Financial year 2017 The presentation herein may contain forward - - PowerPoint PPT Presentation

Corporate Presentation

Financial year 2017 The presentation herein may contain forward looking statements by the management of Best World International Ltd (BWI) that pertain to expectations for financial performance of future periods vs past periods. Such forward looking statements involve certain risks and uncertainties as they relate to future events. Actual results may vary materially from those targeted, expected or projected due to various factors. Such factors are, among others, general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures as well as changes in tax regimes and regulatory developments. Such statements are not and should not be construed as management’s representation on the future performance of BWI. Therefore, the actual performance of BWI may differ significantly from expressions provided herein. The reader is cautioned to not unduly rely on these forward-looking statements. Neither the Group nor its advisers and representatives shall have any liability whatsoever for any loss arising, whether directly or indirectly, from any use or distribution of this presentation or its contents. This presentation is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for shares in BWI.

Welcome to Best World

Corporate Presentation

Overview of our business

About Best World Business Model & Strategy Growth Areas FY2017 Financial Highlights

To be a Global Leader in the creaFon of Beauty and Wellness products that enhance the lives of our customers.

3

Our Vision

About Best World

4

Company Milestone

About Best World

1990 1995 2000 2005 2010 2016

July 2004

Listed on the Singapore Stock Exchange.

2014

AcquisiFon of Zhejiang SoildGold. Manufacture and 
 Distribute Aurigen supplements in China through retail drugstores

2016

Direct Selling license in China, Hangzhou

1998

Malaysia

2004

Thailand

2005

Vietnam

2006

Hong Kong

2007

Indonesia Taiwan

2009

Korea

2010

Philippines

2016 UAE Founded in 1990

Best World InternaFonal specializes in Premium Skincare, Health Supplements, NutriFonal & Wellness products.

1990

Singapore

5

Company Milestone

About Best World

Network of over 490,000 and approximately 8.7% acFve distributors

FY2013 FY2014 FY2015 FY2016 FY2017

490,041 435,765 402,422 377,830 298,251

Membership Growth 2013 - 2017

CAGR: 13.22%

6

Our Markets Our Markets

Seoul Hangzhou Taipei Taichung Kaohsiung Changsha Hong Kong Manila Jakarta Kuala Lumpur Johor Bahru Singapore Myanmar Bangkok Ho Chi Minh City Dubai

About Best World

7

BWL - Best World Lifestyle

About Best World

All our subsidiaries operate under the BWL brand

8

Core Products

About Best World

DR’s Secret, Aestier & Miraglo

Brands for our Skincare

PentaLab

Personal Care

Optrimax

Wellness & Weight Management

Aurigen

Health Supplements 9

Avance

Health Supplements

Brands for our Health Supplements, Personal Care and Wellness products

Core Products

About Best World

DR’s Secret Skincare contributed close to 89% of our revenue

10

Top Brands

About Best World

11

Top Brands

About Best World

Avance and Optrimax contributed 6% and 3% of our revenue.

