Zen Corporation Group Public Company Limited

Opportunity Day

13th August 2020

ExperienceBeyond Food

Agenda

1. 2Q20 Overview

2. 2Q20 Financial Performance

3. Outlook

2

2Q20 Overview

Agenda 1

Update Summary

4

COVID-19 Situation Improved but Some Risks Remain

• April was low point due to shutdown for full month

• Since re-opening in May, sales have recovered faster than expected

• However, there is risk of second wave and business likely to be impacted for some time

Actions Taken During Crisis to Increase Sales Channels, Manage Expenses

• Expand to omni-channel to serve as many customers as possible

• Drive sales in Delivery, Retail and Cloud Kitchens

• Control all expenses with priority on Rent and Labor while managing cash flow

Zen Well-Positioned for Recovery with Adjusted Business Plan

• Sales continue to improve towards pre-COVID levels, profit has recovered

• Lower equity branch expansion plan for rest of 2020, look for opportunity to expand franchise branches

• Still invest in projects to improve efficiency

• Expect actions taken during crisis to result in higher profitability going forward

5

Branch Sales Recover Back to Pre-Covid Levels

WK1 WK2 WK3 WK4 WK5 WK6 WK7 WK8 WK9 WK10 WK11 WK12 WK13 WK14 WK15 WK16 WK17 WK18 WK19 WK20 WK21 WK22 WK23 WK24 WK25 WK26 WK27

On 22 Mar, Lockdown Starts

Wk2 of Mar, COVID-19 Outbreak

in BKK-CBD

On 3 Apr, Lockdown Curfew announcement,

prohibit time 4 pm - 4 am.

On 27 Mar, Emergency Decreeannouncement

On 17 May, Easing Lockdown Phase 2 announcement, Shopping Malls Re-Open with strict social

distancing

On 1 June, Unlock Phase 3

On 15 June, Unlock Phase 4

Jan Feb Mar Apr May Jun

Equity Branch Sales (THB Mn)

Zen Implement Omni-Channel Strategy During 2Q20

6

Contribute 30% sales during lockdown

Developed and Deployed During Lockdown

Sales Increase +100% YoY in 2Q20

Delivery Sales +270% YoY in 2Q20

Delivery Sales Boosted During Lockdown

7

2.8 3.1 3.4 4.2 10.5

18.3

30.3

42.5 49.1

65.5

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Zen Group Delivery Sales

THB Million

Growth 3.6x YoY

Retail Sales Jump While Consumers Stay at Home

8

Traditional Trade

- General Market

- Souvenir Shop

- Export

Modern Trade

- Gourmet Market (The Mall Group)

15 branches

Modern Trade

- Makro Wholesales 115 branches

Modern Trade

- Tesco Lotus 1500 branches

Modern Trade

- Tops Supermarket 200 branches

Modern Trade

- Big C Supercenter 800 branches

1.5 1.4 1.62.7 3.4

6.98.2

9.8 10.4

13.7

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

THB Million

Zen Group Commercial Retail Sales

Growth 2x YoY

9

Cloud Kitchens Help Expand Network Reach

69 Active Cloud Kitchens

1. 30 Musha operate by Zen

2. 14 Chicken Z operate by Thai brands

3. 16 Yummour operate by Thai brands

4. 9 Khiang operate by Thai brands

Khiang Shophouse Model High Potential

10

• Shophouse model requires low

investment of ~1.25Mn

• High sales of both dine-in and delivery

• Target 100 Khiang branches by end 2020

Cost Control and Cash Flow Management

11

• Reduce staffing levels during lower sales period, gradual resumption• Voluntary leave without pay program for remaining staff• Work from home program• Organisational re-structure

Cost Reduction

CAPEX Reduction

Manage Cash Flow

Staff

Rent

Suppliers

Others

• Negotiate with landlords on suitable rent during crisis, defer payments• Temporary close branches with low sales

• Negotiate with suppliers for reduced prices, better payment terms

• Reduced travel, staff training• Delayed marketing spend• Reduce / delay all non-critical expenses

