BM & CBI Budget Presentation

Presence in Key Metropolitan Areas in the Philippines

VDC Trucking Affiliates2016 Business Plan and 5-year OutlookPresentation to the Finance CommitteeNovember 3, 20151

WORKING DRAFTLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard TimeDocument typeDate

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVE1

Objectives and framing questions2 BackgroundFraming QuestionsCargo Bayan and Bayan Movers are the trucking units of VDC that have been providing trucking services to Metro Retail

Metro Retail has recently decided to invest in its own in-house trucking fleet, which will significantly reduce MRSGIs reliance on the CBI & BMLI fleet.

CBI & BMLI now re-evaluating their business model and plans given this new reality1How have VDCs trucking units performed as core affiliates to our Retail business?

What is the proposed business plan and budget for 2016?

What is the growth prospect and potential for these units?

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TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVE

Agenda3 Agenda itemAction from Finance CommHIGH-LEVEL OVERVIEW: Financial Performance, Challenges, OutlookDiscussionCARGO BAYAN AND BAYAN MOVERS Budget Plan 2016DiscussionCARGO BAYAN AND BAYAN MOVERS 5-year Projection PlanDiscussion


General Profile of VDCs Trucking Affiliates (CBI and BMLI)4 Provide trucking services to MRSGI (Warehouse / Store / Port)Capital-light structure:Trucks leased from VDCDrivers provided by agencyLean back office staffBusiness Model51 trucks in total (19 CBI, 32 BMLI)36 vans and 15 prime movers80+% have been in service at least 15 yearsBMLI fleet is for VDC/private use only (white plates)Practically 90% reliant on MRSGI for incomeSome backhauling and 3rd party revenue, only as opportunity presents Starting to explore additional external clients80+% of costs are concentrated in the following items:Truck lease (VDC and subcon)Truck crew (drivers, helpers, food)Fuel expenseRepairs and MaintenanceManagement feeSalaries and wages Garage RentalCost StructureFleetRevenue

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVE2013-2015 : Revenue and EBITDA5 CAGR = 15%CARGO BAYAN(Luzon)CAGR = 53%BAYAN MOVERS(Visayas)

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVEConsolidated P & L 20156

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVECargo Bayan: 2013-15 Income Statement7

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVEBayan Movers: 2013-15 Income Statement8

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVEFor 2016, significant change is brewing9

Angeles

Market MarketAlabangLawtonPlaza 66Antipolo

LegazpiLucenaNaga

ColonMandaueAyalaParkingHollywoodMambalingGrillLapu LapuShangTG (1-6)

MaasinCalbayogBacolodIloilo

ImusCalambaBinondoAnonasMandaluyong

Cargo Bayan: Fleet Breakdownfor MRSGI 2016Dry Van (6W): 5 units5Dry Van (4W): 22Refr Van (4W): 11Prime Mover:112Total Trucks:19 trucks10 units for MRSGI

Other:32 trailers19 containers vansTotal Units in Fleet:70 unitsBayan Movers: Fleet Breakdownfor MRSGI 2016Dry Van (10W):10 units7Wing Van (6W): 22Dry Van (6W):119Refr Van (4W): 11Dry Van (4W): 4-Prime Mover: 4-Total Trucks:32 trucks19 units for MRSGI

Other:19 trailersTotal Units in Fleet:51 unitsBogoCarmenToledoNagaCarcarCargo Bayan and Bayan Movers can provide up to 50 trucks to support MRSGIs trucking requirements.However, with MRSGIs in-house trucking initiative, utilization of CBI/BMLI fleet is projected to be cut by 40-50%.

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVE9Outlook is not hopeless: With some near-term rationalizations, trucking could generate for VDC an EBITDA of 58 mn Php by 202010 Current Situation:51-truck fleet, 90% for MRSGI reqts2015 Highlights (consolidated): 151 mn revenue, 36 mn ebitdaMRSGI have expressed concerns on availability and service qualityMRSGI building own in-house fleetBy 2020:100-truck fleet, 47% for MRSGI/53% outside clients284 mn in revenue, 102 mn ebitda

But there are challenges that need to be addressed in the next 1-2 years:Usage - MRSGI in-house fleet will immediately lay-off 50% of CB/BM fleetAging fleet at least 80% of trucks already in service for 15+ years Overhead - payments to Vicsal (eqpt lease, mgmt fee, rent) ~12% of salesProcesses between MRSGI and CBI/BMLI not yet smooth/seamlessCBI/BMLI operations not in-place to pursue external clients (plates, clients)


Agenda11 Agenda itemAction from Finance CommHIGH-LEVEL OVERVIEW: Financial Performance, Challenges, OutlookDiscussionCARGO BAYAN AND BAYAN MOVERS Budget Plan 2016DiscussionCARGO BAYAN AND BAYAN MOVERS 5-year Projection PlanDiscussion

