Investor Relations Index Contents Page 1. Company overview 1-1. CJ Group 2~3 1-2. CJ Freshway 4~7

2. Food Material Distribution 8 2-1. Business environment 9~11 2-2. FMD core competency 12 2-3. Advanced business model 13

3. Catering Service 14 3-1. Business environment 15 3-2. FS core competency 16~17

4. Global Business 18 4-1. Global outposts 19 4-2. Global business structure 20 4-3. Current tasks 21 4-4. Mid/long-term strategy 22 1-1. CJ Group Company overview

CJ group is one of the largest conglomerate in Korea(annual revenue of W24tn in 2016), specialized in Consumer and Culture business. CJ Freshway is a key player in the food & food service division along with CJCJ(097950 KS), CJ Foodville(U/L).

Four core business divisions of CJ group (Total revenue of CJ group W24trn) Revenue W7.5trn W4.3trn W7.7trn W3.9trn

 CJ Cheiljedang  CJ Cheiljedang  CJ O shopping  CJ E&M food stuff, lysine, nucleotides, homeshopping broadcast, movie, processed food feed&livestock music, musical, etc

 CJ Foodville  CJ Healthcare  CJ Korea express  CJ CGV franchise restaurant pharmaceutical logistics, parcel service movie theater

 CJ Freshway  CJ Olive young  CJ Hellovision Food materials distribution, Health & beauty cable TV Catering

2 1-1. CJ Group Company overview

CJ has integrated value chain of food & food service industry. From raw material to restaurant brands, CJ maximizes synergy effect with affiliates by cost-effectiveness and product competitiveness.

Food & Food Service value chain model

Wholesaler/ Seeds Producer Sourcing Hotel Retailer Franchise Fertilizer/feed M Distributing Restaurant Manufacturer Maker Catering

Under consideration

Synergy amongst affiliates

No.1 Food ingredient & Supply of competitive Food material distribution Cost-effective raw Processed food maker Restaurant & franchise co. processed food & catering service materials . No.1 processed food maker in Korea . No.1 food material distributor . Main products: . No.1 franchise company with . Sourcing and distribution - Food material: sugar, wheat flour, etc. 2,159 restaurants - Processed food: . Catering service Raw materials Captive client (fine dining, bakery, coffee, etc.) frozen food(dumplings ,pizza etc.), meat processed food(SPAM, bacon), HMR(Microwavable rice, soup/stew) etc.

3 1-2. CJ Freshway Company overview

CJ Corp(001040 KS) + special interest group holds 58.7% of CJ Freshway. Shareholder mix diversified in the recent years, as domestic institutions & NPS added their stake in the company. Most recently foreign funds have increased their holdings.

Shareholding structure Market cap

[FY 2016] Market cap Foreign investors Share of institutional investors 987 1.4% Share of foreign investors

Domestic Institutions 24.1% 501 463 24.74 CJ Corp + 397 24.10 affiliated person 318 58.7% 16.29 12.55 14.87

2.63 0.57 1.81 1.91 1.44

2012 2013 2014 2015 2016

4 1-2. CJ Freshway Company overview

CJ Freshway, founded in 1988, is leading domestic food material distribution market and catering business with largest infrastructure and more than 20 years of experience

History

1988. 1 Founded Samil agriculture & marine 1996. 5 Incorporated into CJ Corp (ex-CJCJ) 1999. 1 Launched food material distribution business 2000. 9 Launched catering business 2000.11 Launched PB brand for food material 2001. 7 Listed KOSDAQ market 2005. 7 Opened service academy and culinary education center 2005. 1 Acquired ISO 22000 certificate 2007. 1 Acquired a certificate of HCCP of Hospital for the first time in Korea 2008. 3 Company renamed to “CJ Freshway” 2009. 8 Designated as a food safety inspection agency by KFDA 2010. 7 Opened the largest low-temperature logistics center of Korea 2012. 4 Launched PB brand for primary food, ‘FRESHWAY’ 2012. 5 Founded a distribution company in China(CJFW Qingdao corp) 2013. 7 Founded a distribution company in Vietnam(freshway Vietnam) 2016. 11 Established JV company with Younhui in China - CJ Freshway Yonghui(Shanghai) Trade 2016. 12 Songlim food(sauce & seasoning manufacturer) Acquisition

5 1-2. CJ Freshway Company overview

Comprised of two main businesses, Food material distribution(FMD) and Food service(FS), make-up majority of its sales and has shown strong growth.

