September 2016 http: //www.pouchen.com E-mail: ir@pouchen.com - - PowerPoint PPT Presentation

September 2016 http: //www.pouchen.com E-mail: ir@pouchen.com

1

Table of Contents

Page

• 1. PCG’s Profile

2

• 2. Business Overview

3

• 3. Footwear Business – Yue Yuen

5

• 4. Retail Business – Pou Sheng

7

• 5. Financial Highlights

9

• Founded in 1969; listed on the TWSE in 1990
• Paid in Capital: US$916 mn (NT$29.47 bn)
• Market Cap.: US$3,931 mn (@NT$43.05 as of 2016/06/30)
• Revenue: 1H2016 Consolidated Sales US$4,296 mn (NT$140.75 bn)
• Product Mix: Footwear 70.1%, Retail 29.6%, Others 0.3% (as of 1H2016 Consolidated Sales)
• Footwear Business

– Volume: Made 165.7 million pairs in 1H2016; made 317.5 million pairs in FY2015 – Market Share: 20% of the combined wholesales value of the global branded athletic and causal footwear market (including JVs) – Customers: Leading international brands such as Nike, adidas, Asics, Salomon and Timberland

• Retail Business
• Target Market: The Greater China
• POS: 8,222 POS (5,131 self-run and 3,091 sub-distributor) (as of 2016/06/30)

PCG’s Profile

Pou Chen Group -- The largest footwear manufacture Group in the world

2

Pou Chen: (Consolidated) FY2013 FY2014 FY2015

1H2015 1H2016

(NT$mn; %) (NT$mn; %) (NT$mn; %) (NT$mn; %) (NT$mn; %)

Footwear

174,264 76.9% 183,292 75.1%

195,313 72.6% 95,453 71.9% 98,725 70.1%

Retail

51,249 22.6% 59,891 24.6%

72,927 27.1% 36,979 27.9% 41,573 29.6%

Others

1,152 0.5% 793 0.3%

841 0.3% 328 0.2% 447 0.3%

Total

226,665 100% 243,976 100%

269,081 100% 132,760 100% 140,745 100%

Business Overview

Bus Business iness Se Segment gment Mi Mix

(1) Yue Yuen and Pou Sheng, consolidated entities in Pou Chen’s consolidated financial statements, had changed their financial year end date from

9/30 to 12/31 in 2012. Therefore, their FY2012 annual information covering 15 months from 2011/10/01~2012/12/31. Due to the aforesaid change and TWSE regulation, Pou Chen’s FY2012 consolidated financial statements included Yue Yuen and Pou Sheng’s 2011/10/01~2012/12/31 information.

(2) On January 1, 2011, Pou Chen adopted SFAS No.41 “Disclosure of operating segment information”, and had identified “Footwear business”,

“Retail business” and “Others” as its three reportable segments.

(3) Pou Chen originally diversified into electronics business by investing in GBM in 1999. On March 24, 2010, Pou Chen and its three subsidiaries

disposed their 40% stake in GBM, which is engaged in manufacturing and selling PCB/PCBAs. After the transaction, Pou Chen lost the controlling power over GBM, and GBM is no longer included as a consolidated entity in Pou Chen’s consolidated financial statements.

3

(NT$mn)

174,264 183,292 195,313 95,453 98,725 2013 2014 2015 1H2015 1H2016

(NT$mn)

(NT$mn) (NT$mn)

51,249 59,891 72,927 36,979 41,573 2013 2014 2015 1H2015 1H2016 1,152 793 841 328 447 2013 2014 2015 1H2015 1H2016 226,665 243,976 269,081 132,760 140,745 2013 2014 2015 1H2015 1H2016

4

Business Overview

Pou Chen’s 8M2016 unaudited consolidated sales ended 2016/08/31 increased Y-o-Y by 4.2% to NT$183.5 bn.

Revenue – Footwear Business Revenue - Retail Business Revenue – Others Revenue - Total

(US$mn) FY2013 FY2014 FY2015 1H2015 1H2016 Revenue 7,582 8,013 8,435 4,245 4,281 Gross Profit 1,647 1,774 1,972 959 1,059 Gross Margin 21.7% 22.1% 23.4% 22.6% 24.7% Net Income(1) 435 331 390 210 249 Net Income Margin 5.7% 4.1% 4.6% 5.0% 5.8%

Footwear Business – Yue Yuen

Yue Yuen: FY2013 FY2014 FY2015 1H2015 1H2016 YoY

(US$mn; %) (US$mn; %) (US$mn; %) (US$mn; %) (US$mn; %) (%)

