PCSC — Interim / Quarterly Report 2018

Nov 15, 2018

President Chain Store Corp.

2912TT

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2018 9M Financial Results

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Financial Highlights

 Historical revenue and profit

Unit:NTD billion

2013 2014 2015 2016 2017 YoY

2018 9M

YoY

Revenue (Company Only)	126.9	131.3	133.4	140.1	144.5	3.1%	116.1	6.9%
Revenue (Consolidated)	200.6	200.4	205.5	215.4	221.1	2.7%	183.2	10.7%
Net Profit	8.0	9.1	8.2	9.8	31.0	215.3%	7.9	-7.8%
One-off gain
from Starbucks	-	-	-	-	20.4	-	-	-
deal
EPS (NT$)	7.73	8.74	7.92	9.46	29.83	+20.37	7.64	-0.65

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 2017 EPS is NT$10.18, YoY grows NT$0.72. Note 3：Due to one-off tax adjustment from deferred tax liabilities etc, 2018 9M consolidated profits YoY declines.

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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 4 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
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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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Q&A

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