Company Presentation - May 2017 - Minor International
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FORWARD LOOKING STATEMENT Statements included or incorporated in these materials that use the words "believe", "anticipate", "estimate", "target", or "hope", or that otherwise relate to 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 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. MINT undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. MINT makes no representation whatsoever about the opinion or statements of any analyst or other third party. MINT does not monitor or control the content of 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. Disclaimer 2
Agenda 1Q17 Performance Recap & Recent Updates Key Drivers of 2017 Minor Hotels Minor Food Minor Lifestyle Corporate Information
RESILIENT PERFORMANCE WITH QUICK TURNAROUND 1Q17 net profit increased by 17% from 1Q16 core net profit, from the strong performance of both Minor Hotels and Minor Food. The quick turnaround from the national mourning period signified MINT’s strengths, including robust multi-brand portfolios, geographical diversification and business agility. REVENUE THB million 18,000 Excl special gain +11% y-y 16,000 15,816 15,379 14,000 13,884 12,000 10,000 1Q16 Minor Hotels Minor Food Minor Lifestyle 1Q17 NET PROFIT THB million 4,000 3,575 Excl special gain 3,000 +17% y-y 1,924 2,000 1,643 1,000 0 1Q16 Minor Hotels Minor Food Minor Lifestyle 1Q17 Non-recurring item: gain from bargain purchase of the Tivoli Hotels & Resorts of THB 1,932 million 1Q17 Performance Recap 5
INTERNATIONAL PRESENCE With solid diversification strategy, MINT’s presence was in 32 countries at the end of 1Q17 across its hospitality and restaurant businesses. REVENUE CONTRIBUTION 100% Minor Hotels 13% 75% 50% 44% 52% International Minor Food 50% Thailand 87% Combination 25% 50% 56% 48% 0% 2008 2016 1Q17 2021F * Excludes non-recurring gains MINT’s Footprint 6
WHAT’S NEW IN 1Q17 TO DATE MINOR HOTELS MINOR FOOD Hotel Investment Launch of Franchise in China • Opened Oaks Bodhgaya, a 25% joint-venture • Launched the first Thai Express franchise outlet at the property in Bihar, India in January 2017 Beijing Capital International Airport • Brought Anantara and AVANI to Europe for the first time with the rebranding of two Tivoli hotels in April 2017: - Anantara Vilamoura Algarve, Portugal - AVANI Avenida Liberdade Lisbon, Portugal Oaks • Assumed MLR contract of Metro Suites in Auckland, New Zealand in May 2017 MINOR LIFESTYLE New Brand Launch • Launched Joseph Joseph, design-led houseware products from England, in March 2017 Anantara Vacation Club • Added five units in Phuket to the inventory pool of Anantara Vacation Club Recent Development 7
LATEST INVESTMENTS TO REAFFIRM MINT’S LEADERSHIP POSITION IN PHUKET MINT unveils three new mixed-use projects with total economic value of over THB 9 billion to drive sustainable growth of its mixed-use business. ANANTARA VACATION CLUB AVADINA HILLS BY ANANTARA MAI KHAO PHASE III Mai Khao Beach Project Details: • 97 newly-designed luxury apartments and pool villas and facilities on 20 rais of land Layan Beach • Estimated real estate value of THB 3 billion 50% joint-venture with Kajima Corporation, the Expected Launch Date: 2018 project is situated adjacent to Anantara Layan Phuket Phuket TURTLE VILLAGE MAI KHAO II Project Details: • 16 luxury villas on 99 rais of land with total Project Details: sales value of THB 6 billion • 3-storey mixed-use building with • 6-8 bedroom pool villas with approximate size approximately 1,270 ranging from 2,158-3,251 sq.m. sq.m. of retail space & 534 sq.m. of office space Expected Launch • Strategic location in northern Phuket, Date: 2018 surrounded by leading hotels and vacation clubs Expected Launch Date: 2019 Recent Development 8
KEY DRIVERS OF 2017 AND BEYOND – MINOR HOTELS PORTUGAL - STRONG GROWTH TO THAILAND - BACK IN FULL SWING CONTINUE h Demand: h Demand: • TAT forecast of international tourist • Shift of European tourists to arrivals growth of 9% in 2017 geopolitical stable regions h ADR & RevPar: • Affordability of the country with • Hotel renovations: Anantara Siam weakening of Euro against USD Bangkok (Phase 2), AVANI Pattaya, h ADR & RevPar: Anantara Mai Khao Phuket Villas • Hotel renovations and Four Seasons Tented Camp • Hotels rebranding: Anantara AUSTRALIA – MORE PROMISING GROWTH Vilamoura Algarve and AVANI OUTLOOK Avenida Liberdade Lisbon h Demand: • International tourists driven by AFRICA - POSITIVE GROWTH PROSPECTS Asian markets – Chinese and India FUELED BY ROBUST DEMAND • Domestic