BANGLADESH LIMITED
INVESTOR PRESENTATION
March 2019 Today’s Presenters
Gavin Walker MHM Fairoz Chairman Chief Executive Officer Singer Bangladesh Limited Singer Bangladesh Limited
President & CEO Singer Asia Limited
2 Company Profile
Industry Retail and consumer finance Household consumer durables
Revenue1 US$ 164m / BDT 13,7bn Shareholder structure2 1 EBITDA US$ 20.0m / BDT 1,7bn (Listed on DSE since 1983 & CSE since 2001) EBITDA margin1 12.4%
Net income1 US$ 11.0m / BDT 921m
Number of retail stores2 385 2 Number of employees 1,507 3 Number of shareholders2 9,273
Note: 1. For 12 months ended 31 Dec 2018 2. As at 31 Dec 2018 3. Held via Retail Holdings Bhold B.V. Details of the group structure are provided in Appendix 1 3 Key Growth Drivers
4 Key Growth Driver 1 - Robust economic fundamentals Great environment for long-term growth
Note: 1. Middle & affluent class 2. World Bank 3. Product penetration rates amongst Bangladesh households remains very low in certain product categories (for example; air conditioners 3%, washing machines 2%, personal computers 5%, refrigerators 20%) – company estimates 5 Key Growth Driver 2 - Strong brand and reputation is one of the most recognised brands in Bangladesh
Notes: 1. Company history is set-out in Appendix 2 2. Awarded - No 1 Refrigerator Brand in Bangladesh by Bangladesh Brand Forum/ AC Nielson 3. Awarded super brand status in consumer durable industry 6 Key Growth Driver 2 - Strong brand and reputation is one of the most recognised brands in Bangladesh
Notes: 1. Awarded annually by ICSB 2. Emerging Credit Rating Agency 7 Key Growth Driver 3 – Extensive product portfolio A leading position in multiple product categories
Home appliances 68%1 Consumer electronics 25%1
Refrigerators & Washing Air Televisions Laptops freezers machines conditioners
Furniture 2%1 Sewing machines 4%1 Others 1%1
Sitting Bedroom Dining Zig-Zag Straight Instant power Voltage room sets sets room sets model stitch model supply stabilizer
House brands – 90%1 Third-party (including) - 10%1 Own
TRUSTED INTERNATIONAL BRAND
Note: 8 1. Based on sale of goods for 12 months ended 31 December 2018 Key Growth Driver 3 – Extensive product portfolio
Margin growth through local manufacturing / Significant capacity increases planned
Notes: 1. Current maximum capacity assuming a double shift 2. Of products sold during the 12 months ended 31 December 2018, 50% were manufactured or assembled in house to save duties and transport costs. This is likely to exceed 60% in 2019 9 3. Technical partners for factory and materials Key Growth Driver 4 - Extensive distribution Largest retail distribution network in Bangladesh
Note: 1. As at 31 December 2018 10 Key Growth Driver 4 - Extensive distribution Multiple store formats – Focus on increasing store sizes
Total: 24 stores1 Larger flagship store format (ave. store size 291 sqm1) Total: 361 stores1 Products Wider premium range of HCDs and furniture Main retail format (ave. store size 159 sqm1) Products HCDs, house brands , third-party brands and furniture
Total: 721 stores1
Wholesale dealers (ave. store size 100sqm1) Products House brand HCDs
Notes: 1. As at 31 December 2018 2. The retail stores comprise 80%, whilst the wholesale dealers 20% of total revenue (for 12 months ended 31 December 2018) 11 Key Growth Driver 5 - Multiple financial services offerings Drives significant footfall to stores Consumer credit products1 Financial services (over 66,500 transactions per month2)
Hire purchase Consumer protection plans
