IT S MY LIFE STYLE MC GROUP Public Company Limited 2016 Results Summary 1 March 2017
IT S MY LIFE STYLE MC GROUP Public Company Limited 2016 Results Summary 1 March 2017 CONFIDENTIAL
Disclaimer The information contained in our presentation is intended solely for your personal reference only. In addition, such information contains projections and forward-looking statements that reflect our current views with respect to future events and financial performance. These views are based on assumptions subject to various risks and uncertainties. No assurance is given that future events will occur, that projections will be achieved, or that the our assumptions are correct. Actual results may differ materially from those projected. 2
Agenda Pages 2016 Recap 3 Financial Results 15 2017 Strategy & Guidance 28 CONFIDENTIAL 3
2016 Recap 4
Adjusted Merchandise Mix Gearing Towards Top-Wear In 2016, more product varieties were added particularly top-wears with good and innovative fabric quality as well as special screen techniques. CONFIDENTIAL 5
New Lifestyle Products Launched in Q4 2016 November 2016: Introduced an activewear under the new brand UP. Made from innovative Hydrophilic fabric that contains synthetic fibers to keep the body dry and comfortable. Customers can mix and match UP products with other clothing to best match the lifestyles they live. Sourced domestically with international standards Nationwide distributed at Mc Jeans stores and online channel www.mcshop.com Tracksuit Running set 6
New Lifestyle Products Launched in Q4 2016 (Cont d) December 2016: Launched an aromatic active skin care products under brand M&C. Currently available collections of body lotion and shower gel are Deep Blue, light Blue and True Blue. Body lotion is aromatic and infused with natural extracts of rice bran oil, shea butter and witch hazel extract that evens out and soothes the skin. Does not contain petroleum, parabens and silicone. Shower gel mildly cleanses the skin without drying up skin s natural oil. Products are cruelty-free -no animal testing in R&D and manufacturing. Nationwide distributed at Mc Jeans stores and online channel www.mcshop.com 7
2016: Year of Fun and Worthy Marketing Campaigns To stimulate the consumer spending, to return benefits to the customers and to reduce inventory level. CONFIDENTIAL 8
Q4 2016: Adjusted Campaigns For Rising Demand in Black & White 9
Fun-Fun-Fun Shopping Experience Enjoyable shopping experience offered to customers at free-standing shops CONFIDENTIAL 10
More Stores Rollout in 2H 2016 As Planned This year focus is to achieve optimal efficiency of sales channel management through store renovation, store enlargement, and closure of non-performing stores. End of 2015 # Points of Sales 866 End of 2016 # Points of Sales 897 (+31) Brand Free- Standing Modern Trade Mobile unit Int'l Total Brand Free- Standing Modern Trade Mobile unit and Others Int'l Total 225 450 5 18 698 14 1 15 7 0 7 0 14 5 19 3 0 3 14 2 16 25 83 108 Total 288 550 5 23 866 249 471 6 20 746 11 1 12 0 0 0* 0 5 5 10 1 0 1 21 0 21 21 86 107 Total 303 563 6 25 897 *Remark: mcpink PoS are combined with McLady PoS 11
But Slowed Down in mc mc Shop Expansion Slowed down sales channel at PTT service stations in Q4 2016 to fine tune product assortment before further expansion. At the end of 2016, there were 18 mc mc shops compared to 10 shops in 2015. 12
Continued CLMV Expansion Through Dealership 25 points of sales in CLMV at the end of 2016 Yangon, Myanmar Mandaley, Myanmar Ho Chi Minh City, Vietnam Vientiane, Laos Phnom Penh, Cambodia 13
More Online Activities & Communication Since 2H16 More contents, more products, special items, exclusive promotions, exclusive for member, and online special. 14
Realignment of TDC Business in Q4/16 Time Deco Corporation ( TDC ), an operator of the Company s watch business and a 51% subsidiary, has realigned its management and strategy since October 2016. For better response to consumers needs, more attractive and more worthy sales campaigns were executed and new sales channel was added to tap into new customer groups; for example, sales through www.mcshop.com, the online distribution channel of MC and corporate sales. New Products: Adidas (Fall Winter 2016), Coach Limited 2016 (Breast Cancer Collections), Victorinox Swiss Army: TITANUM and Fossil smart watches (Fossil Q) Receipts from Mc Jeans shop can be used as discount for online purchase at www.mcshop.com 15
Financial Results 16
Results Highlights Record sales with strong net profit growth (THB millions) Q4/15 Q4/16 % YoY FY15 FY16 % YoY Sales Revenue 1,289 1,411 +9% 3,895 4,442 +14% Gross Profit 698 805 +15% 2,186 2,430 +11% EBITDA 312 415 +33% 928 1,098 +18% Net Profit 250 317 +27% 732 843 +15% Net Profit Margin 19.1% 22.2% 18.5% 18.8% EPS (THB) 0.31 0.40 0.92 1.05 17