market driven by h Demand: previously weakened AUD • Improving economy, h ADR & RevPar: infrastructure and flight MALDIVES - PROMOTING RESILIENCY • Hotel renovations, such as Oaks connectivity HOTEL MANAGEMENT CONTRACT THROUGH DIVERSIFICATION Cypress Lakes • Victoria Falls as a main attraction h Occupancy: h Number of hotels: h profitability: h ADR & RevPar: • Targeted and dynamic marketing • Ramping up of new properties – The • Over 20 management contracts • Renovation of AVANI Gaborone in tactics signed and to be opened over next Milton Brisbane and Oaks Botswana • Diversification to new markets, three years Southbank h Profitability: such as Middle East • Over 100 hotels under h Room count: • Leverage of MINT’s global h Quality of products and services: management by 2021 • Expansion of Oaks brand both in platform and operational • Earn global recognitions • Potential rebranding opportunities home market and outside e.g. India excellence and Middle East • Strong pick-up of residential sales: The Residences by Anantara, Layan, Phuket (3 sold in 1Q17); Anantara Chiang Mai Serviced Suites (3 sold in 1Q17); Torres Rani (1 penthouse sold in 1Q17); more units of these projects are to be sold while additional new pipeline include REAL ESTATE BUSINESS Desaru, Ubud and Avadina Hills. • Turnaround of AVC through enhanced product offerings, accelerated cash flow, strengthened risk management procedures and targeted sales and marketing strategy; new inventory is to be added to provide more points to sell. 2017 and Beyond 10
KEY DRIVERS OF 2017 AND BEYOND – MINOR FOOD Thailand Australia China Singapore STABLE OPERATIONS WITH FURTHER MAINTAINING LEADERSHIP POSITION PROFITABLE EXPANSION PORTFOLIO RATIONALIZATION GROWTH + Macro environment: + Revenue potential: + New management: + Revenue potential: • Recovery of domestic consumption, • Product improvement to capture • Rebuilding a strong foundation for • Strengthening of franchise with increased infrastructure rising middle-class consumption and sustainable growth in the long-term capabilities through leverage of spending, higher farm income and urbanization MINT’s operational excellence and + Revenue potential: lower household debt after expiry of global platform • Expansion of delivery channel the first-car scheme • Strengthening of Thai food portfolio to prepare for economic turnaround + Minor Food’s strengths: • Strong brand portfolio with significant market share in most categories • Continued development of Thai • Adopting effective segmentation • Franchise opportunities of The • Product & service innovations Express, with first franchised outlet strategy Coffee Club brand both in Australia in Beijing Capital International and overseas e.g. Middle East, • Expansion of Thai Express’s Airport in Jan17, and one more in Thailand etc. franchise outside of Singapore such May17 as Vietnam and Malaysia + Efficiency & profitability • Potential stake increase in Riverside • Expansion of the higher margin based on the original agreement coffee roasting business with the Founders • Leading digital strategy and delivery platform to enhance customer + Efficiency & profitability experience; e.g. TPC’s • Improvement of operational online delivery order excellence, supply chain contribution jumped + Efficiency & profitability management and network planning from +10% to almost • Ongoing portfolio rationalization 40% of total delivery dockets in one year 2017 and Beyond 11
Minor Hotels Anantara Vilamoura Algarve, Portugal
FINANCIAL PERFORMANCE – MINOR HOTELS 1Q17 revenues of hotel & mixed-use business grew by 19%, as a result of increase in revenues of owned hotels, Oaks, management contracts and real estate business. 1Q17 EBITDA increased by 19%, while net profit increased by 21%, primarily attributable to the strong performance of Oaks and the real estate business. KEY HIGHLIGHTS THB million +19% y-y Owned hotels • Revenue grew by 7%, as a result of 8,388 improved overall operations, together 7,078 6,099 7,237 7,344 49% with the incremental revenue from new of 1Q17 hospitality hotels. Revenue revenue Oaks • Revenue increased by 11%, primarily from the RevPar growth of 7% (in THB term). +19% y-y 19% 2,594 of 1Q17 hospitality 2,175 2,132 revenue EBITDA 1,723 1,117 Management contracts • Revenue increased by 21%, primarily EBITDA attributable to good performance of Margin 30.7% 18.3% 23.8% 29.0% 30.9% 4% existing hotels, together with additional of 1Q17 hospitality management fees from newly managed +21% y-y revenue hotels. 1,361 1,124 NPAT 889 561 Real estate • Revenue increased by over 60% from 237 strong performance of both residential Net 15.9% 3.9% 7.8% 12.1% 16.2% 25% sales and Anantara Vacation Club after Margin of 1Q17 hospitality the adjustment of its business model. revenue 1Q16 2Q16 3Q16 4Q16 1Q17 * The financials above reflect performance from operation, and therefore exclude non-recurring items as detailed on page 40 Minor Hotels 13
