P j t A hi lProject ArchipelagoBusiness Plan

1

Table of Contents

1. Where to Compete?

2 The Opportunity2. The Opportunity

3. Adapta Strategy

4. Route to Market

5. Medical Marketing

6. Medical Insurance / ‘Free Services’

7. Financials

Appendices

2

1 Wh t C t ?1. Where to Compete?

33

The Market IMF Market - VolumeExtrapolation

Market growth IFFO& GUM, 2005- 2009*Volume (‘000 Tonnage):120

CAGR:5.2%

Value (Bio US $): 1.128 in 2009

Extrapolation

CAGR:15 7%

61.72

84.44

5.2%

8.2%

84.44

61.72

415 16

781.86

15.7%

17.1%415 16

781.86

GUM

12.05 13.63

20.12 21.551.7%

3.1 % 85.40140.13

129.92

206.41

415.16

GUM

FOF

IF

12.3%

13.2%

415.16

FOF

IF

Vol Cont%2005 2009 Q1-2010

2005 2009 2005 2009

Value Cont %2005 2009 Q1-2010

GUM :66% -> 71% -> 75%

FO : 21% 18% 15%

IF :13% 11% 10%

GUM: 66% => 70%=> 66%

FO : 20% => 18% =>19%

IF :14% => 12% =>15%

4

Note: S4 = 15% of IMF-market Volume

Source: Nielsen Retail Audit (Indonesia Urban Grocery),Extrapolation HP :0,75 MP : 0.65 LP:0.55

The Competition SGM Very dominant in IF/FOFp yIF

Volume (Kg) Value (Mill Rp)

07 08 09 07 08 09

SGM 43% 45% 48% 28% 31% 33%

L t 20% 17% 16% 16% 15% 14%Lactogen 20% 17% 16% 16% 15% 14%

Bendera 7% 8% 7% 5% 6% 5%

Bebelac 4% 5% 6% 6% 6% 7%

Nutrilon 5% 5% 5% 9% 10% 10%

Volume (Kg) Value (Mill Rp)FOF

Volume (Kg) Value (Mill Rp)

07 08 09 07 08 09

SGM 41% 42% 46% 29% 31% 33%

Lactogen 26% 24% 20% 23% 23% 19%

Bendera 7% 8% 8% 6% 7% 7%

Bebelac 4% 4% 5% 5% 5% 6%

Chil-mil 7% 6% 5% 12% 11% 9%

GUMVolume (Kg) Value (Mill Rp)

07 08 09 07 08 09

Dancow 33% 33% 32% 26% 27% 26%

Bendera 19% 20% 20% 14% 15% 15%

SGM 18% 19% 19% 12% 13% 13%

Bebelac 4% 4% 5% 5% 5% 6%

Nutrilon 3% 3% 3% 5% 5% 6%

• Dancow dominates GUM => market leader for IMF• SGM dominates IMF with a rather flat (‘Precision Nutrition’) yet low cost image

5

Nutrilon 3% 3% 3% 5% 5% 6%

The Market Pregnancy market data

8%

Pregnancy market dataMarketShares Distribution of Packaging Sizes

900

509

590

108

257

440 By Volume

Avg. price

63%

27%

2%8%

71,9

145,

5

134,

5

105,

150,

2

63,4g p

(IDR/kg)

50.8

% 56.1

%

60.0%

63%

150-200 gr360-400 gr600 gr (only Prenagen)Other

6.3%

5

% %300%

40.0%

50.0%

24%

2%6%

%

19.4

%

%

26

%%

20.8

%

%

20.3

%

%

10.0%

20.0%

30.0%By Value

68%

150-200 gr360-400gr

1.2%

1.6%

0.1%

0.6% 1.6%

0.0%

0.0%

Sun

Anm

um

Nut

rima

Lact

amil

enag

en

Giz

ikita

360-400 gr600 gr (only Prenagen)Other

A N La Pe

Volume Value

The Consumer Consumer Needs Segments* & SECLow Anxiety

A milk that has A milk that has A milk that ensuresA milk that ensures

Chatty Exploring MomsBebelac

complete complete ingredients ingredients allowing me allowing me

and my child to and my child to enjoy and have enjoy and have

funfunAn economical milk An economical milk

A milk that ensures A milk that ensures physical growth physical growth

and convenient to and convenient to both child and both child and

mommomBendera

SGMRole

FulfillmentGoal

Orientationthat popular, used that popular, used

in the past and in the past and easily availableeasily available

A milk that A milk that provides all theprovides all the

A superior A superior product that product that

guarantees a smartguarantees a smart

A milk that is premium A milk that is premium and provides the best and provides the best

for the childfor the child

Strivers strugglers

Moms of th

Dancow

SGM

SEC-spread

Definition 2008q1

A1 3501 &OVER 4%

provides all the provides all the elements to elements to nourish and nourish and

