Q22020 Financial Performance 14 August 2020 Disclaimer Statements - - PowerPoint PPT Presentation

Analyst Meeting Q2’2020 Financial Performance

14 August 2020

Osotspa Public Company Limited (OSP)

Disclaimer

Statements included or incorporated in these materials that use the word “believes”, “anticipate”, “estimate”, “target”, or “hope”, or that otherwise relate to the objectives, strategies, plans, intentions, beliefs or expectations or that have been constructed as statements as to future performance or events, are “forward-looking statements” within the meaning that are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated at the time the forward-looking statements are made. Osotspa Public Company Limited (“OSP” or the “Company”) undertakes no obligation to publicly update or revise any forward-looking statement, whether as result of new information, future events or otherwise. OSP makes no representation and assume no liabilities against whatsoever about the opinion or statements of any analyst or other third party. OSP does not monitor or control the content to 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. The information contained herein has been obtained from sources that the Company considers reliable, but the Company does not represent or warrant that the information is complete or accurate, in particular with respect to data provided by or regarding third parties. The information in the presentation does not purpose to be comprehensive or to contain all the information that a prospective investor may desire or require to decide whether or not to purchase securities of the Company. The information in the presentation might be incomplete or summarized and has not been independently verified and will not be updated. Such information may in the future be subject to audit, limited review or any other control by an auditor or independent party. Therefore, the information included in the presentation may be modified or amended in the future. The information in this presentation, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future

• results. The Company and each of its agents expressly disclaims any obligation or undertaking to update or release any updates or revisions to the information, including any financial date and any forward-looking

statements, contained in this [presentation[. This presentation includes forward-looking representations or statements on purposes, expectations or forecasts of the Company or its management up to the date of release of this document. Said forward-looking representations and statements or forecasts are mere value judgments of the Company and do not imply undertakings of future performance. Additionally, they are subject to risks, uncertainties and other factors, which were unknown or not taken into account by the time this document was produced and released and which may cause such actual results, performance or achievements, to be materially different from those expressed or implied by these forward-looking statements. Moreover, these forward-looking statements are based on numerous assumptions (which are not stated in the presentation) regarding the Company’s present and future business strategies and the environment in which the Company expects to operate in the future. There are many factors, most of them out

• f the Company’s control, which may cause the Company’s actual operations and results to substantially differ from those forward-looking statements. Accordingly, you should not place undue reliance on forward-

looking statements due to the inherent uncertainty therein. Certain financial and statistical information contained in this document is subject to rounding adjustments. Accordingly, any discrepancies between the totals and the sums of the amounts listed may be due to

• rounding. In additional, certain figures contained in this document, which have also not been subject to financial audit, are combined and pro forma figures. The information and opinions in this presentation are

not based upon a consideration of your particular investment objectives, financial situation or needs. You may wish to seek independent and professional advice and conduct your own independent research and analysis of the information contained in the presentation and of the business, operations, financial condition, prospects, status and affairs of the Company. This presentation discloses neither the risks nor other material issues regarding an investment in the securities of the Company. The information included in this presentation is subject to, and should be read together with, all publicly available information. Any person acquiring securities of the Company shall do so on their own risk and judgement over the merits and suitability of the securities of the Company, after having received professional advice or of any other kind that may be needed or appropriate but not only on the grounds of this presentation. By delivering this presentation, the Company is not providing any advisory, purchase or sale recommendation, or any other instrument of negotiation over the securities or financial instruments of the Company. This presentation does not constitute or form part of, and should not be construed as, any offer, inducement, invitation, solicitation or commitment to purchase, subscribe to, provide or sell any securities, services or products or to provide any recommendations for financial, securities, investment or other advice or to take any decision. This presentation is not and shall not constitute an offer for the sale of securities in Thailand or any jurisdictions. By attending to or receiving this presentation you agree to be bound by the foregoing restrictions and limitations and acknowledge that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the presentation.

