Q319 Financial Performance 14 November 2019 Disclaimer Statements - - PowerPoint PPT Presentation

Analyst Meeting Q3’19 Financial Performance

14 November 2019

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

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• 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-

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• 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

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Financial Performance

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Q3’19 Financial Highlights – by Segment

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• CLMV

+14.2% Mainly driven by Myanmar (+10.1% at constant FX)

• Others

+14.9% Driven by Middle East

• M-150 back to growth since

Q2’19 from strong brand preposition and sales execution

• Som In Sum

+ 64.4% Continued strong growth after repositioning in 2H’17

• Chalarm
• 11.3%

High base CKD last year

• C-Vitt

+ 37.8% Maintained no. 1 in functional drinks with increased capacity in Q3’19

• Peptein

+ 31.8% With Peptein Plus in Feb’19

• BBM

+ 1.7 % Mainly driven by NPD Sweet Almond launched in May’19

• 12Plus

+12.8% Continue momentum of cool powder and NPD whitening plus roll on

• OEM
• 6.1%

Growth in OEM – Glass

• ffsetting with lower sales
• n OEM - personal care
• Confectionary

+ 2.9% Driven by growth from Ole

+

+ +

Full Year Target

• Net profit* +8.5% YoY
• Net profit margin** at

13.2% vs. 13.1% in Q3’18

• Outstanding GM at 34.6%

improved by 280 bps YoY from “Fit Fast Firm” project driving overall costs down

Net Profit*

THB 838M 13.2%

Net Profit Margin**

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

9M’19 Financial Highlights – by Segment

5

• M-150 back to growth since

Q2’19 from strong brand preposition and sales execution

• Som In Sum

+ 36.1% Continued strong growth after repositioning in 2H’17

• Chalarm

+ 12.8% Mainly from CKD

• C-Vitt

+ 51.0% Maintained no. 1 in functional drinks with increased capacity in Q3’19

• Peptein

+ 25.3% With Peptein Plus in Feb’19

• BBM

+ 5.6 % Mainly driven by NPD Sweet Almond launched in May’19

• 12Plus

+ 19.3% Continue momentum of cool powder and NPD whitening plus roll on

• OEM
• 3.8%

Growth in OEM – Glass

• ffsetting with lower sales
• n OEM - personal care
• Confectionary

+ 11.3% Driven by growth from both Ole and Botan

Net Profit*

THB 2,436M 12.8%

Net Profit Margin**

• Net profit* +9.9% YoY
• Net profit margin** at

12.8% vs. 12.3% in 9M’18

(13.2% if excluding additional provision for retirement benefits 96.8 MB)

• Outstanding GM at 34.9%

improved by 320 bps YoY from “Fit Fast Firm” project driving overall costs down

• CLMV

+9.7% Mainly driven by Myanmar (+6.5% at constant FX)

• Others

+17.6% Driven by Middle East

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

31.8% 34.6% 31.7% 34.9% Q3'18 Q3'19 9M'18 9M'19

18,452 19,438

9M'18 9M'19 14.0% 16.2% 14.4% 15.3% 5.7% 6.8% 5.6% 7.1% Q3'18 Q3'19 9M'18 9M'19

772 838 2,216 2,436 13.1% 13.2% 12.3% 12.8%

• 10.0
• 9.0%
• 8.0%
• 7.0%
• 6.0%
• 5.0%
• 4.0%
• 3.0%
• 2.0%
• 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 500 1,000 1,500 2,000 2,500 3,000

Q3'18 Q3'19 9M'18 9M'19

To the owner of the parents

Revenues Gross Margin SG&A Net Profit

Q3’19 and 9M’19 Financial Highlights

Admin Exp Selling Exp ⚫ Net Profit Margin

6,063 6,532

Q3'18 Q3'19 ⚫ Other Income (19.6%) (23.1%)

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(20.1%) (22.3%)

Net Sales Analysis: Thai Beverages

+12.8%

SALES GROWTH YOY Chalarm Black Galingale turnaround Chalarm brand Continued activation and promotion campaign nationwide

37.4%

MARKET SHARE

+36.1%

SALES GROWTH YOY

Focus on below-the-line activities

7

Continued promotional campaign through LINE Official Account for M-Point collection campaign 2019

