I.

Introduction

Type Subsidiary
Industry Retail (Convenience stores
Founded 1927; 92 years ago (as Tote'm Stores)
Founders Joe C. Thompson, Gordon Cheung, Cynthia Ma
Headquarters Dallas, Texas, U.S
Number of locations 68,236
Key people Joseph DePinto
(CEO & President)
Stanley Reynolds
(EVP & CFO)
Products Slurpee beverage
Big Gulp beverage cup
Other products include: coffee, candy, prepared foods, gasoline,
dairy, snacks, various assortment of beverages
Number of employees 45,000 (2010 NA)
II. Company Profile
Philippine Seven Corporation (“PSC”) was registered with the Securities and
Exchange Commission (“SEC”) on November 23, 1982. It acquired from
Southland Corporation (now Seven Eleven, Inc. or “SEI”) of Dallas, Texas the
license to operate 7-Eleven stores in the Philippines in December 13, 1982.
Operations commenced with the opening of its first store in February 29, 1984
at the corner of Kamias Road and EDSA Quezon City, Metro Manila.
Considering the country’s economic condition at that time, the Company grew
slowly in its first few years of existence.

In July 28, 1988, PSC transferred the Philippine area license to operate 7-
Eleven stores to its affiliate, Phil-Seven Properties Corporation (“PSPC”),
together with some of its store properties. In exchange thereof, PSC received
47% of PSPC stock as payment. Concurrent with the transfer, PSC entered into
a sublicensing agreement with PSPC to operate 7-Eleven stores in Metro
Manila and suburbs. As part of PSPC’s main business, it acquired or leased
commercial properties and constructed retail store buildings, leasing the
buildings to PSC on long term basis together with most of the capital
equipment used for store operations. In effect, PSC concentrated on managing
its stores and effectively took the role of a pure retailer.

In May 2, 1996, the stockholders of both PSC and PSPC approved the merger of
the two companies to advance PSC group’s expansion. In October 30, 1996,
SEC approved the merger and PSPC was then absorbed by PSC as the surviving
entity. With the consolidation of the respective lines of business of PSC and
PSPC, PSC’s retailing strengths were complemented by PSPC’s property and
franchise holdings. Their management as a single entity enhanced operational
efficiency and strengthened ability to raise capital for growth. PSC listed its
shares (SEVN) in the Philippine Stock Exchange and had its initial public
offering in February 04, 1998. The shares were offered at the price of P4.40
per share from its par value of P1.00 per share. In September 17, 1998, PSC
established Convenience Distribution Inc. (“CDI”), a wholly owned subsidiary,
to provide logistics planning and services to its 7-Eleven stores.
With the effectivity of the Retail Trade Liberalization Act (R.A. 8762) on March
25, 2000, foreign entities were allowed to invest in an existing retail company
subject to the requirements of the law. President Chain Store (Labuan)
Holdings, Ltd. (PCSL), a Malaysian investment holding company, purchased
119,575,008 common shares of PSC or 50.4% of PSC’s outstanding capital
stock at the price of P8.30 per share. The purchase was made under a tender
offer during October 9 to November 7, 2000. PCSL is affiliated with President
Chain Store Corporation, which is also the 7-Eleven licensee in Taiwan. This
provided source for technical support to strengthen PSC’s organizational
structure and operating systems and pursue store expansion plans. A new
affiliate, Store Sites Holding, Inc., was also established on November 9, 2000,
as the entity to own land properties. These land properties are leased to PSC
by SSHI.

PSC’s area license to operate 7-Eleven Stores in the Philippines was renewed in
August 31, 2007 for another term of 20 years, renewable every 10 years. The
Renewal Area License Agreement has been approved by and registered with
the Intellectual Property Office as of September 25, 2007.
PSC initiated the establishment of PhilSeven Foundation, Inc. (PFI) in October
2, 2007 to support its corporate social responsibility programs. PFI was granted
a certificate of registration by DSWD on August 6, 2010, after completing the
2-year operations requirement. BIR issued a certificate of registration to PFI
dated December 21, 2011 recognizing PFI as a donee institution. In October
10, 2013, PFI became a member of the League of Corporate Foundations, Inc.
In July 08, 2016, DSWD issued a Certificate of Registration to PFI allowing it to
expand its operations from NCR to nationwide which is valid for 3 years.

As of December 31, 2018, the Company has a total of 3,166 direct hires and
augments its temporary needs during peak hours or season in the stores and
the support services units with cooperative members. There is no existing
labor union in the company and collective bargaining agreement. There is a
PSC Employees’ Council which communicates to management the employees
concerns. There has been no strike or threat to strike from the employees for
the past three years.

The Company provides supplemental benefits or incentives to its employees

such as: retirement benefit plan, health card group life and and accident
insurance plan, various employee programs and recognition of top performing
employees and service awards among others.

Recognizing the need of employees for growth, training and development

programs are regularly provided by PSC across all levels. For Senior
Management and Officers, the company conducts a Leadership Academy &
Mentor’s Leadership Training Program with the objective in line with the
Company’s succession planning program. In-house trainings on leadership
skills, products, basic negotiation, change management, retailer initiative and
basic operating and quality assurance procedures are also provided by the
Company to employees. These are offered periodically based on annual
training calendar every month or quarterly. In-house trainings are designed to
augment and develop the employees skills and competencies.

The top risks in retail industry to which PSC belongs include increase in
competition, brand reputation and business operations/supply chain
continuity. Meanwhile, the main risks arising from the Company’s financial
instruments are credit risk, liquidity risk, and interest rate risk. The Audit &
Risk Committee ensures the integrity of internal control activities, develops,
oversees, checks and preapproves financial management functions and
systems in the areas of credit, market, liquidity, operational, legal and other
risks and crisis management. The Internal Audit Division and the External
Auditor directly report to the Audit Committee regarding the direction, scope
and coordination of audit and any related activities.
PSC continually observes the activities of competitors in the relevant market,
which operate in various retail formats, all selling typical products and services
for c-stores (branded foreign/ local or generic), mini-marts, gas marts,
drugstore-marts, groceries, supermarkets ( including their express or junior or
smaller formats), and other hybrid stores. As part thereof, the Corporation
estimates it market share within the sector at 26% as to store count. In terms
of fast moving consumer goods offered by the aforementioned retailers, PSC
accounts for 2% of the value sales of the market.