Business model ① Food Material distribution ② Food Service

Catering Office Manufacturer Franchise Factories

Producer Restaurant Hospital

Hotel University Global Packer Manufacturer Leisure/etc. Sales breakdown

Overseas& Food material distribution(Wtn) Food service(Wtn) others Food Service 3.2% 1.94 13.6% 1.75 0.32 1.61 1.57 1.53 CAGR 0.27 1.35 15.9% Sales Mix 0.22 CAGR 0.20 [FY 2016] 16% 0.17 Distribution 0.80 0.15 83.2% 0.13

2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016

6 1-2. CJ Freshway Company overview

Despite recent sluggish market condition, CJFW maintains its market dominance on the back of strong top-line growth. Effort to find working "Korean FMD model”, CJ FW spent years endeavoring fast changing market conditions, often challenging through worst down-cycles.

CJ Freshway Earnings Revenue comparison with competitors

Revenue(W bn) 232.8 [FY 2016] 207.2 187.3 179.5 (Unit: W tn) 160.3 187.7 102.0 CAGR% 14.7%

2010 2011 2012 2013 2014 2015 2016 Company 1.94 ‘A’ . Revenue has grown at CAGR of 14.7% with establishment of ‘B’ JVs(FreshOne) and enhanced sourcing ability within CJ group ‘C’ ‘D’ Operating Profit(W bn) 0.81 0.61 0.52 0.49 OP OP margin 3.2 2.5 2.7 2.7 2.1 . CJ Freshway is an unrivaled domestic food material distributor with the largest economy of scale. 0.9 1.6% 1.4% 0.8 1.5% 1.5% 0.9% 0.9% 0.5%

2010 2011 2012 2013 2014 2015 2016

. Fluctuation in OPm caused by external events in the market 7 Food material Distribution

8 2-1. Business environment

Domestic FMD(food material distribution) market to grow at the rate of 3.1% annually till 2020, reaching W58tn in size. Strong growth from domestic restaurant industry to push its proportion up to 51% Vs. wholesale 34%, and FS(Food Service) 15%

Korean food distribution market size & channel mix

(W tn) Market size of restaurant food material W 29.2tn (51%) CAGR 3.1%

19.5

7.5 55.9 57.6 8.2 52.8 54.4 49.9 51.2 46.4 48.3 13.5

8.8

2013 2014 2015 2016 2017(F) 2018(F) 2019(F) 2020(F) Wholesale Small ML Chain Catering 2) & factory Medium

Source : Bank of Korea, Statistics Korea Wholesales & retail service Index, Internal interview etc. 1) Scale of restaurants : Mid-large(Yearly revenue more than W0.3bn), Mid-small(less than W0.3bn) 2) Market includes manufacturing sites, office, hospital, military, university and etc 9 2-1. Business environment

Domestic FMD market is still at its early phase of industrialization. However, recently, market is accelerating its industrialization/corporatization process as government policy and industry demand trend changes require stricter system.

M/S trend of large corporations Breakdown of restaurant industry

CAGR total 2.5%

26% ▲2.1% Small 35% 34% 32% 30%

28% 1.0% SME Middle 30% 30% & 31% 31% large

46% 7.4% 40% Franchise 33% 36% 38%

7.4% 8.5% 8.2% 9.1% 10.2% 11.6% Enterprise 2011 2012 2013 2014 2015 2016 2013 2014 2015 2016 … 2020

. Korea’s food material distribution market is fragmented as . Rising needs of corporate food distributor M/S of large corporate is only 11.6% as restaurant industry grows . The gov’t policy is leading the industrialization and : Franchise to grow @ CAGR of 7.4%, corporatization of the market as it demands stricter : and small declines @ CAGR -2.1% transaction transparency and quality control

10 2-1. Business environment Residual income squeeze driven by weakening economy led eat-outers to be more prudent on their expenditures. To meet change in trend, restaurants soon turned to tighter budgeting which sparked fierce price competition between SMEs.

