Samsung C&T Corporation and Subsidiaries

Samsung C&T Corporation and Subsidiaries Consolidated Interim Financial Statements September 30, 2017 and 2016 Samsung C&T Corporation and Subsidiaries Index September 30, 2017 and 2016

Pages

Report on Review of Interim Financial Statements ………………………...... 1 - 5

Consolidated Interim Financial Statements

Consolidated Interim Statements of Financial Position …………………………………………….. 6 - 8

Consolidated Interim Statements of Comprehensive Income...... 9 - 10

Consolidated Interim Statements of Changes in Equity...... …………...... 11 - 12

Consolidated Interim Statements of Cash Flows…………………………………………………….. 13 - 14

Notes to the Consolidated Interim Financial Statements...... ……....……...... 15 - 102

Report on Review of Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of Directors of Samsung C&T Corporation

Reviewed Financial Statements We have reviewed the accompanying consolidated interim financial statements of Samsung C&T Corporation (the Company) and its subsidiaries (collectively referred to as the “Group”). These financial statements consist of the consolidated interim statement of financial position of the Group as at September 30, 2017, and the related consolidated interim statements of comprehensive income for the three-month and nine-months periods ended September 30, 2017 and 2016, and consolidated interim statements of changes in equity and cash flows for the nine-month periods ended September 30, 2017 and 2016, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to issue a report on these consolidated interim financial statements based on our review.

We conducted our review in accordance with quarterly or semi-annual review standards established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion Based on our review, nothing has come to our attention that causes us to believe the accompanying consolidated interim financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS 1034 Interim Financial Reporting.

Emphasis of Matters Without qualifying our opinion, we draw attention to the following area of focus:

Auditor’s emphasis on area of focus on construction contracts 1

Area of focus on construction contracts in accordance with the Practical Guidance of Auditing Standard 2016-1 are those matters that, in the auditor’s professional judgment and communication with those charged with governance, were of most significance in the review of the consolidated interim financial statements of the current period. These matters were addressed in the context of the review of the financial statements as a whole, and the auditor does not provide a separate opinion on these matters.

As described in the "Auditor’s responsibility", it is our responsibility to conduct our review in accordance with quarterly or semi-annual review standards established by the Securities and Futures Commission of the Republic of Korea and to issue a report based on our review. A review of the area of focus on construction contract consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

- Uncertainty of the estimated total contract costs

As described in Note 2 to the consolidated interim financial statements, the Group recognizes contract revenue and contract costs associated with the construction contract as revenue and expense respectively based on the percentage of completion of the contract activity at the end of the reporting period when the outcome of a construction contract can be estimated reliably. The percentage of completion of the contract activity is the proportion of costs incurred to date divided by the estimated total costs of the contract. Also, as described in Note 4 to the consolidated interim financial statements, total contract costs are estimated based on future expectation of material costs, labor costs, construction period and others.

In addition, Note 5 to the consolidated interim financial statements states that changes in the estimated total contract costs by construction types for the nine-month period ended September 30, 2017, amount to \ 2,606,718 million, which is 106% of changes in the estimated total contract revenue. It also states that impact on profit or loss for the current period and in the succeeding periods amounts to \ (72,633) million and \ (80,524) million, respectively.

For a construction contract, it is probable that an unexpected change in the estimated total contract costs may incur due to changes in market price of raw materials, construction delays caused by natural disasters, changes in foreign currency exchange rates, and risks associated with developing a new market and others. Considering the impact of an increase in uncertainty of estimating total contract costs and changes in the estimates on the Group’s profit or loss for the period, we identified the uncertainty of the estimated total contract costs as a significant risk.

1 This paragraph is being included in accordance with the “Practical Guidance of Auditing Standard 2016-1, Practical Guidance for Special Consideration in Auditing Construction Contracts”, prescribed by Korean Institute of Certified Public Accountants, and should not be considered as a communication of key audit matter described in International Standards on Auditing 700 (Revised).

In respect of the uncertainty of the estimated total contract costs on the Group’s consolidated financial statements, we have performed the following review procedures as at September 30, 2017.  Made inquiries and performed analytical review procedures on how major components of the estimated total contract costs has changed by reporting periods.  Made inquiries and performed analytical review procedures on appropriateness of estimated total contract cost component for each project.  With regards to the projects where the estimated total contract costs has changed significantly, made inquiries about reasons for the significant changes in the estimated total contract costs.  With regards to the projects where the ratio of estimated total contract costs to estimated total contract revenue has a material change comparing to the ratio of final contract costs to final total contract revenue, made inquiries about reasons for the difference.