• 66% of retail sales2
Utilities payments (Bill Pay) • 136,421 accounts3
Initial Monthly Payment Payments • Over 100 years experience Remittances (Western Union)
• Unique Singer processes1
Mobile phone re-loads (Grameen Phone) • Low credit default rates1
• 94%+ of receivables in advance1 Mobile Money (Bkash)
Note: 1. Details of credit granting, monitoring and collection processes are provided in Appendix 3, with details of receivables performance in Appendix 4 2. For the 12 months ended 31 December 2018 3. As at 31 December 2018 12 Financials - Revenue growth
Revenue (BDT Billion / US$ Million)1
BDT Billion USD million 18 180
15 150 % = 16 S$ / U 12 19% 120 T = BD AGR E C ENU 9 REV 90 EAR 14 Y
6 60
3 30
0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenue BDT billion Revenue USD million
Note: 1. Revenue for 12 months ended 31 December 2018 2. General election instability impacted 2009 and 2013, whilst 2015 was affected by civil unrest 13 Financials – Revenue analysis
2018 Revenue %
Retail - Singer Interest earned Mega and other 9% Interest & other Retail credit - 2% Wholesale long term Wholesale 2% 19% 10% 19%
Retail Cash 27% Retail - Singer Retail credit - Plus short term 70% 42%
Notes: 1. For 12 months ended 31 December 2018 14 Financials - Profitability ratios
Gross profit and total overheads
Gross profit Operating expenses 4,500 36% 4,500 36% 4,000 28.5% 32% 4,000 32% 28.8% 28.2% 26.7% 3,500 28% 3,500 28% 3,000 24% 3,000 24% 18.6% 18.4% 17.7% 2,500 20% 2,500 16.6% 20% 2,000 16% 2,000 16% 1,500 12% 1,500 12% 1,000 8% 1,000 8% 500 4% 500 4% - 0% - 0% 2015 2016 2017 2018 2015 2016 2017 2018 Operating expenses BDT million % of revenue Gross Profit BDT million % of revenue
Notes: 1. For 12 months ended 31 December 2018 15 Financials – Focus on cost control
Components of total operating expenses as a % of revenue
20.0% 18.6% 18.4% 17.7% 18.0% 16.6% 16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0% 2015 2016 2017 2018 Employee benefits 5.8% 5.8% 5.4% 5.0% Advertising & promotion 3.6% 5.1% 5.0% 4.7% Rent and occupancy 2.9% 2.5% 2.4% 2.3% Royalty 1.5% 1.1% 1.1% 1.3% Depreciation & amortization 0.8% 0.6% 0.6% 0.5% 2 Others 4.0% 3.3% 3.3% 2.7%
Notes: 1. For 12 months ended 31 December 2018 2. Others comprises items such as product guarantee costs, travel and vehicle costs, bad debts and other sundry expenses 16 Financials - Profitability ratios
EBITDA and net profit
EBITDA Net profit 1,800 18% 1,500 15%
1,500 15% 1,200 12% 12.4%
1,200 12% 10.8% 9.9% 900 9% 11.6% 6.8% 900 9%
600 6% 6.9% 600 6% 5.5% 6.2%
300 3% 300 3%
- 0% - 0% 2015 2016 2017 2018 2015 2016 2017 2018
EBITDA BDT million EBITDA margin % Net profit BDT million Net profit margin %
Notes: 1. For 12 months ended 31 December 2018 17 Financials - Summary
BDT in million (unless otherwise indicated) 2018 2017 2016 2015 2014 2013
Income statement Revenue 13,701 11,059 9,007 6,911 7,262 6,605 Revenue growth (%) 23.9% 22.8% 30.3% 9.9% -1.5% EBITDA1 1,674 1,256 944 663 637 636 EBITDA growth (%) 33.3% 33.1% 42.4% 0.2% -21.0%
Net profit 921 746 546 369 362 382
Net profit margin (%) 6.7% 6.7% 6.1% 5.3% 5.0% 5.8%
Net profit growth (%) 23.5% 36.6% 48.0% -5.2% -22.1%
Balance sheet as at end December Inventories 3,897 2,968 2,160 1,127 1,522 1,254 Trade receivable 2,225 1,856 1,538 1,042 881 946 Trade payable 1,646 1,508 1,158 804 735 719 Net working capital 4,476 3,316 2,540 1,365 1,668 1,481 Cash and cash equivalent 195 203 152 104 153 168 Total interest bearing borrowings 2,775 1,587 1,131 19 218 26 Shareholder's equity 2,299 2,160 1,947 1,417 1,527 2,633 Debt to equity ratio (times) 1.2 0.7 0.6 0.0 0.14 0.01
