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COSCO CAPITAL GROUP
INVESTOR PRESENTATION 9M 2015 RESULTS & PERFORMANCE
1
DISCLAIMER
These presentations and/or other documents have been written and presented by
COSCO CAPITAL, INC. (COSCO). COSCO is solely responsible for the accuracy
and completeness of the contents of such presentations and/or other documents.
Third parties, other than COSCO, 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 COSCO. 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
CONGLOMERATE MAP
3
Lucio Co & Family
Cosco Capital Inc.
Grocery Retailing
Liquor Distribution
Commercial Real Estate
Specialty Retail
Oil & Minerals
73%
51% 100% 100%
100%
100%
90%
One of the leading retail holding companies in the Philippines
CORPORATE RESTRUCTURING
4
CORPORATE HIGHLIGHTS
April 22: Approval by the
Securities and
Exchange Commission
(SEC) of change in
corporate name and
increase in capital stock
of Parent company.
May 31: Implementation
of issuance and listing
of new shares, cross
trade at the Philippine
Stock Exchange (PSE)
of PGOLD shares to
the Parent company,
issuance of shares to
the subscribers
pursuant to share swap,
special block sale at the
PSE of new shares.
August 12: Cosco Capital, Inc. through
its wholly-owned subsidiary, Ellimac
Prime Holdings, Inc., acquired
Maunlad mall situated at Malolos
Bulacan
August 6: Puregold Price Club, through
wholly-owned subsidiary Entenso
Equities and Goldtempo Company, Inc.,
acquired eight (8) supermarket stores
operating under trade name Budgetlane
August 5: through wholly-owned
subsidiary, Ellimac Prime Holdings,
Inc. acquired RFC mall located along
Alabang, Zapote, Las Pinas City
February 3
Puregold Price Club, Inc. acquired
nine (9) supermarkets from NE
Incorporated.
Cosco Capital, Inc. through its
wholly-owned subsidiary, Ellimac
Prime Holdings, Inc., acquired four (4)
commercial properties from NE
Incorporated
January 29: Approval of
merger of Nation Realty,
Inc., Go Fay & Co, Inc.,
SVF Corporation and 999
Shopping Mall, Inc. (Nation
Realty, Inc. as the
absorbing entity).
February 28: Acquisition of
NE Pacific Shopping
Centers Corporation
May 1: Acquisition of Office
Warehouse, Inc.
July 17: Acquisition and
subscription of additional
shares of Canaria Holdings
Corporation.
July 21: Acquisition of
Liquigaz Philippine
Corporation through
Canaria Holdings
Corporation
2013 2014 2015
5
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. Management focused on the sustainable and Long-Term growth ofthe company
6
9M 2015 RESULTS AND PERFORMANCE
Consolidated revenue grew by 23% in 9M 2015;Grocery Retail segment accounted for about 83% of theconsolidated revenue.
Gross profit grew by 15% in 9M 2015; with gross marginposted 17%.
Consolidated net income grew by 15% in 9M 2015; withconsolidated net profit margin at 6%.