- Measurement of percentage of completion

As described in Note 2 to the consolidated interim financial statements, the Group measures the percentage of completion by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. For a construction contract, it is probable that costs that do not reflect the percentage of completion and costs that are not chargeable to the customers may be incurred due to additional costs from change of circumstances, delay in the customer’s progress payment, concentration of costs incurred in certain periods and other reasons. There is a risk that the percentage of completion measured by reference to the costs incurred and the actual construction progress may be significantly different; therefore, we identified the Group’s measurement of percentage of completion as a significant risk.

We performed the following review procedures with regards to estimated total contract costs and cumulative contract costs incurred, which affect the Group’s measurement of percentage of completion.  Made inquiries about reasons for quarterly changes in the percentage of completion.  Made inquiries why contract costs have increased, and how they are expected to be.  Made inquiries to determine the existence of costs that are not reflected in the percentage of completion, and are excluded from both cumulative contract costs incurred and estimated total contract costs. Made inquiries on how these costs have been accounted for, if any.

- Collectability of the gross amount due from customer for contract work

As described in Note 2 to the consolidated interim financial statements, the Group presents the gross amount due from customer for contract work as an asset for all contracts in progress for which costs incurred plus recognized profits (less recognized losses) exceed progress billings, and presents the gross amount due to customers for contract work as a liability for all contracts in progress for which progress billings exceed costs incurred plus recognized profits (less recognized losses).

In addition, Note 5 to the consolidated interim financial statements describes that the Group’s due from customers for contract work as at September 30, 2017 amounts to \ 1,330,082 million, consisting 44% of total trade receivables related to contract work. The amount of due from customers for contract work is material to the Group, and the uncertainty in collectability has increased recently due to delayed payment, change in terms of payment, claims, and others; therefore, we identified collectability of the gross amount due from customers for contract work as a significant risk.

We have performed the following review procedures for the projects whose due from customers for contract work have increased significantly for the nine-month period ended September 30, 2017.  Made inquiries about payment terms, conditions of liquidated damages, duration of contract and other requirements.  Made inquiries whether contractual due date of payment for the project has arrived, and whether the customer is financially stable.

- Accounting treatment regarding variations in contract work

As described in Note 2 to the consolidated interim financial statements, the Group measures total contract revenue based on the initial amount of revenue agreed in the contract. Change in contract revenue due to variations in contract work, and other occasions is recognized when it is probable that the customer will approve the increase in revenue due to the changes in contract work, or when it is probable that the Group will be able to satisfy the performance requirements and the amount can be estimated reliably.

However, the measurement of contract revenue is affected by a variety of uncertainties that depend on the outcome of future event; for example, the amount of contract revenue may increase as a result of variations in contract work, claims and inventive payments; on the other hand, the amount of contract revenue may decrease as a result of penalties arising from delays caused by the Group in the completion of the contract. These variations in contract work and liquidated damages may have an impact on total contract revenue; therefore, we identified accounting treatment regarding variations in contract work as a significant risk.

We performed the following review procedures in respect to the accounting treatment regarding variations in contract work and its disclosure.  Made inquiries about reason for significant change in total contract amount.  Made inquiries about any projects that are probable in delay (or expected to be delayed) which is likely to bear liquidated damages.  Made inquiries on the Group’s accounting policies for estimation of liquidated damages due to delay of completion.  Made inquiries on possibilities of customer’s approval for change in total contract revenue due to variations in contract work.  Made inquiries about impact on estimated total contract costs and percentage of completion caused by variations in contract work.

Other Matters We have audited the consolidated statement of financial position of the Group as at December 31, 2016, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, in accordance with Korean Standards on Auditing. We expressed an unqualified opinion on those financial statements, not presented herein, in our audit report dated March 16, 2017. The consolidated statement of financial position as at December 31, 2016, presented herein for comparative purposes, is consistent, in all material respects, with the above audited statement of financial position as at December 31, 2016.

The accompanying consolidated interim financial statements as at September 30, 2017 and December 31, 2016, and for the three-month and nine-month periods ended September 30, 2017 and 2016, have been translated into U.S. dollars solely for the convenience of the reader and have been translated on the basis set forth in Note 3 to the consolidated interim financial statements.

Review standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries.