protect the childprotect the child

guarantees a smart guarantees a smart child, allows the mom to child, allows the mom to

exercise control over exercise control over her babies futureher babies future

strugglers 18%

the year

HighC lt l A1 3501 &OVER 4%

A2 2501 - 3500 7%

B 1751 - 2500 15%

C1 1251 - 1750 23%High

High Pressure Worrier

Cultural Progressives

27%A-B SECCD SEC

C2 901 - 1250 22%

D 601 - 900 18%

E 600 & BELOW 11%

Anxiety* Developed internally based on several (competitive) studies

To keep in mind: Adapta-target: SEC C1, C2 & D + Striver Strugglers + Culturally Progressives

2. THE OPPORTUNITY2. THE OPPORTUNITY

8

The Opportunity – Distribution/Accessibility DroppingContribution of traditional trade dropping sharply due to distribution falling

Huge opportunity to improve accessibility, especially for lower SECInstant Flavor is showing the opposite distribution trend: consumer switch away from IMFLack of affordable SKU (in Rp 2500-range) both for consumer, as well as traditional trade (running on cash)

61151515

14

16

Trend Numeric Distribution IMF Channel Contribution to IMF-sales (vol)

41

50 5257

61

3430 31 28 262420 17 15 13

Key Account

Independent MT

Provision

12

10 109

12

10 109

12

10 109

12

9

78

76

8

10

12

14

Total Infant Formula LowPriceStarter Low Price 13

2005 2006 2007 2008 20090

2

4

2005 2006 2007 2008 2009

Starter Low Price

Follow On Low Price

GUM Low Price

Trend Numeric Distribution Instant Flavour54.0

51.0

44.046.0

49.0

43.0

39.0

34.036.0

38.0

34.032.0

26 0

31.033.0

Children

Dancow

9

26.0

12.010.0

7.0 6.04.0

03.0

5.08.0 8.0

1.0 1.0 1.0 2.0 2.02.0 2.0 2.0 2.0 1.0

2005 2006 2007 2008 2009

Milo

Bendera

Ideal

Boneeto

Indomilk

The Opportunity 360 degree protection

Very high consumer interest (qualitative):

“We all know that a healthy child starts with a healthy mom. From my pregnancy all the way up to his golden age, I want to feel secure & choose the right nutrition to make sure we are both betterto his golden age, I want to feel secure & choose the right nutrition to make sure we are both better protected & as healthy as possible.

To provide this protection, we introduce Adapta, a range of highly nutritious milk formulas for you & your child’s health.

Adapta contains mineral – proteins - AHA/DHA, is enriched with Nutradefense, and is proven for 75 years in Europe & now tailor-fitted for Indonesian children.

Nutradefense contains GOS for optimal absorption of essential nutrients to boost better body immunity and protection.

Protection for Adapta however goes beyond plain nutrition.- We offer free & unbiased advice on nutrition & health care from trustable experts in your local

community to help you protect your baby and yourself (Ibu Adapta). - Adapta also offers special medical insurance (was also tested as free medical services) that

builds up with each purchase of its products helping to protect & take care of you & your baby’s healthbuilds up with each purchase of its products, helping to protect & take care of you & your baby s health care.

Adapta, nutritious & complete protection for healthy baby and moms.Core interests: - Absorption/Nutradefense - Single Sachet

- International/EU-brand/75 years - Price-level- Free medical service/cost-saving - From/in the community

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Opportunity : “Free” Medical Services pp y

-Common concerns of pregnant mom (3% of total hhds) and assistance in medical will b BIG t it ith HIGH tt ti t if l t d i th ibe a BIG opportunity with HIGH attraction to consumers, if only to reducing their OoP-expenditure. Nutrition for her and her baby- Approach on Consumer-level:pp

* Ibu Adapta & Free Medical-services for Adapta-customers* Pregnant mom: Get proper consultation of what nutrition (includes vitamin) needed

* Have proper check for pregnant mom (blood pressure, glucose level) to ensurefitness fornormal delivery + for kid: (check baby’s heart beat, USG’s, etc.

