Mega Lifesciences Public Company Limited (MEGA) Investor Presentation - - PowerPoint PPT Presentation

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Mega Lifesciences Public Company Limited (MEGA)

Investor Presentation – March 2018

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Disclaimer

The presentation contains forward-looking statements which are based on MEGAs’ current expectations, estimates and projections about its industry, management’s beliefs and certain assumptions. These forward-looking statements are subject to various risks and uncertainties. No assurance is given that future events will occur or that our assumptions are correct. Actual results may differ materially from those projected. For any further queries please contact: Email : investor@megawecare.com T elephone: +66 27694222 Ext. 4230 Fax: +66 27694244

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• 1. Business Overview
• The journey
• Business Segments
• OEM business
• Mega We CareTM branded products business
• MaxxcareTM distribution business
• 2. Financial Overview
• 3. Leadership and Shareholders
• 4. Future outlook

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The journey so far…. Key milestones..

Company Incorporated 1982

• Commenced

branded products business

• Acquired

Medicrafts brand 1993-94

• Received approval

from Thai FDA for Samut Prakarn facility in Thailand

• Began manufacturing

nifedipine for Berlin Pharmaceutical Industry Co. Ltd 1985-86 Expanded into Vietnam, Myanmar and Cambodia to sell branded products and started distribution business 1995-96 Established manufacturing plant in Australia 2002

• Became market leading

branded products company in key Southeast Asian markets

• Leading distributor of

pharmaceutical and OTC products

• Acquisition of Eugica

brand in Vietnam 2012

• Commissioning of new

plant in Australia

• Planned manufacturing

expansion in Thailand

• Successful IPO on SET

2013

• Acquired Bio-Life

Marketing SDN. BHD. Malaysia

• Mega Malee joint venture
• Wellness We Care center

established

• Construction of own

state-of-art warehouse in Myanmar approved 2016

Started as an OEM player and became largest soft gel manufacturer in Southeast Asia Started branded and distribution business Emerged as a leading branded and international distribution player in Southeast Asia

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Distribution Business Branded Products Business

What we do…

OEM Business

Mega Lifesciences PCL business segments

THB 3,428 mn 48.8% THB 473 mn 6.7% THB 2,179 mn 73.6%

We develop, manufacture, market and sell our own brand of market leading medicinal supplements, prescription pharmaceutical products and OTC products, mainly sold in developing countries with market leading presence in Southeast Asia and growing presence in Sub-Saharan Africa. We market, sell and distribute various branded prescription pharmaceutical products, OTC and consumer products in Myanmar, Vietnam and

• Cambodia. Our clients include

leading domestic and international pharmaceutical and consumer goods companies. In addition to manufacturing our

• wn

branded products,

• ur

manufacturing facilities in Thailand and Australia accept various production orders from third-party customers.

Mega We Care and Maxxcare are key businesses

*

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76.1% 21.0% 2.9% 52.9% 42.2% 4.9%

Mega We Care contributes maximum to the business…

Mega We Care Maxxcare OEM

Revenue by Segments FY2017

THB 4,053mn THB 5,078mn THB 466mn

THB 9,597mn THB 4,320mn

Mega We Care contributed 53% of total revenue and 76% of total gross profits while Maxxcare contributed 42% of total revenue and 21% of total gross profits in 2017

Gross profits by Segments FY2017

THB 907mn THB 3,289mn THB 124mn

Mega We Care Maxxcare OEM

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We derive majority of our revenue from Southeast Asia while our reach in African continues to widen

Southeast Asia and Indochina contributed 85% and 76% of our operating revenue in FY2017

Legend

Southeast Asia accounts for majority of revenues1 Revenue Breakdown by Region (FY2017)

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Key value drivers

Leading distributor of pharmaceutical and OTC products in select frontier markets of Myanmar, Vietnam and Cambodia (Refer to slide 17)

2

Focused on fast growing markets including a unique established and market leading presence in the Myanmar market (Refer to slide 18)

3

High quality products manufactured in world-class manufacturing facilities accredited by international regulatory agencies (Refer to slide 12)

4

Strong product pipeline driven by an efficient and targeted product development strategy (Refer to slide 15)

5

Proven track record of delivering growth and profitability (Refer to slide 24)

6

Experienced management team instrumental in building the business is significantly invested in the Company (Refer to slide 37)

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Market leading own consumer health and pharmaceutical brands in fast growing developing markets (Refer to slide 11)

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• 1. Business Overview
• The journey
• Business Segments
• OEM business
• Mega We CareTM branded products business
• MaxxcareTM distribution business
• 2. Financial Overview
• 3. Leadership and Shareholders
• 4. Future outlook

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TM Branded products business

Categories Description Key Brands Medicinal supplements

• Products which provide health benefits in addition

to the basic nutritional value found in normal diet.

