1M2JC0 Plan 199@r-1229
A CEC meeting to review the Imasco Plan for 1995-1999 was held in Montrial on
14th December 1994.
P.-=t: Mr 'Y1 F Bmughton. Nir U 0 V Herter Mr D P Allvey Mr P Crawford.
Mr B L Le%rim ?vlr R E GuvarL Miss H C Barton
1. The 1"4 update is Jamely unchanged from the Preview. Them am some special
factors affecting the cash flow. including the restoration of stocks in Imperial.
deferred c=itai expenditure at Hardee@s, land purchases at Genstar. and reditcing
inventories ax UCS. The CS40m tobacco surtxx for 1994 will be paid in February
19919.
2. The businesses withL- Imasco have crepared thme year phws for 1995. 1996 and
?00*11 199 7. The fizares in r-6e Plan for 1998 =d 1994 are Imasco's centre -roj'ccz'ons.
71he main change since the Preview is an improved outlook for C1. which is
projected to increcase its RoE from I O?@- in 1994 o I 1.5% in 1995. and to irc.-ease its
Net w Common by 2:%.
bffwb, and the Saps
are wider in ! 996 and :997. It is UKUL=
as a recently proposed -'-% price incre3se has not successful. Therrifore the gap will
need to be CICSeC DV COW-MMCM0125.
*Pcimed
-wom out- The evoive-wwwdsme
planwWrAGuehAmbur, KW& be- w.,Ayime.-. The capit-1 pL-i--
includes hW,-p-n over-4,--yaxw
6. The presentaton on Canada Trust by 'Ar C!ark and his ceam on 13th December
confirmed chat a clear stratezv is in :iac:.
7. One-third of ;he 199-5 ;-oje-.,ed zroft im=vennent is from reduced provisioning.
.7-cm ie
Nluch of the revenue ;-n-arovemcnt is for ecample. from mutual funds. and
fiduciary fees.
S. CT does not have full. economics of scale '.n Can-cla hence the an =-don of acquiring
National Trust. which would be justified on the basis of a reduced cost ratio. Taciding
the cost ratio is one of the biggest challenzes now f=.ng CT.
9 CT his not %et me- =vc-.- I-rorn Farmers to discuss oppommities in Canada
,@,lr BroughEon 6%iil ar.-amp ,,,r % Ir C!aric to nice, with Mr Gasich about opportunities
within the Life business. -,4
--J
10, Zurich is merested oriv in P&-C in Canada. whereas CT has no intention to be
involvedm P&C. Uhasac:ess to Zurci's customer base to sc!l non-P&C products. C:)
BAT INDUSTRIES CONFIDENTIAL- CATEGORY 1: MINNESOTA TOBACCO LMGATION
BAT Industries document for Province of British Columbia 13 April 1999

11. The acquisition of First Federal has been jus-ified by the value added to the busimm
As a business, it is very different from CT. for ecampfc. differtmt delivery chief
for mortgages, and diffr=t roles of the national agencie& It is still an open question
whether FF and CT can, add value to one another, and a review will be carried out To
determine the lone term role of Fr-.
1'. It has beeri decided that the nizattfactur-rig part of FFM does not have strategic value,
therefore its sale is being negotiated. The distribution side would be retained.
'3. Hardee's @= reduced its overfie:id cost base by about LISS30m to USS90m over the
put thme years. Tbere is now little scoot to reduce costs further and profit
improvements must come from increased sales. The gross margin is simila to that
from Tobacco, and the cash flow is strong if the growth is through fianchistes.
Therefore increased saies and we;- controlled costs will lead to strong profits.
and cash flows. Ther: may be _- otroorruniry to convert smaller competitors into
franchisees. to take ad-.m=e of national adve-rdsing. The forecast imurovezaent in
net margins looks opm-Listic whea:Liecd :0 forecast growth in like-for-like store sales.
zove from decc:ntralised to centralised functions. for
I Shoppers "Vision 1997' is a rz
example. product acatz'sidion and zrministranam,
Howrmr. itmill be a good achievement if Shoppers
can hold its earnings flaz ova 1995 and 1996. with the loss of Tobacco, and other
chan2eS- such as the --nay of Waimarn. W-Aimar. his imDacmd Shoppers in low
mamin household :,tc--s and in bezun- croducz.
ccr:=i -:-eir pre-scri-tion costs. A Oro-00 al bv
7nm ;s pr:ss= on =ioycs s
Shot) ers is beinj teszed Dv C7," ZUrnj 199.4 :0 gatl2e its tmpioyeees' reacdons. In a
I p
Pa=2_-! L I ',S busineSS=zn Wm---- it
%ill trizi with -1 5 Shoc=-s' Associa:.Is.
-7 -CS has 240 leases.
An offifer. slightly below book vai-.:.-.'iw been:v--tived for E;CS- U
the-efom a strong cove=nt wili '.-e needed to ensure that problems from these do not
arise in the turner
18. The land in Genstar is valued at cos: and inte=st is not capitalised. Profit is made by
obtaining development permission. A view of at least ten years needs to be Taken of
when developments %ill ccrne to @;-_,;ticn.
15. The economic return is the opera-ing earnings after mx minus the cost of capital. It
has a c@ear relatior-shir ,with the s@are price. and over time %vill be built into the
incentives for senz'cr
C)
IC. The cortemplated dividend incrcu: @s :0%. ;Nt the decision will be mkcn in Jama7z
1995.
BAT INDUSTRIES CONFIDENTIAL. CATEGORY 1: MINNEsoTA TOBAcco LmGATION
BAT Industries document for Province of British Columbia 13 April 1999

21. The buy-back in 1994 YTD has been CS92= at was speculatcd as to whether the
share price would have fallen firther wnhout the buy-back). CSS100m p-a. Ls
expected in the future. The prop== mus: be continued long term fbr the fun
benefits, but it can be stopped if necemy.- Mr Allvey will assess the kV= of the
buy-back programme on BAT.
H C Banon
13th February 1995
Nj
-Nj
%Z
C:)
BAT INDUSTRIES CONFIDENTIAL- CATEGORY 1: MINNESOTA TOBACCO LMr.A-nON
BAT Industries document for Province of BritiSh Columbia 13 April 1999