* For the kids: Free (simple) medicine for fever/diarrhea/dengue/etc.* For the family: vouchers for in-patient/Puskasmas-consultation with every 3KG-purchase

The Opportunity New Route to Marketpp y

Basically all competitors are heavily inclined to a * “fi d” t t t* “fixed” cost structure

- Advertising to pull consumers- (often) Paid listing fees to have product available- Heavy & pay-rolled medical marketing-teams & related expenses- Sales force to run around- etc.* and ‘fixed’ nation-wide relationships- Retail partnersp- Distribution partners

Disruptive Adapta-RtM tries to: - Increase availibilityAvoid traditional channel approaches- Avoid traditional channel approaches

- Incl. head-2-head & related cost- Use & tap into the social structures- Combined with a close to heart concept

Directly resonating with consumers’ core concerns- Directly resonating with consumers core concerns

12

3. ADAPTA STRATEGY3. ADAPTA STRATEGY

13

Overall Adapta Strategy Core Elementsp gy

Become an Affordable, Accessible, Social & Sympathetic infant milk LOVE brandAdapta The local hero, cater the need of less well-off

Through tackling consumers early on already in Pregnancy-stage

With a strongly competitive formula & rangeWith a strongly competitive formula & range

At a competitive price-level

By means of a new, disruptive Route to Market

Tapping into the social structures & relationships (in/from/by the local community)

With a strong 360o Protection-concept

That is directly addressing core consumer concerns (anxiety & OoP-expenditure)That is directly addressing core consumer concerns (anxiety & OoP expenditure)

14

Overall Adapta Strategy (I)p gy ( )Affordable: - Competitive price, low cash-outlay & single sachet

- Helping to reduce OoP-expense

Accessible: - Within 5km2 & in your local Warung- Brought to you by your I. Adapta- Accessible from a physical & social (community) point of view (RT/RW)

Social: - Going beyond selling formulas - Wife of RT/RW-head- In your local community with local events

Sympathetic - ‘Free’ medical services for customers (& free info/events for all)- Free advise @ your doorstep- Helps the Indonesian who & where they really need itHelps the Indonesian who & where they really need it- Brings you good quality @ fair prices w/o the unnecessary thrills

- Positive word of mouth

The local hero, cater the need of less well-off

15

Overall Adapta Strategy (II)p gy ( )Core target: SEC C1, C2 & D

With a strong concept 360o Protection through: f lWith a strong concept 360o Protection through: - formulas- ‘free’ mdeical services- free advice by a person you trust (RW/RT)

Entry via pregnancy-milk together with strong retention model:Saving system for free medical services for customers- Saving system for free medical services for customers

- LUPP for IMF & pregnancy low incidence usage (BF rather high first 6 mnths, yet supplementfeeding starts early on)

- Competitive pricing (& flavoring) LOVE-brand: sympathetic, straight forward & close to you:LOVE brand: sympathetic, straight forward & close to you:

- No fancy thrills: - No major advertising campaigns, but advice straight @ yr doorstep- Not selling you stuff you don’t need, but (i.e.) 1 single pregn/lact-formula)- Honest pricing & straight-forward portfolio

- Facilitating your cash-position (through lower sizing/pricing)Off i th j t i l t ti f i f Ad t t- Offering you more than just an economical transaction: free services for Adapta-customers

- More convenience/hygiene (multiple single sachets)- In, from & by the community / the people you know & trust (Ibu Adapta)- Winning over the hearts of the HCP-community (as we offer what Indonesia(ns) really need)

16

Overall Adapta Strategy (III)p gy ( )Disruptive RtM: - Selected & co-operative Warungs

- Delivered through selected stockpoints- Avoiding the traditional channels & cost-structures- Avoiding the traditional channels & cost-structures- Avoiding head-2-head with key-competitor/risk of being outspent- Pulling consumers in by using & playing at the local community structure

17

Pricing Strategy Adaptag gy p

Capture target as early as possible through affordability by:- Lower pricing Pregnancy (& throughout as matter of fact)

Lower cash outlay/unit price S1 (120gr + even single sachets)- Lower cash-outlay/unit-price S1 (120gr + even single sachets)

Apply (target group-related) market leader-benchmarking: - SGM (IMF) - Lactamil (Pregn.)[ D 1 (GUM)][- Dancow 1+ (GUM)]

Signal Affordability & keep pricing simple/honest/straight forward for consumers Same sizes throughout entire range (exception S3: higher volume pack)g g ( p g p )

Affordability through: - Lower cash-outlay/being cheaper- Lower unit-size: 120gr. (+ even single sachets)

Where size-wise @ par w. SGM: price-index 96 – 99 Pregnancy price-index/kg vs. Lactamil: 94 - 97 Follow Lactamil /SGM pricing logic across stages Follow Lactamil-/SGM-pricing logic across stages Largely follow Lactamil-/SGM-price decent across stages

18

Proposed Adapta PricingPROPOSED PRICING

Prices Pregnancy * Stage 1 & 2  Stage 3in Rp. 

