ITS MY LIFE STYLE MC GROUP Public Company Limited 2016 Results - - PowerPoint PPT Presentation

MC GROUP Public Company Limited

2016 Results Summary

1 March 2017

IT’S MY LIFE STYLE

CONFIDENTIAL

MC GROUP Public Company Limited

2016 Results Summary

1 March 2017

IT’S MY LIFE STYLE

Disclaimer

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The information contained in our presentation is intended solely for your personal reference only. In addition, such information contains projections and forward-looking statements that reflect our current views with respect to future events and financial performance. These views are based on assumptions subject to various risks and uncertainties. No assurance is given that future events will occur, that projections will be achieved, or that the our assumptions are correct. Actual results may differ materially from those projected.

CONFIDENTIAL

Agenda

Pages 2016 Recap 3 Financial Results 15 2017 Strategy & Guidance 28

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2016 Recap

CONFIDENTIAL

Adjusted Merchandise Mix Gearing Towards Top-Wear

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In 2016, more product varieties were added particularly top-wears with good and innovative fabric quality as well as special screen techniques.

New Lifestyle Products Launched in Q4 2016

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November 2016: Introduced an activewear under the new brand “UP”.

• Made from innovative “Hydrophilic fabric” that contains synthetic fibers to keep

the body dry and comfortable.

• Customers can mix and match UP products with other clothing to best match the

lifestyles they live.

• Sourced domestically with international standards
• Nationwide distributed at Mc Jeans stores and online channel www.mcshop.com

Tracksuit Running set

New Lifestyle Products Launched in Q4 2016 (Cont’d)

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December 2016: Launched an aromatic active skin care products under brand “M&C”.

• Currently available collections of body lotion and shower gel are Deep Blue,

light Blue and True Blue .

• Body lotion is aromatic and infused with natural extracts of rice bran oil, shea

butter and witch hazel extract that evens out and soothes the skin. Does not contain petroleum, parabens and silicone.

• Shower gel mildly cleanses the skin without drying up skin’s natural oil.
• Products are cruelty-free -no animal testing in R&D and manufacturing.
• Nationwide distributed at Mc Jeans stores and online channel www.mcshop.com

CONFIDENTIAL

2016: Year of Fun and Worthy Marketing Campaigns

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To stimulate the consumer spending, to return benefits to the customers and to reduce inventory level.

Q4 2016: Adjusted Campaigns For Rising Demand in Black & White

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CONFIDENTIAL

Fun-Fun-Fun Shopping Experience

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Enjoyable shopping experience offered to customers at free-standing shops

More Stores Rollout in 2H 2016 As Planned…

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End of 2015 # Points of Sales

866

End of 2016 # Points of Sales

897

(+31)

Brand Free- Standing Modern Trade Mobile unit Int'l Total 225 450 5 18 698 14 1 15 7 7 14 5 19 3 3 14 2 16 25 83 108 Total 288 550 5 23 866

This year focus is to achieve optimal efficiency of sales channel management through store renovation, store enlargement, and closure of non-performing stores.

*Remark: mcPink PoS are combined with McLady PoS

*

Brand Free- Standing Modern Trade Mobile unit and Others Int'l Total 249 471 6 20 746 11 1 12 5 5 10 1 1 21 21 21 86 107 Total 303 563 6 25 897

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… But Slowed Down in mc mc Shop Expansion

Slowed down sales channel at PTT service stations in Q4 2016 to fine tune product assortment before further expansion. At the end of 2016, there were 18 mc mc shops compared to 10 shops in 2015.

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Continued CLMV Expansion Through Dealership

25 points of sales in CLMV at the end of 2016 Vientiane, Laos Yangon, Myanmar Ho Chi Minh City, Vietnam Phnom Penh, Cambodia Mandaley, Myanmar

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More Online Activities & Communication Since 2H16

More contents, more products, special items, exclusive promotions, exclusive for member, and online special.

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Realignment of TDC Business in Q4/16

Time Deco Corporation (“TDC”), an operator of the Company’s watch business and a 51% subsidiary, has realigned its management and strategy since October 2016. For better response to consumers’ needs, more attractive and more worthy sales campaigns were executed and new sales channel was added to tap into new customer groups; for example, sales through www.mcshop.com, the online distribution channel of MC and corporate sales.

Receipts from Mc Jeans shop can be used as discount for online purchase at www.mcshop.com New Products: Adidas (Fall Winter 2016), Coach Limited 2016 (Breast Cancer Collections), Victorinox Swiss Army: TITANUM and Fossil smart watches (Fossil Q)

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Financial Results

Results Highlights

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Record sales with strong net profit growth

(THB millions)

Q4/15 Q4/16 % YoY FY15 FY16 % YoY

Sales Revenue

1,289 1,411 +9% 3,895 4,442 +14%

Gross Profit

698 805 +15% 2,186 2,430 +11%

EBITDA

312 415 +33% 928 1,098 +18%

Net Profit

250 317 +27% 732 843 +15%

Net Profit Margin

19.1% 22.2% 18.5% 18.8%

EPS (THB)

0.31 0.40 0.92 1.05

Modern Trade 39%

Annual Sales Reached 14% Growth

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Quarterly Sales Revenue 2016 Sales Revenue

+14% YoY

Free Standing 57%

52% 44% 4%

2015 2016 Other 4% (THB millions)

Q4 2016 sales remained strong amid the national mourning period pushing annual sales to achieve 14% growth yoy, in line with the guidance. Sales Revenue by Channel

+9% YoY

Distribution Channels Performance

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Remark: (1) Figures are calculated based on modern trade sales revenue, before GP. Excluded sales from international markets and other source (i.e., exhibition etc.)