Annual Sales Reached 14% Growth Q4 2016 sales remained strong amid the national mourning period pushing annual sales to achieve 14% growth yoy, in line with the guidance. (THB millions) Quarterly Sales Revenue 2016 Sales Revenue +9% YoY +14% YoY Sales Revenue by Channel 2015 4% 44% 52% Modern Trade 39% 2016 Other 4% Free Standing 57% 18
Distribution Channels Performance Free Standing Shop THB 000 THB Modern Trade (1) Remark: (1) Figures are calculated based on modern trade sales revenue, before GP. Excluded sales from international markets and other source (i.e., exhibition etc.) 19
Strong Same-Store Sales Growth Due to more varieties of apparel product offering and sales promotional campaigns executed throughout the year, same-store sales growth in 2016 boosted by 11% from 2015 compared to 4% same-store sales growth in 2015. TSS & SSSG Quarterly TSS & SSSG Total System Growth Same Store Sales Growth Remark: Hypermarkets are not included in the calculation. 20
Same-Store Sales Growth by Channel SSG By Channel Free Standing Modern Trade Free standing shop Modern Trade Remark: Hypermarkets are not included in the calculation. 21 Bangkok Upcountry
Lower GPM YoY but Improving Since Q2 2016 Gross profit margin (GPM) dropped yoy due to lower margin of apparel and watch business. GPM of apparel declined due to the promotional campaigns launched during the year to stimulate spending, give back to customers, and optimize inventory level. GPM of watch business dropped from promotional campaigns in 1H16 and clearance sales in Q4 2016. However, overall GPM improved qoq thanks to the effective adjustments of promotional campaigns and effective cost management during the year. (THB millions) 2016 Quarterly Gross Profit +11% YoY +15% YoY Gross Profit Gross Profit Margin Gross Profit Margin (excl TDC) 22
%SG&A to Sales Lower YoY SG&A expenses rose 7% yoy due to higher amortization from SAP implementation since early 2016, higher rental and service fees and higher personnel expenses. %SG&A expenses to sales declined yoy to 35% from 37% in 2015. (THB millions) % SG&A Expense to Sales 2016 SG&A Breakdown +7% YoY +1% YoY 23
Improving EBITDA EBITDA increased yoy due mainly to better operating performance as well as the higher depreciation and amortization. EBITDA margin also improved yoy. (THB millions) +18% YoY +33% YoY EBITDA EBITDA Margin EBITDA Margin (excl TDC) 0 65.0% -35.0% 24
Greater Net Profit Growth Q4 2016 net profit increased 27% yoy thanks to solid sales growth and effective cost management. For 2016, MC reported net profit of THB 843 mn, an increase of 15% yoy thanks mainly to greater sales and effective promotional campaigns. (THB millions) 15% YoY 27% YoY Net Profit Net Profit Margin Net Profit Margin (excl TDC) 0 65.0% -35.0% 25
Financial Position Remained Strong with Net Cash Position Consolidated Balance Sheet Net Debt to Equity Ratio (THB millions) 2015 2016 Cash & Cash Equiv alent 877 1,277 Accounts Receiv able 702 787 Inv entory 2,316 1,989 Other Assets 1,205 1,144 Total Assets 5,100 5,196 Accounts Payable 554 448 Interest-bearing Liabilities 158 147 Other Liabilities 312 315 Total Liabilities 1,024 910 Shareholders' Equity 4,076 4,286 26
Improving Profitability And Better Inventory Days ROA ROE THB millions THB millions Finished Good Inventory Days (Months) Cash Cycle (Months) 27
85% Dividend Payout For FY2016 Proposed dividend payment for the performance during 1 Jul 2016 to 31 Dec 2016 as follows: DPS THB 0.50 XD 27 Apr 2017 Book Closing 3 May 2017 Payment 19 May 2017 Remark: Dividend policy is not less than 50% of net profit 28
2017 Strategy & Guidance 29
GREAT Strategy GRowth Generate growth of sales revenue from key products and develop new lifestyle products using innovations through both of offline and online channels. Maintain leader position for jeans brand in domestic market. Efficiency Optimize supply chain management. Effectively manage operating costs and operate points of sales Further expand online sales channel as well as promote integrated business operations to attain omni channel business model. Asia Brand Develop dealership programs to strengthen sales agents in foreign territories in Cambodia, Laos, Myanmar and Vietnam (CLMV). Talented Team Develop talents to enhance their capabilities to understand and quickly respond to changes in business strategies to sustainably support business growth in the long run. 30
Growing Diversified Portfolio With the mission to provide quality products that respond to everyday needs of consumers so that they can look and feel good anytime at reasonable cost, MC s portfolio has continuously expanded into the broader fashion and lifestyle market, not just jeanswear. Sales Revenue Contribution by Product Type Sales Revenue (THB mn) 2,556 4,442 6,700 CONFIDENTIAL 31
2017 Guidance Sales growth 12%-15% Gross profit margin In line with 2016 (54%-55%) SG&A CAPEX ~ 35% of sales THB 70 mn Effective tax rate 5%-7% Dividend payout not less than 50% 32
Thank you Investor Relations MC GROUP Public Company Limited ir@mcgroupnet.com Tel: +662 117-9999 Ext 1210 Line ID: @mc_jeans 33