Proposal for Investment

2014

CJ Group Overview

CJ Group has 4 major businesses with over 160 subsidiaries

1

CJ group integrated the Food & Food Service value chain so that CJFW can leverage on

group companies’ infrastructure

Restaurant & franchise co.

No1. restaurant operator

1,700 restaurants

(bakery, coffee, fine dining, etc.)

Food distribution & food

service co.

No. 1 food distributor in Korea

sourcing and distributing

institutional food service

M

Producer Sourcing

Distributing

Wholesaler/

Retailer

Franchise

Restaurant

Catering

Fertilizer/Feed

Seeds Hotel

Maker

Manufacturer

Korea’s No. 1 food manufacturer

Major products:

sugar, flour, chilled products,

meat processed products

Competitive

finished products

Supply raw food Captive client

Under consideration

Food & Food Service Value Chain

Cost-effective

products

Food & Food Service Division Overview

2

A number of global companies are providing their products in Korean B2B market through

No.1 company, CJ Freshway’s sales channels

Restaurant

Franchise

Manufacturer

Hotel

Catering

Manufacturer

Producer

Global Packer

CJ Freshway channel in Korea

Business of CJ Freshway

1.6

Sales in FY 2013

0.4

0.4

0.3

Major players in B2B market

(tril. KRW)

Company ‘A’(No 2)

Company ‘B’

Company ‘C’

Overview

3

30,000 SKU (one-stop delivery)

bargaining power

(economies of scale)

exclusive products

various PB products

worldwide sourcing network

(sourced directly from producers)

diversified sales channel

to wholesalers(distributors),

hotels, restaurants, caterers,

manufacturers global

Vietnam, China, USA, etc more than 30,000 clients

expertise in B2B market

food safety center

HACCP

largest logistics center

in Korea

13 logistics center

nationwide

Commodity competitiveness Strong sales network

Food safety SCM

Strength and Infrastructure

CJ Freshway leads in the Korean B2B market with a wide product range, high food-safety

standards , SCM solutions, and a strong sales network

Overview

4

With recession and governmental

policies, SMEs are losing

competitiveness

expanded JVs with SMEs

began to supply raw materials

to factories

- based on captive clients

expanded wholesale business

sustainable growth

- won orders from large firms

- hospital route expanded

Inha Univ, funeral halls

Recent Performance Overview

CJ Freshway showed sustainable sales growth and significant margin improvement over

the last 5 years

675

1,020

1,603

1,873 1,877

2008 2009 2010 2011 2012 2013

Revenue(KRW bil)

CAGR 22.7%

780

9

26

8

1.1% 1.3%

0.9%

1.5% 1.4%

0.5%

2008 2009 2010 2011 2012 2013

OP(KRW bil)

26

6 1

482 582

796

1,361

1,585 1,609

2008 2009 2010 2011 2012 2013

Food distribution

(KRW bil)

118 116 130 150

175 196

2008 2009 2010 2011 2012 2013

Catering (KRW bil)

CAGR 27.3%

CAGR 10.7%

Vietnam

Hochiminh

in the World

China

Shanghai

Qingdao

Shenyang

CJ Freshway

sites CJ group sites

USA

Los

Angeles

Global CJ Freshway Overview

Riding on its expertise and experience in the industry, CJ Freshway is expanding globally

6

Size of Korean B2B market(KRW tril, %)

• Korean B2B food distribution market is expected to

grow as the number of women in workplace and single

family increases

2010 2013 2016

31.3

36.8

43.3 CAGR

5.6%

69 67

31 32 33

2010 2013 2016

68

Food Material Breakdown in Korean B2B

(KRW tril, %)

• Raw material takes a substantial portion of

food distributed in Korean B2B market

High standard of food safety and

high level of sourcing expertise are needed

Processed

Raw

Material

18.8 22.4 26.7

Market Size Business Environment(Distribution)

Market will reach KRW 37tril in 2013 with 6% annual growth in the future

Food Safety is essential as raw material takes a major portion of food distributed

institutional

Small - mid

1 3 5

100 99 97 95

1995 2000 2005 2008

9

91

2011

SMEs without relevant infrastructure account for 90% M/S

Recent market trends and government policies have

weakened SMEs’ competitiveness

- Stricter regulations on food-safety and illegal transactions

- Restaurant industry is becoming industrialised with an

increasing number of large scale restaurants, including franchises

M/S of institutional distributors are increasing

(%)