Seoul, Korea November 14, 2017

This report is effective as of November 14, 2017, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that there is a possibility that the above review report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

5 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Financial Position September 30, 2017 and December 31, 2016

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016 (Unaudited) (Unaudited) Assets Current assets Cash and cash equivalents 7 ￦ 2,657,091 ￦ 2,698,530 $ 2,317,163 $ 2,353,301 Short-term financial instruments 7 81,025 1,058,872 70,659 923,408 Available-for-sale financial assets 7,11 247 2,033 215 1,773 Trade receivables 7,8 4,544,392 5,383,853 3,963,018 4,695,084 Other current assets 7,8 2,854,828 2,881,915 2,489,603 2,513,225 Inventories 6 1,569,980 1,312,829 1,369,129 1,144,876 Total current assets 11,707,563 13,338,032 10,209,787 11,631,667 Assets held for sale 12 49,627 20,522 43,278 17,897 Non-current assets Available-for-sale financial assets 7,11 22,471,433 17,497,196 19,596,610 15,258,739 Investments in associates and joint ventures 12 5,808,560 5,699,709 5,065,457 4,970,532 Property, plant and equipment 13 4,962,191 5,281,209 4,327,366 4,605,571 Investment properties 14 671,323 116,281 585,439 101,405 Biological assets 15 2,365 2,505 2,063 2,185 Intangible assets 13 1,418,092 1,601,303 1,236,672 1,396,444 Deferred tax assets 69,869 52,815 60,932 46,059 Other non-current assets 7,8 708,702 848,943 618,036 740,335 Total non-current assets 36,112,535 31,099,961 31,492,575 27,121,270 Total assets ￦ 47,869,725 ￦ 44,458,515 $ 41,745,640 $ 38,770,834

6 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Financial Position September 30, 2017 and December 31, 2016

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016 (Unaudited) (Unaudited) Liabilities Current liabilities Trade payables 7 ￦ 1,353,744 ￦ 1,823,810 $ 1,180,556 $ 1,590,485 Short-term borrowings 7,16 2,214,352 1,865,815 1,931,065 1,627,117 Current portion of long-term borrowings 7,16 1,298,430 1,607,367 1,132,318 1,401,733 Current tax liabilities 38,772 51,527 33,812 44,935 Other current liabilities 5,7,10,18 8,839,990 9,356,429 7,709,070 8,159,439 Total current liabilities 13,745,288 14,704,948 11,986,821 12,823,709 Non-current liabilities Debentures and long-term borrowings 7,16 2,734,161 3,657,278 2,384,373 3,189,394 Net defined benefit liability 17 153,981 100,687 134,281 87,806 Deferred tax liabilities 5,539,142 4,253,107 4,830,509 3,708,996 Provisions 5,18 267,686 278,292 233,440 242,690 Other non-current liabilities 7,10 258,354 358,492 225,302 312,630 Total non-current liabilities 8,953,324 8,647,856 7,807,905 7,541,516 Total liabilities 22,698,612 23,352,804 19,794,726 20,365,225

7 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Financial Position September 30, 2017 and December 31, 2016

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016 (Unaudited) (Unaudited) Equity Share capital 20 19,132 19,132 16,684 16,684 Consolidated share premium 10,468,265 10,468,266 9,129,036 9,129,036 Other components of equity 21 6,332,241 2,584,211 5,522,142 2,253,607 Consolidated retained earnings 5,630,713 5,229,978 4,910,363 4,560,895 Equity attributable to owners of the Parent Company 22,450,351 18,301,587 19,578,225 15,960,223 Non-controlling interests 1 2,720,762 2,804,124 2,372,689 2,445,386 Total equity 25,171,113 21,105,711 21,950,914 18,405,609 Total liabilities and equity ￦ 47,869,725 ￦ 44,458,515 $ 41,745,640 $ 38,770,834

The U.S. dollar figures are provided for information purposes only and do not form part of the consolidated interim financial statements. Refer to Note 3.

The above consolidated interim statements of financial position should be read in conjunction with the accompanying notes.

8 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Comprehensive Income Three-Month and Nine-Month Periods Ended September 30, 2017 and 2016

(in millions of Korean won and thousands of U.S. dollars, except earnings per share amounts (Note 3)) Notes 2017(Unaudited) 2016 (Unaudited) 2017 (Unaudited) 2016 (Unaudited) Three Nine Three Nine Three Nine Three Nine