Athletic Shoes

3,813 50.3% 3,870 48.3% 4,016 47.6% 2,005 47.2% 2,065 48.2%

+3.0%

Casual/Outdoor Shoes

1,357 17.9% 1,429 17.8% 1,366 16.2% 675 15.9% 611 14.3%

• 9.6%

Sports Sandals

86 1.1% 85 1.1% 94 1.1% 53 1.3% 54 1.3%

+3.6%

Retail & Brand Licensee

1,727 22.8% 1,976 24.6% 2,298 27.3% 1,186 27.9% 1,268 29.6%

+6.9%

Soles, Components, Others

599 7.9% 653 8.2% 661 7.8% 326 7.7% 283 6.6%

• 13.0%

Total

7,582 100% 8,013 100% 8,435 100% 4,245 100% 4,281 100%

+0.8%

Pr Product

• duct Mi

Mix Financial Highlights Financial Highlights

(1) Net profit attributable to owners of the company, excluding “non-controlling interests”.

5

1,647 1,774 1,972 959 1,059 21.7% 22.1% 23.4% 22.6% 24.7% 19.5% 19.8% 19.7% 18.9% 20.2%

16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0% 24.0% 25.0% 2,000 4,000 6,000 8,000 10,000

2013 2014 2015 1H2015 1H2016 Yue Yuen OEM/ODM

(US$mm) (US$mn)

Revenue Gross Margin Net Income(1) Net Margin

(US$mn)

Financial Highlights – Yue Yuen

Yue Yuen’s 8M2016 unaudited sales ended 2016/08/31 increased Y-o-Y by 0.2% to US$5.6 bn.

(1) Net profit attributable to owners of the company, excluding “non-controlling interests”.

6

7,582 8,013 8,435 4,245 4,281 2013 2014 2015 1H2015 1H2016 435 331 390 210 249 2013 2014 2015 1H2015 1H2016 5.7% 4.1% 4.6% 5.0% 5.8% 2013 2014 2015 1H2015 1H2016

FY2013 FY2014 FY2015 1H2015 1H2016 1H2015 1H2016

(US$mn) (RMB$mn) (1) (US$mn)

Revenue

1,777 1,981 2,300 7,402 8,313

1,187 1,268

Gross Profit

514 581 766 2,381 2,959

382 451

Gross Margin

28.9% 29.3% 33.3% 32.2% 35.6%

32.2% 35.6%

Operating Profit

17 34 97 344 584

55 89

Operating Margin

1.0% 1.7% 4.2% 4.6% 7.0%

4.6% 7.0%

Net Income(2)

• 39

5 64 164 385

26 59

Net Income Margin

• 2.2%

0.2% 2.8% 2.2% 4.6%

2.2% 4.6%

(POS)

Directly-Operated Sub-Distributor Total

2015/12/31 4,943 2,893 7,836 Net Change 188 198 386 2016/06/30 5,131 3,091 8,222

7

(1) Pou Sheng has adopted RMB as its presentation currency from USD starting from 1H2016. In RMB terms, Pou Sheng 1H2016

revenue increased by 12.3% compared to the same period last year.

(1) Net profit attributable to owners of the company, excluding “non-controlling interests”.

Retail Business – Pou Sheng

Fina Financia ncial High l Highlights lights Stor Store Netw e Networ

• rk

514 581 766 382 451 28.9% 29.3% 33.3% 32.2% 35.6%

24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 36.0% 38.0% 500 1,000 1,500 2,000 2,500 3,000 3,500

2013 2014 2015 1H2015 1H2016

• 39

5 64 26 59 2013 2014 2015 1H2015 1H2016 (US$mn) 1,777 1,981 2,300 1,187 1,268 2013 2014 2015 1H2015 1H2016

(US$mn)

• 2.2%

0.2% 2.8% 2.2% 4.6% 2013 2014 2015 1H2015 1H2016

(US$mn)

8

Financial Highlights – Pou Sheng

Pou Sheng’s 8M2016 unaudited sales ended 2016/08/31 increased Y-o-Y by 5.7% to US$1.6 bn.

Revenue Gross Margin Net Income(1) Net Margin

(1) Net profit attributable to owners of the company, excluding “non-controlling interests”.

Financial Highlights – PCC (Consolidated)

(NT$mn) FY2013 FY2014 FY2015 Revenue 226,665 243,976 269,081 Gross Profit 50,528 55,269 64,505 Gross Margin 22.3% 22.6% 24.0% Operating Income 10,099 7,921 12,353 Operating Margin 4.5% 3.2% 4.6% Non-operating Income, net 8,633 7,953 7,887 Profit before taxation 18,732 15,874 20,240 Income Tax Expense 1,821 2,015 3,639 Net Income(1) 10,619 8,616 9,531 Net Income Margin 4.7% 3.5% 3.5% EPS (NT$) 3.62 2.93 3.24

Footwear business maintained a steady growth in FY2015. Meanwhile, retail business had a stronger growth rate due to the growth in the same store sales, as well as growth in the net new store openings for the overall store network. Besides, benefited from the increase of non-operating income, PCC’s net income for FY2015 increased 10.6% compared with FY2014.