• Regulation varies across jurisdictions but generally

regulated for their manufacturing, safety, efficacy, labeling and marketing.

• Dermatology , general health/Immunity,

gastroenterology, men’s/women health and

• rthopedics are the key therapeutic categories.

Prescription Products

• Medicines only available for purchase by

consumers with a medical prescription

• Strictly regulated by authorities as to their

manufacturing, safety, efficacy, labeling and marketing.

• Diabetology, dermatology , gastroenterology and
• rthopedics are the key therapeutic categories.

OTC Products

• Medicines sold directly to consumer without a

prescription from a healthcare professional.

• Analgesics , gastroenterology and cough and cold

are the key therapeutic categories.

We sell medicinal supplements, prescription and OTC products within our branded business

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Own Brand Rank Therapeutic Category (TC)

Own Brand Rank Therapeutic Category (TC)

Own Brand Rank Therapeutic Category (TC)

Cerebral and Peripheral Vascular

Emollients and Protectives

Our market leading medicinal supplements, branded generic and OTC brands

Thailand Vietnam Myanmar Acnotin

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Thailand Manufacturing Facility 1 – Soi 6, Samutprakarn

• Commenced production in 1985
• Manufactures: Soft gels, Hard gels and Sachets
• Approved by German health authorities, the Thai FDA and the Australian TGA

Thailand Manufacturing Facility 2 – Soi 8, Samutprakarn

• Commenced production in 2009
• Manufactures: Soft gels, Hard gels, Tablets and Sachets
• Approved by German health authorities, the Thai FDA and the Australian TGA

Australian Manufacturing Facility – Pakenham Facility

• Facility replaces the manufacturing facility established in Dandenong, Melbourne
• Commenced production in 2nd quarter 2013
• Manufactures: Hard capsules, Tablets and Powders
• Approved by Australian TGA

World-class manufacturing facilities subordinated to

Mega We CareTM branded products

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High quality products manufactured in world-class facilities accredited by international regulatory bodies

State of the art quality control laboratory Internationally accredited manufacturing facilities

Manufacturing facilities in Australia and Thailand These facilities are accredited and regularly inspected by:

• German health authorities
• Australian TGA
• Thai FDA
• Additional GMP

certifications from other countries

• Australian TGA approved since 1992
• Amongst the few manufacturers globally,

who apply the same standards for the manufacturing of medicinal supplements as with pharmaceutical products

• Team of more than 160 professionals in our

Quality Assurance and Quality Control teams to ensure our products comply with the highest quality standards

• State of the art QC laboratory with world

class Quality Assurance (“QA”) systems and EU GMP standard manufacturing facilities make us amongst the leading such facility in its category in Thailand and Southeast Asia Internationally accredited facilities Sizeable and dedicated teams monitor quality Significant investment made into infrastructure

We manufacture medicinal supplements to pharmaceutical standards

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Science-based sales and marketing approach to build awareness of the safety and efficacy of our brands

“Science-based” sales and educational approach catering to medical customers Overview

• Customers of branded products business include:

– Pharmacies – Hospitals – Clinics – Health practitioners – Physicians

• Direct promotion to these channels to strengthen market

recognition and build brand loyalty

• Sales representatives and product consultants promote

products through – Educational seminars – Trade shows – Product information and promotional material – Academic trainings – Informational sessions for medical professionals

• Sales force includes members with a medical background

Sales and product consultants promoting Mega products

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Product development strategy

Efficient and targeted product development strategy drives a strong product pipeline

Medicinal supplements

• Identify new clinically-effective and safe

product candidates

• Create line extensions of existing established

products Prescription Pharmaceuticals

• Review effective pharmaceutical compounds

which have been successful for major

• riginator companies
• Products with expired or due to expire

patents OTC

• Develop products which offer the following:

faster relief, are easy to use, have better formulations for self medication, and will be recommended by pharmacies Our objective is to develop new products which offer consumers health and wellness benefits

