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overview pure business pure is the second-largest retailer among modern food retail format based on gross sales and total selling area 175,956 sqm in the phl in 2010 it has 3 store formats ­ hypermarkets supermarkets and discounters approximately 60-70 of revenues are sourced from stores in metro manila it focuses on serving 2 particular market segments ­ retailer consumers and resellers approx 65 of customers are class c d around 2m households with monthly income of 8,000 ­ 50,000 the company has grown its brand to be identified with value-for-money which helps attract and retain customers as an offshoot well-established real estate cos regularly offer the brand an opportunity to be an anchor tenant in the former s developments financials in h1 2011 net sales increased by 41 to p17.3b from p12.3b h1 2010 net income grew by 269 to p782.80 from p212.2m in h1 2010 this is a significant improvement form comparative figures in 2010 and 2009 net sales grew 20.7 to p29.10b from p24.1b while net income grew 288 to p510.4m from p131.4m current ratios forecasts interim eps is 0.39 interim p/e is 32.05x if annualized at a conservative estimate ahead of the strong sale season i.e.christmas est full-year eps is 0.78 est full-year p/e is 16.02x assuming 30 growth in 2012 assumption of full-year eps 1.014 est full-year p/e is 12.32x strategy growth 1 expansion of stores in strategic locations leads to increase in net selling space greater purchasing power and gross margins in large part increasing the amount of rebates and bonuses obtained from suppliers intends to expand presence outside of m mla north luzon and south luzon sees opening approx 38 additional stores in 2011 with 28 openings planned during the latter 5 months of 2011.

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plans to expand in visayas and mindanao regions generally hypermarkets and supermarkets become profitable within 6-8 months of opening lower disposable income in areas outside m mla is seen to be offset by higher customer traffic where there is less competition vs m mla as of august 26 2011 the company entered into 24 lease agreements and 60 construction agreements for the development of these new stores to be opened 2 efficient and scalable operations outsourcing various logistics and distribution functions to third party cross-docking providers allows it to expand its store network rapidly while lowering its operating costs 3 information management is a key contributor to the co s growth providing an in-depth understanding of local demographics and ability to respond quickly to changing consumer preferences 4 well-established relationships with key business partners tnap or tindahan ni aling puring puts small business owners directly in contact with suppliers at an annual trade show the company served over 170,000 sari-sari stores and small to medium-size businesses and engaged over 1,500 suppliers and trade partners industry opportunities from 2010 ­ 2012 the sector is expected to grow 11.3 with hypermarkets and supermarkets to grow the fastest at a cagr of 28.3 and 27.1 respectively phl has one of the lowest penetration rates in asia in modern food retail sector providing significant upside for growth phl retail industry outlook 1 higher gdp growth positively correlates with consumer spending gdp growth is supported by increasing job creation and employment increasing overseas remittances and a revival of exports nominal gdp is expected to grow from us$188.7b to us$251.3b from 2010 to 2012 a cagr of 15.4 real gdp is expected to grow from us$125b to us$139.5b from 2010 to 2012 at a cagr of 5.6 total consumer spending is expected to reach us$172.8b by 2012 a growth of 25

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from 2010 ­ 2012 retail sales are expected to reach $117.4b a cagr of 11.3 modern food retail are expected to reach us$25b in 2012 a cagr of 11.3 2 modern food retail format is under-penetrated in the phl vs asian counterparts provides significant opportunity for growth due to highly regulated foreign entry until 2000 there is limited foreign presence traditional sari-sari stores are also prevalent especially in rural areas and some neighborhoods in urban areas in 2010 there were an estimated 770,000 sari-sari stores while modern food retail format currently benefits from traditional stores as they serve this reseller market it has led to a gradual decline of such traditional stores resulting in increased sales for large retailers 3 the phl modern retail sector experienced significant growth despite the financial crisis growing 15.5 between 2005 and 2010 from us$9.8 billion to us$20.2 billion it is estimated that the sector will grow to us$25.0 billion by 2012 representing a cagr of 11.3 2010­ 2012 4 hypermarkets superstores have been gaining popularity at different rates the number of hypermarket and superstores in the philippines is expected to increase to 116 in 2012 a growth of 41 growth in the hypermarket sector is expected to be driven by the penetration untapped provincial areas wider product range of such stores combined with the convenience of shopping in air-conditioned malls is attractive to customers thereby driving sales growth and increasing market share hypermarket sales are forecasted to increase from us$2.1b in 2010 to us$3.5b by 2012 representing a cagr of 28.3 growth in the supermarket sector is forecasted to increase over the medium term with an expected cagr of 27.1 between 2010 and 2012 growth is also expected to be driven by expansion into provincial areas where independent local retailers have a large presence competition see image in link provided above

