Philippine Seven Corporation · PSE:SEVN

Philippine Seven — Q1 2019 Earnings Presentation

21 slides from Philippine Seven's earnings presentation, Sep 25, 2019

  1. Slide 1: Q1 2019 Investor Briefing

    Philippine Seven Corpora/on (SEVN) Q1 2019 Investor Briefing 7th Floor The Columbia Tower, Or4gas Avenue, Mandaluyong City 1550 Email: [email protected]

  2. Slide 2: A Global Brand

    A Global Brand The World’s Largest Retailer: a. more than 68,600 Stores (as of May 31, 2019) b. Philippines ranked 6th out of 26 countries and territories Norway SERVING OVER 62M Sweden Canada Denmark GUESTS United States China South Korea Japan DAILY Mexico Hong Kong Taiwan Vietnam 2018 Thailand Ma

  3. Slide 3: Global Recognition

    Global Recognition ' + = 7 — Asian Convenience Industry Leader of the Year Award Pictured left to right: Jackie Lai, Marketing Director 7-Eleven Philippines; Kazuki Furuya, Chairman of SEJ; Richard Lee, Vice President Marketing & Operations 7-Eleven Philippines; Armi Cagasan, Division Head of Strate

  4. Slide 4: Shareholding Structure

    Shareholding Structure Agus Development Corp. Present 3% Shareholding Others-Foreign Structure 15% Others-Filipino 6% Progressive Development Corp. President Chain Store 1% (Labuan) Holdings, Ltd. Asian Holdings Corp. 52% 6% As of March 31, 2019 % ownership President Chain Store (Labuan) Holdings, L

  5. Slide 5: SEVN Share Information

    SEVN Share Informa/on Price (Mar. 31, 2019) Php 113.00 Hi/Low (YTD) Php 100.00 – Php 145.00 Free Float 33.1% Outstanding Shares 756.42 million Market Capitaliza4on USD 1.63 billion Dividend 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Payment Stock 0.10 0.10 0.05 0.15 0.15 0.15 - - - 0.65

  6. Slide 6: Philippine Economy

    Philippine Economy _ = BREAKING <=> _ PH economic growth slows down to 6.967 6.2 in Q1 2019 oF CO DD Se rr re o SoS 8S 8& NN N SN Source: Philippine Statistic Authority PHILIPPINE SEVEN CORPORATION Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

  7. Slide 7: Market Performance

    Market Performance Market Share per Trade 2018 YTD (%) 2019 YTD (%) Difference (%) Channel Supermarket 45.3 45.8 +0.5 Grocery 5.5 5.6 +0.1 Convenience Stores 3.6 3.9 +0.3 Sari-sari Stores 33.5 33.5 0 Market Stall 5.2 4.9 -0.3 Drugstore 3.3 3.2 -0.1 Others 2.6 2.3 -0.3

  8. Slide 8: Store Network: Q1 2019

    Store Network: Q1 2019 7-Eleven By Loca/on Store Count % Jan. 1 Net addi4ons Mar. 31 Metro Manila 938 5 943 36% Luzon-ex MM 1,027 25 1,052 41% Visayas 365 5 370 14% Mindanao 220 8 228 9% Total 2,550 43 2,593 100% As of March 31, 2019 + 264 stores vs. Q1 2018 All Store Count 2,593 512 70 578 25 0 SSS

  9. Slide 9: Q1 2019 Financial Performance

    Q1 2019 Financial Performance 2018 2019 % Change 10,620.0 Sales Before Aeer 12,535.1 IFRS 16 IFRS 16 EBITDA, before IFRS 774.7 Sales + 18.0 + 18.0 927.3 774.7 EBITDA, after IFRS 1,347.7 EBITDA + 19.7 + 74.0 190.5 Net income, before IFRS 282.6 Net Income + 48.3 - 41.1 190.5 Net income, after IFRS 112

