R&B Food Supply : Management Discussion and Analysis Q.2 Ending 30 Jun 2022 (Amended)

R&B Food Supply Public Company Limited

	9 August 2022
Re	Management Discussion and Analysis for the second quarter and 6-months period of 2022
	(Amended)
Attn.	The President
	The Stock Exchange of Thailand (SET)

R&B Food Supply Public Company Limited and its subsidiaries would like to notify the operating results stated in consolidated financial statements for the second quarter and 6- months period of year 2022 with the following details:

Revenues Structure

The revenues of manufacturing and distributing of Food Ingredients that are classified into

6 categories as follows:

1. Flavour, Fragrance & Color
2. Food Coating
3. Dry
4. Frozen
5. Packaging (Plastic)
6. Trading Goods

Analysis of Operating Results

		Three months period		Change		Six months period		Change
Profit or Loss		(April - June)			(January - June)
(In Million Baht)	2022		2021			Amount	%		2022		2021			Amount	%
Revenue from sales and rendering services	978.35		788.35		190.01	24.10%		1,962.58		1,633.29		329.29	20.16%
Cost of goods sold and rendering services	(643.43)		(489.25)		(154.18)	31.51%		(1,258.12)		(989.41)		(268.71)	27.16%
Gross profit	334.92		299.10		35.83	11.98%		704.46		643.88		60.58	9.41%
Gain (loss) on exchange rate	2.10		1.40		0.70	50.15%		14.20		(0.81)		15.00	-1861.78%
Other income	0.78		0.41		0.36	88.41%		5.01		1.81		3.20	176.78%
Selling expenses	(62.74)		(49.52)		(13.23)	26.72%		(124.82)		(104.42)		(20.40)	19.54%
Administrative expenses	(127.03)		(108.86)		(18.17)	16.69%		(249.31)		(220.02)		(29.29)	13.31%
Net impairment losses on financial assets	1.56		(8.46)		10.02	-118.44%		2.58		(10.73)		13.31	-124.08%
Finance costs	(2.32)		(1.83)		(0.49)	27.00%		(4.61)		(3.56)		(1.05)	29.61%
Profit before income tax expense	147.27		132.24		15.02	11.36%		347.50		306.15		41.35	13.51%
Income tax expense	(30.98)		(27.66)		(3.33)	12.03%		(65.50)		(62.83)		(2.66)	4.24%
Profit for the period from continuing operations	116.28		104.59			11.69	11.18%		282.00		243.32			38.69	15.90%

Gain (loss) from discontinued operations - net of tax

Profit for the period

Profit attributable to:

-	3.85	(3.85)	-100.00%	-	(58.74)	58.74	-100.00%
116.28	108.44	7.84	7.23%	282.00	184.58	97.42	52.78%

Non-controlling interests	0.99	0.46	0.53	114.58%	3.85	1.58	2.27	143.34%
Owners of the parent	115.29	107.98	7.31	6.77%	278.16	183.00	95.16	52.00%

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R&B Food Supply Public Company Limited

The Revenue from sales and rendering services for the second quarter of 2022

In Q2'2022, the revenue from sales and rendering services of the Group was THB 978.35 million, which increased by THB 190.01 million or 24.10% YoY compared to the second quarter of 2021, which revenue from sales was THB 788.35 million.

The increase in sales of THB 190.01 million, can be mainly considered as follows:

1. The source of Income
2. • Increase in domestic sales of THB 116.79 million. (YoY 17.85%)
   • Increase in oversea sales of THB 73.22 million. (YoY 54.66%)
3. By Product Group
4. • Increase in sales of Food Coating category THB 122.92 million. (YoY 40.11%)
   • Increase in sales of Flavour, Fragrance & Color category THB 28.33 million. (YoY 10.05%)
   • Increase in sales of Dry category THB 22.50 million. (YoY 42.67%)
   • Increase in sales of Trading Goods category THB 9.01 million. (YoY 7.16%)
   • Increase in sales of Plastic category THB 7.56 million. (YoY 159.09%)
5. By The Customer Group
6. • Increase in sales from the Industrial customer THB 151.00 million. (YoY 21.75%)
   • Increase in sales from the Wholesale customer THB 22.53 million. (YoY 44.79%)
   • Increase in sales from the Retail customer THB 16.48 million. (YoY 37.58%)

The increase in domestic sales of THB 116.79 million mainly came from the industrial customer and the wholesale customer of Food Coating category amounting to THB 61.13 million and THB 23.27 million ,respectively, and came from the industrial customer of Flavour, Fragrance & Color category amounting to THB 27.06 million.