Adapta  Per kg  Lactamil Per kg  Adapta  Per kg  SGM  Per kg  Adapta  Per kg  SGM  Per kg 4*30gr.  13.000 108.333 20.750/185gr 115.300 9.500 79.167 11.500/150 gr 76.666 9.000 75.000 10500/150 kg 70.000300 gr.  32.000 106.667 40.600/370gr 109.700 20.000 66.667 20.900/300 gr 69.666 19.000 63.333 19.400/300 gr 64.666600 gr.  39.000 65.000 39.500/600 gr 65.833 36.000 60.000 36.900/600 gr 61.500*Prenangen @ Rp. 34700 for 200gr. (173.500/kg) & RP. 64500 for 400 gr. (161.250/kg) 900 gr. 55.000 61.111 56.000/900 gr 62.222Note: Single sachets S1, S2 & S3 @ Rp. 2.500 & Single Pregn. @ Rp. 3.500

KG‐PRICE INDEX vs. SGM/Lactamil

Preg index/kg S1 & S2 Index vs SGM/kg S3 Index vs SGM/kgPreg.‐index/kg S1 & S2‐Index vs. SGM/kg S3‐Index vs. SGM/kg

vs. Lactamil 185 gr. 94 120gr 103* 300gr 98vs. Lactamil 370gr 97 300gr 96 600gr 98

600gr 99 900gr 98* Compensated by lower cash outlay (& single sachet)* Compensated by lower cash‐outlay (& single sachet)

PRICE HIKES on KG‐base

120/150 gr Pr => S1* S1 => S2 S2 => S3Adapta 73 100 95Adapta 73 100 95

SGM/Lactamil 66 100 n.a.300 gr

Adapta 63 100 95SGM/Lactamil 64 100 93

600 gr

19

Adapta n.a. 100 92SGM/Lactamil n.a. 100 93

* 120gr‐Price decline only seems to odd out vs. SGM, yet is driven by lower per KG‐price on Pregn. & higher per KG S1‐price (which is compensated by lower cash‐outlay)

4 R t T M k t4. Route To Market

2020

Route To Market Overall Framework

FactoryGoods + Invoicing Money collection

Area Manager 5% Logistic

Local Stockiest

3rd Party LogisticsArea Supervisor

Area Manager 5% Logistic

5% Cost of Sales Ratio

16% Cost of Sales Ratio

Money Collectors

R1 WarungAdapta Bikers

Ibu Adapta

Consumers

6% Cost of Sales Ratio

1 2 3 4 5

Recruitment & Acquisition of Mothers A & P Budget

21

In steady growth area where steady demand are already in place we can consider to ask our stockiest to take the product direct to our supply point , for this we will eliminate the presence of 3rd party logistic, yet we need to give extra margin for our stockiest by approx 1.5%

5 M di l M k ti5. Medical Marketing

2222

Medical Marketing - Informing HCP g

Get endorsements from ministry of health and top pediatricians and nutritionalspecialists that

• Adapta is the company that does not promote stage 1 and 2

• Adapta’s supporting government campaign in extending the use of breastAdapta s supporting government campaign in extending the use of breast feeding

• Adapta want to work with the government to resolve energy deficiency in nutrition for pregnant and lactating mothersnutrition for pregnant and lactating mothers

Inform HCP formally for our product to neutralize their stance regarding ourvalue proposition Recruitment starting at midwives level and downwardsRecruitment starting at midwives level and downwardsThrough PR department which is in charge of ‘external / non-commercial’ PRand to maintain relationship with government (2 people to start with)

Medical Marketing – Partnership HCPg p

The following are the activities that we can work together with the HCP

• Samplingp g

• Incentive program

• Seminars

• Partnering HCP for making seminar as part of their social responsibilities

• Together with local HCP to activate bus program “ Adapta Mobile Health Unit (AMHU)

6 M di l I /S i6. Medical Insurance/Services

2525

Free Medical Services-Cost effective delivery with impact (1)ee ed ca Se ces Cost e ect e de e y t pact ( )To have an immediate impact, its important to be able to deliver free basic services that address real

concerns of pregnant women and new moms;

Basic services for moms:Free consultation @ IDR7,500 voucher per2 kg product purchase (3kg for GUM @ 15kD t t h t b t f f t

Basic services for infants & Gum kidsFree consultation @ IDR7,500 voucher per2kg product purchase M di i t t di hDetect heart beat of fetus

Blood pressure checkGlucose checkVitaminReferral for USG/add 1 RB per Kabupaten

Medicine to stop diarrheaAntibiotic to treat typhoid & respiratory

infection (check if possible)Weight check and growth monitoringAssessment of nutritional insufficiency

The services can be provided from the Adapta Mobile Health Unit (AMHU) which should have 1

p pIdem for referral for Caecerian

y

health personnel (bidan/nurse) and a basic medical kit

26

7 Fi i l7. Financials

2727

3. FinancialsKey assumptions – Volume & salesKey assumptions – Volume & sales

Areas (population)

• Year 1: West Java (46m)• Year 2: Central Java & Jogjakarta (36m)• Year 3: Jakarta & Banten (20m)

Y 4 E t J & B li (40 )(population) • Year 4: East Java & Bali (40m)• Year 5: Sumatra & South Sulawesi (58m)