(1) Net profit attributable to owners of the company, excluding “non-controlling interests”.

9

10

(NT$mn) 1H2015 1H2016 Growth Rate Revenue 132,760 140,745 +6.0% Gross Profit 30,714 35,459 +15.5% Gross Margin 23.1% 25.2% Operating Income 5,899 9,002 +52.6% Operating Margin 4.4% 6.4% Non-operating Income, net 4,718 2,953

• 37.4%

Profit before taxation 10,617 11,955 +12.6% Income Tax Expense 2,100 1,858

• 11.5%

Net Income(1) 4,779 5,171 +8.2% Net Income Margin 3.6% 3.7% EPS (NT$) 1.62 1.75 +8.0%

Financial Highlights – PCC (Consolidated)

Both footwear manufacturing and retail businesses had profit improvement, PCC’s operating income for 1H2016 increased 52.6% compared to the same period last year.

(1) Net profit attributable to owners of the company, excluding “non-controlling interests”.

3.62 2.93 3.24 1.62 1.75 4.7% 3.5% 3.5% 3.6% 3.7%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0.00 1.00 2.00 3.00 4.00 5.00 6.00

2013 2014 2015 1H2015 1H2016 10,619 8,616 9,531 4,779 5,171 2013 2014 2015 1H2015 1H2016 50,528 55,269 64,505 30,714 35,459 22.3% 22.6% 24.0% 23.1% 25.2%

21.0% 22.0% 23.0% 24.0% 25.0% 26.0% 10,000 20,000 30,000 40,000 50,000 60,000 70,000

2013 2014 2015 1H2015 1H2016 (NT$mn) 226,665 243,976 269,081 132,760 140,745 2013 2014 2015 1H2015 1H2016 (NT$mn) (NT$mn) (NT$)

11

Financial Highlights – PCC (Consolidated)

Revenue Gross Margin Net Income(1) EPS/Net Margin

(1) Net profit attributable to owners of the company, excluding “non-controlling interests”.

76.9% 75.1% 72.6% 71.9% 70.1% 22.6% 24.6% 27.1% 27.9% 29.6% 0.5% 0.3% 0.3% 0.2% 0.3%

0% 20% 40% 60% 80% 100% 2013 2014 2015 1H2015 1H2016 Footwear Retail Other

91.1% 87.5% 80.6% 79.7% 75.6% 6.8% 10.7% 17.8% 19.0% 22.8% 2.1% 1.8% 1.6% 1.3% 1.6%

0% 20% 40% 60% 80% 100% 2013 2014 2015 1H2015 1H2016 Footwear Retail Other

Financial Highlights – PCC (Consolidated)

Revenue Breakdown by Segments Operating Income Breakdown by Segments(1)

(1) On January 1, 2011, Pou Chen adopted SFAS No.41 “Disclosure of operating segment information”, and had identified “Footwear business”,

“Retail business” and “Others” as its three reportable segments. Besides, “segmental results” is used instead of “operating income”.

12

Dividend Policy

Per Share FY2013(1) FY2014(1) FY2015(1) Dividend

• Pou Chen (NT$)

1.00

(Cash 1.00)

1.50

(Cash 1.50)

1.50

(Cash 1.50)

• Yue Yuen (HK$)

1.10

(Interim 0.35 / Final 0.75)

1.15

(Interim 0.35 / Final 0.80)

1.20

(Interim 0.40 / Final 0.80)

Cash Dividend Yield(2)

• Pou Chen

2.2%

(@NT$44.55)

3.9%

(@NT$38.45)

3.5%

(@NT$43.10)

• Yue Yuen

4.2%

(@HK$25.90)

4.1%

(@HK$27.95)

4.6%

(@HK$26.35)

Cash Dividend Payout Ratio

• Pou Chen

27.6% 51.2% 46.3%

• Yue Yuen

53.8% 73.9% 65.4%

(1) The dividends for 2013, 2014 and 2015 would be distributed in next years. (2) The cash dividend yield was divided by the market closing price at the end of 2013, 2014 and 2015. (3) Yue Yuen and Pou Sheng declared HK$0.40 and HK$0.02 as 2016 interim dividend, respectively.

13