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notable risks related to the company s strategy 1 may experience difficulties in expanding into the visayas and mindanao 2 new stores may place a greater burden on existing resources and adversely affect its business 3 may face increased competition from other hypermarket or supermarket companies dividends on july 15 2010 declared stock dividends of 382m shares p1.00 par value/share comprised 48 of outstanding capital stock there has been no dividend declared for 2011 use of proceeds primary offer final offer price p12.50/share est proceeds p6.25b est net proceeds p5.76b after underwriting discounts commissions and expenses intended for capex required for new store openings and the remainder to be allocated to repay certain of its outstanding debt p2,245.30 company will use internally generated funds from operations existing credit lines and other potential borrowings to finance the expected uses in case of net proceeds not met.

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secondary offer est net proceeds p1.1b after underwriting discounts commissions and expenses dilution net tangible book value/share p1.92 net tangible book value/share p5.70 after effect of offer at final offer price of p12.50 the shares will be purchased at a premium of p6.80 to the net tangible book value/share outlook the pure offer provides a position in the resilient consumer market in the phl as exhibited amidst the recent global crisis when sales from 2005 ­ 2010 grew at a cagr of 15.5 much upside is seen for the industry with the phl having the lowest penetration rates in asia in particular by tapping the underserved rural areas the sector is expected to grow 11.3 with hypermarkets and supermarkets to grow the fastest at a cagr of 28.3 and 27.1 respectively economic growth is primarily driven by higher disposable income through more employment continued strong ofw remittances and a revival of exports which leads to stronger consumer spending real gdp is expected to grow from 2010 to 2012 at a cagr of 5.6 while consumer spending positively correlated with economic growth is expected to reach us$172.8b by 2012 a growth of 25 the company has a strategic roadmap of increasing stores thereby selling space which leads to greater purchasing power and higher gross margins in large part increasing the amount of rebates and bonuses obtained from suppliers and providing more attractive price points to its serviced markets a new store generally becomes profitable within 6 ­ 8 months of opening the offer of p12.50/share prices each stake at a p6.80 premium to net tangible book value it registers a pe of 32.05x at interim eps of 0.39 if annualized at a conservative rate full-2011 pe is pegged at 16.02x with the company looking forward to an estimated 30 growth at the same offer price eps could average 1.014 with a p/e of 12.32x given current market conditions when global markets are facing a possible double-dip scenario for advanced economies and increased risks of a slowdown in asia market appetite for the ipo will be subdued similarly upside will be capped in the near-term.

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in the midst of current market environment with valuations of other stocks becoming more attractive there may be better alternatives to investment furthermore the est annualized 2011 pe of 16.02x is pricey a deeper discount to 10x pe or below pegged at price range of p7.80 ­ p10.14 or better est 2011 ­ 2012 eps would initiate a strong buy recommendation puregold price club inc shares applied for listing issued and outstanding 1,500,000,000 primary offering up to 500,000,000 total no of shares applied for up to listing 2,000,000,000 par value per common share php1.00 shares for initial public offering primary shares up to 500,000,000 secondary shares up to 100,000,000 total no of offer shares excluding over allotmentooption offer price p12.50 over-allotment option up to 90,000,000 common shares distribution of offer shares excluding over-allotment option international offering 70 up to 420,000,000 common shares domestic offeirng 30 up to 180,000,000 common shares trading participants tps 20 up to 120,000,000 common shares local small investors lsi 10 up to 60,000,000 common shares distribution through tps total tp allocation up to 120,000,000 common shares

