CLSA 21st Investors' Forum

15 September 2014

Chow Tai Fook Jewellery Group Limited

Agenda

About Chow Tai Fook

Financial Highlights and Business Outlook

Initiatives to Enhance Understanding of

Customers

About Chow Tai Fook

2014

2011

2003

1998

1990

1956

Opened our first POS in Mainland China

The first to launch the 999.9 gold jewellery products in Hong Kong & Macau, and became an industry standard in 1980s

Implemented the “Fixed Price” policy which enhanced the pricing transparency and customers’ shopping experience

Listed on the Main Board of The Stock Exchange of Hong Kong (stock code: 1929)

1929

Started engaging in the jewellery business

Centralised PRC operations and established the headquarters in Shenzhen

Opened our 2,000th POS in Wuhan

The largest jeweller by market share in Mainland China, Hong Kong & Macau

The world’s largest pure-play jeweller by market capitalisation

3

The Story of Chow Tai Fook

4

Loyal, highly-experienced & dynamic management team

Vertically integrated business model

Extensive retail network with deep access to rising consumer spending

Diversified product portfolio

Our Unrivalled Competitive Strengths

Iconic & trusted brand with 85 years of heritage

Procurement of raw materials

Well established

relationship with

global suppliers

e.g. De Beers,

Rio Tinto,

ALROSA, etc

Rough diamond cutting and

polishing

4 diamond cutting

and polishing sites

in Botswana,

South Africa and

Mainland China

Process over

190,000 carat of

diamonds yearly

Dia

mo

nd

an

d g

em

sto

ne

s P

rec

iou

s

me

tals

Designs Award-winning

R&D team with

over 600

employees

Jewellery

manufacturing

4 production sites

in Shunde,

Shenzhen, Wuhan,

and Hong Kong

Produce almost

50% of products

sold

Retail and Wholesale

Over 2,000 POS in

Mainland China,

Hong Kong, Macau,

Taiwan, Singapore

and Malaysia

Sold over 20 million pieces of product

yearly

Over 1,300,000 members under

Chow Tai Fook

Membership

Programme

Upstream Midstream Downstream

5

Our Vertically Integrated Business Model

6

Jewellery Park, Wuhan

Occupied area

(secured)

221,000 m2

Production

capacity

(annual)

Over 1 million jewellery pieces at the

end of FY2015

Investment Estimated investment:

- HK$2.6 billion up to FY2018

Investment spent up to FY2014:

- HK$130.2 million

Jewellery

Production

16%

77%

7%

Furniture,

Fixtures and

Equipment

Land & Buildings

Plant and

Machineries

& Motor

Vehicles

Logistics and

Distribution

Training E-commerce

Jewellery

Business

Support

Sales

Exhibition

and Tourism

2,123 POS as at 30 June 2014

Target 200 net Jewellery POS openings in FY2015

7

Our Extensive Retail Network

Hong Kong, Macau and other Asian markets

Mainland China

116 POS as at 30 June 2014

4 net Jewellery POS openings in

1QFY2015

2,007 POS as at 30 June 2014

42 net Jewellery POS openings in

1QFY2015

8

17.2%

51.7%

31.1%

12.8%

46.3%

40.9%

By tier of cities

(Total: 1,828 POS)

% of % of

RSV1 POS

Tier I

Tier II

Tier III & others

Retail Network Management – FY2015

Leverage on quality franchisees for the expansion of POS in lower tier cities

Strategically enrich product offerings & increase selections of SKUs & collections at store level

¹ RSV = Retail sales value is measured at the ending price (VAT inclusive, if any) of products sold to customers in self-operated POS and franchised POS

17.0%

19.5%

17.6%

16.3%

18.6%

11.0%

17.3%

18.2%

19.1% 15.4%

19.1%

10.9%

By geography

(Total: 1,828 POS)

% of % of

RSV1 POS

Eastern

Southern

Western

Northern

Central

Northeastern

61.3%

10.4%

28.3%

56.4%

8.3%

35.3%

By operation model

(Total: 1,828 POS)

% of % of

RSV1 POS Self-Operated (Concessionaire) Self-Operated (Others) Franchised

Our Jewellery POS Network – Mainland China

(As at 31 March 2014)

9

Our Diversified Product Portfolio

Mass

luxury

Youth

line

Broad product

portfolio ranging

from high-end luxury

to mass luxury and

youth line segments

Mass luxury accounts for over

80% of our Group’s revenue

Broad product

offerings include

one-of-a-kind

pieces, patented,

proprietary and

licensed collections

Design-oriented

collections with sophisticated

craftsmanship

High-end

luxury “Reflections of Siem” Collection

“The Perfect One” Wedding Collection

“Bao Bao Family” Collection “Magic Square” Collection

“Angry Bird” Collection “Disney Classic” Collection

Financial Highlights &

Business Outlook

Revenue by operation model

(HK$ m)