months months months months months months months months

Net sales 32 \ 7,492,645 \21,514,191 \ 6,621,486 \20,159,272 $ 6,580,172 $ 18,894,141 $ 5,815,106 $ 17,704,227 Cost of sales 24 6,633,049 18,847,074 5,670,450 17,917,556 5,825,260 16,551,832 4,979,889 15,735,512 Gross profit 859,596 2,667,117 951,036 2,241,716 754,912 2,342,309 835,217 1,968,715 Selling and administrative expenses 22,24 639,417 2,054,489 764,287 2,312,970 561,547 1,804,288 671,210 2,031,291 Operating profit (loss) 26,32 220,179 612,628 186,749 (71,254) 193,365 538,021 164,007 (62,576) Other income 12,23 215,223 851,793 373,578 1,073,750 189,013 748,060 328,082 942,986 Other expenses 12,23 206,730 693,290 237,796 914,535 181,554 608,860 208,837 803,161 Financial income 27 32,830 150,955 122,395 242,565 28,832 132,572 107,490 213,025 Financial expenses 27 61,997 212,026 100,418 291,544 54,447 186,205 88,189 256,039 Share of profit of associates and joint ventures 12 1,580 15,504 2,625 13,896 1,388 13,616 2,305 12,203 Share of loss of associates and joint ventures 12 25,325 103,008 47,950 119,905 22,242 90,464 42,110 105,303 Profit (loss) before income tax 175,760 622,556 299,183 (67,027) 154,355 546,740 262,748 (58,865) Income tax expenses 28 36,767 186,431 154,611 170,454 32,289 163,727 135,782 149,695 Profit (loss) for the period \ 138,993 \ 436,125 \ 144,572 \ (237,481) $ 122,066 $ 383,013 $ 126,966 $ (208,560)

9 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Comprehensive Income Three-Month and Nine-Month Periods Ended September 30, 2017 and 2016

(in millions of Korean won and thousands of U.S. dollars, except earnings per share amounts (Note 3)) Notes 2017 (Unaudited) 2016 (Unaudited) 2017 (Unaudited) 2016 (Unaudited) Three Nine Three Nine Three Nine Three Nine

months months months months months months months months Other comprehensive income for the period, net of tax Items that may be subsequently reclassified to profit or loss \ 595,698 \ 3,728,006 \ 831,821 \ 155,074 $ 523,152 $ 3,274,000 $ 730,520 $ 136,189 Items that will not be reclassified to profit or loss - 11 159 (1,571) 0 10 139 (1,380) 595,698 3,728,017 831,980 153,503 523,152 3,274,010 730,659 134,809 Total comprehensive income (loss) for the period \ 734,691 \ 4,164,142 \ 976,552 \ (83,978) $ 645,218 $ 3,657,023 $ 857,625 $ (73,751) Profit (loss) for the period attributable to: 0 0

Owners of the Parent Company \ 158,543 \ 491,611 \ 168,946 \ (126,585) $ 139,235 $ 431,742 $ 148,372 $ (111,169) Non-controlling interest 1 (19,550) (55,486) (24,374) (110,896) (17,169) (48,729) (21,406) (97,391) Total comprehensive income (loss) for the period attributable to: 0 0

Owners of the Parent Company \ 752,621 \ 4,239,652 \ 1,025,416 \ 45,518 $ 660,965 $ 3,723,337 $ 900,539 $ 39,975 Non-controlling interest (17,930) (75,510) (48,864) (129,496) (15,747 ) (66,314) (42,914) (113,726)

Earnings (loss) per share: 29 Basic earnings (loss) per share \ 961 \ 2,980 \ 1,016 \ (764) $ 0.84 $ 2.62 $ 0.89 $ (0.67)

The U.S. dollar figures are provided for information purposes only and do not form part of the consolidated interim financial statements. Refer to Note 3.

The above consolidated interim statements of comprehensive income should be read in conjunction with the accompanying notes.

10 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Changes in Equity Nine-Month Periods Ended September 30, 2017 and 2016

(in millions of Korean won and thousands of U.S. dollars (Note 3))

Consolidated Consolidated Other Non- Consolidated Consolidated Other Non- Share share retained components controlling Share share retained components controlling Notes capital premium earnings of equity interests Total capital premium earnings of equity interests Total