The increase in oversea sales of THB 73.22 million mainly came from the industrial customer of Food Coating category amounting to THB 53.20 million and industrial customer of Dry category amounting to THB 12.92 million.

The Revenue from sales and rendering services for the 6-months period of 2022

For six-months period of 2022, the revenue from sales and rendering services of the Group was THB 1,962.58 million, which increased by THB 329.29 million or 20.16% YoY compared to the same period of 2021, which revenue from sales was THB 1,633.29 million.

The increase in sales of THB 329.29 million, can be mainly considered as follows:

1. The source of Income
2. • Increase in domestic sales of THB 184.52 million. (YoY 13.41%)
   • Increase in oversea sales of THB 144.77 million. (YoY 56.24%)
3. By Product Group
4. • Increase in sales of Food Coating category THB 217.08 million. (YoY 34.37%)
   • Increase in sales of Flavour, Fragrance & Color category THB 54.77 million. (YoY 9.14%)
   • Increase in sales of Dry category THB 34.00 million. (YoY 30.58%)
   • Increase in sales of Trading Goods category THB 9.36 million. (YoY 3.71%)
   • Increase in sales of Plastic category THB 7.49 million. (YoY 64.82%)
   • Increase in sales of Frozen category THB 6.59 million. (YoY 24.08%)

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Flavour, Fragrance & Color category

R&B Food Supply Public Company Limited

1. By The Customer Group
2. • Increase in sales from the Industrial customer THB 303.35 million. (YoY 21.72%)
   • Increase in sales from the Wholesale customer THB 18.93 million. (YoY 15.11%)
   • Increase in sales from the Retail customer THB 7.01 million. (YoY 6.29%)

The increase in domestic sales of THB 184.52 million mainly came from the Industrial customer and the wholesale customer of Food Coating category amounting to THB 109.07 million and THB 20.70 million respectively and came from the industrial customer of Flavour, Fragrance & Color category amounting to THB 47.60 million.

The increase in oversea sales of THB 144.77 million mainly came from the Industrial customer of Food Coating category amounting to THB 112.56 million came from the Industrial customer of Dry category amounting to THB 15.30 million and the industrial customer of Flavour, Fragrance & Color category amounting to THB 11.23 million.

.

Gross Profit for the second quarter of 2022

In Q2'2022, the gross profit was THB 334.92 million or 34.23% of revenue from sales and rendering services, which increased by THB 35.83 million (YoY 11.98%) compared to the second quarter of 2021, which the gross profit was THB 299.10 million or 37.94% of revenue from sales and rendering services.

Due to the revenue increase from expanding customer markets both domestically and internationally, the gross profit in the second quarter of 2022 increased by THB 35.83 million, which came from the gross profit of Food Coating category by THB 17.87 million, the gross profit of Trading Goods category by THB 15.18 million, and the gross profit of Dry category by THB 7.49 million.

Declining average gross margin came from the proportion of the sales revenue in the low-margin product group increased more than the sales revenue of high-margin product group. In addition, the higher cost of some raw materials of Flavour, Fragrance & Color category and Food Coating category due to the price adjustment in the world market resulted in the higher cost of both categories.

Gross Profit for the 6-months period of 2022

For six-months period of 2022, the gross profit was THB 704.46 million or 35.89% of revenue from sales and rendering services, which increased by THB 60.58 million (YoY 9.41%) compared to the same period of 2021, which the gross profit was THB 643.88 million or 39.42% of revenue from sales and rendering services.

Due to the revenue increase from the business recovery of food and beverage industries, the gross profit for the 6-months period of 2022 increased by THB 60.58 million, which came from the gross profit of Food Coating category by THB 27.97 million, the gross profit of Flavour, Fragrance & Color category by THB 17.44 million, the gross profit of Dry category by THB 12.31 million, and the gross profit of Trading Goods category by THB 5.81 million.

Declining average gross margin came from the proportion of the sales revenue in the low-margin product group increased more than the sales revenue of high-margin product group. In addition, the higher

cost of some raw materials ofand Food Coating category due to the price adjustment in the world market resulted in the higher cost of both categories.