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allocation per tp based on 134 active tps as of august 19 2011 and following the minimum subscription offer amount excluding over-allotment option up to 895,500 common shares balance of 3,000 common shares to be allocated by pse among tps up to p10,800,000,000.00 up to 12,420,000,000.00 minimum of 1,000 shares and multiples of 500 shares thereafter 1 settlement of bank loans 2 capital expenditures no of shares held 795,551,681 592,719,600 1,388,271,281 hsbc and ubs ag ubs ag bdo fmic september 21 2011 september 21 2011 september 23 2011 including over-allotment option minimum subscription use of proceeds shares under lock-up shareholder lucio l co susan p co total common shares joint international bookrunners and lead managers stabilizing agent domestic lead underwriters timetable pricing and allocation of international offer shares notification of final offer price start of domestic offer period 180-day lock up 53.04 644,732,068 39.51 517,604,731 1,162,336,799 365-day lock up 50,000,000 50,000,000

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pse tps commitment period lsi offer period domestic lead underwriters offer period deadline of submission of applications and payments of tps end of domestic offer period listing date and commencement of trading on the pse puregold price club inc pure second largest retailer among hypermarkets supermarkets cash and carries in the phl based on gross sales and total selling area in the phl in 2010 the company has an aggregate of 175,956 sqm net selling space and offer up to 50,000 skus from one store in 1998 it has expanded to 72 stores in 20 cities and 22 municipalities throughout m mla and luzon as of aug 26 2011 the company has 46 hypermarkets with an aggregate net selling space of 154,927 sqm 19 supermarkets with an aggregate net selling space of 18,002 sqm and 7 discounters with an aggregate net selling space of 3,027 sqm 3 retail formats and store brands 1 hypermarkets puregold price club located in major commercial centers and near transportation hubs offers a variety of food and non-food products generally caters to retailers and resellers such as members of the tindahan ni aling puring tnap loyalty marketing program net selling space ranges from 1,500 ­ 7,800 sqm with average net selling space of 3,368 sqm offering 30,000 ­ 50,000 stock-keeping units skus 2 supermarkets puregold junior mostly located in residential areas and offer a higher proportion of food to non food products compared to the hypermarkets with a similar store layout but on a smaller scale caters to more retailers than resellers net selling space ranges 800 ­ 1,500 sqm with an average net selling space of 947 sqm september 23 27 2011 september 23-29 2011 september 23-29 2011 september 29 2011 september 91 2011 october 5 2011

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2 customer segments retail consumers and resellers approx 65 of the company s customers are c-class and d-class retail customers comprising over 2m households with monthly income from p8000 to 50,000 approximately 35 of the company s customers resellers who are small to medium-size business owners as of aug 26 the company served over 170,000 sari-sari stores small to medium-sized businesses engaged over 1,500 suppliers and trade partners financials h1 2011 in h1 2011 net sales were p17.3b an increase of 41 from p12.3b h1 2010 net income grew by 269 to p782.80 from p212.2m in h1 2010 comparing dec 2009 and 2010 net sales p24.1b grew 20.7 to 29.10b net income p131.4m grew 288 to p510.4m offer price p12.50 eps pe assuming full exercise of over-allotment option total listed shares will be 2,000,000 interim eps is 0.39 interim p/e is 32.05x simple annualized assumption of full-year eps of 0.78 conservative estimate given the strong sale season ahead i.e christmas est full-year p/e is 16.02x assuming 30 growth in 2012 assumption of full-year eps 1.014 est full-year p/e is 12.32x strengths 1 strong growth prospects as one of the largest and fastest growing hypermarket and supermarket retailers in the phl the phl has one of the lowest penetration rates in asia in the modern food retail sector the sector grew 15.5 in 2005 ­ 2010 is expected to grow 11.3 from 2010 to 2012 with hypermarkets and supermarkets to grow the fastest at a cagr of 28.3 and 27.1 respectively from 2010 ­ 2012 3 discounters puregold extra discount store format which offers a more limited number of goods comprising top skus at lower prices vs puregold price club or puregold junior net selling space 300 sqm to 700 sqm with an average net selling space of 432 sqm.

