No. 1 food supply distributor IR Material(2012) 0 Vision & Holding Structure Summary The SYSCO of Asia, No.1 domestic food supply distributor and leader in the paradigm shift of cafeteria services VISION To become the sole leader in the domestic food supply distribution market in terms of scale and capability, and become the Sysco of Asia through globalization "2016 sales of W5tn, OP W150bn" History Holding Structure . 1988, established Samil Agriculture Fishery(material processing) . 1996, transferred to CJ CJ affiliation Other . 10,798,900 outstanding shares . 1999, began food supply distrubution . Market cap W270bn ITC + corporate (Dec 31, 2011 standard) . 2001, listed on Kosdaq 11.1% . 2007, received first HACCP for hospital catering . 2009, selected as hygiene inspection institution by KFDA . 2010, opened largest domestic distribution center (Icheon) Treasury shares 7.3% 1 Business Structure(Food supply distribution) Overview Leading the food supply distribution market with its simplified process via direct-sourcing from the producer and thorough health control, No.1 domestic food supply distributor with the best SCM and products in the industry CJ Agency Freshway (wholesale) Dining • 317 Sales personnel Maker • 109 MD personnel Cafeteria Affiliates • 20,000+ SKU Producer/ • 9 distribution centers Food Global • 39 food safety center processing personnel Dining Cafeteria Food processing • SamCheongGak • STX Catering • CJ Foodvill • Pizza Hut • Kuksundang • CJ CJ • Pho Mein • Harim • Saempyo • Beer Cabin • Dongyang Magic • Samlip Foods • Bon Juk 2 Business Structure(Cafeteria) Overview Secured various clients in businesses, hospitals, colleges with endless R&D for tastier and healthier food CJ Freshway Business/ Public Menu development & Hygiene & safety Customer satisfaction cooking Hospitals . Food hygiene lab . Service academy . Menu development . Continuous audit . Various events team activity . Customer satisfaction . Cooking academy . HACCP team . 4,000+ Menus Colleges Business/Public Hospitals Colleges • Kumho Asiana • Severence Hospital • Seoul National Univ • Lotte Confectionery • Dongkuk Hospital, • Hanseo Univ. Ilsan • Renault Samsung • Woosong Univ. R&D Center • Health Insurance, Ilsan Hospital • Dongseo Univ. • Prosecutor’s Office • Inha Univ. Hospital 3 Current Business Condition Overview Sales growth (CAGR 27%) and margin improvement from large growth in the food supply distribution industry Sales (W100mn) Food Supply Distribution (W100mn) CAGR 27.5% CAGR . 2011 sales +71% 39.0% - Stronger agency sales 6,570 Dining/Cafeteria W465.5bn(’10) W681bn(’11) - Stronger food material distribution business W298.6bn(‘10) W556.7bn(‘11) OP (W100mn) Cafeteria (W100mn) - Expanding affiliate model W31.5bn(‘10) W123.5bn(‘11) CAGR 230 7.4% . 2011 sales +15% - Won orders from majors Kumho Asiana, Inha Univ. 71 - Hospital route expanded -17 Inha Univ, funeral halls 4 Market condition Market Size (Food supply distribution) W31tn market with 5.6% average annual growth, large portion of primary commodity, hence high health control and expertise in sourcing is necessary Dining product weight(Wtn, %) Food supply distribution market size(Wtn, %) 18.8 22.4 26.7 CAGR 43.3 Processed 5.6% CAGR 36.8 Primary 68 4.9% commodity 31.3 Raw Raw material product weight(Wtn, %) material 12.5 14.4 16.6 6.0% 22.4 Processed Dining/ Cafeteria Primary 47 commodity • Expect continued growth in the food supply • Large portion of primary commodity, hence high health distribution market as women's economic activities control and expertise in sourcing is necessary increase and dining consumption increases Source: BoK, Statistics Korea, Korea Rural Economic Institute 5 Market condition Current Competition (Food supply distribution) Market share of mid-small wholesalers dominate at 92%, but large enterprise participation is increasing Sales weighting of enterprise food supply distributors(%) . 10,000+ mid-small wholesalers taking up over 90% of the market - Low business efficiency and health control from a lack Small of business infra (health control, distribution, sourcing) wholesalers 92 100 99 97 95 . Enterprise food supply distributor's M/S increasing - M/S increasing with its superior business infra amid Enterprise-type government policies demanding hygiene and food supply transaction clarity distributor 0 1 3 5 8 1995 2000 2005 2008 2010 ※ Enterprise food supply distributors refer to CJ Freshway, Our Home, Everland, Shinsegae Foods, Hyundai Greenfood, Foodmus, Hanwha, and Dongwon ※ Source: Internal analysis Source: Internal analysis & estimates 6 Market condition Clients (Food supply distribution) Increased purchases through specialized distributors following growth of large restaurants within the dining market Purchase source of large, mid-small