12

Strong Brand Equity and Credibility

About Best World

Singapore 1000 Company

2016, 2015, 2014, 2013, 2010

SuperBrands Singapore Choice

Avance 2011, 2010, 2009, 2008, 2006, 2004

Singapore Fastest Growing 50 Cerdficadon

2008, 2007, 2005

200 Best Companies

Under A Billion in Asia Pacific 2008, 2007

Singapore Presdge Brand Award

2015, 2009, 2008

ASEAN Business Award

2008

Singapore 500 SME

2009, 2008

Best Annual Report Under Sesdaq Listed Company

2006

Black Book AR 100 Award

2006

Grand Prix Winner Red Dot Design Awards

Best World AR 2005 – Happy World

Bronze Award for Annual Report

Best World AR 2005 – Happy World

PR Awards 2017

Gold Award for Best Investor RelaFons 2017

• Begin product

registraFon

• Prepare markeFng

13

Best World Business Model

Business Model & Strategy

Direct Selling

• Launch sold via

the Group’s subsidiaries

• In ASEAN (except

Laos, Cambodia and Brunei), Hong Kong, Korea and Taiwan

• ConceptualisaFon by

in-house product development team

• Develop and run the

necessary tests on products before any product launch

• FinalizaFon of product

formula and start manufacturing

• 3rd Party manufacturing

in US, Korea and Taiwan

Markedng Tools & Product Registradon 3rd Party Manufacturing Product Concept

14

Direct Selling as Major Revenue Contributor

Business Model & Strategy

Group Revenue Direct Selling Singapore Taiwan Indonesia Others

FY2017

49.7% of sales

FY2016: 70.9% of sales

Export China Myanmar

FY2017

48.2% of sales

FY2016: 26.8% of sales

Manufacturing & Wholesale China

Aurigen supplements FY2017

2.1% of sales

FY2016: 2.3% of sales

15

Our Winning Strategy

Business Model & Strategy

Attract, Retain, Educate

Products Plan People

Business Updates

Corporate Presentation

17

Conversion of Export Business to China Wholesale

Business Updates

Impact

• Increase in Revenue and Gross Profit due to

recogniFon at a price higher than export price;

• Decline in Other OperaFng Income;
• Increase in AdministraFve Expenses due to

staff & rental.

• Increase in DistribuFon Expenses due to

logisFcs and other related expenses but no commissions.

18

Export vs China Wholesale

Business Updates Export Price

Import Agent

• Export to China expected to ceased in 2Q

2018 and will be replaced by China Wholesale

• Export segment beyond 2Q2018 shall refer

to Group exports to Myanmar

Transfer Price

}

Export Profit

China Wholesale

}

Wholesale Profit Wholesale Price Export Profit

}

Export 2017 EBITDA margin: 41.9%

19

Direct Selling vs China Wholesale

Business Updates Transfer Price

}

Export Profit

China Wholesale

}

Wholesale Profit Wholesale Price Transfer Price

Member Price

Direct Selling

Sales Profit Export Profit

}

2017 EBITDA margin: 25.7%

20

Impact to the Group’s Profit

Business Updates

Member Price Wholesale Price Export Price Cost of Goods Sold

} } }

Direct Selling profit net of remaining commission Wholesale profit net

• f administraFve

expenses & commission Export profit

Direct Selling Revenue China Wholesale Revenue Export Revenue

Growth Areas

Corporate Presentation

22 * Constant 2015 prices, Fixed 2015 exchange rate Informa;on extracted from Euromonitor Asia, “ Asian Beauty Consumers – Key Trends Shaping the Industry”, November 2016 and Reimagining Growth in the Global Beauty Industry, May 2017

Growth in the Global Beauty Industry

Growth Areas

US$ billion 350 380 410 440 470 500

2010 2011 2012 2013 2014 2015 2016

447 426 417 410 401 392 385

5 4 3 2 1

% Growth Value Sales

Skin care remains the largest value sales by category Global Beauty and Personal Care Value Sales*

Eastern Europe 5% Australia 1% Asia Pacific 32% Western Europe 21% North America 21% Latin America 14% Middle East & Africa 6%

Value Sales by Region (2015)

% Growth

23

Skincare* as a %

• f retail value

(2016)

RMB 192.5 Billion Direct Selling 16% Store-based Retailing 64%

Non-store

Retailing 20%


(excl. direct selling)

China, World’s Second Largest Cosmetics and Personal Care Market

Growth Areas

*Skincare also includes sun care and sets/kits Informa;on from Euromonitor Interna;onal, “ Beauty and Personal Care in China), April 2017 ^ Based on total retail value in 2016

Aims to capture 5%^(RMB 10B) of market share

In 2022 FY2017

Recorded export sales

• f S$106.5

(RMB 513M) to China

24

Average number

• f friends

per user

130# 194*

Facebook EN 295% Facebook TCN 437% Wechat 455% Weibo 210%

Growth in no. of users (since incepdon of each social media plalorm)