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2 well-recognized brand and strong customer loyalty among philippine consumers associated with low prices value and a wide assortment of goods value-for money its brand equity and ability to attract and retain customers has also led to several well-established real estate cos such as vll ali and lifescapes inc regularly offering the co opportunities to be an anchor tenant in their property developments 3 focus on philippine resellers as a significant customer base the retail market is at an early stage of development and traditional retail formats i.e sari-sari stores comprise 70 of the retail market and the company is well-positioned to take advantage of the growth of modern retail formats 4 multi-format efficient and scalable business model positioned for further expansion 1 a multi-format offering of hypermarket supermarket and discounter stores 2 strategic store locations and 3 efficient and scalable operations strategically-located stores maximize coverage and penetration of its targeted markets segments outsourcing various logistics and distribution functions to third party cross docking providers allows it to expand its store network rapidly while lowering its operating costs 5 advanced management information systems that optimize inventory control and product offerings information management is a key contributor to the co s growth providing an in-depth understanding of local demographics and ability to respond quickly to changing consumer preferences 6 well-established relationships with key business partners fostered relationships with suppliers through programs such as tnap tindahan ni aling puring which puts small business owners directly in contact with suppliers at an annual trade show 7 strong and experienced management team strategy

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1 expand operations in existing markets as well as the visayas and mindanao regions 2 continue to focus on price competitiveness through leveraging scale and operating efficiencies and by continuing promotional activities 3 4 further develop and increase awareness of the puregold brand continue to use advanced information technology systems to monitor customer preferences and market trends enables the company to respond quickly to significant changes in the market and efficiently respond with automated order replenishment and just-in-time delivery continue to appeal to existing customers and attract new customers by improving and renovating stores continue to build on synergies with suppliers tenants and other strategic business partners and customers 5 6 risks 4 may experience difficulty in implementing its growth strategy identification of suitable sites for location ability to purchase or lease appropriate real estate for store locations 5 may experience difficulties in expanding into the visayas and mindanao 6 a deterioration of the value of the puregold brand name and trademark or the loss of the ability to use such brand name and trademark trademark licensing agreement expires in august 2041 also licensed to other affiliate cos 7 may not be able to maintain or improve store sales recently ceased relationship as a supplier to pnp service stores system due to changes in phl tax laws that made the business relationship unprofitable 8 new stores may place a greater burden on existing resources and adversely affect its business

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9 may face increased competition from other hypermarket or supermarket companies 10 retail business depends on its ability to source and sell the appropriate mix of products to suit consumer preferences 11 success of the business depends in part on the ability to develop and maintain good relationships with its current and future suppliers 12 currently relies on distributors service providers and the distribution networks of its multinational suppliers for its logistics requirements 13 relies on services rendered by independent contractors that may not always meet requirements for quality or completed within budget 14 negative changes in the retail market environment in m mla the company s stores in m mla account for approximately 68 66 and 64 of the company s revenue in 2009 2010 and h1 2011 plans to open 11 stores in m mla within 2011 15 systems failures delays and failure to optimize its information technology systems 16 operations may require significant capital expenditure and financing which it may not be able to secure 17 may be subject to increase in operating and other expenses 18 leases a majority of its stores and there is no assurance that it will be able to continue to renew these leases on acceptable terms 19 increases in prices charged by food producers may affect profitability of the company which cannot pass on increases to customers 20 currently and will be further exposed to risks relating to operating commercial real estate properties 21 sale of consumer products exposes the company to risk of adverse publicity 22 exposed to certain risks in connection with substantial use of cash in its operations ­ possible cash shortages petty theft and robbery.