Notes: 1. EBITDA calculated as net operating profit plus depreciation and amortization 2. Information for the 12 months ended / or as at 31 December 2018 18 Appendices
19 Appendix 1 – Group structure
UCL Asia Retail Gavin Walker Partners LLP Holdings NV (Sewko CEO)
41.1% 54.1% 4.8%
100%
57.0%1
Singer Bangladesh Limited
83.8%2
International Appliances Limited (IAL)
Note: 1. Singer Asia Limited shares in Singer Bangladesh Limited are held via wholly owned intermediate holding companies, with the immediate shareholder being Retail Holdings Bhold B.V. 2. Singer Bangladesh purchased the minority shareholder interests in IAL in early 2019 20 Appendix 2 – Growing and evolving during 114 years in Bangladesh
Single product / single brand – 52 years Multi-product / single brand – 48 years Multi-product / multi-brand – 13 years
1851 1905 1988 2005 2008 2012 2014 . Isaac Merritt . Singer . Singer . Singer . Singer launches . Singer . Singer Singer founds commences commences introduces an new financial commences commences I.M. Singer & operations in television improved credit services air conditioner furniture Company Bangladesh assembly in system and products, assembling in manufacturing (“Singer”) and Bangladesh commences including inward Bangladesh in Bangladesh commences expansion of its remittance, in- production of distribution store bill payment sewing network and mobile machines in the phone reload . Introduces third United States services party brands
1856 1957 2004 2007 2010 2013 2016 . First Singer . Singer . Singer . Singer . Singer . Singer introduces . Singer forms implements becomes commences introduces sale of home Singer Asia to hold Mega store new distributor for refrigerator installment appliances to Asia interests opens in additional third- manufacturing in payment plan complement Bangladesh Information . UCL Asia acquires party brands Bangladesh sewing machine systems (SIS) stake of Singer sales in the Asian Asia markets
21 Appendix 3 - Proven credit approval, monitoring & collections process
Unique features of Singer credit model:
1. Branch managers are commission only 4. Advance payments by customers 2. Branch manager responsible for uncollectible accounts 5. Branch manager can pay on behalf of customer 3. Collection bonus system 6. Security deposit
Credit Life Cycle: a systematic step-by-step approach to managing the credit process
Approval process Monitoring Collections
Credit Application, Customer Blacklist Photo and Two Guarantors Point Scoring Identification Card
Credit Department / Execute Credit Multiple Payment Account Checker / Background Checks Call Center Arrears Agreement and Points Internal Audit And Physical Visits Follow up Welcome Call
Monthly Performance Legal Recourse / Promise-To-Pay Assessment: Delinquency Letter Repossession Security Deposit System Credit Dashboards Offset Balanced Scorecards VIP Clubs
Security deposit as at 31 December 2018 totals BDT 235m 22 Appendix 4 – Low credit default rates
Significant improvements in arrears % and gross receivables materially increased1 Installment payments in advance1
5.9%
94.1%
% of customers who have made installment payments in advance
Increasing number of accounts and paying percentage1 Amounts in advance exceed arrears1
BDT Millions
Net 682 advances = BDT 638M
44
Amounts in arrears
Amounts in advance Note: 1. As at 31 December 2018 23 Thank you