Net Sales Analysis: Thai Beverages

25.5%

MARKET SHARE

4.8%

MARKET SHARE

Strengthen communication campaign and below-the-line activities

8

Launched promotional campaign, received “Most Top Rising Brand 2019” and ensured adequate supply Continued activation campaign with new packaging to support “Fit Fast Firm”

+19.3%

SALES GROWTH YOY

Net Sales Analysis: Thai Personal Care

Strengthened brand together with NPD Twelve Plus Whitening Plus Roll On and Twelve Plus Perfume Card

+5.6%

SALES GROWTH YOY

9

Continued promotional campaign to support all product ranges

Net Sales Analysis: International Sales

At constant FX

10

Myanmar - Instant win and Dance with Shark digital campaign reaching 50 million posts Laos & Cambodia - Instant win campaign and on-the-ground activation

Balance Sheet (as of 30 Sep 2019)

11 Key Changes in Balance Sheet Items

• Total assets: Decreased by THB 547mn from

: THB 927mn decrease in cash and cash equivalents : THB 2,257mn decrease in current investments (in private funds) : THB 256mn decrease in inventories : THB 1,739mn increase in PPE from SGA2

• Total liabilities: Increased by 211mn from higher trade and other payables
• Shareholders’ equity: Decreased by THB 758mn, where profit for the period was
• ffset by to dividend payment of THB 3,124mn for 2018 and 1H’2019 performance

ASSETS As at As at (THB million) 30-Sep-19 31-Dec-18 Cash and cash equivalents 3,559 4,486 Current investments 1,243 3,500 Trade and other receivables 3,239 3,030 Inventories 1,301 1,557 Other current assets 78 67 Total Current Asset 9,420 12,640 Net PP&E 8,257 6,518 Long term investments 3,247 2,608 Other assets 1,985 1,690 Total N

• n-Current Assets

13,489 10,816 Total Assets 22,909 23,456 LIABILITIES and EQUITIES As at As at (THB million) 30-Sep-19 31-Dec-18 Trade and Other Payables 4,479 4,131 Other Liabilities 885 1,022 Total Liabilities 5,364 5,153 Issued and Paid-Up Share Capital 3,004 3,004 Share Premium 11,848 11,848 Retained Earnigs 2,611 3,298 Surplus on Business Combination Under Common Control 353 353 Other Components of SE (460) (415) Non-Controlling Interest 189 215 Total Shareholders' Equity 17,545 18,303 Total Liabilities and Shareholders' Equity 22,909 23,456

Cash Flow Movement Operating CF: THB 2,943mn cash inflow from 1) THB 2,459mn Net profit 2) THB 1,098mn Non-cash transactions (depreciation and provision) 3) THB 236mn change in working capital 4) THB -850mn tax paid Investing CF: THB 675mn cash outflow from 1) THB 2,804mn PPE acquisition 2) THB -1,853mn Decrease in investment in private fund Financing CF: THB 3,195mn cash outflow from 1) THB -3,124mn Total dividend payment

Cash Flows and Key Ratios

12

Cash Flow (as at 30 Sep 2019) Key Financial Ratios

Notes: ROE and ROA are annualized

Units: THB million

Q3'19 Q3'18 9M'19 9M'18

Liquidity Ratios Current ratio (times) 2.0 0.6 2.0 0.6 Number of days of inventory 29 38 31 37 Collection period (days) 44 44 45 44 Accounts payable (days) 43 45 44 42 Profitability Ratios Gross profit margin (%) 34.6 31.8 34.9 31.7 EBITDA margin (%) 19.7 20.7 19.5 19.7 Net profit margin for the period (%) 13.3 13.4 12.9 12.6 Net profit margin attributable to

• wners of the parent (%)

13.2 13.1 12.8 12.3 Return on equity (%) - trailing 28.7 53.0 28.7 53.0 Return on assets (%) - trailing 17.0 16.8 17.0 16.8 Other Ratios Total debt to equity (times) 0.3 2.0 0.3 2.0 4,486 4,486 6,754 3,559 3,559 2,943 (675) (3,195)

Beginning cash and cash equivalents (31 Dec 2018) Net cash used in

• perating activities

Net cash used in investing activities Net cash used in financing activities Ending cash and cash equivalents (30 Sep 2019)

Core Strategy Updates

Production Efficiency – New facilities

• New glass factory (SGA2)
• New factory in Myanmar
• New cullet treatment lines
• Total Productive Maintenance

