OPPORTUNITY DAY 1Q2017 Disclaimer This presentation contains certain - - PowerPoint PPT Presentation

OPPORTUNITY DAY

1Q2017

2

Disclaimer

This presentation contains certain forward looking statements. Such forward looking statements (the words "believe“, "anticipate“, "estimate“, "target“, or "hope",

• r that otherwise relate to objectives, strategies, plans, intentions, beliefs or expectations) are not guarantees of future performances or events and involve risks

and uncertainties, and actual results may differ from those in the forward looking statements as a result of various factors and circumstances. The views, analyses and opinions expressed herein contain some information derived from publicly available sources and third party information providers. Mudman Public Company Limited and its affiliates (“Mudman”) undertakes no representation or warranty is made as to the accuracy, completeness, or reliability

• f such information and no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or
• therwise.

Mudman makes no representation whatsoever about the opinion or statements of any analyst or other third party. Mudman does not monitor or control the content

• f third party opinions or statements and does not endorse or accept any responsibility for the content or the use of any such opinion or statement.

Nothing in this presentation should be construed as either an offer to sell, a solicitation of an offer to buy or sell shares or any type of securities in any jurisdiction. This presentation is not intended to be any type of investment advice and must not be relied upon as such. You must always seek the relevant professional advice before otherwise making any such financial, legal or commercial decisions.

1) Company Overview 2) Compelling Investment Story 3) Financial Highlights

Agenda

4

Overview

To be great, enduring company, with appealing food & lifestyle brands, proving a healthy and quality work environment

Successful International Food & Lifestyle Brands Trend Setters Developing & Caring for Our People

5

Key Milestones

2007 - 2011 2006 2015 2014 2013 2012

Sub Sri Thai PCL acquired 100% stakes in Mudman

Acquisition of Thailand operation

• f Baskin Robbins

Khon Kaen Sugar Industry PCL subscript capital increase (9.3% stake) Capital increase to THB 843 mm Capital increase to THB 525 mm Company registration

Sub Sri Thai PCL (SST) A documentary/goods storage service provider with attractive cash flow streams enabling SST to continuously raise fund via property funds/REIT to fuel growth with market capitalization of ~THB 4,500 mm Khon Kaen Sugar Industry PCL (KSL) One of the largest Thailand’s sugar producers with vision to diversify into many business ventures with market capitalization of ~THB 24,000 mm

Capital increase to THB 300 mm

Create catering services at Ramkamheng hospital (cafeteria and IPD) Open in Mar 2015 Acquisition of Greyhound Original & Cafe Master franchisee of Dunkin Donuts (1981) Au Bon Pain (1996)

2016

Public Conversion

2017

Capital increase to THB 1,055 mm

6

799 857 987 1,036 1,150 1,421 1,627 1,855 2,235 2,889 2,992

170 188 207 224 240 258 301 349 370 389 401

98 92 104 109 135 192 224 232 216 253 255

• 50
• 50

• 500

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total Revenues (THB mm)

• No. of Stores

EBITDA (THB mm)

Solid Operational Platform & Strong Growth Capabilities

Acquisition of Thailand operation

• f Baskin Robbins

ORGANIC INORGANIC

Global Brand Acquisition Selective International Franchising Operational Excellence Consolidation of Systems and Infrastructures Intensive International Expansion

Create catering services at Ramkamheng hospital (cafeteria and IPD)

Note: (1) Excluded international stores & some types of local stores (catering / booth / convention stores) (2) Included Greyhound in 2014 onward

Acquisition of Greyhound Original & Cafe Master franchisee of Dunkin Donuts (1981) Au Bon Pain (1996)

7

64.3% 7.5% 4.9% 23.4%

Others Strategic SHs*

Mudman at a Glance

Shareholding Structure Management Team Business Overview

Note: Please see details in the following page Note: * Strategic SHs are individual investors who are defined per SEC regulation As of April 2017

Nadim Xavier Salhani CEO

• A proven track record of successful turnaround
• Over 15 years experience in Food & Beverage retail business

with leading international brands including Starbucks, Auntie Anne’s Pretzel, Au Bon Pain and Dunkin Donuts

• Joined Mudman Group in 2003

Hansa Sermsri CFO

• Over 20 years in accounting and finance
• Joined Mudman Group in 2006
• Previously with Excel Distribution, Motorola, Taylor Nelson