Products - Key information as at 31 Dec 2017

Existing registered unique formulations:

# of unique formulations as at Dec'16 256 # net increase during the period* 73

# of unique formulations as at Dec'17 329 Existing product registrations:

# of product registrations as at Dec'16 873 # net increase during the period* 136

# of product registrations as at Dec'17 1,009

Product pipeline:

Applications pending for registration: # of unique formulations 67 # of product registrations 361 # of unique product formulations under development 74

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• 1. Business Overview
• The journey
• Business Segments
• OEM business
• Mega We CareTM branded products business
• MaxxcareTM distribution business
• 2. Financial Overview
• 3. Leadership and Shareholders
• 4. Future outlook

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Key Distribution Markets Myanmar Vietnam Cambodia

Market Positioning

• Leading international

distributor of pharmaceutical and OTC products

• Leading international

distribution of pharmaceutical and OTC products

• Leading international

distributor of pharmaceutical and OTC products Distribution Infrastructure

• 9 warehouses strategically

located across Yangon, Mandalay, Mawlamyaing, Naypyidaw, Taungyyi and Lashio

• Access to around 30,000
• utlets representing c.85%

geographical coverage

• 3 strategic storage locations
• Access to around 12,000
• utlets
• 2 warehouse located in Phnom

Penh and Battambang

• Access to around 9,900
• utlets

% of Distribution Sales (FY2017) 56% 31% 12%

We are a leading distributor of pharmaceutical and OTC products in select frontier markets

Distribution business

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72 120 2017 2022 8 38 86 Myanmar Vietnam Thailand Mega is well-positioned to capitalize on this development

… With a leading position in Myanmar

A key market with significant growth potential

1995 85% 9 56%

Establishment date testament to our long-standing presence in the country

• f FY2017 MaxxcareTM revenues

generated in Myanmar # of strategically located warehouses Extensive distribution reach covering 85% of the country

c.1,4432

# of employees in Myanmar

Expected to growth at healthy rates Pharma market (USD per capita) Significant head room in Myanmar for future growth

11%

Of consolidated Mega We CareTM revenue in FY2017 with market leading products in select categories

• Economy likely to grow at a healthy rate of 10.7% in 2017 -

’22

• Existing Pharma market size at 1/10 of Thailand, offers

tremendous future growth opportunities

• Required infrastructure to capitalize growth opportunity

already in place

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Our value-added distribution business models for pharmaceutical and consumer products

Conventional distribution services (CDS)

• Our integrated approach lends enhanced efficiency and quality control of our

products at every stage of our operations from procurement to delivery to our end consumers

• We purchase products from our principals, subject them to a quality control

inspection, then warehouse the products in a climate-controlled environment until receipt of end customer orders. We arrange for logistics services and ensure the timely delivery of products

1 2 3

Sales and conventional distribution services (SCDS)

• In addition to our conventional distribution services, we also provide sales support

to our principals

• Our sales channels include pharmacies, hospitals and clinics for pharmaceutical

products and supermarkets, department stores, key accounts, wholesalers and dealers for consumer products Marketing, sales and conventional distribution services (MSCDS)

• Our pharmaceutical and consumer products teams provide a complete package
• f marketing, sales and distribution services tailored to our principals and their

products

• The teams market directly and engage in marketing activities through available

channels

Principals can choose from any of our three service models to help meet their distribution needs

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Advanced information technology systems provide valuable business intelligence for our principals

Overview

• Our advanced IT systems allow us to collect, analyze and

derive business intelligence across each of our distribution markets

• We offer a broad range of value-added services, including:

– Inventory tracking systems – Inventory management systems – Access to valuable market data – Real-time information sharing

• Our principals can leverage on the array of value-added

services we offer in order to: – Increase operational efficiency – Reduce inventory cost, fulfillment cost and operational expenses – Tailor their marketing activities to target their customers – Improve overall efficiency of their businesses

• We believe this is a key competitive advantage and it

strengthens the existing principal and customer relationships Through our advanced IT systems we can provide value-added services to help our principals increase operational efficiency, reduce inventory cost, fulfillment cost and operational expenses, and tailor their marketing activities Our teams collecting real time data on the field

We capture all aspects of our relationship with customers, providing us with current market insights which we use for effective sales & marketing

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• 1. Business Overview
• The journey
• Business Segments
• OEM business
• Mega We CareTM branded products business
• MaxxcareTM distribution business
• 2. Financial Overview
• 3. Leadership and Shareholders
• 4. Future outlook

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OEM Business

In addition to manufacturing our own branded products, our manufacturing facilities in Thailand and Australia accept production orders from third-party customers

• OEM business contributed 4.9% and 2.9% to our overall operating revenues and overall gross

profits for FY2017.

