PCSC — Call Transcript 2018

Mar 19, 2018

President Chain Store Corp. Investor Conference March 19, 2018

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Agenda

 2017 Achievements and Results

 Outlook

 Ending Remarks

• Q&A

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Achievements in 2017

1. Listed on FTSE4Good, MSCI Global Sustainability Indexes, and TWSE Corporate Governance 100 Index, ranked as top 5% by Taiwan Corporate Governance Evaluation System. Listed as the top 250 retailers around the world by Deloitte, and ranking rise in the third consecutive year.

2. Improve franchisee profitability by adjusting franchise program. Franchise Ratio and renewal rate both hit the record high.

3. Optimize operations through talents cultivation and TK mindset.

4. Develop bigger stores and feature stores to enrich customers experience.

5. CITY Brand revenue exceeded NT$12 billion. New product line launched as another growth driver.

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Achievements in 2017

1. Fortify logistics infrastructure to enhance its capability and efficiency. Delivery and Pick-up parcels surpassed 180 million.

2. ibon transactions exceeded 200 million by further enhancement of mobile services and cooperation with EC platforms.

3. Fresh food contribution reached 17.6% by equipment and products upgrade and process optimized.

4. Diversified payment tools and OPENPOINT rewards provide more convenience and interests .

5. Philippine 7-ELEVEN expands aggressively with store number exceeded 2,200 stores.

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2017 Financial Results

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Financial Highlights

 Historical revenue and profit

Unit:NTD billion

2013 2014 2015 2016 2017 YoY

Revenue 126.9 131.3 133.4 140.1 144.5 3.1% (Company Only) Revenue 200.6 200.4 205.5 215.4 221.1 2.7% (Consolidated) Net Profit 8.0 9.1 8.2 9.8 31.0 215.3% One-off gain from - - - - - 20.4 Starbucks deal EPS (NT$) 7.73 8.74 7.92 9.46 29.83 +20.37

Note 1：The one-off gain from Starbucks deal includes disposal gain of Shanghai Starbucks, re-measurement gain of Taiwan Starbucks and relative expenses. Note 2：Excluding one-off gain from Starbucks deal, PCSC’s recurring EPS is NT$10.18, YoY grows NT$0.72.

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Profitability Trend

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Company Only Unit:NTD billion
100% 40%
40 25%
20%
30
15%
20 10% 50% 14.3% 14.4% 15.2% 15.2% 20%
10 5% 33.3% 35.0% 36.0%
32.4%
0 0%
2013 2014 2015 2016 2017
0% 0%
NI 8.0 9.1 8.2 9.8 31.0 2013 2014 2015 2016 2017
ROE 36.1% 36.2% 30.7% 35.3% 78.3%
NI Margin 6.3% 6.9% 6.2% 7.0% 21.5%
ROA 14.2% 15.6% 13.7% 15.3% 37.0%
Consolidated 100% 30%
Unit:NTD billion
40 15%
20%
30
10% 12.0% 12.2%
50% 11.2% 11.3%
20
34.4% 10%
5% 34.3%
33.0%
10 32.2%
0 0%
2013 2014 2015 2016 2017 0% 0%
2013 2014 2015 2016 2017
NI 9.2 10.2 9.4 11.1 32.3 ROE 35.8% 35.5% 30.8% 34.6% 69.7%
Net Margin 4.6% 5.1% 4.6% 5.2% 14.6% ROA 11.3% 12.3% 10.9% 12.2% 27.6%
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Note： Numbers in 2014, 2015, 2016 and 2017 excluded MUJI disposal gain, profit-sharing pcsc adjustment, BankPro E-service disposal gain, and Starbucks gain respectively for like-for-like 7 comparison.

Cash Flow Trend

Unit: NTD billion

Net Cash(Company only)

Net Cash(Consolidated)

Note：The longer holidays in the end of 2017 resulted in payment terms deferred temporally.

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Cash Dividend Trend

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30
25
20
15
10
5
Unit:NTD
0
2013 2014 2015 2016 2017
Cash Dividends 6.0 7.0 7.2 8 25
Payout Ratio 77.61% 80.06% 90.85% 84.57% 83.81%
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Note 1：2017 cash dividend has not been approved by AGM. Note 2 ：2017 cash dividend includes Shanghai Starbucks disposal gain.

