Sa PUREGOLD PRICE CLUB, INC., Always Panalo! Company Presentation 1Q 2016 Results and Performance July 2016
Disclaimer These presentations and/or other documents have been written and presented by Puregold Price Club, Inc. (PGOLD). PGOLD is solely responsible for the accuracy and completeness of the contents of such presentations and/or other documents. Third parties, other than PGOLD, do not have any responsibility for or control over the contents of such presentations and/or other documents. No endorsement is intended or implied notwithstanding the distribution of this presentation and/or other documents during the analysts and investors calls and meetings of PUREGOLD. The materials and information in the presentations and other documents are for informational purposes only, and are not an offer or solicitation for the purchase or sale of any securities or financial instruments or to provide any investment service or investment advice. 2
Investment Summary 1. Sustained economic growth of the Philippines 2. Exposure to growing & robust consumer sector 3. Visible growth pipeline in the next 5 years 4. Focused core target market per brand 5. Expansion of new store formats aimed at the broad-c market 6. Expansion to new geographic locations 7. Management focused on the sustainable and Long-Term growth of the company 3
Stores roll-out through FY 2015 1 3 16 20 30 41 64 102 158 215 248 298 1998 2001 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 First store Opened in Mandaluyong City, Metro Manila First format introduction Expansion Launched loyalty program in 2001; renamed as Tindahan ni Aling Puring in 2004 Between 2002 and 2006, launched an average of 3 new stores every year and expanded operations in North and South Luzon Brand recognition Reader s Digest Asia s Most Trusted Brands New format introduction Market leadership The 2 nd largest hypermarket and supermarket retailer in the Philippines in terms of net sales New format introduction - 2010 Rapid expansion via organic new Puregold stores roll-out and acquisitions 2011 - Opened 38 new Puregold stores 2012 Opened 31 new Puregold stores; Acquired Parco supermarkets with 19 stores and S&R warehouse membership shopping club with 6 stores Continuing new stores rollout via organic geographic expansion and acquisitions Opened 40 new Puregold and 2 new S&R stores in 2013 Acquired Company E with 15 stores in 2013 NE Bodega 9 stores and Budgetlane 8 stores acquisitions in 2015 Rapid store expansion from 1 to 298 stores in 17 years 4
Sa, Always Panalo! Update on PGOLD 1Q 2016
1Q 2016 Results and Performance Opened 5 new PGOLD stores; 1 S&R New York Style Pizza (QSR) in 1Q 2016; closed 1 PGOLD store Operating 286 stores in 1Q 2016; with consolidated NSA of more than 430,000 sqm.; excluding acquisition NE Bodega of around 15,000 sqm and Budgetlane of around 18,000 sqm. Consolidated net sales expanded by 19.7% in 1Q 2016; Puregold stores sales accounted for about 82.4% of consolidated net sales Gross profit grew by 12.6% in 1Q 2016; with gross profit margin posted 16.6% Operating income increased by 12.9% in 1Q 2016; with operating margin at 6.7% Consolidated Net income grew by 9.5% in 1Q 2016; consolidated net profit margin at 4.7% PGOLD only net margin is at 3.8% while S&R net margin is 8.7%. 6