Consumption • Pregnancy: 3.1 kg per annum• IF: 8.2 kg per annum• FO: 13 1 kg per annumper capita • FO: 13.1 kg per annum• GUM: 9.6 kg per annum

Market share ti

• Pregnant mums conversion rate: 30%• Pregnant mums retention rate (for GUM formula in next 2 years): 60%• Non-pregnant mums switching rate for IF/FO: 10%assumptions • Non-pregnant mums switching rate for IF/FO: 10%• Non-pregnant mums switching rate for GUM: 10%, 15%, 20% (year 3 onwards)

Average selling i (ASP)

• Pregnancy ASP per kg: IDR 107,667, growing at 3.0% per annum• IF ASP per kg: IDR 72,000, growing at 3.0% per annum• FO ASP per kg: IDR 70 375 growing at 3 0% per annum

• More detail available in the Appendix

price (ASP) FO ASP per kg: IDR 70,375, growing at 3.0% per annum• GUM ASP per kg: IDR 63,639, growing at 3.0% per annum

28

3. FinancialsKey assumptions – Volume & sales (cont’d)Key assumptions – Volume & sales (cont d)

Sales (IDRm) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7West Java 35,594 111,763 170,741 213,487 227,678 238,038 241,846Central Java & Yogya 0 34,899 79,562 116,715 135,819 142,431 149,392Jakarta &Banten 0 0 40,803 84,440 124,134 142,698 152,200, , , , ,East Java & Bali 0 0 0 49,296 112,968 166,498 194,587Sumatra, Sulawesi 0 0 0 0 32,439 74,787 111,109Total (IDRm) 35,594 146,661 291,106 463,938 633,039 764,451 849,134Total (US$m) 4 16 32 52 70 85 94

Volume (T) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Volume (T) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7West Java 531 1,641 2,424 2,911 2,957 3,005 3,053Central Java & Yogya 0 496 1,112 1,579 1,768 1,773 1,779Jakarta &Banten 0 0 553 1,117 1,582 1,740 1,768East Java & Bali 0 0 0 636 1,427 2,029 2,272Sumatra, Sulawesi 0 0 0 0 399 900 1,290Total (T) 531 2,137 4,089 6,243 8,133 9,447 10,161Market share 0.5% 2.0% 3.6% 5.4% 6.8% 7.7% 8.0%

Total Market (T) 125,080 128,832 132,697 136,678 140,779 145,002 149,352Total Market less S4 (T) 106,318 109,508 112,793 116,177 119,662 123,252 126,949

• We have assumed volume spread as follows (year 1 / year 2):- West Java (40% / 60%)- Central Java & Yogyakarta (60% / 40%)- Jakarta & Banten (70% / 30%)- East Java & Bali (60% / 40%)

29

East Java & Bali (60% / 40%)- Sumatra & Sulawesi (60% / 40%)

• The market share calculation above is based on the total market size less Stage 4 (3-5 year old formula) in which we do not compete in for the first 5 years

3. FinancialsP&L – Part 1 1 2 3 4 5 6 7

In IDR billions except where stated Dec 11e Dec 12e Dec 13e Dec 14e Dec 15e Dec 16e Dec 17eIn IDR billions, except where stated Dec-11e Dec-12e Dec-13e Dec-14e Dec-15e Dec-16e Dec-17e

P&LTotal volume 531 2,137 4,089 6,243 8,133 9,447 10,161Avg. consumer price (IDR/kg) 67,064 67,821 69,149 70,891 72,898 74,876 76,969Consumer sales 36 145 283 443 593 707 782

% growth 307.2% 95.1% 56.5% 34.0% 19.3% 10.6%

R2 margin (2) (9) (17) (27) (36) (42) (47)% consumer sales 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%

Stockist margin (2) (7) (14) (22) (30) (35) (39)% consumer sales 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

3rd party distributorship margin (2) (7) (14) (22) (30) (35) (39)% consumer sales 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

Adapta Bike Costs (0) (0) (0) (0) (0) 0 0Adapta Bike Costs (0) (0) (0) (0) (0) 0 0% consumer sales 1.0% 0.2% 0.1% 0.1% 0.1% 0.0% 0.0%

VAT (3) (11) (22) (34) (45) (54) (60)Net sales 27 110 216 338 452 540 597

% growth 311.7% 95.4% 56.5% 33.9% 19.4% 10.6%

Ingredients costs (17) (71) (139) (221) (300) (360) (398)% net sales 65.2% 64.2% 64.6% 65.5% 66.3% 66.6% 66.7%

Duty / shipping / demurage (1) (5) (10) (16) (21) (25) (28)% net sales 4.6% 4.5% 4.6% 4.6% 4.7% 4.7% 4.7%

Damaged goods (0) (1) (2) (3) (5) (5) (6)% net sales 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%