Financial Performance Business Updates on New Products and Activities OSP Going Forward

Agenda

Financial Performance

4%

Q2’20 Financial Highlights – by Segment

Energy Drinks

• 15.6%

Impact from COVID-19

• lockdown. However, total

OSP energy drink market share hit record hit at 55.6% in Jun’20 Functional Drinks + 141.5% C-Vitt + 249.3% Maintained strong no. 1 in functional drinks, responded to healthy trend with unlock capacity and added new Jelly format into the portfolio

Remark : * Net Profit attributable to owners of the parent ** Net Profit attributable to owners of the parent to Total Revenue from Sales

Total personal care got more impact from COVID-19 lockdown BBM

• 16.3 %

Launched Babi Mild Healthi Plus to capture health and hygiene trend 12Plus

• 27.3%

Beauty category declined more from lockdown, mainly from cologne and fragrance products OEM +23.8% Growth driven by OEM – PC Others + 3.4% CLMV

• 30.1%

Beverages got lesser COVID impact than personal care products Others

• 52.9%

Net profit* +13.2% YoY Net profit margin** at 13.6% vs. 11.3% in Q2’19 (12.5% in Q2’19 if excluding employee benefit in Q2’19) Record GM at 33.6% decreased from higher contribution of C-vitt. “Fit Fast Firm” project continued driving overall costs down

Total Revenue from Sale 5,909M (-6.1%YoY)

Drive selective growth, push for relevancy, defend profit and cut costs

• 36.6%

Net Profit*

804 MB 13.6%

Net Profit Margin**

4

1.3%

Net Sales: THB4,310M

• 18.2%

18.0%

Net Sales: THB512M Net Sales: THB364M

• 34.5%

Net Sales: THB723M

4%

1H’20 Financial Highlights – by Segment

Remark : * Net Profit attributable to owners of the parent ** Net Profit attributable to owners of the parent to Total Revenue from Sales

Total Revenue from Sale 12,596M (-0.5%YoY)

Net Profit*

5

1,730 MB 13.7%

Net Profit Margin**

3.0%

Net Sales: THB8,899M

• 9.2%

Net Sales: THB1,081M

14.8%

Net Sales: THB810M Net Sales: THB1,806M

• 15.7%
• 14.9%

Energy Drinks

• 7.2%

Impact from COVID-19

• lockdown. However, total OSP

energy drink market share hit record hit at 55.6% in Jun’20 Functional Drinks + 74.4% C-Vitt + 115.4% Maintained strong no. 1 in functional drinks, responded to healthy trend with unlock capacity and added new Jelly format into the portfolio Total personal care got more impact from COVID-19 lockdown BBM

• 6.3 %

Launched Babi Mild Healthi Plus to capture health and hygiene trend 12Plus

• 20.7%

Beauty category declined more from lockdown, mainly from cologne and fragrance products OEM + 3.7% Growth driven by OEM – PC Others + 43.0% CLMV

• 13.4%

Beverages got lesser COVID impact than personal care products Others

• 21.2%

Net profit* +8.2% YoY Net profit margin at 13.7% vs. 12.6% in 1H’19 (13.2% in 1H’19 if excluding employee benefit) Record GM at 34.5% decreased from higher contribution of C-vitt. “Fit Fast Firm” project continued driving

• verall costs down

Drive selective growth, push for relevancy, defend profit and cut costs

35.3% 33.6% 35.0% 34.5% Q2'19 Q2'20 1H'19 1H'20

12,906 13,020

1H'19 1H'20 15.7% 15.7% 14.8% 15.7% 7.5% 7.0% 7.2% 7.1% Q2'19 Q2'20 1H'19 1H'20

710 804 1,599 1,730 11.3% 13.6% 12.6% 13.7%

3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 500 1,000 1,500 2,000 2,500

