Omni-Channel Retailer - TodayIR.comThis presentation and the accompanying slides (the “Presentation”) which have been prepared by GOME Electrical Appliances Holding Limited (“GOME”

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Omni-Channel

Retailer 2013 Annual Results Announcement

This presentation and the accompanying slides (the “Presentation”) which have been prepared by GOME Electrical

Appliances Holding Limited (“GOME” or the “Company”) do not constitute any offer or invitation to purchase or

subscribe for any securities, and shall not form the basis for or be relied on in connection with any contract or

binding commitment whatsoever. They are only being furnished to you and may not be photocopied, reproduced or

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has been prepared by the Company based on information and data which the Company considers reliable, but the

Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on,

the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This

Presentation may not be all inclusive and may not contain all of the information that you may consider material.

Any liability in respect of the contents of or any omission from this Presentation is expressly excluded.

Certain matters discussed in this presentation may contain statements regarding the Company’s market

opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-

looking statements are not guarantees of future performance and are subject to known and unknown risks,

uncertainties and assumptions that are difficult to predict. The Company’s actual results, levels of activity,

performance or achievements could differ materially and adversely from results expressed in or implied by this

Presentation, including, amongst others: whether the Company can successfully penetrate new markets and the

degree to which the Company gains traction in these new markets; the sustainability of recent growth rates; the

anticipation of the growth of certain market segments; the positioning of the Company’s products and services in

those segments; the competitive environment; and general market conditions. The Company assumes no

obligation to update any forward-looking information contained in this presentation. Any forward-looking statements

and projections made by third parties included in this Presentation are not adopted by the Company and the

Company is not responsible for such third-party statements and projections.

Disclaimer

1

Key Messages 1

2

3

4

Content

2013 Performance Review

Strategic Implementation

Appendix

2

From 2014, dividend payout ratio

to increase from no more than 30% to 40%

2013 interim & final dividend payout ratio

approximately: 30%

2013 special dividend

approximately: RMB 268 Million

The management has full confidence in the prospects

of the Company with continued growth in earnings

creating value for investors

Strong Performance Continues

to Create Value for Investors

3

Key Messages 1

2

3

4

Content



Appendix

4

( in RMB) Revenue

Consolidated

Gross Profit Margin

Operating

Expense/Revenue

Inventory

Turnover Days

Net Cashflow

from Operations

Net Profit

Attributable to

Owners of the

Parent Company

Cash & Cash

Equivalents

as of 31/12/2013

56.4 B

(+10.4%)

18.4%

(+1.7p.p.)

16.6%

(-1.6 p.p.)

892 M (+222.5%)

9.02 B (+27.6%)

2.0 B

61 Days

(-13 Days)

Main Driving Force of Robust Performance:

Low-Cost High-Efficient Supply Chain

5

In RMB Million 2012 2013 Increase

Revenue 51,097 56,401 10.4%

Consolidated gross profit 8,513 10,354 21.6%

Consolidated gross profit margin 16.7% 18.4% 1.7 p.p.

Operating (loss)/profit (812) 1,015 225.0%

Operating profit margin (1.6)% 1.8% 3.4 p.p.

(Loss)/Profit before tax (759) 1,195 257.4%

(Loss)/Profit attributable to owners of the parent company (728) 892 222.5%

Net profit margin (attributable to owners of the parent company) (1.4)% 1.6% 3.0 p.p.

Main Driving Force of Robust Performance:


6

Note: Discrepancy due to rounding error

Compared with 2012：

• High GPM products proportion increased from17%

to 22%，average GPM 23-27%

• Regular product decreased from 80% to 70%，average GPM 15-18%

• Quantity product increased from 3% to 8%，average GPM10-13%

High

GPM

22%

70%

8%

Regular Quantity

2013 Product Mix

Powerful Benefits of Procurement Platform

7

51,097.1 56,400.7

2012 2013

42,026.8 47,779.7

2012 2013

RMB Million

RMB Million

Revenue ▲10.4% YoY

Same Store Sales ▲ 13.7% YoY

Consolidated Gross Profit Margin ▲ 1.7 p.p.