MINOR HOTELS - INTERNATIONAL PRESENCE In recent years, MINT has implemented a solid diversification strategy. At the end of 1Q17, MINT operates hotels and spas under a combination of investment, joint-venture and management business models in 25 countries, with another 4 countries in the pipeline over the next three years. REVENUE CONTRIBUTION 100% 6% 75% 63% 54% International 68% 50% Thailand 94% 25% 37% 46% 32% 0% 2008 2016 1Q17 2021F * Excludes non-recurring gains Investment Management Combination New Destinations in Pipeline Hubs Minor Hotels 14
SYSTEM-WIDE HOTEL OPERATIONS Excluding new hotels and impact from exchange rate, organic RevPar of the entire portfolio increased by 3% in 1Q17, driven by higher occupancy. However, 1Q17 system-wide RevPar decreased by 2%, primarily from newly-added overseas hotels which were either recently acquired or are still in the ramping-up stage. NUMBER OF HOTEL ROOMS ADR No of Rooms +4% y-y THB Organic excl FX System-wide 19,006 19,115 19,512 19,776 19,794 20,000 8,000 -1% y-y -1% y-y 15,000 6,431 6,397 6,338 5,963 MLR / Oaks 6,000 5,410 5,198 10,000 Managed Joint-venture 4,000 5,000 Owned 0 2,000 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 OCCUPANCY REVPAR 90% THB Organic excl FX System-wide +3% y-y -2% y-y 80% 5,000 70% 4,337 4,450 4,270 70% Organic 3,858 70% 67% +3% y-y 4,000 3,793 64% 65% 3,327 System-wide 3,000 67% Flat y-y 60% 2,000 50% 1,000 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 Minor Hotels 15
OWNED-HOTELS OPERATIONS 1Q17 HOSPITALITY Owned hotels contribute almost half of hotel & mixed-use revenues in 1Q17. Excluding new hotels and REVENUE CONTRIBUTION foreign exchange impact, 1Q17 organic RevPar grew by 4%, driven by both overseas and Thai hotels. Including 49% new hotels, system-wide RevPar declined by 4%, primarily from the addition of Tivoli portfolio in Feb 2016. In Owned- hotels addition, first quarter was the low season for Portugal and some Tivoli properties were under renovation. NUMBER OF HOTEL ROOMS ADR +Tivoli Victoria +Tivoli Palacio de Organic excl FX System-wide Sateais THB +Tivoli Jardin +Anantara Kalutara +2% y-y +1% y-y +Tivoli Lagos +Royal Livingstone +8% y-y No of +Tivoli Sintra by Anantara +Elements 8,000 Rooms +Tivoli Coimbra +AVANI Victoria Boutique +AVANI Riverside Bkk Falls Resort & Spa 6,733 6,863 6,791 8,000 6,143 7,084 7,118 7,118 6,000 5,572 7,000 6,566 6,566 4,926 6,000 4,000 5,000 4,000 2,000 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 OCCUPANCY REVPAR 90% THB Organic excl FX System-wide 6,000 +4% y-y -4% y-y 80% 73% 4,063 4,041 4,208 3,907 70% 64% Organic 4,000 60% 61% 3,129 3,445 56% +1% y-y 60% System-wide 58% 2,000 50% -2% y-y 40% 0 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 * Change in 1Q16 stats because of retroactive classification of hotels in Zambia from JV hotels to owned hotels as a result of change in investment status effective 3Q16. Minor Hotels 16
OWNED-HOTELS OPERATIONS – THAILAND vs. OVERSEAS 1Q17 HOSPITALITY Thailand hotels continued to be the largest contributor to the hospitality business, with revenue of owned REVENUE CONTRIBUTION Thailand hotels in Thailand accounting for 30% of hospitality revenue. Following the acquisition of Tivoli hotels hotels portfolio, overseas hotels contributed 19% of hospitality revenue. 30% Overseas hotels 19% BANGKOK OVERSEAS RevPar Growth Organic RevPar Growth Organic (y-y) -3% -8% +2% -3% +4% (y-y) -48% -18% +11% -35% +8% THB THB 6,000 5,178 10,000 5,103 5,048 4,367 4,240 4,098 8,000 72% 3,923 6,838 4,000 3,173 3,596 6,021 63% 5,817 5,643 2,717 81% 6,000 48% 76% 75% 48% 4,727 4,217 46% 62% 70% 4,000 2,903 2,959 3,148 2,000 2,711 2,000 0 0 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 THAILAND PROVINCES KEY HIGHLIGHTS RevPar Growth Organic • Bangkok: organic owned RevPar increase of 4% in 1Q17, driven by (y-y) +11% +4% +6% +2% +1% occupancy. Including the new AVANI Riverside which is still in the ramping- THB up stage, system-wide owned RevPar increased by lesser magnitude of 2% 10,000 9,132 9,257 in 1Q17. 7,188 8,355 7,229 8,000 5,956 6,125 • Thailand provinces: organic owned RevPar increase of 1% in 1Q17, 79% 5,582 78% 6,000 70% primarily from hotels in the North of Thailand, including Chiang Mai and 67% 67% 4,311 Chiang Rai. 4,000 4,015 • Overseas: increase in 1Q17 organic owned RevPar of 8% due to the 2,000 turnaround of hotels in Brazil and some of the renovated hotels in Portugal. 0 With the addition of new hotels which commanded lower RevPar than the 1Q16 2Q16 3Q16 4Q16 1Q17 portfolio’s average, system-wide owned RevPar was down 7% in 1Q17. * Change in 1Q16 stats because of retroactive classification of hotels in Zambia from JV hotels to owned % Occupancy ADR RevPar hotels as a result of change in investment status effective 3Q16. Minor Hotels 17