• We provide contract manufacturing of nutraceuticals, prescription pharmaceuticals and OTC

products for third-party customers.

• Most are long standing customers of the business.
• OEM business provides us productivity and efficiency benefits through the utilization of

available manufacturing capacity.

• The contribution of OEM to overall business of MEGA is expected to remain around current

levels.

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• 1. Business Overview
• The journey
• Business Segments
• OEM business
• Mega We CareTM branded products business
• MaxxcareTM distribution business
• 2. Financial Overview
• 3. Leadership and Shareholders
• 4. Future outlook

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1

Figures inTHB mn

2012 2013 2014 2015 2016 2017 CAGR Operating Revenue

5,965 7,034 7,730 7,945 8,810 9,597 10.0%

Gross profit

2,633 2,959 3,105 3,406 3,687 4,320 10.4%

Selling and Admin. exp (SGA)

1,980 2,236 2,471 2,660 2,674 2,965 8.4%

SGA (% to revenue)

33.2% 31.8% 32.0% 33.5% 30.4% 30.9% na

EBITDA

800 888 787 986 1,107 1,479 13.1%

EBITDA (% optg.revenue)

13.4% 12.6% 10.2% 12.4% 12.6% 15.4% na

EBIT

723 789 655 841 955 1,324 12.9%

Net Profit

578 624 548 696 795 1,113 14.0%

Net profit (% optg.revenue)

9.7% 8.9% 7.1% 8.8% 9.0% 11.6% na

EPS (in THB)

0.79 0.84 0.63 0.80 0.92 1.29 na

Return on equity

38.2% 23.1% 14.3% 16.7% 17.6% 22.4% na

Net cash from operations

342 466 614 609 1,250 927 na

• Given, MEGA’s market position, strategy and future potential in its markets, we expect to double 2014 business in 5 years ; growth trajectory

expected to be non-linear.

• Net profit CAGR 2012-‘17 of 14%. Net profit decline in 2014 was mainly a result of lower growth in Mega We CareTM revenue, additional
• verheads from the capacity expansion, and spending towards business expansion activities in Africa and Myanmar.
• Net profits in FY17 of THB 1,112.8mn (including THB 41mn from Bio-Life), up 40% YoY. Increase in net profits was mainly a result of growth in

Mega We CareTM revenue, better gross profits and steady SGA expenses. New projects caused a net outflow of THB 25.9mn.

• Board of Directors proposed final dividend of 40 satang per share taking FY17 dividends to 70 satang per share representing 54.4% of FY17 net

profits and growth of 48.9% YoY in FY17.

Steady earnings and healthy cash flows ….

2

• 1. THB 57.7 million attributable to forex loss in 2015 has been classified as selling expenses in audited financials per TFRS guidance; given the charge being a forex loss, the amount has been adjusted from forex

• f TFRS. EPS for 2013 based on 865.2mn shares would have been THB 0.72 per share.
• 2017 revenue grew by

8.9% YoY,

• net profits were up by

40% YoY, and

• dividends for 2017 at 70

satang per share, 54.4%

• f profits, up 48.9% YoY

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2012 2013 2014 2015 2016 2017

Key business continues to grow with significant head room for future growth…

• 1. Thailand, Myanmar, Vietnam, Cambodia, Malaysia, Philippines, Indonesia and Singapore. 2. Thailand, Myanmar, Vietnam and Cambodia.

Mega We Care Maxxcare OEM

Operating revenues (THBmn)

Revenue mix (%) across segments

Mega We Care Maxxcare OEM

• Overall operating revenue CAGR of 10% in 2012-’17, driven by Mega We

Care (+13.5%) and Maxxcare (+7.9%).

• Overall operating revenue in FY17 grew by 8.9% YoY driven by Mega We

Care growth of 19.4% YoY. Mega We Care growth excluding Bio-Life (the newly acquired company in Dec’16) was 9.5% YoY in FY17.