7
9M 2015 REVENUE AND PATMI CONTRIBUTIONS
8
54%
24%
13%
14%
-6%
PATMI
Grocery retailing
Real estate
Liquor distribution
Specialty retail
Parent, mining and oil
83%
1%
4%
12% 0%
REVENUE
Grocery retail
Real estate and propertyleasing
Liquor Distributions
Specialty retail
Oil and Gas
REVENUE CONTRIBUTION BY BUSINESS SEGMENT
86%
4%
1% 9%0%
FY 2014
GROCERY RETAIL
LIQUOR DISTRIBUTION
REAL ESTATE
SPECIALTY RETAIL
PARENT, OIL & MINING
94%
4%
2%
0%
0%FY 2013
GROCERY RETAIL
LIQUOR DISTRIBUTION
REAL ESTATE
SPECIALTY RETAIL
PARENT, OIL & MINING
9
PATMI CONTRIBUTION BY BUSINESS SEGMENT
10
57%15%
24%
3% 1%FY 2014
GROCERY RETAIL
LIQUOR DISTRIBUTION
REAL ESTATE
SPECIALTY RETAIL
PARENT, OIL & MINING
52%24%
23%0% 1%
FY 2013
GROCERY RETAIL
LIQUOR DISTRIBUTION
REAL ESTATE
SPECIALTY RETAIL
PARENT, OIL & MINING
PATMI – Net income attributable to equity holders of the parent company
9M 2015 CONSOLIDATED FINANCIAL PERFORMANCE
11
48,976
98,787
66,28481,455
2013 2014 9M 14 9M 15
Revenues (in Php Millions) Gross Profit and Margin (in Php Millions)
9,534
17,012
11,74213,490
19% 17% 18%
17%
8%
13%
18%
23%
28%
33%
38%
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2013 2014 9M 14 9M 15GP GP Margin
5,733
10,179
6,7177,742
12%10% 10% 10%
0%
5%
10%
15%
20%
25%
30%
2,000
4,000
6,000
8,000
10,000
12,000
2013 2014 9M 14 9M 15EBITDA EBITDA Margin
EBITDA and Margin (in Php Millions) Net Profit and Margin (in Php Millions)
3,731
6,236
4,0334,622
8% 6% 6% 6%
0%
5%
10%
15%
20%
25%
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2013 2014 9M 14 9M 15
NIAT NIAT Margin
1 3 16 20 30 4164
102
158
215248
1998 2001 2006 2007 2008 2009 2010 2011 2012 2013 2014
Stores roll-out through FY 2014
First store
Opened in
Mandaluyong
City, Metro
Manila
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”
Market leadership
The 2nd largest
hypermarket and
supermarket
retailer in the
Philippines in
terms of net sales
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
Rapid store expansion from 1 to 248 stores in 16 years
First format
introduction
New format
introduction
New format
introduction - 2010
Continuing new
stores roll-out 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
same year
12
RETAIL SEGMENT HIGHLIGHTS
13
Opened 16 new PGOLD stores; 7 S&R New York Style Pizza (QSR) in 9M 2015; acquired 9 Stores NE Bodega, 8 Stores Budgetlane Supermarket and closed 4 PGOLD stores
Operating 267 stores as of 9M 2015; with consolidated NSA of more than 421,000 sqm.; excluding acquisition NE Bodega of around 15,000 sqm and Budgetlane of around 18,000 sqm.
Consolidated net sales expanded by 12.6% in 9M 2015; Puregold stores sales accounted for about 82.7% of consolidated net sales
Gross profit grew by 6.8% in 9M 2015; with gross profit margin posted 16.3%
Operating income increased by 6.6% in 9M 2015; with operating margin at 6.8%
Consolidated Net income grew by 6.5% in 9M 2015; consolidated net profit margin at 4.8% PGOLD only net margin is at 3.6% while S&R net margin is 10.1%.
RETAIL SEGMENT HIGHLIGHTS
Guidance for FY 2015
14
• Consolidated net sales targeted to grow by 12 to 15% driven by the following:
– Net sales growth from Puregold and S&R stores
– Positive SSSG for Puregold (2-3%) and S&R (2-3%)
– Opening of 25 new Puregold stores; 1 S&R & 5 S&R QSR
– Acquisition of NE Bodega & Budgetlane Supermarket
– Opening of new store formats: Lawson Convenience Stores and Merkado Supermarket (AYAGOLD)
• Sustain current PGOLD consolidated gross and net profit margins
• Pursue acquisitions and expand into new geographic locations
RETAIL SEGMENT HIGHLIGHTS
15
• CAPEX Budget of Php 3.4 billion in 2015
– Php 1 billion for 25 new Puregold Stores
– Php 550 million for 1 S&R
– Php 150 million for 10 S&R QSR
– Php 40 million for S&R store renovations
– Php 150 million for 25 Lawsons Stores
– Php 1.5 billion for acquisitions
• To be funded by internally generated cash and short term untapped bank credit lines if necessary.