• Reduce equity branch expansion plan• Maintain projects critical to build future efficiency, CRM, HRIS, RPA

• Conservative draw-down of working capital to maintain cash• More suitable dividend considering current situation (pending approval)

• Reduce 2020 CAPEX by 120 Mn

• Ensure strong liquidity position

• Minimise loss during period of lowest sales

• Actions taken will improve profit going forward

Restaurant Outlets as at 30 June 2020

Type of Business Brand Equity FranchiseTotal

Outlets

Japanese

Restaurant

45 - 45

25 3 28

25 2 27

Other Japanese

8 - 8

2 - 2

Thai Restaurants

Thai Traditional

25 153 178

Thai Street Food

25 35 60

Total 155 (45%) 193 (55%) 348

Branches Expansion in 2Q20Demand for Khiang Strong even During Covid-19

12

13 New Branches Opened in 2Q20

27 New Branches Opened in 1H20

2Q20 3 New Equity

• 1 On the Table, 1 Sushi Cyu, 1 Khiang

2Q20 10 New Franchise

• 3 Tummour, 7 Khiang (+ 4 Khiang

convert from equity to franchise)

2Q20 Close Underperform Stores

• 2 Zen, 7 Khiang, 3 Musha, 4 Tummour

• 1-time loss approx. 8 Mn

• Improve profit going forward

• Maintain sales by cloud kitchens

2Q20 Financial Performance

Agenda 2

Business Group Structure and Revenue Structure

14

I. Restaurant

Business

II. Franchise

Business

III. Other Food Related Business

• Retail Products

• Delivery & Catering

Business Groups Revenue Structure

* 2Q20 data

Retail, 4.0%

Restaurant, 63.5%

Delivery , 20.0%

Raw Material Sales, 5.2%

Franchise Fees, 4.0%

Other Income, 3.2%

Franchise, 9.2%

Major Changes YoY (partly due to Covid-19):

• Restaurant decrease from 87% to 64%

• Delivery increase from 2% to 20%

• Retail increase from 1% to 4%

81.177.8

73.6

69.4

60.8

48.2

COVID-19 Impacts SSSG; Consumer Confidence PlummetsZEN SSSG in 2Q20 -58%, Bottoms out in April and Improves in May, June

15

-4.4% -1.3% -10.0% -3.0% -26.5% -58.3%

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20

Consumer Confidence index

1Q19-4Q19• CCI improves prior to general election but then resumes downward trend on

political uncertainty and poor economic results e.g. export slowdown • Jan-Feb sales also impacted by air pollution in Bangkok• 2Q19 improves but impact by fire at Central World in April• 3Q-4Q consumer confidence continues to slide to lowest in 4 years

1Q20-2Q20• COVID-19 Crisis results in shutdown• CCI lowest in many years

3Q20 expect rebound

1H20 Total Revenue and Net Profit

16

1,496

982

1H19 1H20

Total Revenue

65

-125-170

-120

-70

-20

30

80

1H19 1H20

%Net margin 4.4% -12.7%

Net Profit

THB Million

THB Million

❖ Total revenue of 1H20 decreased by 34% YoY, drop by restaurant sales from COVID-19 pandemic

❖ Net Loss of THB 125Mn, dropped of 292% YoY. Net margin decreased from 4.4% to -12.7%

YoY -34%

YoY -292%

2Q20 Total Revenue and Net Profit (YoY, QoQ Comparison)