GDP growth rate(%) Service industry GDP growth rate(%)

V shaped 10.4 10.2 Perk-up

L shaped

Slow growth recession (4%)

2016~2025 -2.7 -5.5 forecast1)

1990 1998 2009 2016 2025 1990 1998 2009 2016 2025 ⇒ Entering into L shaped recession, unable to break above, sluggish growth rate to last in coming years

1) 2012~2060 long-term financial prospects(National Assembly ), 2016~2020 : 3.4%, 2021~2025(F) : 3.0% 11 2-2. FMD Core competency

Market differentiation by core competency; 1) Global sourcing network, 2) SCM ability, 3) distribution channels, and 4) quality control infrastructure

1 Sourcing Competitiveness 2 SCM – largest logistics Infrastructure

. Sourcing Status . Freshway(6) : Domestic W2.1tn(90%), : Icheon(2), Suwon, Yangsan, Overseas W0.23tn(10%) Jangsung, Daegu . 30,000SKU of B2B food products . FreshOne(12) . PB, global exclusive food products : Kwangju, Namseoul, Daejen, YongIn, Namyangju, Daegu, Busan, Incheon, Cheongju, Gunsan, Mokpo, Jeonju

: Freshway : FreshOne 3 Diversification of Distribution Channel 4 Top tier class of food safety infrastructure . Restaurant(including FreshOne), . Specialties in Food Safety catering, wholesale/factory : Designated food safety inspection centers and food safety experts (total 60 specialists) Total revenue [FY 2016] . Risk Management Activity W2.33tn : systematic audit, on-site training programs . Customer Satisfaction Activity :VoC analysis→ understanding customer needs → propose business insight → customer satisfaction ▪ Designated as the Best Food Safety Company Restaurant Catering Whole Factory Others for 4 consecutive years sales 12 2-3. Advanced business model

One-stop service to cut out unnecessary distribution stages by expanding direct transactions (CJFW⇌B2B client), strengthening bargaining power through integration/consolidation of distribution channel → Result : simplified distribution structure & gain cost competitiveness.

[AS-WAS] [AS-IS] . Inefficient distribution structures resort to . Cost reduction achieved through integration of additional cost to end-users distribution structure with advanced infrastructure

Global Packer Producer Global Packer Producer Manufacturers/ Manufacturers/ Wholesalers Wholesalers Procurement integration ⇒ Bargaining power Agent(a) CJ Freshway CJ Freshway Agent(b) Food safety, SCM Infra Agent(C) FreshOne Small A F Distributors

C E … B D A B C D E F

B2B Channel(Ho∙Re∙Ca∙∙∙) B2B Channel(Ho∙Re∙Ca∙∙∙)

13 Catering Service

14 3-1. Business environment

Food Service(FS) market to grow at the rate of 3.3% annually till 2020 to W16.0tn. Outsourcing market leading the growth.

Domestic catering market size & channel mix M/S

[FY 2016] CAGR others 3.3% 14~20 Hanhwa 16.0 7.2% CAGR 5.9% 14.8 Shinsege Wellstory 13.1 13.4 12.7 food

5.3 5.0% 26.0%

4.8 6.9%

Outsourcing 4.0 4.2 4.3 (33%) CJ Freshway (%) (30%) 7.3% ECMD 10.3% Ourhome 10.7 Hyundai 9.1 9.3 9.5 10.0 2.7% 21.2% (67%) green food In-house (70%) 15.2% (%)

2014 2015 2016 … 2018(F) … 2020(F) . Domestic catering outsourcing market to grow at CAGR of . Domestic catering outsourcing market, already consolidated, 3.3% until 2020. is fiercely competed by conglomerates. . Recently, In-house operations are turning toward outsourcing . CJ FW continues to gain M/S by winning top tier contracts as a solution to improve efficiency and quality available and wielding its core competency in hospital and leisure channel

Source : Bank of Korea, Statistics Kore, Internal Interview etc. 1) Assuming that middle/high school and military cafeteria maintained In-house catering service 15 3-2. FS core competency

CJ Freshway’s expansion lies with its customizable service, and indisputable top position in specialty areas.