(Increase capacity without major investment in new production line)

Business Update: Core Strategies Progress Update

14

Strengthen domestic presence in broader non-alc. beverages and expand PC Leverage market-leading position in Thailand to sustain and expand to

• verseas markets

Focus on cost-efficiency and margin enhancement through NRM principle

Maintain Energy Drink Market Share (Value) : 9M’19

53.5%

Grow Functional Drink Market Share 9M’18 → 9M’19

29.9%→33.7%

Personal Care Sales Growth in 9M’19 :

+10.7%

Total International Sales Growth for 9M’19 (at constant FX):

+10.4%

International PC Sales Growth For 9M’19 (at constant FX):

+16.3%

Fit Fast Firm

9M’19 GM

= 34.6%

+280bps YoY

Continue impact in 9M’19: Bev International Sales Growth for 9M’19 (at constant FX):

+10.0%

2019 “Fit Fast Firm” Project ►Reap benefits from projects implemented in 2018 ►Increase efficiency through new cullet treatment lines ►Harmonize packaging specification ►New lighter weight bottles ►Optimize product formulation OEM Bottle sales – Improve margin

• verall beverage by sharing fixed costs

+20%

1H'18 1H'19 2H'18 2H'19 ( E )

+1%

Business Updates

• Invest in Channel – Vending Machine Business TH
• Increase R&D Capabilities - Osotspa Innovation Center (OIC)
• Complete new Glass Factory under BOI – SGA2 (Aug19)
• Complete new Talcum Plant (4Q19)
• Complete Myanmar New Plant, RTM, Portfolio strategy (4Q19)
• Expand to new country - Vietnam
• Invest in Glass Factories in Myanmar
• Progress cost saving program for margin expansion and cost

efficiencies through “Fit Fast Firm”

• Technology: Robotics for accounting process
• Distribution and Warehouse (2020)
• Next step Net Revenue Management (2020)
• Extend portfolio – Babi Mild Sweet Almond
• Revitalize using idol marketing – Twelve Plus
• Capture Premium Segment – Organik by Babi Mild
• Enter Facial and Skincare Category - Plantstory
• Adopt New Distribution Channel – E-commerce
• Embrace New trend and New packaging – Olé Boost

and Olé Mini Sugar Free

• Grow Herbal Variant – Chalarm Black Galingale
• Extend Segmentation – Som In-Sum
• Strengthen Consumer Base - M-Point Loyalty Program
• Target New Trend – Shark Natural Caffeine

/ No Sugar

• Start New Channel – Osotspa Delivery
• Continue Growth – C-Vitt Capacity Expansion
• Expand Distribution Channel – C-Vitt Tetra Pack
• Add New Variant – Peptein Plus
• Respond New Healthy Trend – Vplus
• New Benefits - Slimma

2019 Highlights: To achieve mid-single digit growth and pursue margin accretive initiatives

Energy Drinks Functional Drinks Strategic Moves Personal Care and Others

16

Product Category Implementation Outcomes Energy Drinks Grow and premiumize herbal variant Strengthen consumer base

Q3’18 +19% Q3’17 +336% Start Q3’19

%Sales growth (MAT*) compared to before implementation 1.2 3 3.9

Y2017 Y2018 9M2019

OSP’s Market share Herbal Segment 108% 146% 54%

Y2016 Y2017 Y2018 9M2019

Herbal Segment’s Revenue Growth (YoY)

Start Q3’19

3.3 Million Users

After 4 months launched

Growing proximity channels - Get closer to the consumer

100 ml 10 Baht

OSP’s Revenue Growth in Vending Machine and E-commerce Channel (YoY)

23% 75%

Y2017 Y2018 9M2019

17

Product

Q1’19 +23%

Category Implementation Outcomes

Start Q3’19 Q3’18 +187% Start Q3’19

Functional Drinks Personal Care

%Sales growth (MAT*) compared to before implementation

Capacity and distribution expansion New healthy trend and benefits Extend portfolio and capturing premium segment Enter facial and skincare category Add new variant

%Sales growth (MAT*) compared to before implementation Market share uplift for overall brands Distribute through e-commerce, image stores and some MT channels

Market Share 33.7% 36.1% Start Q2’19 Q3’19 Market Share 18.2% 19.9% Start Q2’19 Q3’19 18