OWNED-HOTELS OPERATIONS BY KEY MARKETS 1Q17 HOSPITALITY In 1Q17, owned hotels in Thailand and Brazil led the overall RevPar performance of the owned hotel REVENUE CONTRIBUTION portfolio and helped offset the softness of the Maldives and Africa, as well as the impact of renovation in 49% Portugal. Owned- hotels 1Q17 REVENUE CONTRIBUTION KEY MARKET HIGHLIGHTS OF OWNED HOTELS BY GEOGRAPHY Others, 3% Thailand • International tourist arrivals grew moderately by 2% in 1Q17, while Africa, 8% Minor Hotels outperformed the industry with room nights of hotels in Maldives, 9% Thailand growing at a faster rate of 10%. • Excluding new hotels, organic RevPar of Thailand owned hotels Brazil, 11% recovered from the mourning period with an increase of 1% in 1Q17. • 1Q17 system-wide RevPar of Thailand owned hotels was down by 1% Thailand, 62% Portugal, 7% due to the addition of AVANI Riverside. Portugal • Tivoli hotels in Portugal reported negative RevPar growth in 1Q17 * Excludes non-recurring items because of the ongoing renovation of three hotels. • The hotels that were renovated since last year – Tivoli Oriente and 1Q17 ORGANIC REVPAR GROWTH (Y-Y) Tivoli Marina Vilamoura Algarve – saw double digit RevPar growth in 1Q17. 27% Maldives • The Maldives portfolio started to see an improving trend of its RevPar, with a decline of only 5% in 1Q17 compared to -15% in 2016. • RevPar growth of the Maldives portfolio was positive in March and also going into April of 2017. 1% • RevPar of hotels in Brazil grew by 27% as a result of the completion of Brazil the hotel renovation, together with improving political and macro- -5% economic environment. -6% Africa • Performance of African operations declined due to the slow low -14% season in Zambia. However, the RevPar started to see an improving Thailand Portugal Maldives Brazil Africa trend going into April 2017. Minor Hotels 18
OAKS’ OPERATIONS 1Q17 HOSPITALITY REVENUE CONTRIBUTION Oaks’ serviced-suites operation is the second largest segment in the hotel and mixed-use business, with almost 20% revenue contribution in 1Q17. Oaks continues to provide the hotel & mixed-use business with stable performance throughout the year, compared to hotel operations which is more seasonal. Oaks’ 1Q17 19% revenues in THB increased by 11%, primarily from the increase in RevPar. Oaks NUMBER OF MANAGED ROOMS ADR No of THB THB AUD Rooms +1% y-y +5% y-y 6,000 190 7,000 4,772 4,830 4,592 4,515 6,347 6,339 6,328 4,327 6,257 6,360 180 4,000 179 181 6,000 180 AUD 170 171 +2% y-y 5,000 2,000 165 160 4,000 0 150 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 OCCUPANCY REVPAR THB AUD 90% THB +2% y-y 5,000 +7% y-y 160 3,531 3,528 3,749 3,793 78% 79% 79% 4,000 80% 77% 3,162 140 73% 3,000 141 142 137 134 AUD 2,000 70% +4% y-y 120 1,000 120 60% 0 100 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 Minor Hotels 19
MANAGED-HOTELS OPERATIONS 1Q17 HOSPITALITY REVENUE CONTRIBUTION In 1Q17, managed hotels contributed 4% of hotel & mixed-use revenues. Organic RevPar excluding foreign exchange impact of managed hotels portfolio was up 3%, primarily from increase in occupancy of managed 4% hotels in the Middle East and Seychelles. With RevPar growth and the increase in room counts, 1Q17 Management revenue from management service increased by 21%. Contracts NUMBER OF HOTEL ROOMS ADR Organic excl FX System-wide No of +The +Loisaba Tented +AVANI Khon +Anantara Al Jabal +12% y-y -2% y-y -8% y-y Rooms Residences at Camp Kaen Al Akhdar, Oman THB Victoria, Tivoli +Loisaba Star +AVANI Deira +Al Baleed Salalah Beds Dubai by Anantara 8,000 7,605 7,457 5,000 6,886 7,034 4,533 4,484 6,291 6,068 3,998 4,282 6,000 4,017 4,000 4,000 3,000 2,000 2,000 0 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 OCCUPANCY REVPAR Organic excl FX System-wide THB +3% y-y -6% y-y 80% Organic +4% y-y 6,000 5,280 5,416 73% 4,952 69% 4,244 70% System-wide 3,741 3,788 4,000 62% 62% 70% +1% y-y 59% 60% 2,000 50% 0 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 Minor Hotels 20