17

Net Profit

32

-44

33

-81

2019 2020

1Q19 2Q19 1Q20 2Q20

YoY -344%

%Net margin 4.4% 4.3% -6.7% -23.9%

731

644

765

339

2019 2020

1Q19 2Q19 1Q20 2Q20

YoY -56%

QoQ -47%

THB Million

❖ 2Q20, Total Revenue decreased by 56% YoY and 47% QoQ

❖ Net Loss of THB 81 Mn, Net Margin of -23.9%

THB Million

Total Revenue

59 66 55

31

125

86

1Q19 2Q19 1Q20 2Q20 1H19 1H20

Franchise Fee and Merchandise Sales

662 684 568

283

1,345

851

1Q19 2Q19 1Q20 2Q20 1H19 1H20

YoY -59%

Restaurants & Delivery Revenue

724 757 634328

1,481

961

1Q19 2Q19 1Q20 2Q20 1H19 1H20

37

1014

10

24

1Q19 2Q19 1Q20 2Q20 1H19 1H20

Commercial Retail

Business Impacted by Covid-19

18

THB Million

Revenue from Main Businesses

YoY -37%YoY -31% YoY +134%

YoY -35%

YoY -53%

YoY +99%

YoY -57%

28%

27%15%

4%

8%

6%

3%

8%

Merchandise

and Retail Sales

Franchise Fee

*1H20 data

343 364

271

127

708

398

47.4% 48.2%42.8%

38.8%47.8%

41.4%

-50%

-30%

-10%

10%

30%

50%

0

100

200

300

400

500

600

700

800

900

1Q19 2Q19 1Q20 2Q20 1H19 1H20

Gross Profit and Gross Profit Margin

19

Gross Profit

• Gross Profit of 2Q20 decreased by 65% YoY, and Margin dropped from 48.2% to 38.8%

• The major cause of the % increase was the decrease in sales from the restaurant business while delivery sales

increased which led to higher packaging costs, including promotion discounts to stimulate consumption

Food Cost, 67%

Staff and Benefit, 17%

Rent and Utilities, 5%

Depreciation, 11%

Cost of Sales & Service Breakdown

YoY -65%

* 2Q20 data

YoY -44%

313 333 328

234

646

562

43.2% 43.5%51.7%

69.1%

43.2%57.2%

-200%

-150%

-100%

-50%

0%

50%

100

200

300

400

500

600

700

800

1Q19 2Q19 1Q20 2Q20 1H19 1H20

SG&A Expenses

20

Staff & Benefit, 42%

Rent and Utilities, 12%

Depreciation, 22%

Marketing, 3%

Delivery Fees, 5%

Others, 16%

SG&A Expenses BreakdownSG&A Expense

* Based on 2Q20 data

• 2Q20 SG&A Expense decreased 30% YoY from cost savings measures especially in staff and rental

• % Expenses to total revenue increased to 69% due to the falling restaurant sales as a result of COVID-19

YoY -13%

YoY -30%

Major Changes YoY:

• Staff & Benefit from 69% to 42%

• Rental and Utilities from 39% to12%

Financial Ratios Liquidity Ratios dropped after adoption of New Accounting Policy

21

1.24

0.7

Dec 2019 Jun 2020

610

1,5111,4341,279

0.431.18

-12.00-11.50-11.00-10.50-10.00-9.50-9.00-8.50-8.00-7.50-7.00-6.50-6.00-5.50-5.00-4.50-4.00-3.50-3.00-2.50-2.00-1.50-1.00-0.500.000.501.001.502.002.503.003.504.004.505.00

0

500

1,000

1,500

2,000

2,500

Dec 2019 Jun 2020

Liabilities Equity D/E Ratio

Current Ratio Debt to Equity

Liabilities

Increase due

to TFRS 16

Current ratio = 1.1 if

exclude TFRS Impact

Outlook

Agenda 3

Positive Outlook for Remainder 2020

23

Outlook

• COVID-19 will continue to be a risk

• However, actions taken during 1H20 have successfully

resulted in return to profit in June

• Net profit break-even point has been lowered

• Should result in better net margin going forward

2H20 Key Targets

• Open 2-3 new equity stores

• 40 new franchise branches

• Khiang to have 100 branches by end 2020

• Continued focus on delivery, retail, cloud kitchens

Jan Feb Mar Apr May Jun

Q1 -44Mn Q2 -81Mn

Jan-Jun 2020 Net Profit Trend