Market Dynamics Business Environment(Distribution)

SMEs still dominate the market, but big distributors are growing rapidly

0

Market Share Trend by Players

(%)

8

Market Size and Competition Business Environment(Catering)

The Korea catering market will be driven by hospitals and military sectors

Catering Market M/S(2010)

20%

20%

11% 9% 5%

4%

4%

6%

21% Our Home

Everland

Hyundai

Greenfood Shinsegae

Foods

Hanwha

Resort

CJ Freshway

ECMD

Dongwon/Araco

Others

• Top 9 companies with captive market occupy 80% M/S

• Korean catering enterprises are entering Asian markets

Catering Market Size(KRW tril)

Hospital

Company

CAGR

83%

4.3%

3.3

4.2

5.0

CAGR

6.8%

2.7

Military

10.6%

▲8.5%

School

• gradual expansion of private cafeteria businesses in the

military, expect high growth in military route

Ministry of National Defense pushing “joint-operation project"

• expect CAGR of 10.6% in the hospital route due to aging and

medical law amendments

Revenue Target(KRW tril)

• Target KRW8 tril sales by 2017 (34% CAGR)

1.9

8.0

2012 2013 … 2017

CAGR

34%

1.9

OP Target(KRW bil, %)

• Target KRW 240bil OP by 2017, 3% OPM

27

240

2012 2013 … 2017

CAGR

55%

8.5

0.5%

3.0%

Earnings Target Mid-Long Term Plan

CJ Freshway will meet its performance target supported by a strong sales

network and global M&As

1.4%

10

Sustainable growth through

differentiation

utilise group infrastructure

Accelerating Asian businesses

domestic expertise, M&A, JV

- duplicating domestic model (food

distribution and catering) in global market

- China, Vietnam, USA, etc

Domestic food distribution

Build up entry barriers

- expand sales channels through M&A, JV

- diversify sales channels from high to low-

end, from HoReCa to Food manufacturers

- strengthening commodity competitiveness

Domestic catering

Global business

① Speeding up M&As and JVs to enhance domestic sales network ② Developing

differentiated technologies and branding in Catering ③ Expanding into global market

Strategy Mid-Long Term Plan

11

1.6 1.6

5.3

CAGR 27%

2012 … 2017

Long-term Sales Target

(KRW tril)

Strategy

- expand sales channel through M&A, JV

- diversify sales channels

from high to low-end, from HoReCa to Food manufacturer

Preoccupy the food distribution market

- increase the portion of primary commodity

- increase sales of PB products(it’s well, CJ Freshway)

- increase the number of exclusive commodities and sales

- direct sourcing from manufactures and producers

Build up entry barriers with commodity

Food Distribution

CJ Freshway will preoccupy the food distribution industry with further M&As and JVs

and thus build up entry barriers

2013

Mid-Long Term Plan

12

[JV Model]

CJ Freshway is expanding JV Models with SMEs to acquire numerous distribution

channels and bargaining power with economy of scale

Mid-Long Term Plan

Before JV(FreshOne)

CJ Freshway Manufacturers/

Wholesalers

Small – Medium Restaurants

Small

Distributors

After JV(FreshOne)

JV(FreshOne)

CJ Freshway

Small – Medium Restaurants

Manufacturers/

Wholesalers

A

A B

B C

C D

D

E

E

F

F …

bargaining

power

13

-

- CAGR 23%

175

490

2012 2017

Develop differentiated technologies

Build strong branding

Utilise CJCJ’s R&D technology

Develop special diet meals

diabetic, low-sodium cancer meals, etc

Differentiated meal service

- higher quality and synergies with other

group businesses: bakery, coffee shop, and

drug store

14

…

200

2013

Catering

CJ Freshway will achieve sustainable growth with differentiated technologies and branding

Long Term Revenue Goal

(KRW bil)

Strategy

1)

Mid-Long Term Plan

Sourcing

Distributing

Local Trading

Hotel,

Restaurant

Franchise,

Catering

Producer

Manufacturer

Global

Network

Channel in Korea

Enter the

global market

USA China Vietnam Other countries

…

…

Expand

neighboring

countries

Global Business

CJ Freshway is duplicating it’s successful business model in the global market

10

2,200

2012 2013 … 2017

50

Long-term sales target (KRW bil)

Mid-Long Term Plan

15