Trade incentive (0) (1) (2) (3) (5) (5) (6)% net sales 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%

Total COGS (19) (78) (153) (244) (330) (396) (438)Total COGS (19) (78) (153) (244) (330) (396) (438)% net sales 71.8% 70.7% 71.1% 72.2% 73.0% 73.3% 73.4%

Gross margin 1 8 32 62 94 122 144 159% margin 28.2% 29.3% 28.9% 27.8% 27.0% 26.7% 26.6%

Depreciation (2) (2) (2) (2) (2) 0 0% net sales 7.5% 1.8% 0.9% 0.6% 0.4% 0.0% 0.0%

Gross margin 2 6 30 60 92 120 144 159

30

g% margin 20.7% 27.5% 27.9% 27.2% 26.6% 26.7% 26.6%

3. FinancialsP&L – Part 2P&L – Part 2

1 2 3 4 5 6 7In IDR billions, except where stated Dec-11e Dec-12e Dec-13e Dec-14e Dec-15e Dec-16e Dec-17e

P&LMapping costs (0) (0) (0) (0) (0) 0 0

% net sales 1.5% 0.4% 0.0% 0.1% 0.1% 0.0% 0.0%

Regular Media & PR (4) (4) (4) (4) (4) (4) (4)% net sales 14.9% 3.6% 1.9% 1.2% 0.9% 0.8% 0.7%

Media & PR launch support (8) (6) (7) (6) (6) 0 0% net sales 28.9% 5.8% 3.5% 1.9% 1.4% 0.0% 0.0%

Rental of bus / tools / professional med expenses (2) (2) (3) (3) (3) (3) (3)% net sales 9 0% 2 2% 1 2% 0 8% 0 6% 0 5% 0 5%% net sales 9.0% 2.2% 1.2% 0.8% 0.6% 0.5% 0.5%

Events costs (2) (2) (2) (2) (2) (2) (2)% net sales 6.7% 1.7% 0.9% 0.6% 0.4% 0.4% 0.4%

Purchase rewards (1) (4) (8) (12) (15) (17) (18)% net sales 3.9% 3.9% 3.6% 3.4% 3.3% 3.2% 3.1%

Ibu Adapta costs (0) (2) (5) (8) (10) (12) (13)% net sales 1.2% 2.0% 2.4% 2.4% 2.2% 2.2% 2.2%

S li t (0) (1) (2) (3) (3) (4) (4)Sampling costs (0) (1) (2) (3) (3) (4) (4)% net sales 0.4% 0.7% 0.8% 0.8% 0.7% 0.7% 0.7%

Total A&P expenses (18) (22) (31) (38) (44) (42) (45)% net sales 66.5% 20.4% 14.3% 11.1% 9.8% 7.8% 7.6%

Gross margin 3 (12) 8 30 54 76 102 114% margin (45.8%) 7.1% 13.7% 16.1% 16.8% 18.9% 19.1%

31

3. FinancialsP&L – Part 3P&L – Part 3

1 2 3 4 5 6 7In IDR billions, except where stated Dec-11e Dec-12e Dec-13e Dec-14e Dec-15e Dec-16e Dec-17e

P&LSenior management (2) (2) (2) (2) (2) (2) (2)

% of net sales 7.5% 1.9% 1.0% 0.6% 0.5% 0.4% 0.4%

Medical personnel salary / wages (1) (4) (6) (8) (10) (10) (11)% of net sales 4.6% 3.2% 2.7% 2.3% 2.2% 1.9% 1.8%

Head office salary / wages (1) (2) (3) (5) (6) (6) (7)% of net sales 3.9% 2.0% 1.5% 1.4% 1.4% 1.2% 1.1%

Finance salary / wages (1) (1) (1) (2) (2) (2) (2)% of net sales 3 7% 1 1% 0 6% 0 5% 0 4% 0 4% 0 4%% of net sales 3.7% 1.1% 0.6% 0.5% 0.4% 0.4% 0.4%

Logistic, marketing & support salary / wages (3) (3) (4) (4) (5) (5) (6)% of net sales 10.1% 2.9% 1.6% 1.3% 1.0% 1.0% 0.9%

Research 0 (2) (2) (3) (3) (4) (4)% of net sales 0.0% 1.8% 1.1% 0.9% 0.8% 0.7% 0.6%

Rental (3) (4) (4) (5) (6) (6) (6)% f t l 11 2% 3 3% 2 0% 1 5% 1 2% 1 1% 1 0%% of net sales 11.2% 3.3% 2.0% 1.5% 1.2% 1.1% 1.0%

Total SG&A expenses (11) (18) (23) (29) (34) (36) (37)% net sales 40.9% 16.2% 10.7% 8.5% 7.5% 6.6% 6.2%