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Outlook

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Sustainable Growth of PCSC

Long-term targets

Taiwan 7-ELEVEN

Advancing PSD Sales to NTD 100K

Subsidiaries Following trends and opportunities

Let each store flourish in its own way; Replicate the successes across the network.

Nurture talent with in-depth expertise; Expand the business with clear strategies.

New Technology ; Advanced process; Lifestyle trend ; Regional development.

People, Store, Product, System, Logistics, Policy, Culture pcsc

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Multiple Drivers for Sustainable Growth

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PSD Sales
Advanced technology,
NTD 100K
comprehensive E-services,
premium CITY brand, and
differentiated products.
Feature stores,
E-services,
Product mix optimization, and
Franchisee program improvements
Bigger-Store format, TK
Marketing Campaign, CITY CAFE, ibon
NTD 50K
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2008 2012 2017
12
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Apply Technology to Enhance Efficiency and Value

Value and Experience

 Improve operational efficiency and customer experience by system upgrade and advanced technologies testing in X- store.

Environmental Friendly

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 Apply energy-saving equipment to reduce electricity consumption.  Expand energy-saving efficiency to BUs through joint procurement.

Trend of Energy Use Intensity

Unit: kW.h/m2

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Extend Digital Platform

串聯數位行動流量、整合會員資 Integrate digital flow with 訊 OPENPOINT membership

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• Points’ value

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enhancement
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• Strategic Alliance

• Simplified Registration process

Rewards

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OPENPOINT VIP Membership
160
80
0
2015 2016 2017
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Number of EC Transaction
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Number of ibon/ibon APP
Transaction
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Non-Cash Payment Ratio
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Key Drivers:

• Invest in automation equipment and warehouse to enhance capacity and efficiency.

• • Value-added pick-up services. pcsc

Key Drivers:

• Integrate online and offline services

• Customized service

Key Drivers:

• Diversify payment tools

• • Increase non-cash payment ratio

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Upscale CITY Brand

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• Upgrade systems and equipment to enhance quality.

• Grow CITY Brand through new products and merchandise launched.

• Improve store service efficiency by optimizing procedures.

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2017 12 billion Sales Introduce Bubble Drinks 2015 10.6 billion Sales Launch Fresh Tea 2007 500 million Sales 1,000 Stores

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2004
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Introduce CITY CAFE
30 Stores
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Provide Quality, Tasty, and Convenient Fresh Food Service

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Trend of Fresh Food Sales and Contribution
250 18%
200 17%
150 16%
2015 2016 2017
Sales(NT$100m) Contribution
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Food Safety  Strengthen traceability mechanism from farm to table.

 Preventive management.

Infrastructure

 Renew equipment, improve efficiency of process and . delivery

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Product Upgrade

 Advanced technique make quality street foods available in 7-ELEVEN.

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Differentiate Product Mix

• Extend frozen products of iseLect and daily necessaries of UNIDESIGN.

• Selective, premium and exclusive international products to enrich product mix.

 Exclusive and quality brands products enhance the feeling of freshness.

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Trend of International and PL product sales

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(NT$100m)
85
80
75
2015 2016 2017
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Fast Growing Philippine 7 ELEVEN

Aggressive Expansion Profitability Improvement

Digital Service

Maintain dominant market shares, and will exceed 2,600 stores in 2018.

 Ground up more satellite kitchens to raise the capacity of fried products.

 Introduce E-Wallet, CliQQ Pay.  Develop in-store pickup service.

 Continue to expand stores in new areas.

 Continually introduce coffee machines and enhance brand image.

Transfer successful experiences from Taiwan 7- ELEVEN.

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 Expand assortment to optimize product display.  Adjust Franchise program.

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Regional Trend and Opportunities

• Cultivate talents and transfer Know-how.

 Follow the lifestyle trend to drive sustainable growth of Takkyubin, Books.com, Taiwan Starbucks , etc.

• Strengthen profitability of Philippine 7-ELEVEN.

• Improve operations of Shanghai and Zhejiang 7-ELEVEN by enhancing infrastructure.

 Evaluate potential investments in domestic and overseas markets.

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Ending Remarks - Jui Tang, Chen

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Q&A

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