interest rates > a rise in the SG CaPELSTM • a rise in the shares of the portfolio > a rise in the SG CaPELSTM • a rise in market volatility > a drop in the SG CaPELSTM • a rise in the AUD > no impact on the SG CaPELSTM

  15. “My First Global Portfolio” During the life of the product - events relating to the shares • The composition of the portfolio will be adjusted upon the occurrence of corporate events. From the investor’s point of view, the treatment will just like he were long the share. • takeover > the share of the absorbing company will be replaced • split > the number of shares will be increased • bankruptcy > the value of the portfolio will drop • For further information please read the Offering Circular.

  16. “My First Global Portfolio” During the life of the product - liquidity • SG CaPELSTM will be listed on the ASX. • As the shares in the portfolio are listed overseas, in different time zones, the price of the product will not move much during ASX business hours and the spread will be wide (roughly 3%) • However, on every Thursday night, SG look at the orders in SEATS and execute on Friday morning the orders which were filled in overnight trading. • For reference purposes the normal bid-ask spread is 1%. The Fair Value is the Ask price (or the selling price)

  17. “My First Global Portfolio” Example - liquidity • SG CaPELSTM My First Global Portfolio will be issued at $1,000. • On June 25, 2001, the SG market on the ASX will be $970 - $1,000. • Two years later, suppose the fair value (= ask price) of the SG CaPELSTM My First Global Portfolio is $1300. • The SG market on the ASX will be $1,261-$1,300. • If you are in a hurry to buy or sell, you can hit these prices. • However, if you want a better repurchasing price (=bid price), place your limit order with your broker on Thursday and leave overnight. • If the market does not move considerably overnight, we can consider that the fair repurchasing price will be $1,287 (=$1,300 x .99)

  18. “My First Global Portfolio” How can I follow the value of my investment? • Your broker and financial planner are the best sources of information. • Prices for SG CaPELSTM My First Global Portfolio will be available on www.sgcapels.com • CaPELS updates will be given in SG’s free monthly newsletter, the Navigator

  19. Fill in the exercise notice and pay the aggregate exercise price ($0.01 x the number of CaPELSTM being exercised) The investor must have settlement and custody arrangements in the country of each share Do nothing & receive a cash amount equal to the “accumulated annual performance” “My First Global Portfolio” Investor’s choices at maturity Exercise and take delivery of the shares

  20. SG Instalment WarrantsA less taxing way to invest!

  21. SG Instalment Warrants Like a share on lay-by, only better! • With SG Instalment Warrants • With SG Instalments, investors can • Obtain full exposure to a share at a fraction of the market price • Be entitled to full economic benefits (franked dividends) • Have no obligation to make the final instalment payment • Acquire an eligible security for Self-Managed Super Funds • Acquire ASX-listed shares • Have the ability to convert shares into SG Instalment Warrants • Take advantage of potential tax benefits • Cash extraction facility • Investment horizon: 1 to 5 years

  22. SG Instalment Warrants • Longer term Investment warrant, European or American style. • What happens when you buy an SG Instalment for 55 to 60% of the share price? • SG buys the share on market and it is held in trust for the benefit of the warrant holder. • Warrant holders are entitled to dividends and franking credits • The value of the instalment warrant moves in line with the share price during the life of the product (Delta is close to 1.0).

  23. SG Instalment Warrants • What happens at expiry? • Pay the final instalment amount and receive the underlying share. • Do nothing and receive an amount equal to the proceeds of the sale, less the amount of the second payment. • If the final instalment is higher than the proceeds of the sale, the warrant will expire worthless.

  24. SG Instalment Warrants Superior Returns ... … and Boosted Yields Based on historical dividends

  25. SG Instalment Warrants

  26. SG Instalment Warrants Example: SG WOW Instalment Warrant John wants to keep his exposure to 2,000 WOW shares, currently trading at $9.42 ($18,840 investment) but is in need of cash. He decides to transfer his shares and apply of WOW instalments. SG Warrant Investment John is able to lodge his WOW shares with SG, which will hold them in trust and pay him the difference between the shares’ market price and the market price of the corresponding Instalment warrants. Warrant price xConversion ratio x Number of Shares= $5.55 x 1 x 2,000 = $11,100 Hence John extracts $7,740 (41% of his investment) from the market while maintaining his exposure to the WOW shares. He pays NO CGT!

  27. SG Instalment Warrants WOW reaches $12 at completion • John can take delivery of the WOW shares by paying the final instalment of $4.50 per share (total cost of $10.05) • John can sell his warrant back on market and realise a 20.7% return (excludes tax and transaction costs) WOW drops to $8 at completion • John can still take delivery of the WOW shares by paying the final instalment of $4.50 per share (cost of $10.05) • John was able to exit his position at all times during the life of the warrant

  28. SG Instalment Warrants For whom are these products designed? Investors who… • Wish to participate in the performance of a share over the medium term by paying in increments • Wish to receive dividends and franking credits for the share without paying for it in full • Have Self-Managed Super Funds as instalments are a great way to leverage your super • Are looking for a product with tax advantages

  29. SG Instalment Warrants What are these potential tax advantages? • No CGT on Cash Back amount • Many of the shares underlying SG Instalments yield dividends which are fully franked - ie holders are entitled to imputation credits • The pre-paid interest component (part of the instalment amounts) is tax deductible • Remember the crucial date of the 29th of June 2001!

  30. SG Instalment Warrants • SG Warrants are ASX-listed and are available through your broker or your financial planner. • SG Instalment Warrants are also available directly from SG through the application forms contained in the Offering Circulars. • As warrant terms are not standardised, investors are advised to familiarise themselves with the particular characteristics of each warrant, as set out in each warrant’s Offering Circular.

  31. SG Instalment Warrants Look out for SG Instalments over the following shares SME ANZ WBC Banks Resources Industrials CSR TAH LLC TAB BHP RIO WSF Watch out for HOTS and 5 yr rolling instalments Check out our website www.warrants.com/au for more info!

  32. SG CaPELSTM - the Option is Yours!1800 TALK SGwww.sgcapels.com

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