EBIT (23) (10) 7 26 42 66 77% margin (86.7%) (9.1%) 3.0% 7.6% 9.3% 12.3% 12.8%

32

3. FinancialsCash FlowCash Flow

1 2 3 4 5 6 7In IDR billions, except where stated Dec-11e Dec-12e Dec-13e Dec-14e Dec-15e Dec-16e Dec-17e

Cash Flow

EBITDA (21) (8) 9 28 44 66 77EBITDA (21) (8) 9 28 44 66 77Less:Taxes 0 0 (2) (6) (11) (17) (19)

% effective rate 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%Capex (10) 0 0 0 0 0 0

% net sales 37.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%(Increase) / decrease in NWC (2) (7) (9) (10) (10) (8) (5)Total NWC 2 9 18 29 38 46 51Trade receivables 1 6 12 19 25 30 33

Days 20 20 20 20 20 20 20Inventory 4 16 32 50 68 81 90

Days 75 75 75 75 75 75 75Trade payables 3 13 25 40 54 65 72

Days 60 60 60 60 60 60 60Days 60 60 60 60 60 60 60Net cash flow (34) (15) (2) 11 24 42 53

33

3. FinancialsKey assumptions – RTM & A&PKey assumptions – RTM & A&P

Trade Margins & • “R2” margin: 6.0% of consumer sales• Stockist margin: 5.0% of consumer sales• 3rd party distributor margin: 5.0% of consumer salesVAT 3 party distributor margin: 5.0% of consumer sales• VAT: 10.0%

• Damaged goods: 1.0% of net sales• Trade incentive: 1 0% of net sales• Trade incentive: 1.0% of net sales• Ibu Adapta visits per day: 15• Ibu Adapta working days per month: 20 days• Ibu Adapta visits per household required: West Java (1 going up to 3), Central Java (1

going up to 2), Jakarta & Banten (1), East Java & Bali (1 going up to 2), Sulawesi & Sumatra (2 going up to 3)

A&P

( g g p )• Ibu Adapta monthly salary: IDR 1.5m• Adapta bikes required for first 3 months upon entry of new region at a cost IDR 2.1m per

month• Purchase reward: assumed that for retained customers, every purchase of 3kg of GUM

rewards them with a voucher of IDR 10,000 and for every purchase of 2kg of Pregnancy, IF FO d th ith h f IDR 7 500IF, FO rewards them with a voucher of IDR 7,500

• Mapping costs (years 1-4): IDR400m, IDR400m, IDR100m, IDR200m, IDR400m• Media and PR launch costs (years 1-5): IDR 8bn, IDR 6bn, IDR 7bn, IDR 6bn, IDR 6bn• Regular media costs: IDR 4bn per annum• Bus rental / professional medical expenditure per month: IDR 200m (growing at 3.0% per

annum)

34

annum) • Events costs: 75% of bus rental / professional medical expenditure • Sampling costs: 1 sachet (cost of c.IDR1,600) provided to each family Ibu Adapta visits

3. FinancialsKey assumptions – COGS SG&A and otherKey assumptions – COGS, SG&A and other

Ingredients & P k i

• Pregnancy: IDR 26,919 per kg• IF: IDR 24,895 per kg• FO: IDR 26,843 per kg

GUM IDR 27 784 kPackaging COGS

• GUM: IDR 27,784 per kg• All COGS growing at 3.0% per annum• Conversion from Euros into Rupiah at forecast IDR / EUR exchange rate from the

Economist Intelligence Unit (EIU)

• Assumed shipping from Europe to Indonesia in 24T containers

Other COGS

Assumed shipping from Europe to Indonesia in 24T containers• Shipping cost per container: US$1,600• Demurage cost per container: US$175• Import duty: 5%• Shipping and demurage costs growth at 3.0% per annum• Conversion from US Dollars into Rupiah at forecast IDR / USD exchange rate from the g

Economist Intelligence Unit (EIU)

• Senior management cost: IDR2bn per annum, growing at 3.0% per annum• Medical personnel salary / wages (years 1-5): IDR1bn, IDR4bn, IDR6bn, IDR8bn,

IDR10bn growing at 10 0% per annum

Personnel Costs

IDR10bn, growing at 10.0% per annum• Central office salary / wages (years 1-5): IDR1bn, IDR2bn, IDR3bn, IDR5bn, IDR6bn,

growing at 10.0% per annum• Finance team salary / wages (years 1-5): IDR1.0bn, IDR1.2bn, IDR1.4bn, IDR1.7bn,

IDR2.0bn, growing at 10.0% per annum

35

• Logistics, marketing & support team salary / wages (years 1-5): IDR2.7bn, IDR3.2bn, IDR3.5bn, IDR4.3bn, IDR4.7bn, growing at 10.0% per annum