RETAIL SEGMENT FINANCIAL PERFORMANCE
Revenues (in Php Millions)
EBITDA and Margin (in Php Millions)
Gross Profit and Margin (in Php Millions)
Net Profit and Margin (in Php Millions)
16
46,024
84,697
59,80067,334
2013 2014 9M 14 9M 15
7,871
14,484
10,252 10,952
17.1% 17.1%17% 16%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2013 2014 9M 14 9M 15
GP GP Margin
4,012
8,133
5,530 5,830
8.7%9.6%
9.2% 8.7%
0.0%
5.0%
10.0%
15.0%
20.0%
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2013 2014 9M 14 9M 15
EBITDA EBITDA Margin
2,548
4,520
3,007 3,203
5.5% 5.3%5.0% 4.8%
-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
1,000
2,000
3,000
4,000
5,000
2013 2014 9M 14 9M 15
NIAT NIAT Margin
LIQUOR SEGMENT HIGHLIGHTS
BrandyAlfonsoAlfonso lightExelenteCarlos
TequilaPatron
WhiskyJohnnie walker
RhumBacardi
TequilaCuervo
WhiskyBushmills whiskiesChivas
CognacVodkaLiquers
Products
17
BrandyFundador lightFundador
WhiskyJB/Grants
LIQUOR SEGMENT HIGHLIGHTS
2014 2013 Increase %
Brandy 860,048 737,985 122,063 17%
Other spirits
and w ines 442,298 320,356 121,943 38%
1,302,346 1,058,340 244,006 23%
Specialty
beverages 87,556 53,854 33,702 63%
1,389,902 1,112,194 277,708 25%
Category
9M 2015 SALES MIXFY 2014 SALES MIX
18
2015 2014 Increase %
Brandy 587,862 427,682 160,180 37%
Other spirits
and w ines 302,700 241,176 61,525 26%
890,563 668,858 221,705 33%
Specialty
beverages 82,297 63,916 18,381 29%
972,860 732,773 240,086 33%
Category
LIQUOR DISTRIBUTION FINANCIAL PERFORMANCE
Revenues (in Php Millions)
Net Profit and Margin (in Php Millions)
Gross Profit and Margin (in Php Millions)
EBITDA and Margin (in Php Millions)
19
3,565
4,841
2,7103,377
2013 2014 9M 14 9M 15
1,0031,176
664770
28.1%24.3% 24.5%
22.8%
8.0%
13.0%
18.0%
23.0%
28.0%
33.0%
38.0%
200
400
600
800
1,000
1,200
1,400
2013 2014 9M 14 9M 15GP GP Margin
731 832
477 52320.5%
17.2% 15.5%17.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
100
200
300
400
500
600
700
800
900
2013 2014 9M 14 9M 15EBITDA EBITDA Margin
594 603
361 38216.7%
12.5%13.3%
11.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
100
200
300
400
500
600
700
2013 2014 9M 14 9M 15
NIAT NIAT Margin
REAL ESTATE SEGMENT HIGHLIGHTS
• Total of 32 properties in 2014 and 27 in 2013.• Gross Leasable Area (GLA) in 2014 378,756 and 286,880 in 2013.• Acquisitions of six (6) commercial properties in 2015 adding GLA of
35,649 sq. m.• Operates 38 commercial properties and buildings as of 9M 2015
with GLA of over 414,000 sqm.• EPHI completes its 2nd co-development mall project with Ayala Malls
at Fairview Terraces in January 2014.• COSCO Capital acquires NE Pacific Mall, Cabanatuan, in Feb 2014.