Strategic Moves

• Cullet sourcing strategy
• Product reformulation
• Cullet treatment lines and recycle center
• Lighter weight bottle
• Net revenue management/Total production management
• Packaging harmonization
• Robotics for accounting process

Future Plan

• Continued Product Reformulation
• Further Packaging Harmonization
• Warehouse and Distribution Optimization
• Completed:
• Osotspa Innovation Center operated in Q3’19
• SGA2 equipped with state-of-the-art technology;

increased overall capacity 10 – 15%

• Talcum Plant completed in Q4’19
• Vending Machine JV in Q3’19
• Vietnam Entry in Q4’19
• On-Going:
• Thilawa (Myanmar) factory completed end of

2019; full commercial run Q1’2020; capturing manufacturing margin and using portfolio strategy

• Myanmar Glass Production Facility (2021)
• Warehouse and Distribution (2020)

Initiatives Implementation Outcomes

GPM improved meaningfully

Start Q4’17 Q3’19 Q4’17 32.7% 34.6%

Gross Profit Margin

Cost Saving Program for Margin Expansion Osotspa Innovation Center Glass Factory (SGA2) New Talcum Plant Vending Machine Business Vietnam Entry Thilawa Beverage Factory Myanmar Glass Factory Warehouse and Distribution

19

+

M-150 New Products and Campaign

20

21

Functional Drinks - New Product

22

Personal Care - New Product Launch

23

Personal Care - New Product Launch

Vietnam Entry

Business Potential Investment ▪ Invest USD 1.5million to acquire 60% shares in Osotspa VTA Joint Stock Company, a holding company that will carry out trading business of energy drink products in Vietnam Partnership Thai Market Leader in Energy Drink and Functional Drink Strong Marketing and Sales Local Distributor of Beverage Products Strong Distribution Network Strong Local Insights in Vietnam

+

24

▪ Large population with high consumer spending ▪ Favorable market growth ▪ Energy Drink per capital consumption still low, compared to Thailand

Glass Manufacturing Business

26

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Use clean cullet and other raw materials to manufacture glass containers for both energy drinks, functional drinks and OEM Glass Production Factory Sort defects or returned goods to be ready for recycle process Recycle Center Treat dirty cullet from recycle center to yield cleaner raw materials at cheaper cost Cullet Treatment Factory

1

Production Process

1 2 3

Recycle Center

Defects/Returned Goods Sorting Ready to be Recycled

To develop and highly utilize the waste to support the whole supply chain of glass manufacturing business

Purpose Method

Defects/Returned goods are gathered and sorted into separate parts, including liquid, paper, glass, plastic, and aluminum to be ready for recycle process Dirty cullet to be treated Sold to third parties

27

Glass Factory (SGA2), Ayutthaya

29

Commercially Operation October, 2019 CAPEX THB1,800 million BOI Privilege Exemption on Raw material and machinery import tax duty 100% exemption for 8 years 50% exemption for another 3 years

General Information

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Self-adjustment production Hot-end inspection Maximize OEM to produce at full capacity and maximize margin High Flexibility

30

Machine Integration Robotic Process Intelligent System Technology 4.0 Applied Less manpower required compared to the typical SGA factory Less Manpower Required Enabled lighter-weight bottles capabilities, resulting in further cost reduction (logistic costs and 3-5% conversion cost) Lighter-weight Bottles Improved total Osotspa’s capacity by 10-15% Capacity Enhancement M2M (Machine to Machine) Autonomous Process Big Data Analytics

Capabilities of the New Glass Production Factory (SGA2)

Glass Bottle Manufacturing in Myanmar

31

Business Outlook Investment Partnership

Strong Expertise in Glass Bottle Manufacturing

+

31

▪ Only Glass Bottle Factory in Myanmar ▪ Strong demand from growing liquor and beverage industries ▪ Potential for OSP own use ▪ Offer Competitive pricing as alternative to imported products ▪ Contract 50+10+10 years ▪ Going for Sustainable packaging Myanmar Local Partner

• Approx. USD 40 million or THB 1,213.6 milllion

49%

Strong Local Insights with Potential Customers

51%

Project Cost Invested at the amount not exceeding USD 8 million in Myanmar Golden Eagle Company Limited (MGE) and Myanmar Golden Glass Company Limited (MGG) for a total of 51% ownership interest with expected commercial run in 2021 &

Thank you

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