Digitalisation and Social Selling

Growth Areas

#Informa;on from Sta;s;c Brain, hWp://www.sta;s;cbrain.com/facebook-sta;s;cs/ *Informa;on from China Watch, hWps://www.chinainternetwatch.com/19524/wechat-data-report-2016/#ixzz4ucJvgSdq

• No. of Followers

6250 12500 18750 25000 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 23,980 22,251 19,325 17,805 16,284 14,341 12,417 10,877 9,393 7,844 4,318 4,056 3,959 3,655 3,545 3,383 3,201 3,027 2,762 2,511 2,046 755 1161 1093 1060 1046 1029 990 958 911 845 817 294 25

Digitalisation and Social Selling

Growth Areas

Best World’s Social Media Outreach

Social media ROI = Brand Visibility, Brand Evangelizers and Referrals and Sales

Average Reach & Engagement

Facebook EN 46,035 Facebook TCN 103,236 Wechat 47,811

Facebook EN Facebook CHI WeChat

26

Skincare Manufacturing Facility

Growth Areas

Acquisidon of 4,550sqm facility

• in Singapore for S$10 million in 2016
• to be commissioned by end-2019

Industry 4.0

• fully automated end-to-end with

integrated communicaFon along the enFre chain for customizaFon and higher efficiency.

27

Skincare Manufacturing Facility

Growth Areas

Radonale

• Greater control over raw material

and in process Q.C and final product quality

• Reduce lead Fme (approximate in

six months) 
 > less inventory > more cash > increase shareholder return and M&A

• In anFcipaFon of greater demand

from key markets

28

New Products, New Markets, M&A

Growth Areas

New Markets

• Dubai RC as a gateway

to other GCC markets

• Deepen penetraFon

into Korea, Indonesia and Singapore M & A O p p

• r

t u n i t i e s New Product Launches N e w M a r k e t s a n d D e e p e n P e n e t r a t i

• n

i n E x i s t i n g M a r k e t s M&A

• Companies that provide

access to new markets e.g. Direct selling companies

• Complementary 


products and services New Products

• Average of 3-4 


products each year

• Enhances consumer

appeal through product innovaFon and improvement

FY2017 Financial Highlights

Corporate Presentation

FY2017 Financial Summary Financial Highlights Membership Growth

30

Comparison with other Direct Selling Companies

FY2017 Financial Highlights

• 10%

0% 10% 20% 30% 40% Avon Herbalife Natura (R$) Nu Skin Oriflame € Tupperware USANA Best World

• 9%

5% 7% 5%

• 4%
• 3%

12% 36%

5 YEARS CAGR

Source: www.worldofdirectselling.com

31

Comparison with other Direct Selling Companies

FY2017 Financial Highlights

2017 Margins

• 22.5%

0% 22.5% 45% 67.5% 90% Avon Herbalife Natura (R$) Nu Skin Oriflame € Tupperware USANA Best World

• 1.7%

8.3% 6.8% 6.9% 5.8% 3.7% 8.8% 25.2% 58.2% 66.8% 59.2% 67.2% 62.2% 58.9% 70.3% 38.6% 61.6% 80.8% 70.3% 78.1% 72.7% 67.4% 82.7% 69.1% Gross Profit Operating Expenses Net Income

Source: www.worldofdirectselling.com

32

FY2017 Performance Summary

FY2017 Financial Highlights

FY2017 (S$’000) FY2016 (S$’000) Change % Revenue

220,875 200,764 10.0

NPAT

Attributable to Owners of the Company

55,673 34,569 61.0

Net Profit Margin (%)

25.2 17.2 8.0 pp

EPS *(cents)