Balance at January 1, 2016 \ 19,132 \ 10,039,685 \ 5,210,896 \ 1,231,966 \ 1,812,257 \18,313,936 $ 16,684 $ 8,755,285 $ 4,544,254 $ 1,074,357 $ 1,580,411 $ 15,970,991 Total comprehensive income: Loss for the period - - (126,585) - (110,896) (237,481) - - (110,391) - (96,709) (207,100) Changes in the fair value of available-for-sale financial assets 11 - - - 344,305 - 344,305 - - - 300,257 - 300,257 Share of other comprehensive income of associates and joint ventures 12 - - - (49,525) (4,808) (54,333) - - - (43,189) (4,193) (47,382) Exchange differences - - - (129,779) (13,182) (142,961) - - - (113,176) (11,496) (124,672) Cash flow hedge 19 - - - 7,921 142 8,063 - - - 6,908 124 7,032 Remeasurements of the net defined benefit liabilities - - (819) - (752) (1,571) - - (714) - (656) (1,370) Transactions with owners: Cash dividends - - (83,893) - (2,095) (85,988) - - (73,160) - (1,827) (74,987) Acquisition of treasury shares - - - (20,940) - (20,940) - - - (18,261) - (18,261) Capital increase of non- controlling interests - - - (38) 3,872 3,834 - - - (33) 3,376 3,343 Capital reduction of non- controlling interests - - - - (4,067) (4,067) - - - - (3,546) (3,546) Acquisition of non-controlling interests - 16,801 - - (32,945) (16,144) - 14,652 - - (28,730) (14,078) Others - (24) 261 - (10) 227 - (20) 228 - (9) 199 Balance at September 30, 2016 (Unaudited) \ 19,132 \ 10,056,462 \ 4,999,860 \ 1,383,910 \ 1,647,516 \ 18,106,880 $ 16,684 $ 8,769,917 $ 4,360,217 $ 1,206,863 $ 1,436,745 $ 15,790,426

11 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Changes in Equity Nine-Month Periods Ended September 30, 2017 and 2016

(in millions of Korean won and thousands of U.S. dollars (Note 3))

Balance at January 1, 2017 \ 19,132 \ 10,468,266 \ 5,229,978 \ 2,584,211 \ 2,804,124 \21,105,711 $ 16,684 $ 9,129,037 $ 4,560,895 $ 2,253,607 $ 2,445,386 $ 18,405,609 Total comprehensive income: ------Profit (loss) for the period - - 491,611 - (55,486) 436,125 - - 428,719 - (48,388) 380,331 Changes in the fair value of available-for-sale financial assets 11 - - - 3,769,418 - 3,769,418 - - - 3,287,187 - 3,287,187 Share of other comprehensive income of associates and joint ventures 12 - - - 14,445 (2,384) 12,061 - - - 12,597 (2,080) 10,517 Exchange differences - - - (35,096) (17,663) (52,759) - - - (30,606) (15,403) (46,009) Cash flow hedge 19 - - - (737) 24 (713) - - - (643) 21 (622) Remeasurements of the net defined benefit liabilities - - 11 - - 11 - - 10 - - 10 Transactions with owners: ------Cash dividends - - (90,786) - (3,772) (94,558) - - (79,172) - (3,289) (82,461) Changes in the scope of consolidation - - - - (3,986) (3,986) - - - - (3,476) (3,476) Others - (1) (101) - (95) (197) - (1) (89) - (82) (172) Balance at September 30, 2017 (Unaudited) \ 19,132 \ 10,468,265 \ 5,630,713 \ 6,332,241 \ 2,720,762 \25,171,113 $ 16,684 $ 9,129,036 $ 4,910,363 $ 5,522,142 $ 2,372,689 $ 21,950,914

The U.S. dollar figures are provided for information purposes only and do not form part of the consolidated interim financial statements. Refer to Note 3.

The above consolidated interim statements of changes in equity should be read in conjunction with the accompanying notes.

12 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Cash flows Nine-Month Periods Ended September 30, 2017 and 2016

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Nine-month period ended September 30 Notes 2017 2016 2017 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Cash flows from operating activities Cash generated from operations 31 \ 436,519 \ 1,767,822 $ 380,674 $ 1,541,661 Interest received 135,255 99,949 117,952 87,162 Interest paid (147,773) (175,664) (128,868) (153,191) Dividends received 360,326 272,714 314,228 237,825 Income taxes paid (173,145) (224,495) (150,994) (195,774) Net cash inflow from operating activities 611,182 1,740,326 532,992 1,517,683

Cash flows from investing activities Disposal of assets held for sale - 86,093 - 75,079 Decrease in short-term financial instruments 965,791 - 842,236 - Net decrease in short-term loans 10,421 16,151 9,088 14,084 Decrease in the current portion of long-term receivables - 48,530 - 42,322 Disposal of available-for-sale financial assets 11 59,231 12,430 51,654 10,840 Disposal of investments in subsidiaries 208 - 182 - Disposal of investments in associates and joint ventures 12 157,773 327,305 137,589 285,432 Decrease in long-term receivables 27,508 46,510 23,988 40,560 Decrease in deposits 45,870 84,157 40,002 73,391 Disposal of property, plant and equipment 13 36,388 22,938 31,733 20,003 Disposal of intangible assets 13 54,873 213 47,853 186 Disposal of investment properties 14 527 1,208 460 1,053 Decrease in other non-current assets 1 397 1 346 Increase in short-term financial instruments - (27,835) - (24,274) Acquisition of available-for-sale financial assets 11 (9,229) (100,885) (8,049) (87,979) Acquisition of investments in associates and joint ventures 12 (248,709) (36,240) (216,891) (31,603) Increase in overseas resources development - (83) - (72) Increase in long-term receivables (142,375) (26,329) (124,161) (22,961) Increase in deposits (42,146) (46,143) (36,754) (40,240) Acquisition of property, plant and equipment 13 (514,382) (327,536) (448,576) (285,633) Acquisition of intangible assets 13 (44,094) (51,804) (38,453) (45,177) Increase in other non-current assets (7,632) (650) (6,658) (568) Net cash inflow from investing activities 350,024 28,427 305,244 24,789