Revenue by product

(HK$ m)

FY2012 FY2013 FY2014

Gem-set jewellery

Gold products

Platinum / Karat gold products

Watches

4.3%

57,434

77,407

56,571

27.2% 22.9%

21.1%

52.6% 57.4%

61.2%

13.8%

6.4%

14.5% 13.4%

5.2%

FY2012 FY2013 FY2014

18.2%

Hong Kong, Macau and other Asian markets

Hong Kong, Macau and other Asian markets (Revenue settled in RMB or

China UnionPay)

Mainland China

52.8% 56.6%

56,571 57,434

77,407

21.0% 25.1%

54.5%

22.4% 22.1%

27.3%

FY2012 FY2013 FY2014

Retail

Wholesale

56,571 57,434

77,407

87.6% 83.5%

12.4% 16.5%

86.8%

13.2%

11

Revenue by geography

(HK$ m)

Revenue Breakdown

3.4%

-7.8%

21.0%

13.8%

-27.9%

-6.3% -1.0%

47.0%

-1.3%

-50.1%

-1.7% -4.5%

33.0%

6.6%

-39.9%

Mainland China Hong Kong, Macau & Taiwan Overall

2HFY2013 1HFY2014 1HFY2013 2HFY2014 1QFY2015

12

SSSG by Geography

-10.1% -9.5%

5.3% 10.8%

1.7% 2.0%

-1.7%

56.0%

5.4%

-56.0%

-1.7% -4.5%

33.0%

6.6%

-39.9%

Gem-set jewellery Gold products Overall

2HFY2013 1HFY2014 1HFY2013 2HFY2014 1QFY2015

13

SSSG by Product

14

Selling, general, administrative and other

expenses (SG&A expenses) (HK$ m)

Rental expenses / Concessionaire fees’

structure1 (%)

2.1%

3.0% 3.5%

10.7%

9.8%

9.2%

Rental expenses - Hong Kong and Macau

Concessionaire fees - Mainland China

FY2013 FY2014 FY2012

¹ Rental and concessionaire fees’ structure represents the % of rental expenses in HK/Macau and the concessionaire fees in Main land China to their respective retail revenue

FY2012 FY2013 FY2014

Staff costs Concessionaire fees

Rental expenses Advertising and promotion

Depreciation Other SG&A

5.5%

14.4%

16.0% 15.8%

As % of Revenue

5.5%

5.7%

3.9%

1.2% 0.8%

2.3%

3.7%

1.4%

0.8%

2.7%

5.7%

3.3%

1.3%

2.7%

8,164

9,182

0.7%

0.8%

1.8%

12,245

2.0%

SG&A and Other Expenses

15

Key Information

Consideration and funding Approximately US$150 million funded internally

100% of HOF on a cash-free and debt-free basis Business to be acquired

Acquisition of HOF

HOF’s operations Existing operations of HOF will continue to run on a standalone basis

under the leadership of the existing team at HOF

16

Company Background Product Category Overview

InDesign Magazine –

50 most visible jewellery brands (2012)

1 Tiffany

2 Pandora

3 Hearts On Fire

4 Cartier

7 Forevermark

12 Harry Winston

13 Bulgari

Bridal

Fashion / Classic

A luxury branded diamond company offering premium bridal and fashion jewellery products using The World’s Most Perfectly Cut Diamond®

Global presence with over 500 POS in 31 countries,

with US being its largest market

Appealing brand proposition to the Chinese community with proven success in Taiwan

Audited sales of US$99m and US$105m in 2012 and 2013, respectively

80% wholesale and 20% retail

Acquisition of HOF

Designer collections

Complementary brand and portfolio position to the CTF’s product offerings A higher value exclusive and unique luxury diamond brand in-line with CTF’s

strategies to optimise product mix and promote higher value products

17

Ownership of a global luxury diamond brand and world-class production

and design Ranked as the 3rd most visible jewellery brand in 2012 by InDesign Magazine, with

strong technological and design know-how that can be shared with CTF

Positive contribution to the financial and operations of CTF HOF’s existing management team will continue to run HOF’s profitable existing

operation on a standalone basis, while CTF will focus on its business in China

Ready for “plug-and play” at CTF’s existing distribution network in China “Shop-in-shop” and “counter-in-shop” models to quickly roll out HOF’s products

Acquisition of HOF

Transaction Rationale

18

Business Outlook

Cautiously optimistic on FY2015

Increase the penetration into lower tier cities through franchisees

Increase the number of SKUs and choices of collections at POS level

E-commerce and O2O (online-to-offline) interactions

Further strengthen the infrastructure and IT system

Initiatives to Enhance

Understanding of Customers

Online-to-Offline

(O2O) Interactions

Interactive Shopping

Environment at POS Level

Exclusive Jewellery Events

held beyond POS Level

Customer Relationship

Management (CRM)