10.12 6.28 61.1

* The weighted average number of ordinary shares (excluding treasury shares) for the 3 months ended 31 December 2017 is 550,088,514 (3 months ended 31 December 2016: 550,459,514). The weighted average number of ordinary shares (excluding treasury shares) for the 12 months ended 31 December 2017 is 550,321,559 (9 months ended 31 December 2016: 550,459,514). For comparative purposes, the earnings per ordinary shares for the prior corresponding periods are adjusted retrospectively pursuant to the share split of every one existing ordinary share into two ordinary shares on 25 May 2017

125,000 250,000 375,000 500,000

2010 2011 2012 2013 2014 2015 2016 2017

490,041 439,765 402,422 377,830 298,251 278,789 245,444 229,498

33

Membership Growth VS Average Revenue per Member

FY2017 Financial Highlights

FY2017

490,041

members

Revenue per member 2016 vs 2017 Members

Ac;ve distributors, which refers to members who have received commission over the last 12 months, is approximately 8.7% Revenue refers to Direct Selling + Sales in China at Direct Selling Price 639 703

75 150 225 300 2014 2015 2016 2017 74.1 61.8 40.9 25

46.8 52.2 26.2 19.2

55.3 51.6 21 18.3

44.7 35.2 13.5 12.8

34

Financial Highlights - Revenue

FY2017 Financial Highlights

FY2014 – FY2017 CAGR: 43.15%

Q4 Q3 Q2 Q1

Revenue (S$’m)

Financial Highlights - Margins

FY2017 Financial Highlights

60 120 180 240

FY2013 FY2014 FY2015 FY2016 FY2017

220.9 200.8 101.7 75.3 41.1

77.4% 74.4% 75.6% 73.2% 69.1% 3.5% 5.4% 9.9% 17.2% 25.2%

Revenue S$million GPM % NPM %

Stable financial margins & highly scalable business model Declining GPM but improving NPM due to:

• Growing export segment (lower

GP and no distribuFon expenses)

• Beqer operaFng leverage (stable

distribuFon and administraFve expenses)

35

S$’m

Financial Highlights - Dividends

FY2017 Financial Highlights

7500 15000 22500 30000

FY13 FY14 FY15 FY16 FY17

22,553 12,661 4,404 1,762 614

43% 43% 44% 37% 41%

Total Dividends Paid (S$’000) Dividends payout %

Dividends Policy

• Revises dividend policy to

distribute annual dividends of not less than 40% of net profit (from 30%)

• Strong commitment to

enhance shareholder return

• Paid out S$71.3M (2004 to

2017 including proposed final dividends)

36

Dividends (S$’000)

Financial Highlights - Cash Holding

FY2017 Financial Highlights

Net cash posidon with negligible borrowings Management is currently undergoing a strategic review of its balance sheet to enhance shareholder value through:

• M&A opportuniFes
• Dividend and share

buyback programme

37

FY2013

(S$million)

FY2014

(S$million)

FY 2015

(S$million)

FY2016

(S$million)

FY2017

(S$million)

Cash and Equivalent

33.3 41.0 47.2 54.9 82.2

Total Borrowings

3.5 6.0 0.018 7.4 7.4 Net Cash 29.8 35.0 47.1 47.5 74.8

Gearing Ratio

0.07 0.11 0.00 0.08 0.06

* CalculaFons based on formula Net Debt/Total Equity

Best World’s Investment Thesis

FY2017 Financial Highlights

2018-2020: The Best is Yet to Be

• Organic growth: 

• Build on China’s growth momentum

• Expects Taiwan to maintain stable contribuFon 


for the Group


• Deepen penetraFon into Indonesia market with 


Halal cerFfied skincare products

• Pursue M&A opportuniFes supported by strong balance sheet

and cash flow

• Experienced management and replicated in new and other

exisFng markets

• Strives to achieve good corporate governance with a focus on

enhancing shareholder value

• Highly scalable business model allows success to be replicated in
• ther markets

Thank you

Corporate Presentation