HOTEL EXPANSION PIPELINE Expansion inside and outside Thailand will contribute to revenue & profit in coming years. HOTEL INVESTMENT MANAGEMENT CONTRACTS • Bodhgaya, • Guiyang, China • Brasilia, Brazil• Auckland, 2017F (218 rms) India* (78 (395 rms) New Zealand rms) • Doha, Qatar (370 rms) (150 rms) • Doha, Qatar • Al Wakrah, (102 rms) Qatar (101 rms) • Quy Nhon, • Shanghai, China (260 rms) • Queensland, 2018F Vietnam Australia • Qiandao Lake, China (25 rms) (120 rms) (219 rms) • Lijiang, China (678 rms) • Tozeur, Tunisia (93 rms) • Desaru, • Warangi, • Zhuhai, China (110 rms) • Zhuhai, China 2019F Malaysia Serengeti • Le Chaland, Mauritius (300 rms) (103 rms) National (164 rms) • Jebel Dhanna, • Ubud, Bali, Park, UAE Tanzania* • Al Houara Tangier, Indonesia* Morocco (150 rms) (228 rms) (80 rms) (12 rms) • Oman (198 rms) • Busan, Korea (400 rms) • Zanzibar, Tanzania (150 rms) • Jebel Dhanna, UAE (60 rms) • Dubai Creek, UAE (292 rms) • Ras Al Khaimah, UAE (306 rms) 2020F • Khao Lak, • Jeddah, Saudi Arabia • Dubai, UAE Thailand (328 rms) (372 rms) (327 rms) • Ras Al Khaimah, UAE (200 rms) Total 6 Hotels / 625 Rooms 25 Hotels / 5,964 Rooms * Note: Joint-ventured properties Minor Hotels 21
REAL ESTATE BUSINESS - RESIDENTIAL 1Q17 HOSPITALITY REVENUE CONTRIBUTION In addition to the current projects, three joint-venture projects have been announced, in order to ensure the revenue stream from residential sales in the coming years. The residential projects in the pipeline include 25% Avadina Hills in Phuket, Desaru in Malaysia and Ubud in Indonesia. Other residential projects will be Real Estates selectively considered in various hotel destinations in order to increase returns of the overall project. THE RESIDENCES BY ANANTARA, LAYAN, PHUKET ANANTARA CHIANG MAI SERVICED SUITES THE ESTATES SAMUI Above a secluded cove of powder-white sands and Inventory 21% crystal-blue waters, The Estates Samui offers 14 Sold luxury villas adjacent to 79% Four Seasons, Koh Samui. TORRES RANI, MAPUTO The project is situated on Layan beach, one of the A 50% joint-venture with U City Pcl., the project most picturesque bays on west coast of Phuket. is in the city center of Chiang Mai, across from Anantara Chiang Mai Resort & Spa. 2 out of 6 ● 15 uniquely designed pool 20% sold & 6% sold & penthouse units villas transferred ● 44 units in 7-storey 13% transferred sold to date; in 1Q17 deposited 1 unit deposited ● Up to 8 bedrooms, each condominium building & contract in 1Q17 signed with 21 meter private ● 65 to 162 sq.m. (one A 49% joint-venture with Rani Investment, the infinity pool to three bedrooms) project is 5 minutes from Maputo CBD. ● 1,313 to 2,317 sq.m. of Inventory ● 26 units sold to date Inventory 38% (3 sold in 1Q17); 5 32% ● 18-storey residential tower, comprising built-up area Sold 181 keys for rent and 6 penthouse units ● Construction of the project 42% units reserved and Sold for sale is completed expected to be 49% transferred in 1Q17 ● 20,926 sq.m., 21-storey office tower Minor Hotels 22
REAL ESTATE BUSINESS – ANANTARA VACATION CLUB 1Q17 HOSPITALITY Part of the real estate business, Anantara Vacation Club is another important contributor to Minor Hotels. REVENUE CONTRIBUTION Growth of members are driven by four main markets – China, Thailand, Hong Kong and Singapore. With the change of the sales model since 2015 which resulted in smaller package, accelerated cash flow, as well as 25% Real Estates lower bad debt and cancellation rate, AVC is seeing the turnaround of its performance since 4Q16. In 1Q17, AVC revenues increased by 27% y-y. TOTAL NUMBER OF MEMBERS MEMBERS PRIMARILY IN ASIA Growth (y-y) +67% +41% +28% +15% +18% US, 1% Others, 10% Philippines, 1% No. of Taiwan, 2% Members UAE, 2% 8,502 8,000 Australia, 3% China, 39% 8,000 6,928 Japan, 4% 6,000 5,431 Malaysia, 8% 4,000 3,857 Singapore, 2,000 9% 0 Hong Kong, Thailand, 2013 2014 2015 2016 1Q17 10% 10% As at Mar 2017 INVENTORY TO ACCOMMODATE GROWING MEMBERS GROWTH DRIVEN BY FOUR MARKETS No. of Units 7 Destinations: China 10 Destinations No. of Queenstown Members Hong Kong 500 Bali 5,870 450 6,000 5,553 Sanya Thailand 400 Samui Singapore 4,896 Phuket 300 Bangkok 4,000 3,731 +17% +19% Chiang Mai +48% 200 2,460 +111% 160 165 137 2,000 +300% +11% +11% 106 119 +35% +38% 100 +39% +7% +11% +23% +19% +5% +36% +12% +10% +10% +9% 0 0 2013 2014 2015 2016 1Q17 2021F 2013 2014 2015 2016 1Q17 Minor Hotels 23
Minor Food