13 Samsung C&T Corporation and Subsidiaries Consolidated Interim Statements of Cash flows Nine-Month Periods Ended September 30, 2017 and 2016

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Nine-month Period Ended September 30 Notes 2017 2016 2017 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Cash flows from financing activities Net increase in short-term borrowings 341,652 - 297,944 - Proceeds from bonds issuance - 468,604 - 408,654 Increase in long-term borrowings 240,076 116,073 209,363 101,223 Increase in non-controlling interests by share issuance - 3,872 - 3,376 Dividends paid (90,786) (83,893) (79,172) (73,160) Net decrease in short-term borrowings - (491,237) - (428,392) Repayment of current portion of long-term borrowings (1,182,934) (654,643) (1,031,598) (570,893) Early redemption of long-term borrowings (278,836) (280,007) (243,164) (244,185) Acquisition of treasury shares - (675,526) - (589,104) Acquisition of non-controlling interests - (16,144) - (14,078) Capital reduction of non-controlling interests - (4,067) - (3,546) Dividends paid to the non-controlling interests (3,772) (2,095) (3,289) (1,827) Net decrease in other components of equity (990) (281) (864) (245) Net cash outflow from financing activities (975,590) (1,619,344) (850,780) (1,412,177) Net increase (decrease) in cash and cash equivalents (14,384) 149,409 (12,544) 130,295 Cash and cash equivalents at the beginning of the period 2,698,530 2,066,404 2,353,301 1,802,045 Effects of exchange rate changes on cash and cash equivalents (27,055) (134,034) (23,594) (116,888) Cash and cash equivalents at the end of the period \ 2,657,091 \ 2,081,779 $ 2,317,163 $ 1,815,452

The U.S. dollar figures are provided for information purposes only and do not form part of the consolidated interim financial statements. Refer to Note 3.

The above consolidated interim statements of cash flows should be read in conjunction with the accompanying notes.

14 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

1. General Information

These consolidated financial statements are prepared in accordance with Korean IFRS 1110 Consolidated Financial Statements. Samsung C&T Corporation (the “Company” or the “Parent Company”) has 118 subsidiaries, including Samsung BioLogics Co., Ltd. (collectively referred to as the “Group”) and 51 associates and joint ventures, including Samsung Bioepis Co., Ltd. that are subject to the equity method of accounting.

1.1 The Company

The Company was established on December 23, 1963, for the purpose of engaging in tourist facilities business, and its corporate headquarters are located in Olympic-ro, Songpa-gu, Seoul. The Company primarily engages in tourist facilities, golf course services, construction, civil engineering, plant building, housing, development business, technology services, landscaping, energy conservation, environment development, fashion, retail business of various merchandise, and project organizing businesses in global market.

The Company sold its building management business of the construction division to S-1 Corporation on January 10, 2014. The Company, with the approval from the Board of Directors on June 19, 2014, changed its company name from Samsung Everland Inc. to Cheil Industries Inc. on July 4, 2014, and was listed on the stock market on December 18, 2014.

For the diversification of the business portfolio and enhancement of core competitiveness, the Company, with the approval from the Board of Directors on May 26, 2015, and from the shareholders on July 17, 2015, merged with Samsung C&T Corporation on September 1, 2015. The Company newly issued 56,317,483 shares (54,690,043 shares of ordinary shares and 1,627,440 shares of preferred shares) as consideration of the acquisition, and the new shares were listed on September 15, 2015.

Meanwhile, the Company changed its name from Cheil Industries Inc. to Samsung C&T Corporation on September 2, 2015, as approved by the Board of Directors on May 26, 2015.