16.7% 18.4%

2012 20132013

92

74 82

74

64 56

68 61

Q1 Q2 Q3 Q4

2012 2013

• ERP system and store-based planning model contribute to decrease in inventory

turnover days and increase in cash & cash equivalents

56.6

87.1

68.9 70.7 64.8

84.1 78.7

90.2

2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4

Powerful Benefits of IT System

8

Reduction in Inventory Turnover Days Increase in Cash & Cash Equivalents

(In Hundred Million)

Operating Expense Optimization

9

14.4%

12.7%

10%

11%

12%

13%

14%

15%

16%

2012 Rent Salary Advertising Delivery Utilities 2013

-1.0%

-0.3%

-0.1% -0.2%

-0.1%

• Mainly through Optimization in rent and salary expenses, 2013 Selling & Distribution

Expenses ▼1.7 p.p. YoY

• Optimization in rent and salary expenses save RMB 229 million in 2013

(0.1)

(5.9)

(2.2)

1.0 0.8

2.5 2.6 3.1

-0.1%

-4.2%

-1.6%

0.8% 0.6%

1.7% 1.8% 2.1%

12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4

Net profit attributable to owners of the parent company

Net profit margin attributable to owners of the parent company

RMB 100 Million

Sustained Growth in Profitability

10

Key Messages 1

2

3

4

Content



Appendix

11


2014

2015

2016

2017

Goal：Build Another GOME

1Y 3Y

Ensures success by 2017

1Y：2014 focus on building open supply chain system

(incl procurement/logistics/IT)

3Y：2015-2017 open up our supply chain to:

supermarkets/department stores/local chains/online

retailers

Transform from Multi-Channel Retailer

to O2M Omni-Channel Retailer

12

O2M = physical stores + e-commerce + mobile commerce’

Omni-

Channel Tier 1

Stores B2C

Dept.

Stores

Super

Markets

Other

Platforms Mobile

Terminals

Local

Chains Platform

Offline Online Mobile

Tier 2

Stores

Open

Supply

Chain

Business

Model

Big Data

Self-Owned Operation


Procurement Logistics IT

O2M Omni-Channel Supply Chain

13

Open Social Platform

Consumer

Interface

Value

Platform

Joint Operation Inventory Supply

Open Supply Chain Tactics

Store Network Tactics

E-Commerce Tactics

O2M Omni-Channel

Retailer Low-cost high-efficient supply chain lies at

the heart.

In addition to supporting 1,585* stores and

e-commerce platforms, it will also be

opened up to supermarkets and department

stores, local chains and online retailers

Through self-owned operation, joint

operation and inventory supply to build a

retail ecosystem in China

Refocus on crux of retail business &

Enhance retail value platform

Path & Tactics to Becoming

O2M Omni-Channel Retailer

14

* 1,585 stores =listed + non-listed entities

Exclusively differentiated products

• are of critical importance in the open procurement platform

• cover more than 100+ brands, 2,000+ SKU, with high GPM at 23%-27%

2013

30%

70%

30%

2017

50% 50%

Differentiated

Products

Regular

Products

Differentiated

Products

Regular

Products

Supply Chain Tactic - Open Procurement Platform

Low-price benchmark: competency in product offering from wide selections, full models, and price range

satisfying various budgets

15

Differentiated products

to be increased to 50%

Target by 2017

16

• Strengthening & extending the following business units in 2014


MVNO

• To be introduced to

supermarkets/department

stores/local chains from

Gome stores

• To improve consumer

loyalty & revenue, boost

online and the O2M

business

• To develop 1.5+ million

high ARPU users

Accessories




Gome stores

• To enrich selection of

accessories by 5,000

models

Warranty




Gome stores

• Warranty & extended

warranty for Gome

purchases

• Extended warranty for

non-Gome purchases

• Open up procurement platform to: Gome stores & Gome.Com, supermarkets/department

stores/local chains/online retailers

• Partner with suppliers in product planning, launch and marketing

17


Open

Procurement

Platform

Order, distribution & replenishment

WuMart

……

Order, distribution & replenishment Suppliers

Suppliers

……….