FINANCIAL PERFORMANCE – MINOR FOOD 1Q17 revenue of Minor Food increased by 3%, attributable to strong performance of Thailand and China hubs, which helped offset the slowdown of Singapore hub. EBITDA and net profit grew by 7% and 12% respectively, primarily from the higher operating leverage of Thailand hub and improved profitability of Veneziano the coffee roasting business in Australia. KEY HIGHLIGHTS THB million +3% y-y Total-system-sales • The Pizza Company, Burger King, Riverside 6,028 growth of and BreadTalk (Thailand) reported strong 5,841 5,794 5,766 5,621 double-digit total-system-sales growth in Revenue 8.2% 1Q17. in 1Q17 Outlet expansion • In 1Q17, Burger King, BreadTalk (Thailand), of The Pizza Company and Riverside achieved +7% y-y the fastest outlet expansion y-y (in terms 8% of percentage growth). 1,051 1,126 in 1Q17 982 933 876 EBITDA • Positive same-store-sales growth in 1Q17 was led by The Pizza Company, Swensen’s, EBITDA Riverside in China and BreadTalk (Thailand). 18.0% 15.2% 17.0% 16.6% 18.7% Margin • Thai Express Group in Singapore continued +12% y-y Same-store-sales to be soft amidst challenging macro 540 growth of condition and intensifying competition in 481 Singapore. 420 425 NPAT 359 1.3% in 1Q17 • Despite challenges in Minor Food’s key operating markets, the strength of its multi- brand portfolio, diversification strategy and Net Margin 8.2% 6.2% 7.2% 7.6% 9.0% operational excellence enabled Minor Food 1Q16 2Q16 3Q16 4Q16 1Q17 to maintain resilience and weather through the difficult time. * The financials above reflect performance from operation, and therefore exclude non-recurring items as detailed on page 40 Minor Food 25
MINOR FOOD - INTERNATIONAL PRESENCE MINT operates four restaurant hubs: Thailand, Singapore, Australia and China. MINT’s restaurant presence is now in 19 countries across the region, operating owned, franchised and a combination of both business models. MINT continues to look for opportunities to expand, especially in these existing markets. REVENUE CONTRIBUTION 100% 19% 75% 41% 37% 46% International 50% 81% Thailand 59% 63% 54% 25% 0% 2008 2016 1Q17 2021F * Excludes nonrecurring gains Owned Franchised Combination Hub Minor Food 26
MINOR FOOD – OPERATIONAL PERFORMANCE 1Q17 total-system-sales of Minor Food grew 8.2%, primarily from same-store-sales growth of 1.3% and outlet expansion of 8%, mostly in Thailand, Vietnam and China. Thailand and China hubs achieved robust operational performance, which helped offset negative same-store-sales growth of Singapore hub in 1Q17. SSS & TSS GROWTH RESTAURANT OUTLETS BY GEOGRAPHY International 3,409 20% Thailand +8% y-y 39% 15% 1,996 2,017 11.3% 36% 36% 1,043 9.9% 8.8% 33% 61% 10% 8.2% 64% 64% 6.4% 67% 2008 2016 1Q17 2021F 5% 3.0% 2.3% 1.3% 0.9% RESTAURANT OUTLETS BY OWNERSHIP -0.9% 0% Franchised 3,409 Owned +8% y-y -5% 49% 1Q16 2Q16 3Q16 4Q16 1Q17 1,996 2,017 No. of 1,859 1,883 1,928 1,996 2,017 49% Outlets 1,043 49% 38% 51% 59% Same-Store-Sales Growth Total-System-Sales Growth 53% 51% 50% 51% 82% 62% 2008 2016 1Q17 2021F Minor Food 27
THAILAND HUB 1Q17 RESTAURANT REVENUE CONTRIBUTION Revenues from domestic operations remained the biggest contributor to Minor Food, accounting for 63% of total restaurant revenue in 1Q17. Diversification, product innovation and effective marketing strategy afforded Minor Food to stay ahead of competition and achieved positive same-store-sales growth for the 63% Thailand quarter. THAILAND’S SSS & TSS GROWTH RESILIENT OPERATIONS Thailand hub experienced gradual recovery from the mourning period and outperformed the industry with same-store-sales Continued to build on innovation of products and services, including new promotional products and user-friendly growth of 2.6% in 1Q17. The two brands that performed well mobile app, to enhance customer traffic. during the quarter were The Pizza Company and Swensen’s. Successfully launched new sundaes with improved With consistent outlet expansion, Thailand hub saw total-system- sales growth of 10.4% in 1Q17. presentation, focused on the kid’s segment and strengthened delivery channel, with the aim to increase customer traffic. 20% Continued to emphasize Sizzler as a healthy, high quality choice with the offer of Royal Project and organic 15% ingredients on salad bar and innovative products. 10% Grew the network of outlets with focus on universities and hospitals, and expanded sales channel to delivery services by partnering with independent delivery operators. 5% Launched innovative, limited-time-offer products such as 0% Thai spiced chicken with sticky rice and chicken cheese pop, which helped increase number of trials and frequency. -5% 1Q16 2Q16 3Q16 4Q16 1Q17 Drove expansion, especially in shopping malls and hypermarket locations in both Bangkok and key cities in Same-Store-Sales Growth Total-System-Sales Growth upcountry. Minor Food 28