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R&B Food Supply Public Company Limited

Selling and Administrative Expenses for the second quarter in 2022

In Q2'2022, selling and administrative expenses were THB 189.78 million, equaled to 19.40% of revenue from sales and rendering services. Selling and administrative expenses of the group increased by THB 31.40 million (YoY 19.83%) compared to the second quarter of 2021, which selling and administrative expenses were THB 158.38 million or 20.09% of revenue from sales and rendering services.

The significant changes of the selling and administrative expenses could be explained as follows:

• Increase in salary, commission fee, and employee expenses of THB 8.15 million, mainly due to
• 1. Salary of staff increase in Research and Development Center, industrial sales team, and the oversea subsidiaries in Indonesia
  2. Annual salary increase
  3. Commission fee for the staff of both domestic and oversea
• Increase in transportation expenses and export expenses of THB 8.76 million from the increasing in Total sales
• Increase in sales commission of THB 2.69 million, mainly came from the industrial sales
• Increase in professional expenses of THB 2.44 million, mainly came from the increasing in the advisory from the Management team and Research and Development Center

Selling and Administrative Expenses for the 6-months period of 2022

For six-months period of 2022, selling and administrative expenses were THB 374.13 million, equaled to 19.06% of revenue from sales and rendering services. Selling and administrative expenses of the group increased by THB 49.69 million (YoY 15.32%) compared to the same period of 2021, which selling and administrative expenses were THB 324.44 million or 19.86% of revenue from sales and rendering services.

The significant changes of the selling and administrative expenses could be explained as follows:

• Increase in salary, commission fee, and employee expenses of THB 18.56 million, mainly due to
• 1. Salary of staff increase in Research and Development Center, industrial sales team, Human Resource department and the oversea subsidiaries in Indonesia
  2. Annual salary increase and bonus increase
  3. Commission fee for the staff of both domestic and oversea
• Increase in Transportation expenses and export expenses of THB 14.38 million from the increasing in Total sales
• Increase in Sales commission of THB 3.06 million, mainly came from the industrial sales
• Increase in Cool & Cold storage expenses of THB 2.77 million from both of domestic and overseas

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R&B Food Supply Public Company Limited

Net impairment losses on financial assets

In Q2'2022, the Group had reversal of net impairment losses on financial assets of THB 1.56 million, equaled to 0.16% of revenue from sales and rendering services, this resulted in a decrease in THB 10.02 million (YoY -118.44%) compared to the second quarter of 2021, which the net impairment losses on financial assets was THB 8.46 million or 1.07% of revenue from sales and rendering services. The decrease in the net impairment losses on financial assets mainly due to better debt settlement, resulting in a decrease in the allowance for expected credit losses.

For six-months period of 2022, the Group had reversal of net impairment losses on financial assets of THB 2.58 million, equaled to 0.13% of revenue from sales and rendering services, this resulted in a decrease in THB 13.31 million (YoY -124.08%) compared to the same period of 2021, which the net impairment losses on financial assets was THB 10.73 million or 0.66% of revenue from sales and rendering services. The decrease in the net impairment losses on financial assets mainly due to the decrease in the allowance for expected credit losses.

Profit for the second quarter of 2022

In Q2'2022, the profit for the period was THB 116.28 million, equaled to 11.89% of revenue from sales and rendering services, and increased by THB 7.84 million (YoY 7.23%) compared to the second quarter of 2021, which profit for the period was THB 108.44 million or 13.76% of revenue from sales and rendering services.

In Q2'2022, the profit for the period from continuing operations was THB 116.28 million, equaled to 11.89% of revenue from sales and rendering services, and increased by THB 11.69 million (YoY 11.18%) compared to the second quarter of 2021, which profit for the period was THB 104.59 million or 13.27% of revenue from sales and rendering services (excluding loss from discontinued operation of hotel business).

Profit for the 6-months period of 2022

For six-months period of 2022, the profit for the period was THB 282.00 million, equaled to 14.37% of revenue from sales and rendering services, and increased by THB 97.42 million (YoY 52.78%) compared to the same period of 2021, which profit for the period was THB 184.58 million or 11.30% of revenue from sales and rendering services.

For six-months period of 2022, the profit for the period from continuing operations was THB 282.00 million, equaled to 14.37% of revenue from sales and rendering services, and increased by THB 38.69 million (YoY 15.90%) compared to the same period of 2021, which profit for the period was THB 243.32 million or 14.90% of revenue from sales and rendering services (excluding loss from discontinued operation of hotel business).

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