15 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

1.2 Subsidiaries

(a) General information of subsidiaries as at September 30, 2017, is as follows:

Number of shares Ownership Share capital Number of interest held by (in millions of outstanding the Group Ownership interest held by Subsidiaries Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location subsidiaries

Seoul Lakeside Co., Ltd. Golf course service \ 1,176 117,600 117,600 - 117,600 100.00 Korea Samoo Architects & Engineers Architectural design 500 100,000 100,000 - 100,000 100.00 Korea Co., Ltd. service CVnet Corporation2 e-Business 3,200 6,400,000 2,569,155 - 2,569,155 40.14 Korea Production of steel Myodo Metal Co., Ltd. 3,811 1,080,000 1,080,000 - 1,080,000 100.00 Japan products Samsung C&T Japan Trading 42,104 5,000,000 5,000,000 - 5,000,000 100.00 Japan Corporation Samsung C&T America, Inc. Trading 52,259 105 105 - 105 100.00 U.S.A. Natural resources Samsung C&T America, Inc. Samsung Oil & Gas USA Corp. 78,895 83,889 75,500 8,389 83,889 100.00 U.S.A. development 10% Samsung Renewable Energy, Renewable energy 22,867 2,000 2,000 - 2,000 100.00 Canada Inc. development Samsung Green Repower, Renewable energy Samsung C&T America, Inc. 2,863 - - - - 100.00 U.S.A. LLC.1 development 100% SCNT Power Norte S. de R.L. Thermal power 9,378 112,683,150 112,683,150 - 112,683,150 100.00 Mexico de C.V. generation Samsung E&C America, Inc. Construction 104 100,000 100,000 - 100,000 100.00 U.S.A. Samsung Solar Construction, Renewable energy Samsung C&T America, Inc. 6 5,000 5,000 - 5,000 100.00 U.S.A. Inc. development 100% Production of steel Samsung C&T America, Inc. QSSC, S.A, de C.V. 8,616 93,758,250 56,254,950 18,751,650 75,006,600 80.00 Mexico products 20%

16 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Samsung C&T Oil & Gas Natural resources \ 59,630 1 1 - 1 100.00 U.S.A. Parallel Corp. development Natural resources Parallel Petroleum LLC.1 837,480 - - - - 51.00 U.S.A. PLL Holdings LLC. 61% development Renewable energy Samsung Renewable Energy, SRE GRW EPC GP, Inc.1 8 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE GRW EPC LP1 11 - - - - 100.00 Canada Inc. 99.99%, development SRE GRW EPC GP, Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE SKW EPC GP, Inc.1 11 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE SKW EPC LP1 11 - - - - 100.00 Canada Inc. 99.99%, development SRE SKW EPC GP, Inc. 0.01% Samsung C&T Canada Ltd. Construction - 1 1 - 1 100.00 Canada Natural resources Samsung C&T Oil & Gas PLL Holdings LLC.1 238,537 - - - - 83.61 U.S.A. development Parallel Corp. 83.61% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE GRW LP Holdings LP1 27,954 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE SKW LP Holdings LP1 10,775 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE WIND PA GP Inc.1 8 - - - - 100.00 Canada development Inc. 100%

17 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Samsung Renewable Energy, Renewable energy SRE WIND PA LP1 \ 11 - - - - 100.00 Canada Inc. 99.99%, development SRE Wind PA GP Inc. 0.01% Natural resources Samsung C&T Oil & Gas PLL E&P LLC.1 34,733 - - - - 90.00 U.S.A. development Parallel Corp. 90% Renewable energy Samsung Renewable Energy, SRE GRS Holdings GP Inc.1 6 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE GRS Holdings LP1 3 - - - - 100.00 Canada development SRE GRS Holdings GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE K2 EPC GP Inc.1 6 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE K2 EPC LP1 - - - - - 100.00 Canada Inc. 99.99%, development SRE K2 EPC GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE KS Holdings GP Inc.1 7 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE KS Holdings LP1 515 - - - - 100.00 Canada development SRE KS Holdings GP, Inc. 0.01% Samsung Renewable Energy, SRE Belle River LP Holdings Renewable energy Inc. 99.99%, 32,706 - - - - 100.00 Canada LP1 development SRE Belle River GP Holdings Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Armow EPC GP Inc.1 8 - - - - 100.00 Canada development Inc. 100%

18 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Armow EPC LP1 \ 9 - - - - 100.00 Canada development SRE Armow EPC GP Inc. 0.01% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Armow LP Holdings LP1 42,318 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01% Samsung Renewable Energy, SRE North Kent 1 LP Holdings Renewable energy Inc. 99.99%, 19,873 - - - - 100.00 Canada LP1 development SRE North Kent 1 GP Holdings Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Wind GP Holdings, Inc.1 124 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, SRE North Kent 2 LP Holdings Renewable energy Inc. 99.99%, 200 - - - - 100.00 Canada LP1 development SRE North Kent 2 GP Holdings Inc. 0.01% SRE Solar Development GP Renewable energy Samsung Renewable Energy, 9 - - - - 100.00 Canada Inc.1 development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Solar Development LP1 277 - - - - 100.00 Canada development SRE Solar Development GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Windsor Holdings GP Inc.1 9 - - - - 100.00 Canada development Inc. 100%

