Star Combo Pharma Ltd. · ASX:S66
Star Combo Pharma — Investor Presentation (July 2019)
29 slides from Star Combo Pharma's investor presentation, Jul 8, 2019
Slide 1: Acquisition of Bio-E and Capital Raising
ACQUISITION OF BIO-E AND CAPITAL RAISING INVESTOR PRESENTATION 8 JULY 2019 NOT FOR RELEASE TO U.S. WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES ASX: S66
Slide 2: Disclaimer
DISCLAIMER The information in this presentation is not a prospectus or other form of disclosure document prepared in accordance with the requirements of the Corporations Act 2001 (Cth) (Corporations Act) and will not be lodged with the Australian Securities and Investments Commission (ASIC). This pr
Slide 3: Introduction to Star Combo Core Business
INTRODUCTION TO STAR COMBO CORE BUSINESS Star Combo Pharma Limited is a Sydney based contract manufacturer of vitamins, health and beauty products with an emerging portfolio of own brands and distribution capability • Star Combo was founded in 2004 and listed on the ASX in May 2018 • TGA licensed ma
Slide 4: Bio-E Acquisition Summary
BIO-E ACQUISITION SUMMARY • Star Combo has entered into an agreement to acquire natural health, food and beverage company Bio-E for A$60.0m Bio-E FY17 FY18 FY19f – Founded and based in Melbourne, Australia Financials – Focused on developing products in-house utilising natural ingredients, usually Re
Slide 5: Board and Management
BOARD AND MANAGEMENT Blended Australian pharma experience and Chinese market knowledge. Plan to appoint an additional non-executive and independent director after transaction completion CHAIRMAN, NON-EXECUTIVE DIRECTOR FOUNDER, MANAGING DIRECTOR Richard Allely MBA, DipCM, FCPA, FAICD Star Zhang BS(B
Slide 6: Acquisition Rationale
ACQUISITION RATIONALE Star Combo and Bio-E is a merger of strong contract manufacturing experience with new product development and marketing expertise Provides the Company with immediate scale Combined New Product development team will be able to develop more innovative products at a faster rat
Slide 7: Bio-E Detail
BIO-E DETAIL 7
Slide 8: Bio-E Overview
Bio-E OVERVIEW Bio-E is an Australian owned company, established in Melbourne, to provide innovative natural and health focused products to consumers FY19f % of Sales by Category • Profitable with strong growth - FY19 EBITDA forecast to be $14.7m – EBITDA growth 800% since FY17 • Young Australian ba
Slide 9: Bio-E Distribution Model
Bio-E DISTRIBUTION MODEL Deliberate focus on working with local Australian/Chinese distributors to land product in China through legitimate channels • 90% of product is sold to Australian based wholesaler/distributors – All product sold in AUD – No FX or currency movement risk for Company – No inven
Slide 10: Bio-E Marketing Model
Bio-E MARKETING MODEL • Brand ambassadors employed by Bio-E who resonate with target Chinese youth audience – AngelaBaby in 2018-2019 (100m followers on Weibo1) – Tamia Liu (43m followers on Weibo1) • Additional focus on digital advertising and not ‘traditional offline’ • Relatively fixed expense wi
Slide 11: Bio-E Manufacturing Expansion Underway
BIO-E MANUFACTURING EXPANSION UNDERWAY Bio-E is expanding to a larger site in Bayswater, Victoria to satisfy current and future demand • The new site will be HACCP approved, increasing Bio-E’s fermented drink capacity with new tanks, produce new products like its probiotic powders and provide additi
Slide 12: TGA Licensed Manufacturing Facility
TGA LICENSED MANUFACTURING FACILITY • Star Combo TGA licensed facility located in Smithfield, Sydney • Significant capacity for future growth – currently one day shift, 6 days per week • Ability to produce Tablets, Hard Shell Capsules, Soft Gel Capsules, Powders and Granules. • Contract manufacturer
Slide 13: New Product Case Study: Sleep Diet
NEW PRODUCT CASE STUDY: SLEEP DIET Star Combo and Bio-E have already co-developed a new product called ‘Sleep Diet’ • In January 2019, Bio-E approached Star Combo with an idea for a new pill aimed at improving sleep and losing weight – Valerian Officinalis – promotes sleep, increases deep sleep – As
Slide 14: Post Transaction Group Revenue & EBITDA