• SEA1 and Indochina2 contributed 84.8% and 76.4% of overall operating

revenues in FY17.

5,965 7,034 7,730 7,945 8,810 9,597

8 7 5 6 5 5 46 45 48 45 47 42 45 49 47 49 48 53 2012 2013 2014 2015 2016 2017

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2012 2013 2014 2015 2016 2017

• Net profits grew at healthy CAGR of 14% between 2012-

‘17.

• Net profit in FY17 was up by 40% YoY. Increase in net

profits was mainly a result of growth in Mega We Care revenue, better segmental gross margins and steady SG&A expenses.

• Decline in FY14 net profit was mainly a result of lower

growth in Mega We CareTM revenue (slow down in Thailand and Ukraine), additional overheads from the manufacturing capacity expansion, and spending towards business expansion activities in Africa and Myanmar.

• Key segmental gross margins remained steady over years.
• Improvement in overall gross margins in FY17 was mainly

led by growth in Mega We CareTM revenue resulting in better revenue mix and higher segmental gross margins.

Steady segmental gross margins and growing net profits

Gross margins Net profits (THBmn)

Overall gross margins are influenced by segmental gross margins and revenue mix.

578 624 548 696 1,113 795 44.1% 42.1% 40.2% 42.9% 41.8% 45.0% 64.2% 63.6% 62.1% 64.8% 63.9% 64.8% 28.2% 22.4% 21.5% 21.0% 21.5% 22.4% 23.8% 17.0% 16.2% 26.1% 19.5% 26.5% 2012 2013 2014 2015 2016 2017

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362 422 325 280 380 424

2012 2013 2014 2015 2016 2017

2,077 2,676 2,898 3,182 3,399 4,064

2012 2013 2014 2015 2016 2017

262 330 388 445 472 589

2012 2013 2014 2015 2016 2017

Mega We CareTM revenue mainly driven out of Southeast Asia complimented well by Africa

Revenue by geography (THBmn)

Southeast Asia (THBmn) Africa (THBmn)

Top 15 products contributing over 55% of revenue

Market leading position in key markets, growing reach in Africa and new product launches to lead future growth underpinned by under-penetration and low per capita consumption of medicinal supplements in our key markets compared to developed countries.

• Mega We Care revenue CAGR 2012-’17 of 13.5%, driven by SEA

CAGR of 14.4% and a CAGR of 17.6% in Africa.

• SEA contributed 80% and Africa 11.6% of Mega We Care

revenues in FY17.

• Mega We Care revenue in FY17 grew by 19.4% mainly driven by

SEA growth of 19.6% YoY.

Others (THBmn)

34.0% 33.2% 31.7% 30.2% 29.6% 29.9% 51.6% 49.9% 47.7% 46.4% 46.0% 45.9% 64.7% 62.6% 60.1% 57.9% 56.7% 56.9% 2012 2013 2014 2015 2016 2017

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2% 7% 6% 6% 10% 10% 12% 36% 31% 28% 31% 30% 31% 55% 63% 66% 59% 60% 56% 2012 2013 2014 2015 2016 2017

MaxxcareTM revenue growth driven by Myanmar…

Revenue mix (%) across geographies

Myanmar Vietnam Cambodia Nigeria

Myanmar

• largest market with significant historic growth and

future opportunities …

• Pharma market size at 1/10 of Thailand
• Infrastructure and capabilities in place to support

future growth in business

• We provide distribution business to third party

principals in Myanmar, Vietnam and Cambodia (The

• perations for third parties in Nigeria was

discontinued since 2013).

• Revenue CAGR of 7.9% during 2012-’17; mainly

driven by Myanmar with CAGR of 8.5% during the same period.

• MaxxcareTM revenue in FY17 was down by 2.6% YoY.

Decline in FY17 was mainly a result of loss of a principal in Myanmar; newly joined principals are expected to offset this decline in due course. Maxxcare business is expected to fair better in FY18.

Revenue THBmn

2,767 3,132 3,694 3,558 4,160 4,053

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Mega We CareTM and MaxxcareTM gross margins remain steady ….

• Maxxcare gross margins have remained steady
• ver years.
• Higher gross margin in 2012 was mainly a

result of change in business model for one of

• ur principal in 2012.
• Gross margins are mainly influenced by change

in principal and service mix amongst other factors.