CHINA HUB 1Q17 RESTAURANT REVENUE CONTRIBUTION China hub maintained strong growth momentum and reported positive same-store-sales growth for the fifth 13% consecutive quarter. MINT is confident in the strong growth prospect of the country, supported by growing China middle class and increased urbanization trend. With its focus on increasing the scale, while instilling productivity and efficiency in the everyday operations of all brands, MINT expects its China hub to yield a meaningful contribution in the future. CHINA’S SSS & TSS GROWTH DRIVING GROWTH AND PRODUCTIVITY Same-store-sales of China operations continued to improve in 1Q17, primarily from the strong operational performance of Riverside reported strong same-store-sales growth in both the north (Beijing) and south (Shanghai) of China. Riverside brand. China hub will continue to expand its outlets across the three 1Q17 total-system-sales growth remained strong at 16.6%, from the expansion of all three brands (Riverside, Sizzler and Thai brands – Riverside, Sizzler and Thai Express. Express). Inmanner, order to support the continued outlet expansion in a scalable China hub remains focused on building exceptional operational excellence, including the supply chain management. 25% The plan to increase Minor Food’s stake in Riverside based on the original agreement with the Founders, in order to capture 20% the strong growth prospect of the brand, remains intact. 15% 10% 5% 0% 1Q16 2Q16 3Q16 4Q16 1Q17 Same-Store-Sales Growth Total-System-Sales Growth Minor Food 29
AUSTRALIA HUB 1Q17 RESTAURANT REVENUE CONTRIBUTION Australia hub’s revenue contributed 13% of total restaurant business in 1Q17. Australia hub has provided Minor Food with stable financial performance despite the temporary impact from the slowdown of the domestic economy, as majority of revenue was franchise income. Apart from franchise business, stronger 13% performance of Veneziano coffee roasting business also helped drive profitability of Australia hub in 1Q17. Australia AUSTRALIA’S SSS & TSS GROWTH STABLE PERFORMANCE WITH BRIGHTER OUTLOOK Same-store-sales of Australia hub remained flat in 1Q17, as Although The Coffee Club in Australia has been impacted by the Queensland continued to experience the prolonged slowdown of domestic economic slowdown, the operation in other markets the mining industry. including New Zealand, the Middle East and Thailand reported strong performance in 1Q17. Consequently, total-system-sales grew by 1.8%, as Australia hub remains cautious in expanding its outlets in the midst of challenging economic environment. Veneziano Group performed well with roasting volume 3.5% over budget in 1Q17. 10.0% Australia hub will remain cautious in outlet expansion with focus on product improvement and store renovation to strengthen its performance when the economic condition turns around. 5.0% 0.0% 1Q16 2Q16 3Q16 4Q16 1Q17 -5.0% Same-Store-Sales Growth Total-System-Sales Growth Minor Food 30
SINGAPORE HUB 1Q17 RESTAURANT REVENUE CONTRIBUTION Like many other F&B operators in the market, the Singapore hub has been impacted by the economic slowdown and increased competition. The hub is not only rationalizing its store portfolio but also strengthening its operations, including the appointment of new management, its product offerings, effective 8% Singapore customer segmentation, brand portfolio and operating platform to prepare for the economic turnaround. SINGAPORE’S SSS & TSS GROWTH STRENGTHENING OF THAI FOOD PORTFOLIO Same-store-sales growth of Singapore hub remained negative in 1Q17 amidst the challenging industry conditions. 5% Percentage Change in F&B Services Index – Restaurants (y-y) Consequently, total-system-sales growth was negative in 1Q17 as Singapore hub continued to be cautious in outlet expansion with 0% the rationalization of its portfolio. -5% 0% -10% -15% -5% -20% Source: Department of Statistics Singapore -10% The F&B industry in Singapore has been weak throughout 2016 and 2M17, as evidenced by the y-y negative change in Singapore F&B Services Index of the Restaurant Sector above. -15% 1Q16 2Q16 3Q16 4Q16 1Q17 InSingapore addition to the quality of total customer experience, the hub will focus on operational efficiency and cost control. Same-Store-Sales Growth Total-System-Sales Growth Minor Food 31
Minor Lifestyle