Joint

Planning

Mopark

Dept.Store

To cover

To cover

To cover To cover To cover

To cover

Tmall

Gome

Store

Dangdang

Gome

E-commerce

……

Mobile

Terminal

To cover To cover To cover

Joint

Planning

Joint

Planning

Upgrade I

Online/offline logistics integrated on one platform

Upgrade II

Regional based logistics become centralized

• Build modern RDCs in core cities covering neighboring areas in strategic implementation of

O2M Omni Channel

• Complete two system upgrades to facilitate integrated logistics operation and 3PL in 2014

18

Supply Chain Tactic - Open Logistics Platform

Shanghai Gome

Suzhou Gome

Nantong Gome

Jiaxing China Paradise

Shanghai China Paradise

Consumer

Consumer

Consumer

Shanghai

Logistics

Centre

Integrated

warehousing

&

Shared

inventory

Gome Online

Integrated

Delivery

Integrated

Delivery

Integrated

Delivery

Consumer

Offline:

Self-owned Operation +

Joint Operation+

Inventory Supply

IT system

Financing System

Consumer

Online:

Gome.Com + mobile

terminals

Supplier Supplier

Logistics:

Shared warehouse and

Delivery

Products

Delivery

Products

Delivery

Order + Payment

Procurement Procurement

Information + Cash Flow Information + Cash Flow

Order + Payment

• Core components: Gome logistics network + Gome Logistics system

• Nation-wide regional logistics system: covering 428 cities with1,585 delivery points

19

Supply Chain Tactic - Open Logistics Platform

* RDCs/428 warehouse/1,585 city based delivery points = listed + non-listed entities

Trucks

Warehouse

EWM

Settlement

Delivery

Information platform

Propriety Warehouse

management

External distribution

resources management

Tmall / dangdang

Supermarkets, department stores & Gome store within store

Gome online/offline

Gome Logistics Platform

Gome Logistics Network

Online/offline integrated

logistics platform

Other logistics & delivery

8* RDCs

428* Warehouses

1,585* city based delivery points

Logistics analysis

……

Nationwide

Integrated operation

Gome Logistics System

Logistic Service Benchmark:

Same-day twice delivery, accurate delivery,

and Delivery & Installation Service ( to raise

the bar of logistics service in home appliance

industry)

Open IT

Cloud

System

Supply Chain Tactic - Open IT Cloud System

Procurement Cloud Platform

Logistics cloud platform

Product cloud platform

CRM cloud platform

Operation cloud platform

Order/replenishment

Pricing/supplier

Warehouse/ delivery

Transportation/3rd party

Product/promotion

Pricing/display

Membership/after-sales

Delivery/installation

Inventory/marketing

Store/after-sales

20

Gome Online/Offline

Supermarkets/deparmen

stores/local chains

Tmall/Dangdang

……

IT Capability Benchmark：

• Support entire operational

process on individual product

• Support entire operational

process on in-store service

• Store-based, individual product-

based and individual employee-

based accounting

Services

Pricing Experience

The future belongs to those with a strong supply chain that can meet

consumer demand in product, price, service and experience

Store

Network

Products • Provide solutions

• Easy shopping , exchange &

return

• Fast delivery & installation

• Improve employees’ wellbeing

• Trend setting products

(Apple/Samsung/Nikon/Sony)