Q2'19 Q2'20 1H'19 1H'20

To the owner of the parents

Revenues Gross Margin SG&A Net Profit

Q2’20 and 1H’20 Financial Highlights

Admin Exp Selling Exp ⚫ Net Profit Margin

6,394 6,114

Q2'19 Q2'20 ⚫ Other Income (23.2%) (22.7%)

6

(22.0%) (22.8%)

• 1.9%

Balance Sheet (as of 30 June2020)

7 Key Changes in Balance Sheet Items

• Total assets: Increased by THB 2,530mn from

: THB 2,216mn increase in the consolidation of assets from Siam Bev Manufacturing Co., Ltd. (formerly known as Calpis Osotspa), beverage capacity expansion in Thailand and investment in a new beverage factory in Myanmar.

• Total liabilities: Increased by 1,620mn mainly from higher trade and other payables and long-term

loans in Myanmar Kyat currency to support beverage factory construction.

• Total equity: Increased by THB 910mn from increase in other components of equity from the impact of

currency translation and the adoption of TFRS 9, while retained earnings decreased THB 210 million from the 2019 interim dividend approved by BOD with the total amount of THB 1,952 million (THB 0.65 per share), offsetting with profit for the period.

ASSETS (THB million) As at 30 June 2020 As at 31 Dec 2019 Cash and cash equivalents 3,149 2,819 Trade and other receivables 3,598 3,628 Inventories 2,237 1,523 Other current financial assets 831 1,299 Other current assets 75 69 Total Current Assets 9,890 9,338 Net PP&E and leasehold rights 11,442 9,226 Other non-current financial assets and long-term investments 4,060 3,887 Other assets 1,462 1,873 Total Non-Current Assets 16,964 14,986 Total Assets 26,854 24,324 LIABILITIES and EQUITIES (THB million) As at 30 June 2020 As at 31 Dec 2019 Trade and other payables 5,378 4,829 Long-term loans 758 121 Other liabilities 1,785 1,351 Total Liabilities 7,921 6,301 Issued and paid-up share capital 3,004 3,004 Share Premium 11,848 11,848 Retained earnings 3,166 3,376 Surplus on business combination under common control 351 353 Other components of SE 423 (710) Non-Controlling Interest 141 152 Total Shareholders' equity 18,933 18,023 Total Liabilities & Equity 26,854 24,324

Cash Flow Movement Operating CF: THB 1,965mn cash inflow from 1) THB 1,702mn Net profit 2) THB 643mn Non-cash transactions (depreciation and provision) 3) THB -152mn change in working capital 4) THB -228mn tax paid Investing CF: THB 99mn cash inflow mainly from 1) THB -1,588mn PPE acquisition 2) THB -200mn from additional investment in Calpis Osotspa, Myanmar Golden Glass and Basecamp Brews Ltd 3) THB 1,627mn decrease in investment in private fund 4) THB 250mn dividend received from other long-term investments Financing CF: THB 1,734mn cash outflow from 1) Additional long-term loan to support factory construction in Myanmar 2) Dividend paid

Cash Flows and Key Ratios

8

Cash Flow (as at 30 June 2020) Key Financial Ratios

Notes: ROE and ROA are annualized Units: THB million

9

Dividend Payment and Policy

Dividend Paid

• Interim dividend from 1H’20 performance 0.45 Baht per share (Approx. 78%

payout) to be paid on 11 September 2020 Dividend policy

• At least 60% of consolidated net profit after deducting the legal reserve

specified by law or Articles of Association of the Company

Nonetheless, the consideration of a dividend payout shall depend on the Company’s performance, financial position, cash flow, contractual obligations (i.e. loan payments), working capital, investment plans, general economic situation, and related factors as deemed appropriate by the Board of Directors and when in compliance with the laws & regulations.