Sofres Wimonrat Asawachavisit Vice President (Supply Chain)

• Over 19 years solid experience in supply chain management
• Joined Mudman Group in 1996
• Previously with Asia Food & Machinery

Lapaporn Tiasakul Vice President (Business Development)

• Over 18 years in F&B retail business
• Joined Mudman Group in 2003
• Previously with Starbucks, Auntie Anne’s Pretzel, The

Brooker Group and IMRS Nobklao Trakoolpan Vice President (Operation)

• Experiences in the management of hospitality industry for
• ver 18 years
• Strong experiences in Food & Beverage, both kitchen and

dining area

• Experience for operating F&B, Culinary, Room Division,

Engineering and Security

• Previously with Holiday Inn Express Bangkok Siam

Food & Beverage

Owned brand Master Franchisee

Premier Asian Player Lifestyle

1 2 4 5 3 1 2 4 5 3

8

Mudman at a Glance (cont’d)

Golden Donut (Thailand) Co.,Ltd. ABP Café (Thailand) Co.,Ltd. Greyhound Co.,Ltd. Golden Scoop Co.,Ltd.

100% 100% 100% 100% 100%

Greyhound Café Co.,Ltd. GHC Café (UK) Co.,Ltd.

100%

1) Company Overview 2) Compelling Investment Story 3) Financial Highlights

Agenda

10

Brands No of Branches 295 75 33 13 16 (Domestic) 14 (International) Products Background

Established in the US in 1950, Dunkin’ Donuts becomes the US #1 retailer of coffee- by-the-cup, selling nearly one billion cups a year and is the largest coffee and baked goods chain in the world. Established in 1978, Au Bon Pain today has over 300 Au Bon Pain cafés throughout the

• world. Au Bon Pain

arrived in Thailand July 1997. Establish in the US in 1945, Baskin- Robbins today is the world’s largest chain of ice cream specialty shops with nearly 7,000 shops in 50 countries and more than 1,000 ice cream recipes. From its debut collection in Bangkok in 1980

• ffering men’s

casual wear, its continued success in the fashion industry propelled Greyhound to expanding into its 16 branches today. Since its beginning as Thailand’s first Fashion Café in 1997, Greyhound become a successful restaurant chain and franchise, with creative concept and emphasis on the “Total Dining Experience”.

Strong Portfolio of Established Brands

“House of Brands”

Franchise operator and brand owner of successful international food brands

Cash Cow Robust Growth Room for Improvements

1

Note : Data as of 31 March 2017 Café and bakery 26% Casual dining 31% Quick service restaurant 43%

EBITDA Breakdown 1Q/17

Total THB 151 mm

Café and bakery 24% Dessert 4% Cafeteria 1% Apparel 5% Casual dining 29% Quick service restaurant 37%

Revenues Breakdown 1Q/17

Total THB 738 mm

11

• Product Development
• Aggressive Marketing Promotion
• FRODO Project
• Continued Expansion
• Successful Bakery Offering Product with Nutritious in Mind
• Additional Organic Product
• Lifestyle Café
• New Exciting Product Innovation
• Value for Money Promotion
• Store Expansion in Prime Location
• Potential Brand Expansion
• Expand through Direct Investment and Franchisee
• Strong Brand Awareness
• Develop Licensing to Other Lifestyle Product

Brand Growth Strategies

Well positioned to capture dynamic growth of Thailand foodservice

2

12

Anticipated exponential growth from franchising model

Strengthen Footprint (Existing Markets) Win ASEAN (Cover East Asia) Expand beyond Asia (Step into Europe) Perceived as Global Brands from Thailand

3

13

Brand Managing Director handles:

• Operation
• Marketing
• Production
• Repair & Maintenance
• QC/QA

CORPORATE SUPPORT BRAND

Centralized Center to Support Each Brand

Supply Chain Management Human Resource Accounting & Finance Information Technology Operation Support Business Development

Franchise Own brand

Well established platform to support organic & inorganic growth

4

14

1) Company Overview 2) Compelling Investment Story 3) Financial Highlights

Agenda

15 1,855 2,234 2,889 2,992 20.48% 29.28% 3.58%

• 1,000

2,000 3,000 4,000 2013 2014 2015 2016 Sales Royalty Fee Other Income Growth

Revenues (THB mm)