• Wide selection of SKUs

• Products to suit all budgets

• Low price, high margin

• Price competitive low-mid-

high end products

• Price match with online

retailers

• Intelligent marketplace

• Wifi & HD digital signal

• Instant paging services

21

Store Network Tactic – Store Management

Opening

• Stable total number of stores

in Tier 1&2 cities, emphatic on

flagship stores renovation

• New stores mainly to be open

in Tier 3&4 cities

• 50-100 new stores in total

• Shut stores with losses

exceeding RMB 1 million and

lacking strategic significance

• Close 30-50 stores in Tier 1&2

cities

• Sublet and/or terminate leases

of underperforming stores

• Reduce rental expenses

through GFA optimization

Extend Gome’s low-cost high-

efficient supply chain towards

other retailers, providing services

in procurement, logistics, and IT

system etc:

• Offline Channels: having

signed with Wumart(1025.HK),

Mopark Department Store,

and Zhejiang Lianhua

Supermarkets on strategic

cooperation in home

appliances and electronics

retailing

• Online Channels: having

signed with Tmall.Com,

Buy.Ccb.Com and

Dangdang.Com on strategic

cooperation

Closure

Rent

Channel Optimization in Tier 1&2 Cities

Expansion in Tier 3&4 Cities

22

Store Network Tactic – Network Expansion

E-commerce Tactics

Consumer Experience

Online:

Self-Owned

Operation &

Joint Operation

Mobile

Terminal

Other Online

Platforms

O2M

Partnership

Omni-

Channel

Key

Open

Supply

Chain Big Data Analysis

Gome’s Low-Cost High-Efficient Supply Chain

Procurement Logistics IT

23

• Breakthrough: traditional appliances and consumer electronics

Integrated supply chain

Integrated logistics network

Shared 100 million members

Shared offline advertising

Congregated big data

Guaranteed lowest price

Price match

Online products available in stores

Online order & offline delivery

Online order & offline pickup,

exchange & return

24

We now offer for online & offline

E-commerce Tactics

Benefits of Omni-Channel Supply Chain

15

2013 2017 2013

O2M Omni-Channel Retailer Strategy

Refined store management

New stores

E-commerce

Supermarkets, department stores,

and Local chains

Build Another GOME by 2017

Low-Cost High-Efficient

Supply Chain

Extension

Key Messages 1

2

3

4

Content



Appendix

26

Amount in RMB Million As of 31st Dec 2012 As of 31st Dec 2013 Change

Balance sheet

Cash & cash equivalents 7,067 9,016 27.6%

Pledged deposits 6,240 6,407 2.7%

Pledged deposit ratio (excl DGPOL) 33.1% 32.9% (0.2) p.p.

Inventories 7,779 8,221 5.7%

Inventory turnover days 74 61 (13) Days

Trade payables 6,630 5,992 (9.6)%

Trade payable turnover days 59 48 (11) Days

Bills payables 11,387 12,085 6.1%

Bills payable turnover days 91 89 (2) Days

Cash flow Statement

Net cash flows from operating activities

4,140 1,995 -51.8%

Cash flows used in investing activities

(829) (328) -60.5%

Cash flows used in financing activities

(2,666) 294 111.0%

Balance Sheet & Cash Flows Statement

27

DGPOL: Domestic Guarantee Pledged for Overseas Loan. Note: Discrepancy due to rounding error

13.3% 15.1%

1.1%

0.9% 2.3%

2.4%

2012 2013

Other income

Other net income from suppliers

Gross profit from suppliers

RMB Million 2012 2013

Revenue 51,097 56,401

Consolidated Gross Profit 8,513 10,354

Consolidated Gross Profit

Margin 16.7% 18.4%

Gross Profit Margin from

Suppliers 13.3% 15.1%

Other Income 3.4% 3.3%

Income from suppliers 1.1% 0.9%

Management fee from non-

listed Gome Group 0.5% 0.4%

Income from air conditioner

installation 0.2% 0.2%

Gross rental income 0.5% 0.5%

Government grants 0.4% 0.3%

Others 0.7% 1.0%

16.7% 18.4%

8,513

10,354

RMB Million

Consolidated Gross Profit Margin

28


2012 2013 Change

Selling &

Distribution

Expenses 14.4% 12.7% (1.7)