Operating Performance 1Q 2016 Format Hypermarket, supermarket, extra Membership shopping Revenue contribution Gross profit (PHP million) & Margin (%) 3,156 (15.5%) 963 (22.1%) Total traffic (million) 36.0 1.4 Average net ticket (PHP) 542 3,368 Net sales growth (%) 19.4% 13.1% Traffic growth (%) 8.1% 12.7% Average net ticket growth (%) 5.6% 0.4% Same Store net sales growth (%)* 7.3% 4.8% Same Store traffic growth (%)* 0.9% 3.4% Same Store average net ticket growth (%)* 6.3% 1.4% *Same Stores Growth for 2016 are based on stores opened as of end December 2014. 7
Operating Performance 1Q 2016 Breakdown of Stores (per format) Group 2013 2014 2015 1Q 16 Hypermarket 113 121 134 138 Supermarket 64 83 93 92 Extra 28 29 28 29 S&R 8 9 10 10 S&R QSR 2 6 16 17 TOTAL 215 248 281 286 Puregold Only 2013 2014 2015 1Q 16 Metro Manila 88 102 104 105 North Luzon 48 58 64 65 South Luzon 63 67 74 76 Visayas 1 1 6 6 Mindanao 5 5 7 7 TOTAL 205 233 255 259 *excludes NE Bodega and Budgetlane stores with a total of 17 stores and 33,000 sqm NSA Net Selling Area of Stores (in sqm) 369,708 404,914 426,559 430,174 1,720 1,893 44,046 50,963 50,963 37,857 331,851 360,868 373,876 377,318 2013 2014 2015 1Q 16 Puregold S&R only S&R QSR Traffic and Ave Ticket Size Traffic (in M) Puregold S&R 2013 119.5 3.9 2014 133.6 4.9 2015 134.3 5.5 1Q 16 36 1.4 Ave Ticket (in Php) Puregold S&R 2013 511 3,798 2014 517 3,763 2015 543 3,584 1Q 16 542 3,368 8
Store Portfolio 1Q 2016 Key statistics 1Q 2016 Geographic coverage Total no. of stores 286 BULACAN Caloocan No. of stores per format 138 hypermarkets; 92 supermarkets; 29 extras 10 S&Rs & 17 S&R QSR North Luzon (69 stores) Metro Manila (120 stores) Valenzuela Quezon City Navotas Malabon Caloocan Marikina San Juan Manila Mandaluyong RIZAL Consolidat ed net selling area about 430,000 square meters South Luzon (80 stores) Mindanao Visayas (8 stores) Manila Bay Pasig Makati Pateros Pasay Taguig Parañaque Metro Manila 105 5 10 North Luzon 65 1 3 South Luzon 76 2 2 Visayas 6 1 1 Mindanao 7 1 1 259 10 17 (9 stores) Las Piñas Laguna de Bay Muntinlupa CAVITE LAGUNA Area with Puregold store coverage 9 *excludes NE Bodega and Budgetlane stores with a total of 17 stores and 33,000 sqm NSA
Financial Performance 1Q 2016 Net sales (in Php billions) Gross profit & Margin (in PHP billions) 73.2 84.7 97.17 20.69 24.76 18 16 14 12 10 8 6 4 12.7 14.8 16.49 3.66 4.12 17.4% 17.4% 17.0% 17.7% 16.6% 28.0% 23.0% 18.0% 13.0% 2 0 8.0% GP GP Margin Continuing strong revenue growth driven by the 255 Puregold stores and the 10 S&R stores Increasing scale of operations resulted to continuing support from suppliers in terms of discount and rebates Re-branded acquisitions supported continuing growth in revenues and sustainability of margins 10
Financial Performance 1Q 2016 Other Operating Income (in PHP millions) Operating Expenses (in PHP millions) 0 0 0 0 0 0 0 0 2,886 2,563 2,204 647 713 3.0% 3.0% 3.0% 3.1% 2.9% 14.0% 14,000 12.0% 12,000 10.0% 10,000 8.0% 8,000 6.0% 6,000 4.0% 4,000 2.0% 2,000 0.0% - 12,225 10,845 9,449 2,829 3,166 12.9% 12.8% 12.6% 13.7% 12.8% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Other Income % of Sales OPEX % of Sales EBITDA & Margin (in Php millions) 12,000 10,000 8,000 6,000 4,000 2,000 6,877 8,133 8,847 9.4% 9.6% 9.1% 1,881 2,096 9.1% 8.5% 40.0% 30.0% 20.0% 10.0% - EBITDA EBITDA Margin 0.0% 11