Mega We Care gross margins Maxxcare gross margins

• Mega We Care gross margins have remained

steady over years.

• Slight variation in the margins are mainly a

result of product mix and country mix amongst other factors.

64.2% 63.6% 62.1% 64.8% 63.9% 64.8%

2012 2013 2014 2015 2016 2017

25.4% 22.4% 21.5% 21.0% 21.5% 22.4%

0% 10% 20% 30% 2012 2013 2014 2015 2016 2017 Reported gross margin Normalized gross margin

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17% 19% 25% 34% 23% 31% 31% 29% 16% 7% 5% 4% 52% 53% 59% 60% 72% 65% 2012 2013 2014 2015 2016 2017

OEM business

Revenue mix (%) across geographies

Australia Thailand Others Revenue THBmn 498 473 424 480 399

Gross margins

• Revenue CAGR has seen a decline of 1.3%
• ver 2012-’17. Revenue growth of 16.9% YoY

in FY17 was mainly driven by demand from

• verseas customers.
• Gross margins are driven by revenue growth

and customer mix amongst other factors.

OEM business contributed 4.9% of total operating revenue and 2.9% of total gross profits in FY17.

466

23.8% 17.0% 16.2% 26.1% 19.5% 26.5%

2012 2013 2014 2015 2016 2017

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13.9% 12.3% 11.7% 12.6% 11.8% 11.6% 19.3% 19.5% 20.2% 20.9% 18.5% 19.3% 33.2% 31.8% 32.0% 33.5% 30.4% 30.9% 2012 2013 2014 2015 2016 2017

• SG&A expense was 30.9% of operating revenue

in FY17 as compared to 30.4% in FY16. In absolute terms SG&A expense in FY17 increased by 10.9% YoY. Apart from relatively higher spending in FY17; Bio-life inclusion also contributed to increase in SG&A expenses.

• Advertisement and personnel cost constituted

42% and 31% of total SG&A expenses in FY17.

SGA benefiting from increased scale

SG&A as a percentage to revenue

Advertisement and personnel cost are key elements of SG&A (THBmn)

1,980 2,236 2,471 2,660 2,674

SG&A as a percentage to revenue has reduced over years from 33% in 2012 to 31% in recent years.

2,965

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Strong balance sheet and stable cash cycle..

• 1. Cash and bank balances as at balance sheet dates includes non-restricted term deposits with banks.

Key balance sheet elements (THBmn)

1

Net cash position of THB 662mn and net debt to equity

• f (0.13) times as at Dec’17
• Increase in equities in 2013 was driven by issue of
• rdinary shares as part of IPO.
• Cash cycle days of 120 to 130 days; remained steady at

123 days in Dec’17 compared to 121 days in Dec’16.

• Capex

spending during 2012-2014 includes, commissioning of new plant in Australia, expansion of manufacturing capacity in Thailand to double the softgel capacity and acquisition of Eugica brand for THB 185mn.

• Capex spending in 2016 mainly includes THB 592mn

towards acquisition of Bio-Life (outflow, net of pre- existing cash in transferee company). THB 167mn towards new land near manufacturing plant in Thailand as part of future expansion plan and THB 151mn towards acquisition of leasehold rights of land in Myanmar for construction of state-of-art warehouse.

• Capex spending of THB 270mn spent in FY17, mainly

towards construction of state-of-art warehouse and

• ffice space in Myanmar and towards construction of

warehouse at manufacturing plant in Thailand.

Dec'12 Dec'13 Dec'14 Dec'15 Dec'16 Dec'17 Assets

4,332 6,551 6,732 7,610 7,941 8,720

Outside liabilities

2,621 2,858 2,754 3,275 3,261 3,475

Equity

1,710 3,693 3,978 4,335 4,680 5,244

Net cash/(debt) (845) 543 714 748 547 662 Capex spent2 624 352 160 181 1,016 270 Net debt/Equity (times) 0.49 (0.15) (0.18) (0.17) (0.12) (0.13) Receivables

1,288 1,747 2,024 2,263 2,233 2,520

Days

81 78 88 97 92 89

Inventories

1,442 1,685 1,649 2,067 1,889 2,219

Days

127 138 130 147 139 140

Trade payables

(769) (1,168) (1,306) (1,603) (1,519) (1,598)

Days

(84) (86) (96) (115) (110) (106)

Cash cycle days 123 130 121 129 121 123

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Healthy cash flows

1 ….