214.44 215.30 252.26 255.40 11.56% 9.64% 8.73% 8.54%

• 80

160 240 320 2013 2014 2015 2016 EBITDA EBITDA Margin

EBITDA (THB mm)

Note : /1 Excluded GHF impairment of THB 155 mm 26 1,829 35 2,184

16

• 50

2,797

41

57 2,889

45

Mudman Group - Key Financial Performance

Café and bakery 24% Dessert 4% Cafeteria 1% Apparel 5% Casual dining 29% Quick service restaurant 37%

Revenues Breakdown 1Q/17

Total THB 738 mm

Revenues Breakdown 2015

Café and bakery 24% Dessert 4% Cafeteria 1% Apparel 8% Casual dining 23% Quick service restaurant 40%

Total THB 2,889 mm

16

95% 5% (6) (14) (132) (17) (16)

• Q1/16

Q2/16 Q3/16 Q4/16 Q1/17 70 59 (87) 59 63

Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 737 738 762 755 738

Q1/16 Q2/16 Q3/16 Q4/16 Q1/17

Key Takeaways

EBITDA Net Profit

Note: * Excluded international stores ** Allocating loss based on EBITDA contribution *** Excluded impairment loss

Revenues THB mm

+ 0.1% YoY

• 2.3% QoQ

Stores * 406 411 425 441 433 EBITDA margin 9.5% 8.1% 8.9%*** 7.8% 8.6% %SG&A/Revenues 58.8% 60.8% 58.4%*** 61.2% 61.0%

• 1Q/17 revenues reported THB 738 mm or flat

growth YoY, mainly due to economic slowdown and lower consumer spending

• EBITDA in 1Q/17 reported THB 63 mm (8.6%

margin) which is lower from 1Q/16 (9.5% margin) primarily due to higher SG&A in 1Q/17 (61.0%) which mainly from staff expenses, rental & services costs in accordance with expanding number of stores

• Net margin in 1Q/17 and 1Q/16 recorded (2.1%)

and (0.8%) respectively, resulting from non-cash items (Purchase Price Allocation) and high industry competition

• Going forward, MM will have no major concern on

the impairment of GHF and will continue to implement tactical strategies, marketing efforts and efficient cost control to ensure strong growth and healthy financial statement

68*** (8)***

Food & Beverage Fashion Lifestyle

Revenues Breakdown (1Q/17)

Net margin (0.8%) (1.8%) (1.0%)*** (2.3%) (2.1%)

Mudman Group - Key Financial Performance (cont’d)

17 (3.4%) (0.2%) 6.3% (1.9%) (2.6%) 6.3% 6.4% 11.2% (0.2%) 1.6%

• 8%
• 4%

Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 SSSG - F&B TSSG - F&B 4.1 3.9 3.6 3.9 4.7

• 0.2

Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 1,847 1,831 1,787 1,999 1,962 2,138 2,124 1,993 1,815 1,799 0.86 0.86 0.90 1.10 1.09

• 4.00
• 3.00
• 2.00
• 1.00
• 1.00

• 500

Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Liabilities Equities D/E

SSSG & TSSG Financial Position Net Debt / LTM EBITDA**

Mudman Group - Key Financial Performance (cont’d)

Note: * SSSG is calculated based on operating stores in the same comparing period (i.e. exclude stores operating only two months in comparing quarter) ** Last-twelve-month EBITDA (without impairment loss in 3Q/16)

• 1Q/17 same-store-sale-growth (SSSG)* of F&B decreased by (2.6%)

YoY, attributable to deteriorating retail sector and economic downturn

• Total-system-sales-growth (TSSG)* of F&B reported +1.6% YoY,

primarily from the on-going store expansion at selective locations

• Debt-to-Equity is 1.09x as of Mar-17, slightly lower from 1.10x at the

year-ended Dec-16

• Net debt / LTM EBITDA in 1Q/17 reported 4.7x higher from 3.9x at

Dec-16, primarily due to higher outstanding interest bearing debt (i.e. loan for dividend payout which has been repaid by IPO proceed)