Change in restaurant sales (including dining companies(%) liquor/beverage) CAGR 70 11% CAGR Retail 59 21% 46 Large restaurant Distributor/ Wholesale 45 7% Mid-small restaurant • Large dining companies purchase mainly from • High portion in mid-small restaurants, but notice distributors, while mid-small dining companies rely more significant growth in large restaurants on direct purchase Source: Korea Rural Economic Institute (2008), Statistics Korea7 Market condition Market Size 시장환경(단체급식) (Cafeteria) Cafeteria market has entered maturity with CAGR of 2.7%, but expect over 10% annual growth in hospital business due to aging society and medical law amendments Cafeteria Market Size(Wtn) CAGR 2.7% 10.5 CAGR 9.7 • Hospital route 0.8% 8.9 - Aging Increase in convalescent hospitals/care homes Military - Medical law amendment(‘09) Increase in foreign patients 10.2% Expect double digit growth due to aging society and Hospital medical law amendments ▲3.4% School • Company route - Higher-quality from various needs of clients and more competition Company 3.6 3.2% • School route - Expect market to shrink on less number of students 출처: 내부분석 및 추정자료 8 Market condition Cafeteria Market Size and Competition (Cafeteria) The cafeteria market is expected to grow in hospitals and military, fierce competition with the top 9 companies occupying 80% M/S Cafeteria Market Size(Wtn) Cafeteria Market M/S(2010) CAGR 6.8% 5.0 CAGR 83% Others Our Home 4.2 21% 20% 10.6% 3.3 Military ▲8.5% Dongwon/Araco 6% Hospital CJ Freshway 4% 20% School Everland 4% ECMD 4.3% 5% 2.7 Hanwha 9% 11% Company Resort Shinsegae Hyundai Foods Greenfood • Gradual expansion of private cafeteria businesses in the • Top 9 companies with captive market occupies 80% M/S military, expect high growth in military route • Overseas cafeteria market expanding amid industrialization of Ministry of National Defense pushing "Anti-cafeteria project" developing and underdeveloped countries, expect domestic • Expect CAGR of 10.6% in the hospital route due to aging and enterprises to enter overseas market medical law amendments 9 Corporate Guidance Mid-long term plan 2016 sales of W5tn, OP of W150bn through domestic expansion and globalization by securing core capabilities Sales Guidance(W100mn) OP Guidance(W100mn, %) CAGR CAGR 45% 27% 19,000 3.0% 335 1.8% 1.5% • Forecast 2012 sales growth of 26% • Forecast 2012 OP of W33.5bn • Target W5tn in 2016 sales(CAGR 27%) from 26% sales growth and SG&A leverage effects • Target W150bn in 2016 OP, 3 % OPM 10 Food Supply Distribution Sales Guidance Mid-long term plan 2016 sales of W4.6tn in food supply distribution through expanded sales channels and stronger product competitiveness Sales Guidance(W100mn) Dining/Cafeteria Sales Guidance(W100mn) CAGR 32.0% 10,300 CAGR 27.6% 17,140 Primary Commodity Wholesale and Material Sales Guidance(W100mn) CAGR 19.9% 6,840 • Economy of Scale on expanded sales channels through alliances and stronger material business • Secure business competitiveness through stronger product competitiveness 11 Food Supply Distribution Mid-long Term Strategy Mid-long term plan Secure market control and economy of scale by expanding sales channels, secure cost competitiveness through strategic product promotion and sourcing expansion . Accelerate alliance model . Promote large products – Secure 8 major branches nationwide – Strengthen sales capacity in large in 2013 Expand sales Promote and monopolized products(ex, strategic soybean oil, wrap) . Expand material business channel product – Expand group-joint-purchase and . Develop restaurant-exclusive PB leverage through stronger exterior Strengthen distribution market sales – Develop B2B-exclusive products fitting the market's low-price needs (ex, import meat, pork, beans, etc) control through expanding sales channels and securing cost competitiveness Expand Expand primary global commodity business . Expand global business business . Expand producer transaction – Expand global sourcing - Turn key purchase in storable farm – Execute local material sales based on products(ex, potato, garlic, dried souring capacity pepper, carrot) – Execute export to third party nations . Strengthen sales of localized fishery 12 Cafeteria Sales Guidance Mid-long term plan 2016 sales of W390bn through differentiated service utilizing group infra, and entering the global market Domestic Sales Guidance(W100mn) Hospital Cafeteria Sales Guidance (W100mn) 422 CAGR 21% 1,860 Overseas Sales Guidance (W100mn) 75 • Increase hospital cafeteria sales by utilizing in-house • Enter global market in devloping and underdeveloped food development R&D countries • Increase new orders in large companies 13 Cafeteria Mid-long Term Strategy Mid-long term plan Preoccupy global cafeteria market through differentiation