Business Updates

Marketing Activities: New Launch Chalarm Vitamin C

11

Chalarm Plus Vitamin C

+

Energy Boost Immunity Boost Reduce chance of sickness

C-Vitt JV Business Model to OSP Sales : Price to 3rd party Gross margin : Manufacturing & distribution margin + 40% of net profit from House Osotspa Foods Profit Approximately equivalent to OSP’s

• ther beverage products

C-Vitt Model and its Journey

12

Y2012 Y2018 Y2019 Y2020

New Product Launched aseptic packaging for school channel Capacity Expansion Debottleneck in Q2’2019 (add 10 – 15% of C-Vitt capacity)

• No. 1 Market share

Became no. 1 market share in functional drink market in Jan’19 The Most Top Rising Brands in beverage category from KANTAR Brand Footprint Award 2019 New Product Launched C-Vitt Jelly - healthy snack to portfolio Capacity Expansion Added 10 – 15% of total OSP’s production capacity in Jun (earlier than plan) Record High Market share 99 million units sold with 33.9% market share in Q2’20 The Most Frequent Purchasing Brand in FMCG business from KANTAR Brand Footprint 2020 Capacity Expansion Double capacity in Jun’18 Joint Venture

“House Osotspa Foods”

Y2016 500 MB

Osotspa : 40% House Foods Corporation (Japan) : 60%

2,000 MB 4,000 MB > 1,000 MB

13

C-Vitt Jelly: New Variants to Support Leading Market Share

C-Vitt Portfolio in various formats

Updated Regulation on Functional Drinks

Excise Tax To be entitled for 3% excise tax rate, fruit juice content must meet specified percentage.

Excise Tax for Functional Drinks

0% 10% 3% 3%

2019

10%

2020 2021

10 Jul 1 Oct Sugar Tax (no change) If sugar content is less than 6%, sugar tax is exempted.

14

Slimma Seeding Journey

From spirit of start-up of online to offline launch in 7-11 and Supermarket

2019

• 12 days challenge campaign to

prove product efficacy in 12 days among popular KOLs.

• Effective word-of-mouth strategy

propelled the brand

Proven Product Result with > 300% value & volume growth in 6 months

• Perfect fit with channel to build in-

home consumption

• Right product price point matching

with channel

• Good Profit Margin

Pilot the market with emerging channel “E-commerce”

• Double sales volume during 3-

month of COVID-19 lockdown

• Slimma is ranking #3 in Shopee

and #5 in Lazada in food and drink category since Q1’20

Achieve new record high during Covid situation

• Distribute through 7-11

BKK and suburb branches and other MT channels

• Now available at

Expand distribution to offline channel

Sep’2019 Oct’19-Mar’20 April-June’20 July’20

Having a good shape without fasting “กินได้ไม่ต้องอด”

Strong & Insightful Proposition

15

16

Babi Mild Healthi Plus: Health & Hygiene Trend

New Launches Multi-purpose Spray Natural Foaming Hand Wash Now available at both online and leading retail stores nationwide

17

Mild Kids by Babi Mild

Now available at both online and leading retail stores nationwide Head-to-toe Wash 2-in-1 Shampoo and Conditioner Liquid Soap

18

Fabric Wash : Capture In-Home and Hygiene Trend

Dermatological Tested for Sensitive Skin of Babies with organic Tinopal CBS-X Extract

Now available at both online and leading retail stores nationwide

Fabric Wash 2-in-1 Fabric Wash and Softener

19

Twelve Plus Perfume and Hand Sanitizer

Twelve Plus Pocket Perfume Twelve Plus Hand Sanitizer

Now available at both online and leading retail stores nationwide

20

New Brand : PROhada Sunscreen

“Sunscreen to protect from UV and Blue-light infrared with Pollustop properties” Poreless and Smooth Firm and Radiance Aura and Bright