3,895 3,955 3,780 3,814 3,761

18 1Q/16 2Q/16 3Q/16 4Q/16 1Q/17 Net sales 716.4 716.2 737.2 719.4 705.9 COGS (289.8) (287.0) (308.4) (295.2) (285.4) Gross profit 426.6 429.2 428.8 424.2 420.6 GPM 59.5% 59.9% 58.2% 59.0% 59.6% Selling exp (351.3) (376.8) (369.9) (375.8) (366.9) Administrative exp (81.9) (71.3) (75.3) (85.8) (82.8) Other inc / (exp) 20.7 21.3 25.2 35.2 31.7 Impairment loss

• (154.9)
• EBIT

14.0 2.4 (146.2) (2.2) 2.5 Interest exp (15.1) (14.1) (13.7) (13.4) (16.2) EBT (1.1) (11.7) (159.9) (15.6) (13.7) Tax (4.9) (1.9) 28.3 (1.7) (1.9) Net profit (6.0) (13.5) (131.6) (17.2) (15.6) NPM (0.8%) (1.8%) (17.3%) (2.3%) (2.1%) PPA 17.7 17.7 17.8 16.8 16.7 Net profit - excl PPA 11.8 4.2 (113.8) (0.4) 1.1 NPM - excl PPA 1.6% 0.6% (14.9%) (0.1%) 0.1% EBITDA 69.9 59.5 (87.2) 58.8 63.2 EBITDA margin 9.5% 8.1% (11.4%) 7.8% 8.6% EBITDA - operating 69.9 59.5 67.8 58.8 63.2 EBITDA margin 9.5% 8.1% 8.9% 7.8% 8.6%

Mudman Group - Key Financial Performance (cont’d)

• Purchase Price allocation (PPA) is

an amortization of identifiable intangible assets (foreseeable useful life) at fair value after the acquisition

• For example, trademark, franchise agreement,

contractual agreement and order backlog

• There are three brands associating with PPA:
• Dunkin’ Donuts
• Au Bon Pain
• Greyhound Cafe
• PPA is an accounting impact only on

“Consolidated” financial statement

• Without PPA impact, net profit would turn

to positive with NPM of 1% - 2%

Key Takeaways PPA Implication to Our Brands

Note: Disregard tax implication in calculating net profit - excl PPA

19 (200) (150) (100) (50)

• 50

100 2013 2014 2015 2016 Net Profit

• Adj. PPA Amortize
• Adj. Impairment

Normalized Net Profit

Net Profit (THB mm)

(168)

• Negative Earnings from Accounting Policies and Financing Costs: Negative net profit is caused by financing cost, depreciation and amortization from

normal operation, and PPA amortization from past acquisitions.

• Earnings from Normal Operation is Positive: by adding back PPA amortization from past acquisitions namely Dunkin’ Donuts, Au Bon Pain, and

Greyhound Group at total THB 32 mm, 48 mm, 71mm, and 70 mm in 2013 – 2016.

• Going forward, Mudman will have no major concern on the impairment of Greyhound Fashion and will continue to implement tactical strategies, marketing

efforts and efficient cost control to ensure strong growth momentum

70 155

57

(43) 71

28

29 32

61

48

13

(35)

Dampen by Greyhound acquisition financing cost

Mudman Group - Key Financial Performance (cont’d)

20

Impact of Purchase Price Allocation (PPA) on Income Statement

• PPA will have an accounting impact on future cost and profit recognition on Mudman’s performance on the consolidated financial

statements

• Mudman will have the amortization on PPA of ~THB 65 - 70 mm for the next five years
• However, it will not affect ability to pay dividend as those expenses doesn’t affect separated financial statement

THB mm 2016 2017 2018 2019 2020 Total 71 67 67 66 65

25 25 25 25 25 7 7 7 7 7 35 35 35 34 33

2025

(9Yr)

2027

(11Yr)

2021/1

(5Yr)

4

• /2
• Note : /1 After 2021, Greyhound Café will recognized PPA expense of THB 5 mm until 2030

/2 GHF has impaired most of goodwill and intangible assets in 3Q2016; thus, there will be minimal PPA amortize for GHF in the future

Q&A

Mudman Public Company Limited

209/1 KKP Tower B, 25th Floor, Sukhumvit 21 Road (Asoke), Klongtoey Nua, Wattana, Bangkok 10110, Thailand Tel: +662 261 5363 - 75 Fax: +662 261 5359 - 60 Website: www.mudman.co.th