Modern Trade (1)

’000 THB

Free Standing Shop

THB

Strong Same-Store Sales Growth

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Due to more varieties of apparel product offering and sales promotional campaigns executed throughout the year, same-store sales growth in 2016 boosted by 11% from 2015 compared to 4% same-store sales growth in 2015.

Total System Growth Same Store Sales Growth Remark: Hypermarkets are not included in the calculation.

TSS & SSSG Quarterly TSS & SSSG

Free standing shop Modern Trade

Same-Store Sales Growth by Channel

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SSG By Channel Free Standing

Remark: Hypermarkets are not included in the calculation.

Modern Trade

Bangkok Upcountry

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Lower GPM YoY but Improving Since Q2 2016

(THB millions)

• 35.0%

65.0%

Gross Profit Gross Profit Margin Gross Profit Margin (excl TDC)

+15% YoY

Gross profit margin (GPM) dropped yoy due to lower margin of apparel and watch business. GPM of apparel declined due to the promotional campaigns launched during the year to stimulate spending, give back to customers, and optimize inventory level. GPM of watch business dropped from promotional campaigns in 1H16 and clearance sales in Q4 2016. However, overall GPM improved qoq thanks to the effective adjustments of promotional campaigns and effective cost management during the year.

+11% YoY

2016 Quarterly Gross Profit

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%SG&A to Sales Lower YoY

+1% YoY

SG&A expenses rose 7% yoy due to higher amortization from SAP implementation since early 2016, higher rental and service fees and higher personnel expenses. %SG&A expenses to sales declined yoy to 35% from 37% in 2015. 2016 SG&A Breakdown % SG&A Expense to Sales

(THB millions)

+7% YoY

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Improving EBITDA

(THB millions)

EBITDA increased yoy due mainly to better operating performance as well as the higher depreciation and amortization. EBITDA margin also improved yoy.

+18% YoY

• 35.0%

65.0%

EBITDA EBITDA Margin EBITDA Margin (excl TDC)

+33% YoY

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Greater Net Profit Growth

15% YoY

• 35.0%

65.0%

Net Profit Net Profit Margin Net Profit Margin (excl TDC)

(THB millions)

Q4 2016 net profit increased 27% yoy thanks to solid sales growth and effective cost

• management. For 2016, MC reported net profit of THB 843 mn, an increase of 15% yoy

thanks mainly to greater sales and effective promotional campaigns.

27% YoY

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Financial Position Remained Strong with Net Cash Position

Consolidated Balance Sheet Net Debt to Equity Ratio

(THB millions)

2015 2016 Cash & Cash Equivalent 877 1,277 Accounts Receivable 702 787 Inventory 2,316 1,989 Other Assets 1,205 1,144 Total Assets 5,100 5,196 Accounts Payable 554 448 Interest-bearing Liabilities 158 147 Other Liabilities 312 315 Total Liabilities 1,024 910 Shareholders' Equity 4,076 4,286

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Improving Profitability And Better Inventory Days

ROA ROE Finished Good Inventory Days (Months) Cash Cycle (Months)

THB millions THB millions

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85% Dividend Payout For FY2016

DPS THB 0.50 XD 27 Apr 2017 Book Closing 3 May 2017 Payment 19 May 2017

Remark: Dividend policy is not less than 50% of net profit

Proposed dividend payment for the performance during 1 Jul 2016 to 31 Dec 2016 as follows:

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2017 Strategy & Guidance

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GREAT Strategy

GRowth Efficiency Asia Brand Talented Team

• Generate growth of sales revenue from key products and develop

new lifestyle products using innovations through both of offline and

• nline channels.
• Maintain leader position for jeans brand in domestic market.
• Optimize supply chain management.
• Effectively manage operating costs and operate points of sales
• Further expand online sales channel as well as promote integrated

business operations to attain omni channel business model.

• Develop dealership programs to strengthen sales agents in foreign

territories in Cambodia, Laos, Myanmar and Vietnam (CLMV).

• Develop talents to enhance their capabilities to understand and

quickly respond to changes in business strategies to sustainably support business growth in the long run.

CONFIDENTIAL

Growing Diversified Portfolio

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With the mission to provide quality products that respond to everyday needs of consumers so that they can look and feel good anytime at reasonable cost, MC’s portfolio has continuously expanded into the broader fashion and lifestyle market, not just jeanswear. Sales Revenue Contribution by Product Type

Sales Revenue (THB mn) 2,556 4,442 6,700

2017 Guidance

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• Sales growth

12%-15%

• Gross profit margin

In line with 2016 (54%-55%)

• SG&A

~ 35% of sales

• CAPEX

THB 70 mn

• Effective tax rate

5%-7%

• Dividend payout

not less than 50%

Thank you

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Investor Relations MC GROUP Public Company Limited ir@mcgroupnet.com Tel: +662 117-9999 Ext 1210

Line ID: @mc_jeans