POST TRANSACTION GROUP REVENUE & EBITDA Pro-Forma Group Revenue1 Pro-Forma Group EBITDA1 $68m $13.7m $10.2m $46m $25m $3.9m FY17 FY18 FY19f FY17 FY18 FY19f 2 1) Includes Bio-E and AustoYou (including Austoyou Group Pty Ltd and Koala Mall Pty Ltd) as if owned by Star Combo as at 1 July 2016 2) Pro-fo
Slide 15: Key Financial Metrics Post Transaction
KEY FINANCIAL METRICS POST TRANSACTION Market Capitalisation1,2,6 A$115.1m Pro forma Net Cash1,3,6 A$12.9m Enterprise Value (EV) A$102.2m FY19 forecast Pro-forma Group Revenue4 A$68m EV/Revenue 1.5x Pro-forma Group EBITDA4,5 A$13.7m EV/EBITDA 7.5x 1) Assumes the Share Purchase Plan of $1.0m is fully
Slide 16: FY20 Growth & Newsflow
FY20 GROWTH & NEWSFLOW New factors that will drive growth in FY20: • Fermented drinks range beginning sales in physical stores in China – recently received full China label and food registration • 7 new Bio-E products in concept stage likely to enter market – 2 imminent product launches • Impact of
Slide 17: Investment Highlights / Summary
INVESTMENT HIGHLIGHTS / SUMMARY • Highly profitable - $13.7m FY19f EBITDA for merged group • No debt • Vertically integrated – end-end control of supply chain • In-house R&D capability to develop new products quickly at low cost • State of the art manufacturing facility – TGA licensed with excess ca
Slide 18: The Offer
THE OFFER 18
Slide 19: Offer Overview
OFFER OVERVIEW Offer structure Transaction will be funded by: • an up to $51.0m capital raising comprising a $50.0m conditional placement and up to $1.0m Share Purchase Plan; and • a placement to the vendors of $18.0m Conditional placement • $50.0m conditional placement to eligible Sophisticated and
Slide 20: Pre and Post Transaction Capital Structure
PRE AND POST TRANSACTION CAPITAL STRUCTURE Issued share capital Pre transaction % Shareholding New shares Post transaction Post transaction % securities securities shareholding Board and management Star Zhang (Founder) 38,165,510 44.1% 2,727,273 40,892,783 19.5% Su Zhang 11,448,980 13.2% 181,818 11,
Slide 21: Indicative Timetable
INDICATIVE TIMETABLE Event Date/Time Trading halt Thursday 4 July 2019 Record date for Share Purchase Plan 7.00pm AEST, Friday 5 July 2019 Announcement of acquisition and capital raising Monday 8 July 2019 Star Combo resumes trading on the ASX Share Purchase Plan opens Monday 15 July 2019 Share Purc
Slide 22: Bio-E Earnout Terms & Financials
Bio-E EARNOUT TERMS & FINANCIALS • Bio-E is entitled to earnouts on FY20 and FY21 performance • FY20 Earnout amount is calculated as (Bio-E FY20 EBITDA less $15m) x 5.5 • FY21 Earnout amount is calculated as ((Bio-E FY21 EBITDA less (the greater of Bio-E FY20 EBITDA or $15m)) x 5.5 • Earnout amounts
Slide 23: Risks
RISKS Risk Description General market and share General economic factors such as interest rates, exchange rates, inflation, business and consumer confidence and general market factors may have an adverse price risks impact on the Company's performance, prospects or value of its assets. The market pr
Slide 24: Risks
RISKS Risk Description Trade restrictions and Trade sanctions or changes to existing trade policies may impact Star Combo’s export market or future sales. offshore operations Regulatory risk Star Combo’s business is subject to a high degree of regulation by the TGA and certain products are registere
Slide 25: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS This document does not constitute an offer of New Shares of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Austral
Slide 26: Appendix
APPENDIX a eT — Z | as \ toe ee 26 “anQ/atr a AZ a
Slide 27: Star Combo Legal Structure
STAR COMBO LEGAL STRUCTURE There are currently five companies in the Star Combo Pharma Limited group. Bio-E will become a 100% owned subsidiary • Star Combo Pharma Limited is the ultimate holding company • Chongqing Lingkang Business Co. Ltd is the China sales and and is listed on ASX. marketing off
Slide 28: Star Combo Transformed Since IPO
STAR COMBO TRANSFORMED SINCE IPO Star Combo manufacturing and brands • New branded products scheduled for release in Australia and China • Living Healthy’s Little Koala range launched in February 2019 • Powder line commencing Q4 FY20 Bio-E manufacturing and brands Expected completion around 12 Augus
Slide 29: Contact
Investor Relations Peter Taylor peter@nwrcommunications.com.au +61 412 036 231 CONTACT 29
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