  10. Slide 10: Adoption of new IFRS on Leases

    Adop/on of new IFRS on Leases 100,000 90,000 80,000 70,000 60,000 Lease Expense 50,000 2019 2020 2021 2022 2023 Year Payment ROU Deprecia4on Interest IFRS 16 Impact A Asset B C D = B+C A-D Payment Deprecia4on IFRS 16 2019 70,000 70,000 67,714 22,828 90,542 (20,542) • The new lease accoun4ng standard

  11. Slide 11: Annual IFRS 16 Impact

    Annual IFRS 16 Impact ESTIMATED BASED FROM 2,400 CONTRACTS REVIEWED LOWER NET INCOME Depreciation of ROU asset approximates cash flow rent expense. Interest is huge affected by the higher outstanding balance of lease liability. NEUTRAL EFFECT Sum of ROU asset depreciation − and accretion of interest

  12. Slide 12: SSSG grew 6.8% in Q1 driven by higher customer count

    SSSG grew 6.8% in Q1 driven by higher customer count Systemwide sales (in millions) Store count SSSG % 50,000.0 2,650 14.0% 46,128.7 12.9% 2,593 45,000.0 2,600 2,550 12.0% 2,550 40,000.0 37,530.8 2,500 10.0% 35,000.0 8.8% 2,450 30,000.0 8.0% 2,400 6.8% 25,000.0 2,350 2,329 6.0% 20,000.0 2,300 2,285

  13. Slide 13: Q1 2019 Balance Sheet

    Q1 2019 Balance Sheet 30,000 % change Balance Sheet and Cash Flow As at (vs. 12/31/2018 except CF, w/c is (in Php Million except Book Value per Share) March 31, 2019 comp. vs. Q1 2018) 25,000 Total Assets 27,457.5 57.8% Current Assets 8,564.2 -4.7% 20,000 Non-current Assets * 18,893.3 124.6% Total A

  14. Slide 14: Selected Financial Ratio

    Selected Financial Ra/o EPS 0.30 Q1 0.25 Selected Financial Ra/o Q1 2019 2018 0.20 Under Under 0.15 new IFRS previous IFRS 0.10 EPS, pre-IFRS 0.05 at P0.37 Liquidity and Leverage Ratio: - Current Ratio (x) 0.82 1.00 0.94 2015 2016 2017 2018 2019 EPS 0.15 0.24 0.21 0.25 0.15 Debt to Equity (x) 2.82 1

  15. Slide 15: Crunch Time and City Blends drive Foodservice sales, while service revenues outperform

    Crunch Time and City Blends drive Foodservice sales, while service revenues outperform 112.2

  16. Slide 16: Marketing income continued to boost margins

    Marke/ng income con/nued to boost margins 112.2

  17. Slide 17: Update on Digital Strategy

    Update on Digital Strategy 2019 Performance YTD Ave daily orders (Ecommerce) Close to 3,000 per day Monthly Ac4ve Users (Ecommerce) About 220,000 # of SKUs (Ecommerce) At least 11,000 E-wallet daily ac4ve users per store More than 2 per store E-wallet average transac4on value Around P250.00 112.2

  18. Slide 18: New Store Concepts

    New Store Concepts Customized racks and counters New City Blends Cafe 112.2 Allooed area for e-commerce order and pick-up

  19. Slide 19: 54% of stores are franchised, dominated by FC1 package

    54% of stores are franchised, dominated by FC1 package FC1 FC2 FC3 Investment Php 4.0 million Up to P1.0 million < P500,000 Building Franchisee PSC Merchandise Franchisee Equipment PSC Cash Bond (PGD) - Franchisee Term 5+5 years 66% FC, 40% FC, Varies per GP Split 34% PSC 60% PSC Store Rent Franchis

  20. Slide 20: Continued store expansion and support infrastructure

    Con/nued store expansion and support infrastructure 2019 CAPEX of P3.7 billion 12 Opera4ng DCs New product Warehouse line and expansion Others equip. 5% 0% Pampanga RDC Stores replacement served: 206 20% La Union RDC Pasig RDC Stores Stores served: served: 120 1,144 Store Naga FDC Stores expansion B

  21. Slide 21: End of Report

    - End of Report-

Philippine Seven — Q1 2019 Earnings Presentation on 6ix