20
REAL ESTATE SEGMENT HIGHLIGHTS
Portfolio of Properties
21
Dec 2013 Dec 2014 9M 2015
1. Land under Lease
Number of properties 7 9 9
Total area in sqms 85,704 145,980 145,980
Book value Php3,324mm Php4,243mm Php4,243mm
2. Commercial Buildings
Number of buildings 18 21 27
Total GLA in sqms 145,876 177,476 213,125
Investment costs Php5,427mm Php7,549mm Php8,668mm
3. Divisoria 999
Number of buildings 2 2 2
Total GLA in sqms 55,300 55,300 55,300
Investment cost Php4,162mm Php4,162mm Php4,162mm
TOTALS
Number of properties 27 32 38
Investment costs Php12,913mm Php15,954mm Php17,073mm
Total GLA in sqms 286,880 378,756 414,405
REAL ESTATE SEGMENT HIGHLIGHTS
Branches %
Sto. Cristo, Baliuag 99.2%
Cabanatuan 60.2%
Candelaria 89.7%
Cubao 99.2%
Don Antonio Heights 96.9%
Tabang, Guiguinto 97.5%
Caloocan, Monumento 97.3%
Pasig 90.5%
Q.I. 99.3%
San Juan, Batangas 83.3%
Sucat 97.9%
FY 2014 Occupancy rates
22
Branches Rate
Taguig 99.4%
Taytay 98.8%
Tayuman 98.5%
Valenzuela 73.1%
Dau 92.6%
Anabu, Cavite 94.5%
Subic Harbor Point 93.0%
Fairview Terraces 62.3%
Angeles, Pampanga 100.0%
Cabanatuan, NE 99.8%
REAL ESTATE SEGMENT HIGHLIGHTS
Selected Financial Ratios
23
2014 2013 9M 2015 9M 2014
A. Ebitda / Rentals 78.4% 49.0% 80.3% 80.2%
B. Rentals / Property & Eqpt 12.3% 12.5% 12.6% 12.2%
C. Ebitda / Property & Eqpt 9.6% 6.1% 10.1% 9.8%
D. Debt : Equity 0.47 0.45 0.53 0.50
E. NIAT / Equity 6.0% 2.7% 5.3% 4.6%
REAL ESTATE FINANCIAL PERFORMANCE
Revenues (in Php Millions) Gross Profit and Margin (in Php Millions)
EBITDA and Margin (in Php Millions) Net Profit and Margin (in Php Millions)
24
1,8382,191
1,4571,721
2013 2014 9M 14 9M 15
980
1,275
8531,022
56.4%
58.9%
58.6%59.4%
54.0%
55.0%
56.0%
57.0%
58.0%
59.0%
60.0%
200
400
600
800
1,000
1,200
1,400
2013 2014 9M 14 9M 15GP GP Margin
771
1,146
9231,105
44.3%53.0%
63.4%64.2%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
200
400
600
800
1,000
1,200
1,400
2013 2014 9M 14 9M 15EBITDA EBITDA Margin
563
959
56771550.1%
44.3%
38.9%41.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
200
400
600
800
1,000
1,200
2013 2014 9M 14 9M 15NIAT NIAT Margin
SPECIALTY RETAIL SEGMENT HIGHLIGHTS
Liquigaz Philippine Corporation
• 432,995 mT sold in 2014• Operates in 5 business segments• Current market share of around 30%.• Acquisition of G&G refiling tank in 2015.• Infrastructures:
• Bataan Terminal• North hub 75 mT tank size• South hub 40 mT tank size• Tanks at customer premises• Cylinders• Auto gas stations• Bulk trucks• Cylinder truck
Five Business Segments1. Wholesale2. Commercial3. Industrial4. Autogas5. Cylinders
25
SPECIALTY RETAIL SEGMENT HIGHLIGHTS
Office Warehouse, Inc.
• A total 48 stores in December 2014• Total of 55 stores in 3Q 2015
• Net selling area of 5,597.08 sq.m.• 67% of outlets are mall based and 33% are stand alone• Target to open 10 stores in 2015
26
SPECIALTY RETAIL SEGMENT HIGHLIGHTS
Product Mix
Category Products Share of Business
Ink & Toner Ink & Toner 32%
Office and School Supplies Papers, envelopes, folders, writing instruments, art materials, desk accessories
31%
Business Machine/ Technology Mainly printers, includes also phones, CCTV, biometrics, computer peripherals, calculators
24%
Office Furniture Tables, desk, cabinets, chairs, vault
8%
Services & Others Binding, photocopy, lamination, general supplies, electricals
5%
27
SPECIALTY RETAIL SEGMENT HIGHLIGHTS
Well-known Global Partner Brands
28
SPECIALTY RETAIL FINANCIAL PERFORMANCE
Revenues (in Php Millions)
EBITDA and Margin (in Php Millions)
Gross Profit and Margin (in Php Millions)
Net Profit and Margin (in Php Millions)
29
8,727
3,159
10,122
2013 2014 9M 14 9M 15
576
300
1,084
6.6%
11%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
200
400
600
800
1,000
1,200
2013 2014 9M 14 9M 15
GP GP Margin
140
300
807
1.6%
8.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
100
200
300
400
500
600
700
800
900
2013 2014 9M 14 9M 15
EBITDA EBITDA Margin
13281
465
1.5%
4.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
100
200
300
400
500
2013 2014 9M 14 9M 15
NIAT NIAT Margin
30
Thank you
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