• 1. Cash and bank balances includes cash and cash equivalents and unrestricted term deposits with banks ; hence redemption and investment in term deposits with bank has

Cash flows (THBmn) Inflow from operating activities Inflow/(Outflow) – financing activities Outflow from investing activities

• Healthy operating cash flows over years. Improvement in 2016, driven by higher profits and improvement in working capital.

Operating cash in FY17 came in at THB 927mn driven by higher profits and investment in working capital.

• Capex spending is mainly towards capacity expansion, improvements and acquisitions. Capex spending in 2016 mainly includes THB

592mn towards acquisition of Bio-Life (outflow, net of pre-existing cash in transferee company). THB 167mn towards new land near

• ur manufacturing plant in Thailand as part of future expansion plan and THB 151mn towards acquisition of leasehold rights of land

in Myanmar for construction of state-of-art warehouse. Capex spending in FY17 was mainly towards construction of state-of-art warehouse and office space in Myanmar and towards construction of warehouse at our manufacturing plant in Thailand.

• Cash flows from financing activity primarily includes movements in loan and dividend payouts. In FY17, net cash outflow from

financing activities was THB625mn, mainly arising from dividend payouts during the year and reduction in working capital loans.

342 466 614 609 1,250 927

2012 2013 2014 2015 2016 2017

626 396 202 174 1,006 307

2012 2013 2014 2015 2016 2017

304 1,103 (671) (247) (473) (625)

2012 2013 2014 2015 2016 2017

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• 1. Business Overview
• The journey
• Business Segments
• OEM business
• Mega We CareTM branded products business
• MaxxcareTM distribution business
• 2. Financial Overview
• 3. Leadership and Shareholders
• 4. Future outlook

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Our organization structure

• PTY. Ltd.

• Sdn. Bhd.

100.00%

Direct subsidiary of MEGA Subsidiary of subsidiary Joint venture Associate of subsidiary

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Our Board of Directors

10

• Mr. Mechai Viravaidya ‐ Chairman of the Board of Directors &

• Mr. Ishaan Shah – Director

• Mr. Alan Kam ‐ Independent Director / Chairman of Audit Committee

• Ms. Sameera Shah – Director

• Mr. Manu SawangJaeng ‐ Independent Director / Chairman of

• Mr. Shiraz Erach Poonevala – Director

• Mr. Thor Santhisiri ‐ Independent Director / Audit Committee

• Mr. Vivek Dhawan – Director and CEO / Remuneration and Nomination

• Mr. Kirit Shah ‐ Director / Remuneration and Nomination Committee

• Mr. Thomas Abraham – Director , CFO and Head Coach

1 2 3 4 5 6 7 8 9

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Management ably supported by other experienced in-country personnel and teams

Management team instrumental in building the business is significantly invested in the Company

Vivek Dhawan Chief Executive Officer and Chief coach

• Joined Mega in 1986

Thomas Abraham Chief Financial Officer and Head coach

• Joined Mega in 1998

Duangnapa Tongsiri President and Head coach, Mega We Care , Thailand (excluding Manufacturing)

• Joined Mega in 1993

Girish Wadhwa President and Head coach, Mega We Care and Maxxcare, Myanmar

• Joined Mega in 1997

Paramjit Singh President International and Head coach , Mega We Care and Maxxcare (excluding Thailand , Myanmar and Manufacturing) Joined Mega in 1993

Management team has a collective history of over 180 years working with the Company. As at 31 Dec 2017, management including their family members held 11.4% of MEGA shares.

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Our shareholding structure as at 31 December 2017

Management Shah Family 38.12% 11.36% 50.08% 0.44%

Other Investors Unistretch Company Ltd.

Mega Lifesciences Public Company Limited ( MEGA)

Shah group 50.52%

Foreign inst. 50.3% Thai retail 12.6% Thai inst. 25.8% Others 11.3%

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23 27 25 28 26 28 947 1,062 985 1,058 1,014 1,062 1,467 1,720 1,744 1,769 1,778 1,614 1,348 1,444 1,540 1,512 1,574 1,665 2012 2013 2014 2015 2016 2017

Steady growth in our peoples strength

MEGA’s core assets – its people…

Overview

• Mega prides on its ‘people-first’ culture which

focuses on the development of human capital.

