STAR COMBO PHARMA LIMITED — AGM Information 2020

Nov 23, 2020

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STAR COMBO PHARMA LTD ABN 38 6157 283 75 171 -177 Woodpark Rd Smithfield NSW 2164 P: +61 2 9756 6555 sales@starcombo.com.au

24 November 2020 ASX Announcement

Star Combo 2020 AGM – CEO Presentation

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Attached, please find the presentation to be delivered by the CEO at the Star Combo Pharma Limited 2020 Annual General Meeting held on 24 November 2020.

Authorised for Release by the Directors

For more information please contact:

Su Zhang Investor Relations CEO Bella Nguyen Star Combo Pharma Limited WE Communications suzhang@starcombo.com.au WE-AUS66@we-worldwide.com +61 424 267 567

About Star Combo Pharma

Star Combo Pharma Ltd (ASX: S66) is a Sydney based contract manufacturer of vitamins, health and beauty products with a portfolio of own brands and distribution capabilities. Our products are made from natural ingredients with scientific R&D and adheres to the highest manufacturing practices governed by the Therapeutic Goods Administration. Star Combo has offices in China and currently supplies the Australian pharmacy network through 450 Terry White Chemmart stores as well as wholesale customers in Australia and China. Directed by pharmacist and experts in health supplement manufacturing, Star Combo's vision is to be the leading manufacturer of premium vitamins and dietary supplements in Australia. Since its establishment in 2004, Star Combo has demonstrated strong product and business development and continues to expand our current operations to serve our loyal business partners, customers and employees.

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ASX: S66

Annual General Meeting CEO Presentation

24 November 2020

DISCLAIMER

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COMPANY OVERVIEW

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Star Combo Pharma (ASX:S66) is a Sydney-based contract manufacturer of vitamins and health products with a portfolio of its own brand products and distribution capabilities

Established revenue-generating business in FY20 $38.8M Diversified business 3 revenue streams

Positive macro environment Continued global demand for vitamins and supplements

Clear path to profitability Contract manufacturing focus

Investments to grow strategy Expected to increase production capabilities by 100+% Continuous business operations 16 years

• TGA licensed manufacturing facility in Sydney

• Contract manufacturing capabilities for a broad range of vitamin and wellness brands.

• In-house R&D capabilities to develop new products

• Multiple distribution channels:

• Wholesaler distributors – China, Vietnam & Korea

• Online platforms

• In-country office in China

• Daigou channels

• Retail touchpoints – 450 Terry White pharmacies nationwide and Koala Mall, plus tourist outlet

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COVID-19 had minimal impact on operations

• Maintained staff numbers

• Continuous operations at Smithfield facility

• No facility closure

Increased demand for health and wellness products

• COVID-19 had heightened awareness for specific health products among consumers

• Introduced hand sanitizer products

• COVID-safe workplace

• Staff safety key priority

• PPE and face masks provided to staff

FY2020 IN REVIEW

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REVENUE $38.8M +81% on FY19

NEW STRATEGIC INVESTOR: GOLDENMAX $33.32M placement

EBITA (exc. significant one-off costs) $1.8M $0.3M in FY19

TRANSITIONING STRATEGY Focus on high value contract manufacturing

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Key activities in FY2020

Transition and implementation of contract manufacturing strategy

• Higher margins (7% vs 5% retail division)

Growth in new contracts

• 14 new OEM clients worth approx. $1M+

• Orders from new clients and increased orders from existing clients

Expanded manufacturing capabilities

• Development of a Milk Powder “Blend and Pack” facility

New ERP system implementation

• A new ERP system implementation for the manufacturing business unit to improve production efficiencies, planning and process controls

$33.32M private placement via Goldenmax

• Shenzhen-listed company; Market cap of CNY 6B

• • Pharma division in China – access to sales/marketing expertise & distribution network

Revenue FY15 – FY20

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34% p.a CAGR
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Company revenue up 81% Revenue breakdown:

• 66% from online platform sales (e-commerce & retail)

• 19% contract manufacturing

• 15% from own brand sales

Strong performance from each division

• Star Combo revenue up 19%

• From $11.3M in FY19 to $13.4M

• Retail (e-commerce included) revenue up 151% • From $10.1M in FY19 to $25.4M

A$ ‘000

CURRENT OPERATIONS

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There are currently six companies in the Star Combo Pharma Limited group

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Star Combo Pharma Ltd
ASX:S66
Costar Pharma
Star Combo Australia
Austoyou.com Koala Mall Chinese subsidiary
Laboratory
Own product brands:
• Australian based
Services include contract Costar In-country office
Two physical retail
• e-commerce
(Chongqing
manufacturing and Living Healthy
stores in Sydney
•
Amax platform Lingkanger Trade)
product R&D capabilities
•
J&K
Contract manufacturing Own branded products Retail division Chinese sales and marketing
division
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Chinese sales and marketing
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Current manufacturing facility at Smithfield, Sydney

Key facility facts:

• A 15,000m² purpose-built facility - established in 2004 with the capacity to expand production significantly

• Commercialisation of 26 new formulations in 2020, with more in the pipeline

• Expansion of milk powder ‘blend and pack’ facility (Aug 2020)

• Recent acquisition of new land adjacent to existing facility

Licensed and certified facility:

• TGA licence for non-sterile medicine manufacturing of Liquids, Tablets, Hard Shell Capsules, Soft Gel Capsules, Powders and Granules

• GMP Certificate for compliance

• NSW Food Authority for FSANZ Food Standards Code for the manufacture of Process Pasteurised DairyProducts

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• Dairy export permit from Department of Agriculture secured for overseas market

Star Combo owns four branded vitamin and health supplement brands: Living Healthy, Costar, Amax and J&K. All manufactured at the Smithfield facility.

