fy 2003 performance review analysts...

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FY 2003 Performance ReviewAnalysts Briefing

24 February 2004

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AgendaAgenda

• Performance Highlights • Financial Review• Segmental Review• Proposed Dividends• Activities• Branding• Looking Back• Going forward• Q & A

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Performance Highlights

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Performance HighlightsPerformance Highlights

• Turnover grew 24.5% to S$139.6 million- Strong market position in core markets

- Expansion of distribution networks

- Strong brand management

• Net Profit declined 31.3% to S$10.2 million - Higher operating and staff expenses

- Higher A&P expenses & logistics costs

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Financial Review

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Profit & Loss StatementProfit & Loss Statement

(31.3)14.810.2Net Profit

18.9%13.2%

10.8%7.3%

EBITDA MarginNet Profit Margin

13.4

15.1

139.6

FY03

(32.5)19.9Profit before tax

(28.8)21.2EBITDA

24.5112.1Revenue

% ChangeFY02S$million

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Review of PerformanceReview of Performance

Revenue grew 24.5% to S$139.6 million

• Achieved 3-yr CAGR of 33%

• Double digit sales improvement in core markets

• Expanded distribution networks

• Effective A&P activities

Group Revenue

FY00 FY01 FY02 FY03

59.284.2

112.1

139.6

0.0

30.0

60.0

90.0

120.0

150.0

S$m

CAGR of 33%

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Net profit declined 31.3% to S$10.2million

• Higher operating and staff costs to strengthen infrastructure for further growth

• Intensive A&P activities to build brand equity

Group Net Profit

FY00 FY01 FY02 FY03

4.7

11.0

14.8

10.2

0.0

3.0

6.0

9.0

12.0

15.0

S$m

dow n 31.3%

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Other Operating Expenses rose 49.7% to S$46.2 million

• Due primarily to higher A&P expenses, Overseas Office expenses and Logistic costs

*Ovs office exp excludes staff costs** Others include doubtful debt provision of S$1.4m

Group Other Operating Expenses

FY02 FY03

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0.0

50.0

Ovs Office exp*

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Logistic cost

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Others**

S$m

up 49.7%

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Quarterly A&P activities ranging from media advertisements, wet sampling & sponsorships

Quarterly A&P expenses trend (FY03)

15%

21%

32% 32%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Q1 Q2 Q3 Q4

% of total A&P expenses

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Increase in Group Headcount tapered towards 4Q03

Breakdown of FY03 headcountHeadcount trend (FY03)

44%44%56% 53%

56%56%47%44%

0%

25%

50%

75%

100%

1Q03 2Q03 3Q03 4Q03

Local Overseas

350

400

450

500

550

1Q03 2Q03 3Q03 4Q03

No. of headcount

Slow dow n in expansion of headcount

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Slowdown in Freight rates increases and port charges under control

Breakdown of FY03 logistic costsFreight rates trend

6% 23%

40% 10%

94% 77%

60% 90%

0%

25%

50%

75%

100%

1Q03 2Q03 3Q03 4Q03

Port charges Freight

0

1,000

2,000

3,000

4,000

Q1 Q2 Q3 Q4

FY02 FY03US$/container

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Financial Ratios Financial Ratios

14.63

3.3X1.6X

0.0X

51.795.234.6112.3

4.30

FY02

16.57

4.4X2.6X

0.0X

53.861.820.794.9

2.95

FY03

NAV per share

LIQUIDITYCurrent ratioQuick ratio

GEARINGDebt ratio

ACTIVITY (DAYS)Receivables turnoverInventory turnoverPayables turnoverCash conversion cycle

PER SHARE DATA (CENTS)EPS

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Segmental Review

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Segmental Revenue Trend Segmental FY03 Revenue Contribution

Segmental Review Segmental Review -- By MarketBy Market(Revenue)(Revenue)

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Russia55%

Eastern Europe & Central Asia

37%

Others8%

61.136.9

14.1

77.651.4

10.60.0

25.0

50.0

75.0

100.0

Russia Eastern Europe& Central Asia

Others

FY02 FY03

S$m

up 27%

up 40%

dow n 25%

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Segmental Review Segmental Review -- By MarketBy Market(Profit Before Tax)(Profit Before Tax)

Segmental PBT Trend

0.0

11.98.110.5 5.4

-2.5-3.0

0.0

3.0

6.0

9.0

12.0

15.0

Russia Eastern Europe& Central Asia

Others

FY02 FY03S$m

dow n 11%

dow n 33%

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Segmental Review Segmental Review -- By MarketBy Market

RUSSIA and EASTERN EUROPE & CENTRAL ASIA• Russia sales grew by 27% while Eastern Europe & Central

Asia grew by 40%• Aggressive A&P activities to boost sales of core and new

products• Expansion of distribution networks• Extension of product portfolio

OTHERS• Revenue declined due to cessation of frozen seafood trading

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Segmental Revenue Trend Segmental FY03 Revenue Contribution

Segmental Review Segmental Review -- By ProductBy Product(Revenue)(Revenue)