• We focus on educating and developing skills of

managers and employees.

• Seek to help all employees capitalize on their

strengths and develop to their full potential.

• There have been no major labour disputes in the

workforce.

3,785 4,253 4,294 4,367 4,392

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• 1. Business Overview
• The journey
• Business Segments
• OEM business
• Mega We CareTM branded products business
• MaxxcareTM distribution business
• 2. Financial Overview
• 3. Leadership and Shareholders
• 4. Future outlook

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Future Outlook... The future of our past and present ….

2014 1994

Became the largest OEM supplier of soft gel caps

• ut of Southeast Asia

Mega We CareTM Branded Products Business

MaxxcareTM Distribution Business

1985

OEM Business

Achieved leadership position in Indochina Became leading international distribution company in Myanmar, Vietnam and Cambodia

Expect to double business

Nutraceutical, OTC and prescription products Pharma and consumer products

Expect to double business

2019

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Continue OEM

• Helps service our long standing

customers and helps improve the productivity and efficiency of our manufacturing processes

Grow our market leading brands

• Leverage brand strength and

recognition to increase demand

• Expand specialized sales and

marketing team to increase our coverage of the market

Launch new branded products

• Launch new products and line

extensions

• Leverage on speed to market

competitive advantage

Expand distribution business

• Strengthen relations with existing

principals, add new principals and invest in infrastructure

Enter new markets

• Selectively enter new markets

where we can compete effectively

• Identified new markets in Middle

East and South America

Expand margins and profitability

• Minimize manufacturing and

distribution cost inefficiencies

• Improving yield in manufacturing

processes

Selective acquisitions and new ideas

• Lookout for acquisition
• pportunity and foster path into

new business ideas to be ahead in human wellness space

The road map pursued and moving ahead…..

Our strategies for the branded and distribution business will drive future growth

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Future Outlook... Mega We CareTM branded products business

• Emerging trends in consumer health care, disease prevention than

struggling for cure is the way forward ….. a sunrise industry.

• Market leading positions in Southeast Asia and growing presence in Sub-

Saharan Africa.

• Products sold in developing countries which are underpenetrated markets

with significant growth opportunities.

• 329 unique products and 1,009 product registrations across the world.

Strong pipeline of 67 new products under registrations and 74 new products under development.

• Manufacturing capacity adequate to meet growth requirements of

ensuing 3-5 years.

• A strong balance sheet with net cash position and business generating

healthy cash flows.

• Fundamental growth drivers in place to help deliver the expected growth.

MEGA expects to grow by expansion

• f customer base

in its existing underpenetrated developing markets, launching new products, strengthening product categories and entering new

• countries. Create

significance in SEA and Sub-Saharan Africa.

MEGA is constructing a warehouse for storing raw material and finished goods and plans to rebuild its product development and quality control center on the newly acquired land in Thailand near our current manufacturing plant causing an estimated future capex of THB 330mn. Improvement and maintenance capex to be incurred in addition to aforementioned capex.

Notwithstanding tremendous future opportunity. Due to the nature of the industry and the markets we are in, growth may not be a straight line up but with occasional disruptions that may be caused by economic, political and other factors.

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Future Outlook... MaxxcareTM distribution business

MEGA expects to capture the strong growth potential

• ffered by

Myanmar, given MEGA’s leadership position as a distributor of pharma and consumer products.

As part of MEGA’s plan to construct its own state-of-art warehouse and office space on leased land in Myanmar on which work has already started; an approximate future outlay

• f THB 350mn may be spent.

Notwithstanding tremendous future opportunity. Due to the nature of the industry and the markets we are in, growth may not be a straight line up but with occasional disruptions that may be caused by economic, political and other factors.

MYANMAR

• Largest market with significant historic growth and future opportunities …
• Pharma market size at 1/10 of Thailand.
• Leading multinational and regional companies as its principals.
• Infrastructure and capabilities in place to support future growth in business:
• Coverage to more than 85% of geographical area.
• Access to more than 30,000 outlets.
• More than 1400 employees.
• Robust information system and market intelligence in place.

VIETNAM AND CAMBODIA TO GROW WITH INDUSTRY.

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Q&A