Financial Performance 1Q 2016 Operating Income/EBIT and Margins (in PHP millions) Net Income & Margins (in PHP millions),000,000,000,000,000,000,000,000 5,454 7.5% 6,478 7.6% 7,150 1,476 1,667 7.4% 7.1% 6.7% 35.0% 30.0% 6,000 25.0% 5,000 20.0% 4,000 15.0% 3,000 10.0% 2,000 5.0% 1,000 4,520 5,002 3,959 1,054 1,154 5.4% 5.3% 5.1% 5.1% 4.7% 25.0% 20.0% 15.0% 10.0% 5.0% - 0.0% - 0.0% EBIT EBIT Margin Net Income NI Margin 12
Financial Performance Puregold Only Revenues (in PHP Billions) Gross Profit & Margins (in PHP millions) 60.99 69.05 79.61 17.08 20.41 14,000 12,000 10,000 8,000 6,000 4,000 2,000-11,108 9,725 12,480 2,817 3,156 16.1% 15.7% 15.9% 16.5% 15.5% GP GP Margin 28.0% 23.0% 18.0% 13.0% 8.0% EBITDA and Margin (in PHP millions) Net Profit & Margins (in PHP millions) 00 00 00 00-5,230 5,915 4,440 1,261 1,460 7.3% 7.6% 7.4% 7.4% 7.2% 25.0% 20.0% 4,000 15.0% 3,000 10.0% 2,000 5.0% 1,000 0.0% - 2,864 3,192 3,671 679 777 4.7% 4.6% 4.6% 4.0% 3.8% 15.0% 10.0% 5.0% 0.0% EBITDA EBITDA Margin NIAT NIAT Margin 13
Financial Performance S&R Only Revenues (in PHP Billions) Gross Profit & Margins (in PHP millions) 12.46 15.77 17.82 3.6 4.35 5,000 4,000 3,000 2,000 1,000 2,974 23.9% 3,652 4,008 841 963 23.2% 22.5% 23.3% 22.1% 90.0% 70.0% 50.0% 30.0% 10.0% - -10.0% GP GP Margin EBITDA and Margin (in PHP millions) Net Profit & Margins (in PHP millions) 4,000 3,000 2,000 1,000 2,904 2,933 2,437 619 636 60.0% 40.0% 20.0% 19.5% 18.4% 16.5% 17.2% 14.6% 0.0% 2,000 1,500 1,000 500 1,570 1,803 1,806 12.6% 11.4% 375 378 10.1% 10.4% 8.7% 40.0% 30.0% 20.0% 10.0% - EBITDA EBITDA Margin - NIAT NIAT Margin 0.0% 14
Financial Performance 1Q 2016 Working capital days impacted by S&R importations and Puregold rapid store expansions and acquisitions Trade Receivables Days 4.1 5.3 5.7 4.9 5.7 Inventory Days 48.2 53.2 54.3 59.8 57.2 New Puregold Store roll out and new S&R Stores to be opened in 2016 Trade Payables Days 36.9 35 27.7 29.1 16.5 Shorter term payments to suppliers to avail of continued discounts Notes: 1.Average of inventory at the beginning and end of the period / cost of sales x 363 (for full year)) 2.Average of trade receivables at the beginning and end of the period / net sales x 363 (for full year) 3.Average of trade payable at the beginning and end of the period / cost of sales x 363 (for full year) 15
CAPEX Guidance for FY 2016 CAPEX Budget of Php 2.6 billion in 2016 Php 1 billion for 25 new Puregold Stores Php 1 billion for 2 S&R stores Php 150 million for 10 S&R QSR Php 450 million for 75 Lawsons Stores To be funded by internally generated cash and short term untapped bank credit lines if necessary. 16
Guidance for FY 2016 Consolidated net sales targeted to grow by 12 to 15% driven by the following: Net sales growth from organic Puregold and S&R stores Positive SSSG for Puregold (3%) and S&R (4 to 5%) Opening of 25 new Puregold stores; 2 S&R stores Full year operations of NE Bodega & Budgetlane Supermarket Lower PGOLD inventory days between 45 to 50 days Sustain PGOLD consolidated gross and net profit margins Pursue acquisitions and expand into new geographic locations 17
Q & A Thank you! 18