3. FinancialsKey assumptions – COGS SG&A and other (cont’d)Key assumptions – COGS, SG&A and other (cont d)

Other SG&A

• Research costs (years 1-5): IDR0bn, IDR2.0bn, IDR2.4bn, IDR2.9bn, IDR3.5bn, then growing at 3.0% per annum

• Rental costs (years 1 5): IDR3bn IDR4bn IDR5bn IDR6bn IDR7bn then growing at• Rental costs (years 1-5): IDR3bn, IDR4bn, IDR5bn, IDR6bn, IDR7bn, then growing at 3.0% per annum

• IT system capex: IDR5bn in year 1, depreciated over five years (straight-line)

Cash Flow

• Other launch capex: IDR5bn in year 1, depreciated over five years (straight-line)

• Tax rate of 25.0%

• Trade receivable days: 20

• Inventory days: 75

• Trade payable days: 60

36

3. FinancialsKey SensitivitiesKey Sensitivities

2015 EBIT (IDRbn) 2015 EBIT (IDRbn)

Volume Sensitivity Trade Margin Sensitivity

42 (20.0%) (10.0%) Base +10.0% +20.0%

(20.0%) 68 87 105 124 142

(10.0%) 43 58 74 89 105

Base 18 30 42 54 67

S Se

nsiti

vity

42 (6.0%) (3.0%) Base +3.0% +6.0%

10.0% 46 34 22 10 (2)

20.0% 60 46 32 18 4

30.0% 74 58 42 26 11

onve

rsio

n en

sitiv

ity

2015 EBIT Margin 2015 EBIT Margin

+10.0% (8) 2 11 20 29

+20.0% (33) (27) (21) (15) (9)CO

GS

40.0% 88 70 52 34 17

50.0% 101 82 62 42 23

Co Se

g g

Volume Sensitivity

0 (20.0%) (10.0%) Base +10.0% +20.0%

(20.0%) 18.8% 21.3% 23.2% 24.9% 26.2%

vity

Trade Margin Sensitivity

0 (6.0%) (3.0%) Base +3.0% +6.0%

10.0% 12.7% 9.7% 6.6% 3.2% (0.5%)

(10.0%) 11.8% 14.3% 16.3% 17.9% 19.3%

Base 4.9% 7.4% 9.3% 10.9% 12.3%

+10.0% (2.1%) 0.4% 2.4% 4.0% 5.3%

+20.0% (9.0%) (6.6%) (4.6%) (3.0%) (1.6%)CO

GS

Sens

itiv 20.0% 14.1% 11.2% 8.1% 4.8% 1.2%

30.0% 15.2% 12.4% 9.3% 6.0% 2.5%

40.0% 16.1% 13.3% 10.3% 7.0% 3.5%

50.0% 16.8% 14.0% 11.0% 7.8% 4.3%

Con

vers

ion

Sens

itivi

ty

37

3. FinancialsKey SensitivitiesKey Sensitivities

2015 EBIT (IDRbn) 2015 EBIT (IDRbn)

Price Inflation Sensitivity Retention Rate Sensitivity

42 (2.0%) (1.0%) Base +1.0% +2.0%

(2.0%) 36 51 66 82 98

(1.0%) 24 39 54 70 86

Base 12 27 42 58 74

GS

Infla

tion

ensi

tivity

42 40.0% 50.0% 60.0% 70.0% 80.0%

10.0% 21 22 22 23 24

20.0% 29 31 32 34 35

30.0% 38 40 42 44 47

onve

rsio

n en

sitiv

ity

2015 EBIT Margin 2015 EBIT Margin

+1.0% (0) 14 30 46 62

+2.0% (13) 2 17 33 49

CO

G Se 40.0% 46 49 52 55 58

50.0% 54 58 62 66 69

Co Se

g g

Price Inflation Sensitivity

0 (2.0%) (1.0%) Base +1.0% +2.0%

(2.0%) 8.5% 11.6% 14.6% 17.4% 20.2%

on

Retention Rate Sensitivity

0 40.0% 50.0% 60.0% 70.0% 80.0%

10.0% 6.3% 6.4% 6.6% 6.7% 6.8%

(1.0%) 5.7% 8.9% 12.0% 14.9% 17.8%

Base 2.8% 6.2% 9.3% 12.4% 15.3%

+1.0% (0.1%) 3.3% 6.6% 9.7% 12.7%

+2.0% (3.1%) 0.4% 3.8% 7.0% 10.1%

CO

GS

Infla

tioSe

nsiti

vity 20.0% 7.8% 8.0% 8.1% 8.3% 8.5%

30.0% 8.9% 9.1% 9.3% 9.5% 9.7%

40.0% 9.9% 10.1% 10.3% 10.4% 10.6%

50.0% 10.6% 10.8% 11.0% 11.2% 11.3%

Con

vers

ion

Sens

itivi

ty

38