Rent 6.3% 5.3% (1.0)

Sales Salaries 3.2% 2.9% (0.3)

Advertising 1.8% 1.6% (0.2)

Delivery 0.8% 0.7% (0.1)

Utilities 0.9% 0.8% (0.1)

Other S&D 1.4% 1.4% (0.0)

Administrative

Expenses 2.9% 2.8% (0.1)

Other Expenses 0.9% 1.1% 0.2

Total 18.2% 16.6% (1.6)

19.8%

18.5%

16.7%

18.4%

17.1% 17.0%

15.8%

16.4%

Operating Expenses/Revenue

Operating Expenses

29

Expenses/Revenue


-34.9% -27.3% -23.4% -22.6%

16.9% 15.1% 12.4% 13.7%

121Q 121H 123Q 12FY 131Q 131H 133Q 13FY

Average Sales per Store

4,087 4,026 3,977 3,865 3,758 3,684 3,614 3,592

12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4

1,000 sq.m

RMB Yuan

RMB Million

Number of comparable stores：

Period-end Sales Area

Average Sales per sq.m

Same Store Sales Growth

840 813 791 774 971 947 911 897

8.7 11.2 11.5 10.4 10.7

12.9 12.7 13.1

12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4

2,471 3,204 3,269 2,994 3,086 3,748 3,721 3,873

12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4

Store Indicators

30

18%

9% 9% 8% 6% 6% 5%

39%

Beijing Guangzhou Shanghai Shenzhen Chengdu Xi'an Tianjin Others

2012 Revenue: RMB 51.1 billion

2013 Revenue: RMB 56.4 billion

18%

10% 10% 9% 6% 6% 5%

36%

北京广州上海深圳成都西安天津其他 Beijing Guangzhou Shanghai Shenzhe Chengdu Xi’an Tianjin Others Beijing Guangzhou Shanghai Shenzhen Chengdu Xi’an Tianjin

Revenue by Region

31

14% 15% 15%

10%

17%

9%

12%

16% 16%

17%

12%

19%

9%

12%

AV Air-con FridgeWashingMachine

Tel-comm SmallAppliances

Computer Digital

2012 2013

23%

14%

18%

16%

12% 11%

6%

24%

15%

20%

15%

12%

10%

4%

AV Air-con FridgeWashingMachine

Tel-comm SmallAppliances

Computer Digital

2012 2013

Revenue by Category Gross Profit Margin by Category

Revenue & Gross Profit Margin by Category

32

Store Network

33

As of 31st December 2013 Group GOME ChinaParadise Dazhong Cellstar

Flagship stores 212 150 35 27 0

Standard stores 327 273 38 16 0

Specialized stores 536 399 82 13 42

Total: 1,075 822 155 56 42

T1 Market 683 482 112 52 37

T2 Market 392 340 43 4 5

Net store increase/(decrease) in 2013: (33) (20) (6) (3) (4)

Number of stores newly opened: 93 77 14 1 1

T1 Market 47 40 6 1 0

T2 Market 46 37 8 0 1

Number of cities accessed: 260 221 59 1 6

T1 Cities 26 20 9 1 1

T2 Cities 234 201 50 0 5

Number of cities newly accessed 13 12 1 0 0

Top Five Suppliers in 2012

Top Five Suppliers in 2013

13.7% 11.3% 5.9% 4.4% 4.3%

39.6%

Samsung Haier Midea Gree Hisense Top Five

12.4% 11.4% 5.1% 4.1% 3.6%

36.6%

Haier Samsung Midea Apple Hisense Top Five

Top Five Suppliers

34

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Omni-Channel Retailer - TodayIR.comThis presentation and the accompanying slides (the “Presentation”) which have been prepared by GOME Electrical Appliances Holding Limited (“GOME”

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