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVE2016 Key InitiativesWith the upcoming implementation of MRSGIs in-house trucking initiative, CBI & BMLIs focus for 2016 will be to stabilize operations and reboot for future growth:Rationalize the fleetRationalize and manage costsFind process and efficiency improvementsDevelop marketing strategy for external clients as main sources for revenueRationalize the fleet:Consider returning laid-off units to VDC (or buyout at an agreed price)Refurbish remaining fleet to upgrade operating condition. Acquire additional fleet for external clients

Rationalize and manage the costs:Renegotiate lease agreement and rates with VDCNegotiate for lower mgmt. fee and rentalFind opportunities for cost savings and better control

Find process and efficiency improvements:Improve trip booking, billing, and payments processCycle time reductionTruck monitoring systemTrain drivers/staff on SOPsImprove Audit System

Develop Marketing Strategy Hire excellent people on marketing to explore for external clientsOffer best trucking services beyond costumers satisfaction

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVE12Cargo Bayan: Budget Plan 201613

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVEBayan Movers: Budget Plan 201614

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVEConsolidated Budget Plan 201615


Items for Approval / Agreement16 ItemCurrentProposedLease agreement with VDC500k/mth for 32 trucks210k/mth for 17 trucksReturn 13 trucks20% reduction on lease rate for remaining fleetTrucks to be laid-off due to MRSGIs in-house initiative

13 trucks to be laid-offBMLI to buy from VDC at an agreed upon priceManagement fee to Global

3% of revenues2% of revenuesRental rate for new trucksMonthly lease rate = 2.5% of acquisition cost


Agenda17 Agenda itemAction from Finance CommHIGH-LEVEL OVERVIEW: Financial Performance, Challenges, OutlookDiscussionCARGO BAYAN AND BAYAN MOVERSBUDGET PLAN 2016DiscussionCARGO BAYAN AND BAYAN MOVERS 5-year Projection PlanDiscussion

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVERoadmap 2020: How CBI/BMLI could get back on solid footing18 2013-1520162017-182019-20Theme

Sister CompanyRationalize and StabilizeNurtureFull-Fledged TruckerTrucksCB: 19BM: 32Total: 51

CB: 21BM: 24Total: 40CB: 29BM: 32Total: 61CB: 50BM: 50Total: 100

Issues and Actions to Pursue Aging fleetTruck plates not eligible for hire

Internal processes not streamlinedMRSGI concerns on service quality

Substantial overhead costs paid to VDC

Only regular client is MRSGIFleet:Return laid-off units (or buyout at an agreed price)Refurbish operating fleet

Process Impr / People Devt:Improve trip booking, billing, and payments processCycle time reductionTruck monitoring systemTrain drivers/staff on SOPs

Cost:Renego eqpt lease packageNego mgmt. fee and rentalOpex control & savings

CustomerBuild external clients opportunistically (CB)Fleet:Follow MRSGI growthInvest for other clients reqts, as needed

Process Impr / People Devt:Integrated book-to-bill system between BM/CB, and MRSGI LogisticsTrip billing validationOptimize org structure

Cost:Optimize procurement for fuel, oil, supplies, etc

CustomerOffer services to other VDC units and 3rd parties

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVECargo Bayan: 5-year Projected Plan19

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVEBayan Movers: 5-year Projected Plan20

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVEConsolidated 5-year Projected Plan21


TOTAL CAPEX22

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVE23 END OF PRESENTATION

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVECONSOLIDATED BALANCE SHEET24

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVECONSOLIDATE CASH FLOW25

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVECargo Bayan: 2016 Budget26


Cargo Bayan: Financial and Operational HighlightsFor 2015, CBI is projected to grow sales by XXXX php and generate an EBITDA of XXX(XX%)

From 2013 to 2015, CBI has experienced diverging financial trends:Revenue has grown very quickly with a cagr of XXX% per yearHowever, EBITDA XXX in 2013 to a projected XXX % for 2015.


Bayan Movers: Financial and Operational HighlightsFor 2015, BM is projected to grow sales by 29% to 74M php and generate an EBITDA of 13M php (18%)

From 2013 to 2015, BMLI has experienced diverging financial trends:Revenue has grown very quickly with a cagr of 53% per yearHowever, EBITDA has had an opposite trend, sharply declining from a high of 48% in 2013 to a projected 18% for 2015.This was driven when all transport cost of MRSGI was coursed through BMLI before billing this to MRSGI.

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVECargo Bayan: 2016 Key Initiatives

TRACKERUnit of measureTitleUnit of measureLast Modified 2/4/2014 11:35 PM SE Asia Standard TimePrinted 11/26/2012 3:54 PM Malay Peninsula Standard Time1 FootnoteSource:SourceLegend1Legend2Legend3Legend4Legend1Legend2Legend3Legend1Legend2Legend3Legend4Legend5ILLUSTRATIVE5-year Assumptions30


BM & CBI Budget Presentation

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Transcript of BM & CBI Budget Presentation