Brand portfolio leverages macro trends:

• Strong demand for Australian made –

• products premium health supplements and beauty products

• Export to growing international markets – China, Vietnam, Thailand, Korea

• Holistic wellness – Vitamins and supplements seen as ‘fourth meal’ in Asian markets

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	Living Healthy	Costar	Amax	J&K
Overview of products	Health supplements	Health supplements –	Supplements for beauty and pregnancy	Skincare and hand sanitizers
Sold at Australian pharmacies	✔	X	X	X
Distributed in China	✔	X	X	✔
Distributed in other overseas market	X	✔	✔	X
Available on Austoyou.com and Koala Mall	✔	X	✔	X
Examples of products	Vitamin D, Calcium tablets, Vitamin C, IDF, 5LX, etc	Fish oil, Propolis, Royal Jelly, Squalene, etc	DHA oil, cod liver oil, zinc, serums etc	Face masks, eye creams and hand sanitizers

Austoyou.com e-commerce platform

• E-commerce platform provides direct access to Chinese consumers, with over 5,000 product lines (includes non-S66 products)

• Star Combo products available on AustoYou.com since May 2019

• Supports B2C opportunities and compliments B2B product offering

• Uploading additional SKU and selling existing product range through Austoyou.com

Koala Mall

• Retail presence in Sydney via two physical stores

• New customer acquisition rate at 14%

• Supports sales growth of Star Combo own branded

• products

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Strengthen focus on R&D

• Commercialise new products for clients, via contract manufacturing and OEMservice • Establish in-house testing laboratory function

Invest in productioncapacity • 13 new production lines to be set up to improve production turn around times to achieve Economies of • Higher volumes of production to achieve economies of scale Scale

Broaden service • Focus on strong customer service and support to improve customer satisfaction offering • Maintain high quality standards of manufacturing and production

Sustain price • Deliver competitive pricing on products with economies of scale competitiveness • Increase value proposition to deliver 'value for money‘ for clients

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Addition to sales team
Expansion of current
site
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• Provide more targeted client segmentation and management • Deliver on validated customer needs

• Expansion of current facility to significantly increase production capacity by2022 (100+%) • Acquisition and development of new building facility to further increase production capacity

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OEM EXPANSION STRATEGY

Aim: To become Australia’s market leader in the health supplement manufacturing sector

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Contract manufacturing competency with focus on OEM

• Operational since 2004, long history of revenue-generation and recognised in the industry

• OEM revenue as percentage of group revenue up to 23% in Q1 FY21 (19% in FY20)

• Contract manufacturing agreement signed with Chemist Warehouse (Q1 FY21)

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Licenses & approvals

• TGA, GMP and dairy export permit

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Investment capital strategy executed

• $33.32M private placement via Goldenmax - budgeted ~$22M to invest in manufacturing, laboratory and R&D facilities

• ~$11M investment in transformational investment to enhance existing manufacturing site

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Experienced management team

• Strong management team to execute the growth strategy

Significant investment expedites Star Combo Pharma’s growth strategy to become Australia’smarket leader in the health supplement manufacturingsector

Investmentplan	A$M
Expand manufacturingfacilityat current location	~11
New site development of new facilities	5-7
New R&D centre	3-5

Investment outcome:

• Acquisition of 13 new production lines for existing site – expect ROI

• within three years of production

• Upgrading of current site

• Production capacity expected to increase 100+% upon completion

• Improve margins with economies of scale

• Secure new contract manufacturing order with existing and new clients

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Pathway to return to profitability

Transformational investment into Smithfield manufacturing facility (expected completion Sep 2022)

• Substantial investment to enhance production to facilitate contract manufacturing plans

• $5M to upgrade existing facility

Higher gross margins ↑% (7% vs 5% for retail division)

• $6M to increase production with 13 new production lines

• Expected to deliver substantial ROI with full return on investment within three years of production

• 100+% increase in production capacity

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Capture growth in Vitamins & Dietary Supplements market

• 13 new production lines to expand product offering (e.g. gummie)

• Set to capture demand growth for Australian-made vitamins and dietary supplements (VDS) within Australia and overseas:

Expected timeline

Activity Date Progress Commencement of acquiring 13 Sep 2020 ✓ new production lines Commencement of upgrading Sep 2020 ✓ existing manufacturing site Clean Room installed Dec 2021 Installation of new production lines Jan 2022 Completion of existing site upgrade Sep 2022 and 13 production lines in production

Key features of completed upgraded site

• TGA-licensed

• GMP compliant

• NSW Food Authority compliant

• DAWR export license for dairy product

• Full designed production daily capacity of 46 million capsules/tablets

• Expected to allow 100+% increase in production capacity compared to current facility

• ~200% greater floor space

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• Contract manufacturing revenue was 23% of total Q1 FY21 revenue (vs 19% in FY20) • New agreement with Chemist warehouse signed – first orders received

Contract manufacturing strategy on track

• Expedited growth strategy from capital investment from strategic investor

Clear growth strategy

• FY21 outlook remains resilient with continued transition on contract manufacturing

• Facility expansion and plant upgrade project on-track. Progressive benefits until Production capability completion in Sep 2022 expansion

• Expected 100+% increase in production capacity

• New and expanded contracts expected in FY21

New contracts • TGA licence extension to cover production of liquids. Full spectrum health supplement manufacturer. Benefit from macro • Ongoing demand for Australian made health and beauty products globally trends

• Ongoing demand for Australian made health and beauty products globally

• Growing middle class in Asia – Chinese middle-class population alone >550M by 2022

Source: Mckinsey

Investor relations Su Zhang, CEO investors@starcombo.com.au