FINANCIAL PERFORMANCE – MINOR LIFESTYLE 1Q17 revenue of Minor Lifestyle was flat, as the revenue increase of retail trading business was offset by the soft performance of contract manufacturing business which faced pressure from sluggish performance of its key customers. Net profit declined by 37% y-y, at a higher rate than the decline in revenue, because of the ramping-up stage of the new brands and lower operating leverage of the contract manufacturing business. KEY HIGHLIGHTS THB million Flat y-y Total-system-sales • Total-system-sales growth was primarily 964 963 growth of attributable to Charles & Keith and Banana Revenue 794 836 910 Republic, together with the additional sales 5.7% from new brands. in 1Q17 Same-store-sales • Charles & Keith and Pedro were the two growth of brands in the portfolio that reported -29% y-y positive same-store-sales growth in 1Q17. 91 -8.5% 85 EBITDA in 1Q17 52 60 40 Retail trading • 1Q17 revenue from retail trading increased EBITDA by 7%, mainly from Charles & Keith, 8.8% 5.1% 6.2% 10.0% 6.2% Margin 75% together with additional sales from new of 1Q17 Minor Lifestyle brands. -37% y-y revenue 38 34 24 NPAT Contract manufacturing • 1Q17 revenue from contract 9 manufacturing declined by 17% from soft 1 Net 25% performance of its key customers. Margin 3.9% 0.1% 1.1% 3.7% 2.5% of 1Q17 Minor Lifestyle 1Q16 2Q16 3Q16 4Q16 1Q17 revenue Minor Lifestyle 33
MINOR LIFESTYLE – OPERATIONAL PERFORMANCE Retail trading business reported total-system-sales growth of 5.7% in 1Q17 from new brands launched, primarily the opening of Anello, Etam and Radley outlets. Sales per sq.m. is seeing an improving trend, signifying the higher efficiency of the business. SSS & TSS GROWTH SALES PER SQ. M. 20% THB 16.4% 35,000 30,000 10% 8.8% 6.5% 5.7% 4.2% 25,000 25,238 3.2% 23,850 24,259 20,893 20,699 20,000 0% 0.4% -0.1% -3.4% 15,000 -8.5% -10% 10,000 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 No. of No. of Shops 307 300 292 327 329 Shops 307 300 292 327 329 Same-Store-Sales Growth Total-System-Sales Growth Fashion & Home & Kitchenware Sales per Sq. m. * Note: sales per sq.m. was restated to exclude sales of contract manufacturing. Minor Lifestyle 34
Corporate Information Oaks Bodhgaya, India
CAPEX & BALANCE SHEET STRENGTH In addition to committed CAPEX, MINT also set aside additional CAPEX for future investments and new opportunities in the pipeline. Even with recent acquisitions, leverage ratio remains below the internal policy. With its solid balance sheet, MINT will be able to primarily use its internal cash flow and debt financing to fund its CAPEX requirements going forward. In addition, MINT and its senior debenture have “A+” rating by TRIS. CAPEX PLANS – COMMITTED & NEW OPPORTUNITIES LEVERAGE RATIOS THB million X X 15,000 6.0 1.4 Internal Policy 1.2 1.21x 1.09x 5.0 1.0 12,000 0.8 4.0 0.6 9,000 0.4 3.0 1Q16 2Q16 3Q16 4Q16 1Q17 Interest Bearing Debt Net Interest Bearing 6,000 to Equity Debt to Equity 2.0 BACK-UP FINANCING 3,000 1.0 Note: Cash on hand as at end of 1Q17 THB million was THB 5,113 million 100,000 - - 80,000 Shareholders’ 2016A 2017F 2018F 2019F 2020F 2021F Equity 60,000 42,159 Minor Food Minor Hotels Minor Lifestyle 40,000 Equity* Additional CAPEX (non-committed average per annum) Debt 7,687 for New Investments/Opportunities 20,000 51,007 Debt 29,087 EBITDA coverage on committed CAPEX 0 Outstanding Borrowing & Equity Un-Utilized Facility * 2016 committed CAPEX includes the final stage of Tivoli acquisition and increased shareholding in the hotel portfolio in Africa * Incremental capital increase from MINT-W5 exercise, assuming 100% MINT-W5 conversion Corporate Information 36
FIVE-YEAR ASPIRATIONS 2021F > 250 hotels > 300 residences built 1Q17 > 450 timeshare units > 3,400 restaurants 155 hotels > 500 retail shops & POS 2009 132 residences built to (> 39,000 Sqm) date 165 timeshare units 30 hotels 2,017 restaurants 1,112 restaurants 329 retail shops & POS 292 retail shops & POS (26,910 Sqm) (14,275 Sqm) 6.6bn 2021F NPAT 2016 (THB) 1.4bn 2009 Corporate Information 37
MINT’S FIVE-YEAR STRATEGY 2017-2021 Five-year strategy consists of the following three key pillars, with clear goals and measurements. 2021 NPAT growth of 15-20% CAGR ROIC of >14% Goals Drive a Portfolio of Own Expand Through Existing and Brands, With Additional Maximize Asset Value Future Strategic Investments & Contribution From Selected and Productivity Acquisitions International Brands Growth Pillars Strengthening of Hub / Cluster System Asset-light Mixed-use Model Initiatives Total-system-sales growth Revenue from overseas of of 15% 50% Measure- Improvement of margins ments Revenue growth Net profit from overseas of over 10% of 50% Corporate Information 38
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