20

360° Shopping Experience

360° 360°

21

360° Shopping Experience

360° 360°

Know Your Customers

Online Environment

Business

Intelligence

System

Offline Environment

Overhead People Counter

22

Understanding our Customers

Foot traffic trend

Conversion rate

ASP per transaction

No. of pieces per

transaction

Analysis

Overhead

people

counter

Sales

transaction

record

+

Central vs Tsim Sha Tsui

23

Understanding our Customers

9,085

13,941

11,512

9,954

11,841

10,674 11,294

12,029

12,359

10,395

10,859 11,363

10,048

6,868 7,329

7,264

7,143

7,056

7,339

7,168 7,277

5,956

6,364

6,138

5,818

5,688

Central Tsim Sha Tsui

Source: Company data

ASP per transaction (HK$)

10% 10%

8% 8%

9%

10%

10%

9% 7%

8%

8%

8%

10%

13% 13%

12%

12%

14%

15%

14%

12%

11%

12%

12%

12% 12%

Central Tsim Sha Tsui

Source: Company data

Conversion rate (%)

Smart Tray – Patented Technology

24

Understanding our Customers

Smart Tray

Products and SKUs

Customer serving time

Sales transactions

Nationality

Gender

Age

Purpose of purchases, etc

Smart Tray – Sales Assistant Function

25

Understanding our Customers

Exchange rate

conversion

Display of the product features

and price calculation

Product features

Retail price

List of stock in

other POS

Product

at other

POS

locations

1 Customers served by Smart Trays in a selected POS in Tsim Sha Tsui, July 2014

Smart Tray – Business Analytics Function

26

Understanding our Customers

11%

46%

12% 7%

19%

3% 2%

35%

23%

13% 11%

8% 6% 4%

Product type mix (%)

Source: Company data

Purchase (%)

View (%)

48%

21%

10% 8% 7%

5%

31-40 21-30 >60 51-60 40-50 <20

Age Group (%)

Ranking of customer served1 by

age group (%)

Rank #1

Rank #2

Source: Company data

CTF Member Database

27

Understanding our Customers

Diamond,

Platinum and

Gold members

Basic

members

Future Trend

• Data integration

• Translation into business insight

• Steering business development

1 RSV = Retail sales value is measured at the ending price (VAT inclusive, if any) of products sold to customers in self-operated POS and franchised POS

Number of members

and their contribution

to RSV1

Proportion of Diamond,

Platinum and Gold

members and their

contribution to RSV1

ASP and product

types of members’

purchases

Repeat purchases to

RSV1

E-commerce CRM System

Understanding our Customers

All customers’ trails and footprints are systematically captured and retained

Facilitate timely follow-up on complete and incomplete transactions

Enhance customer behavioural analysis

E-commerce CRM System

Customer Attrition

Customer Retention

28

Q&A Session

Thank You

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The information contained in this presentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or

subscribe for any securities or other interests of the Company or its holding Company or any of its subsidiaries in any jurisdiction or an inducement to enter into any

investment activity, nor shall it or any part of it form the basis of or be relied on in connection with any contracts, commitment or investment decision whatsoever.

This presentation contains forward-looking statements. Such forward-looking statements are based on a number of assumptions about the operations of the

Company and other factors, many of which may be beyond the Company’s control. By their nature, forward-looking statements involve risks and uncertainties

because they relate to events and depend on circumstances that may or may not occur in the future. Accordingly, the Company’s actual results may differ materially

from those expressed or implied by such forward-looking statements. The Company has no obligation and does not undertake to update or revise any forward-

looking statements, whether as a result of new information, future events or otherwise. The information contained in this presentation has been compiled as of the

date of this presentation, speaks as of the date of this presentation (or earlier, if so indicated) and will not be updated to reflect material developments which may

occur after the date of this presentation, and is subject to change, including substantial changes, without notice.

This presentation may include measures of financial performance which are not a measure of financial performance under IFRS, such as “EBIT”. These measures

are presented because the Company believes they are useful measures to determine the Company’s operating cash flow and historical ability to meet debt service

and capital expenditure requirements. “EBIT” should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an

alternative to net profit or indicators of the Company’s operating performance on any other measure of performance derived in accordance with IFRS. Because it is

not an IFRS measure, “EBIT” may not be comparable to similarly titled measures presented by other companies.

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and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information or opinion contained herein. It is not the intention to

provide, and you may not rely on this document as providing, a complete or comprehensive analysis of the Company’s financial or trading position or

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