Beverages92%

Others8%

11.8

100.3

11.9

127.7

0.0

20.0

40.0

60.080.0

100.0

120.0

140.0

Beverages Others

FY02 FY03

S$m up 27%

up 1%

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Segmental PBT Trend

Segmental Review Segmental Review -- By ProductBy Product(Profit before Tax)(Profit before Tax)

19.6

0.3

14.8

-1.3-5.0

0.0

5.0

10.0

15.0

20.0

25.0

Beverages Others

FY02 FY03

S$m

dow n 25%

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Segmental Review Segmental Review –– By ProductBy Product

Beverage• Stronger demand for 3in1 instant coffee and coffee in tins• Top 3 best selling instant coffee – MacCoffee, FesAroma and Express• Core brand MacCoffee ranked as one of the leading instant coffee brands in Russia, Ukraine & Kazakhstan

Others• Snack food and Frozen Convenience food posted higher sales• Frozen seafood sales declined

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Proposed Dividends

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Proposed DividendsProposed Dividends

Subject to shareholders’ approval:-

Proposed ordinary dividends of 0.5 cents (less tax) per ordinaryshare and special dividends of 0.75 cents (less tax) per ordinary share*

Total Dividends of 1.25 cents (less tax) per ordinary share

25% of par value of 5 cents

* Utilise Section 44 balance for dividends

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Activities

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Advertising & PromotionsAdvertising & Promotions

MacCoffee Strong Promo in Tambov, Russia

MacCoffee Billboard in Rostov-on-Don, Russia

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MacCoffee wins first rally of the Ukrainian Rally Championship of the Stolitsa Rally in Kiev

Lottery draw in Ukraine

Advertisement for MacCoffee 3-in-1, Ukraine

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MacCoffee Deluxe promotion in Kazakhstan

MacCoffee freebies in Kazakhstan

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Sponsorship of Cricket tournament in Ukraine

Product display in Mongolia

MacCoffee Promotion in Serbia

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Trade ShowsTrade Shows

8th International Exhibition For Food, Beverage & Consumer goods,

in Egypt

World Food ’03 in Russia

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Anuga 2003, Germany

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World Food Show in Paris

Food Expo ’03 in Uzbekistan

Traditional World Food Show in Paris

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Branding

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AwardsAwards

Food Empire was recognised as one of the Most Valuable Singapore Brands at the Singapore Brand Award 2003. Food Empire’s portfolio of brands was awarded a high value of S$114 millionMacCoffee was awarded one of ‘The Strongest Singapore

Brands’ (ranked 8 out of 15)MacCoffee 3-in-1 once again won in the category ‘Top Instant Coffee drink’ in the ‘Choice of the Year 2003’ Award in Kiev, Ukraine.MacCoffee also won the national Golden Trade Marks award held in Ukraine recently.For the 4th consecutive year, Food Empire won the Singapore Star Packaging Award 2003 for Klassno Gold (freeze-dried coffee in glass jar) and Kracks Potato CrispsFood Empire was accorded the Gold award in “ The Judge’s Choice Award” category at the 17th Annual International ARC Awards 2003

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Brand ValuationBrand Valuation(Singapore Brand Award 03)

Source: IE Singapore

2003 Position Brand

Brand Value 2003 S$M

2002 Position

Brand Value 2002 S$M

1 Singtel (fixed & mobile) 2,635 1 3,0002 UOB 1,211 3 9503 DBS Bank 1,118 2 1,0004 Asia Pacific Breweries 943 4 8205 OCBC Bank 658 5 6256 Great Eastern 429 6 4007 Singapore Airlines 304 7 380

8F&N (Soft Drinks + 100Plus) 118 9 95

9 Food Empire 114 N.A. N.A.10 Tiger Balm 110 8 11011 Creative 102 10 9012 OSIM 95 13 4513 Brand's 92 12 7514 Sincere 42 N.A. N.A.15 Eu Yan Sang 35 4 30

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Brand StrengthBrand Strength(Singapore Brand Award 03)

Source: IE Singapore

2003 Rank Brand

Brand Strength (/100)

1 SIA (Airline) 602 Creative 593 Tiger Balm 573 Tiger Beer 575 Brand's 566 OSIM 547 Eu Yan Sang 538 Banyan Tree 528 MacCoffee 528 F&N 52

11 Informatics 4911 Raffles International 4911 Super CoffeeMix 4914 Singtel 4814 AKIRA 48

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Looking Back

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2003 Review2003 Review

“2003 is a year of brand building and expansion

We continued our efforts to build up our overseas operations and to invest brand equity

Revenue continued to grow but profitability was impacted as a result of the strategic actions taken to gear up for increasing our market reach “

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Going Forward

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2004 Outlook2004 Outlook

“Market environment in our core markets is expected to remain competitive and challenging.

Foreign currency fluctuations will continue to be an important consideration and raw material costs are expected to rise in 2004 “

We will continue to step up efforts to strengthen our operations and distribution networks, reinforce our marketing and branding. More importantly improve market reach and bottomline.“

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Q & AQ & A

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