Growth Profit Margin/rate of COGS Differentiated capability and service

COGS(%) GPM(%) 11 Hospital channel – menu expertise for the patients . Customized menu to accommodate different types of patients . Meal services for foreign patients

2 Leisure channel – Customized service and menu . Unrivaled M/S No.1 company with specific menu for Leisure site . Optimized staff management system for leisure channels 23 Synergy within CJ group . Restaurant/retail brands of sister companies. 2011 2012 2013 2014 2015 2016 (Café, restaurants, drugstores, etc) . CJ group events . Promote sustainable growth of profit margin through improving COGS ratio and optimized operation (Foodville: FC brand menu day) (E&M: celebrity autograph event) 16 3-2. FS core competency

Remarkable new order momentum and competitive contract renewal rate resulted positive growth.

Amount of new order 1) Contract renewal rate(%)

(W100mil) Amount M/S(%) 100

90.8%

50 2011 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

. Amount of new order exceed W50bn(expected annual . Contract renewal rate maintained above revenue) since 2014 90% for consecutive 5 years, on the back of . Amount of new order in 2016 recorded historical high strong customer satisfaction level winning over a quarter of new contracts available for the year

17 Global Business

18 4-1. Global outposts Recent expansion to China, Vietnam and the US market to add growth momentum mid/long-term. Collaboration between domestic and overseas market to provide regional expertise and synergy between outposts. Overseas entities of CJ Freshway

▶ China . CJ Freshway Qingdao Co.(2012) USA, L.A /Food distribution Korea . Shanghai Blue Wish(2012)/Catering Qingdao . CJ Freshway Yonghui(Shanghai) Trade(2016)/Food distribution Shanghai

▶ Vietnam . CJ Freshway Vietnam(2013) /Food distribution Ho Chi Minh . Fides foods system/Catering Overseas Revenue(Unit: Wbn)

91 ▶ USA 65 . CJ Freshway America(2013) 57 /food distribution

2014 2015 2016

19 4-2. Global business structure

Expansion strategy : Localization & utilization of global outposts

Two-Track Mechanism

Utilizing global sourcing capability to its full extent, Gained competitive edge over local competitors

Global food material Overseas Localization of food trade business Global Freshway based on Local material distribution sourcing in emerging market sourcing networks distribution

Expansion of sourcing volume As distribution channels diversify

Further expansion of local sales channels and development of global packer network

20 4-3. Current tasks

Expansion fueled by strengthening global sourcing & local distribution Developing new local sales channel and global packer network

China Vietnam USA

“Local distribution business “Triangle-trade network based “No. 1 Trade Company Goal based on YH captive channel” on global sourcing power” between Asia-US”

Establishment 2012 2013 2013

Sourcing Canned Chinese food, cellophane mollusk, mango, dragon fruit, Canned tomato, noodle, frozen produce cashew nut Orange, grape distribution whipping cream, imported fruit Imported fruit, beef Basa, Mahi-mahi, Korean product

 JV1 Business stabilization and  FC Channel(Golden gate) supply  Supply Asian fishery strengthened product line-up stabilization and expansion products in local market Core  Local product/distribution channel  Local distribution channel development  Supply primary products to strategy expansion affiliates in China  Korean fruit supply expansion  M&A Target research  Strengthen Sourcing power  Captive client supply expansion(July in America  Captive client coverage expansion 2016~)

Core Global sourcing power Training sales force to expand competency (purchasing cost reduction, supply stabilization) local food distribution

21 Investor Relations

E-mail: [email protected] [email protected] Website: www.cjfreshway.com