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23 operates in a regulated industry and its businesses is affected by development and application of regulations in the country 24 continued compliance with and any changes in environmental laws and regulations may adversely affect results of operations and financial conditions 25 may fail to fulfill the terms of licenses permits and other authorizations or fail to renew them on expiration 26 damage to or other potential losses involving the company s properties may not be covered by insurance 27 financial performance and results of operations are subject to seasonality 28 may be subject to unionization work stoppages slowdowns or increased labor costs dividends on july 15 2010 declared stock dividends of 382m shares p1.00 par value/share comprised 48 of outstanding capital stock there has been no dividend declared for 2011 use of proceeds deriving from details from the prospectus and using final offer price of p12.50/share est proceeds is p6.25b est net of p5.76b after underwriting discounts commissions and expenses for the primary offer est net proceeds from selling shareholders secondary offer will be up to p1.1b after underwriting discounts commissions and expenses majority of net proceeds from the primary offer is intended for capex required for new store openings and the remainder to be allocated to repay certain of its outstanding debt p2,245.30 currently the company is in discussions with various parties regarding the actual locations of the new stores and the type of construction leasehold improvements and equipment in which the company will invest using the proceeds from the primary offer in its prospectus it assumed an p18/share offer price translating to p8,510.2m in net proceeds its est breakdown of use of proceeds is p3,415.10b in nov ­ dec 2011 p3,022.60b in 2012 p2,072.49b in 2013 or a total of p8,510.20.

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the company has said that if expected gross proceeds are not realized it will use internally generated funds from operations existing credit lines and other potential borrowings to finance the expected uses business strategy focuses on 2 customer segments retail consumers and resellers approximately 65 of the company s customers are c-class and d-class retail customers which comprise over two million philippine households with a monthly income from p8,000 to p50,000 2010 nielsen study retail trade dynamics approximately 35 of the company s customers comprise resellers who are small to medium size business owners in 2001 the company established its tnap loyalty/marketing program for resellers and as of august 26 2011 the company served over 170,000 sari-sari stores and small to medium-size businesses and engaged over 1,500 suppliers and trade partners focus on expansion of stores increase in net selling space greater purchasing power and gross margins increase in number of stores was what primarily resulted to the increase in net selling space from december 31 2008 to august 26 2011 improving operations purchasing power and gross margins in large part increasing the amount of rebates and bonuses obtained from suppliers greater purchasing power can be achieved through increased store density in particular localities that will enable the company to obtain favorable purchasing terms from certain suppliers leading to a competitively-priced product assortment consistent with focus on serving mass retail consumers and resellers thereby increasing customer visits to its stores with store expansion came the increase of expenses generally hypermarkets and supermarkets become profitable within 6-8 months of opening hypermarkets usually demonstrate the strongest growth in traffic in the first year after opening supermarkets generally reach traffic maturity more quickly than hypermarkets new stores outside m mla will negatively affect operations in that there is lower disposable income but it intends to offset this by higher customer traffic where there is less competition in m mla intends to expand presence outside of m mla north luzon and south luzon sees

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opening approx 38 additional stores in 2011 with 28 openings planned during the latter 5 months of 2011 intends to continue to leverage the success of its retail and wholesale model by expanding into the visayas and mindanao beginning in 2012 4 cities in visayas and 3 cities in mindanao as of august 26 2011 the company entered into 24 lease agreements and 60 construction agreements for the development of these new stores to be opened dilution net tangible book value/share was p1.92 after effect of the sale of offer shares at est net tangible book value/share would increase to p5.70 at final offer price of p12.50 the shares will be purchased at a premium of p6.80 to the net tangible book value/share overview of the phl retail industry retail sales modern food retail and growth outlook has grown due to steady economic and population growth higher disposable incomes and increasing urbanization from 2005 ­ 2010 retail sales has grown from us$48.4b to us$95.3b a cagr of 14.5 grocery retail sales has grown from us$33.5b to us$64.2 b representing a cagr of 13.9 from 2010 ­ 2012 retail sales are expected to reach $117.4b a cagr of 11.3 modern food retail are expected to reach us$25b in 2012 a cagr of 11.3 gdp growth positively correlated with consumer spending nominal gdp is expected to grow from us$188.7b to us$251.3b from 2010 to 2012 a cagr of 15.4 real gdp is expected to grow from us$125b to us$139.5b from 2010 to 2012 at a cagr of 5.6 gdp growth is supported by increasing job creation and employment increasing overseas remittances and a revival of exports nominal gdp for luzon including metro manila the visayas and mindanao in 2005 were us$84.0 billion us$20.0 billion and us$17.9 billion respectively by 2009 the nominal gdp for these regions increased to us$115.6b 38 us$28.1b 41 and us$27.4b 12.2 respectively.

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