Now available at

21

New Beverage Manufacturing Plants

Commercial Operation : Jun’20

Ayutthaya

Commercial Operation : Jul’20

Thilawa, Myanmar Siam Bev Manufacturing

Acquired from Calpis Osotspa : Jan’20

2020 Beverage Capacity Expansion

Continuous Improvement since Q2’19

Total Productive Maintenance

More than

30%

Increased Capacity

• f

Total Osotspa

22

Thailand : New Beverage Filling Lines Sustainability

Completed and commissioned earlier than planned under COVID-19 situation

High Speed Quality Efficiency

Smart Factory

1,000 bottles per minute Smart Control and Data Tracking Lower Conversion Cost by 10%

Designed for end-to-end production

Less Water / Energy Usage

23

Myanmar : New Beverage Manufacturing Plant

Investment Amount : 2,400 MB State-of-the-art Beverage Manufacturing Plant in Myanmar

High Speed, High Technology with Automation, High Quality

Thilawa SEZ Incentives

• Tax exemption: 100% for year 1 - 5 and 50% for year 6 – 10
• Import and export tariff exemption
• Access to skilled workers and good infrastructure

Offer Margin Enhancement

• Capture manufacturing margin
• High Quality, Agility, Cost Advantage and Speed to Market

Ensure capacity enough to cover growth for the next 3 - 5 years

24

Total Productive Maintenance (TPM)

To be world class manufacturing with high quality and performance excellence in safety, cost, productivity and sustainability Improving capabilities of machines, people and quality systems through a framework of TPM

Goal Mission

1 2 3 4 5

AM : Re-Skill & Up-Skill People

1

PM : Improve Machines condition

2

FI : Build Continuous Improvement by bottom up

3

ET : Support Skill building

4

PQ : Strive Quality defect reduction at source

5

Total Ideas

135 116

Total Engagement

Kaizen

Total Productive Maintenance (TPM)

25

Production : Fit Fast Firm & Sustainability

Less Water Usage Less Energy Usage Solar Roof Top Project Optimized and Centralized Spare Parts Procurement

Cost Savings Journey

26

700 MB 775 MB

Cost Savings: 775MB

• Continued product formulations
• Packaging harmonization
• Raw material cost savings
• Lighter weight bottles

2019

Cost Savings: 700MB

• Cullet sourcing and optimization
• Improved product formulations
• Cold tank repair of AY furnace

(since Apr’18) : % pack and lighter weight bottle

2018

Fit Fast Firm’s Cost Saving Target (2019 - 2023)

2,500 MB

Approximately 500-800 MB/year

Cost Savings: More than 800MB

• Continued product formulations
• Lower key material prices
• Higher production efficiency
• Warehouse & distribution optimization

2020

> 800 MB

OSP has been selected as a constituent member

• f

the FTSE4Good Index Series and continued to be included in Thaipat Institute’s ESG100 universe for the 2nd consecutive year as one of Thailand’s best performing public listed companies for Environmental, Social and Governance (ESG) aspects, emphasizing OSP’s practices and commitment towards sustainability and ESG principles measured against local and international standards

OSP towards Sustainability

27

OSP Going Forward

Winning Strategy and Actions

30

MUST WIN

Product/ Portfolio

QUICK WIN NEW S-CURVE

CORE BRAND

→ Grow Domestic M-150 → Double C-Vitt → Focus on Domestic BBM → Grow Myanmar Bev

HEALTH & HYGIENE RESILIENT PORTFOLIO

→ by Country, Channel, Occasion and Format → Health & Wellbeing (+Herbal)

Channel Profitability

E-COMMERCE

→ Personal Care → Healthcare & Confectionary → Myanmar

FUTURE PLATFORM

→ Efficient & Low Cost → Digitization & Data Analytics

OPERATION & SUPPLY CHAIN FIT FAST FIRM WINNING IN CRISIS NET REVENUE MANAGEMENT

→ More than 800 MB → Respond to Consumer Trend → E-Commerce and Influencers → Vending Machine

AGILITY / INFRASTRUCTURE / FINANCIAL STABILITY

→ Cambodia & Laos

ACCELERATE

29

Thank you

Investor Relations Email: ir@osotspa.com Tel: 02-351-1152 Website: www.osotspa.com