19 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

SRE Southgate Holdings GP Renewable energy Samsung Renewable Energy, \ 12 - - - - 100.00 Canada Inc.1 development Inc. 100% SRE Solar Construction Renewable energy Samsung Renewable Energy, 4 - - - - 100.00 Canada Management GP Inc.1 development Inc. 100% Samsung Renewable Energy, SRE Solar Construction Renewable energy Inc. 99.99%, 9 - - - - 100.00 Canada Management LP1 development SRE Solar Construction Management GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Development GP Inc.1 3 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Development LP1 184 - - - - 100.00 Canada development SRE Solar Construction Management GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE BRW EPC GP Inc.1 3 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE BRW EPC LP1 9 - - - - 100.00 Canada development SRE Solar Construction Management GP Inc. 0.01% SRE North Kent 1 GP Holdings Renewable energy Samsung Renewable Energy, 20 - - - - 100.00 Canada Inc.1 development Inc. 100%% SRE North Kent 2 GP Holdings Renewable energy Samsung Renewable Energy, 4 - - - - 100.00 Canada Inc.1 development Inc. 100%

20 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

SRE Belle River GP Holdings Renewable energy Samsung Renewable Energy, \ 17 - - - - 100.00 Canada Inc.1 development Inc. 100% Renewable energy Samsung Renewable Energy, SRE NK1 EPC GP Inc.1 3 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE NK1 EPC LP1 9 - - - - 100.00 Canada Inc. 99.99%, development SRE NK1 EPC GP Inc. 0.01% SRE Summerside Construction Renewable energy Samsung Renewable Energy, - - - - - 100.00 Canada GP Inc.1 development Inc. 100% Samsung Renewable Energy, SRE Summerside Construction Renewable energy Inc. 99.99%, 9 - - - - 100.00 Canada LP1 development SRE Summerside Construction GP Inc. 0.01% Renewable energy Samsung C&T America, Inc. Samsung Solar Energy LLC.1 2,564 - - - - 100.00 U.S.A. development 100% Renewable energy Samsung Solar Energy LLC. Samsung Solar Energy 1 LLC.1 2,555 - - - - 100.00 U.S.A. development 100% Samsung C&T Deutschland Trading 18,551 - - - - 100.00 Germany GmbH1 United Samsung C&T U.K. Ltd. Trading 59,415 27,950,000 27,950,000 - 27,950,000 100.00 Kingdom United Samsung C&T ECUK Limited Construction 57 33,000 33,000 - 33,000 100.00 Kingdom Industrial plant United Whessoe Engineering Limited - 138 138 - 138 100.00 engineering Kingdom Production of Samsung C&T Deutschland POSS-SLPC S.R.O.1 5,967 - - - - 70.00 Slovakia steel products GmbH 20%

21 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Renewable energy Samsung C&T Deutschland Solluce Romania 1 B.V.1 \ 33,517 - - - - 100.00 Netherlands development GmbH 20% Renewable energy Ecosolar OOD 6,647 27,300,300 27,300,300 - 27,300,300 100.00 Bulgaria development Renewable energy Ecoenergy Solar OOD 4,050 18,656,000 18,656,000 - 18,656,000 100.00 Bulgaria development Renewable energy Agriplam EOOD 1,315 80,041 80,041 - 80,041 100.00 Bulgaria development Renewable energy Fishtrade EOOD 3,260 79,959 79,959 - 79,959 100.00 Bulgaria development Renewable energy Manageproject EOOD 2,274 749,042 749,042 - 749,042 100.00 Bulgaria development Renewable energy Solar Park EOOD 3,514 384,002 384,002 - 384,002 100.00 Bulgaria development Renewable energy Veselinovo Energy OOD 246 606,050 606,050 - 606,050 100.00 Bulgaria development Samsung C&T Construction Construction 2 - - - - 100.00 Hungary Hungary Kft.1 Samsung C&T (KL) Sdn. Bhd. Construction 3,870 1,000,000 1,000,000 - 1,000,000 100.00 Malaysia Samsung C&T Malaysia Sdn. Trading 6,002 15,000,000 15,000,000 - 15,000,000 100.00 Malaysia Bhd. Samsung C&T Singapore Samsung Chemtech VINA1 Trading 3,554 - - - - 100.00 Vietnam Pte. Ltd. 48.33% Samsung C&T America, Inc. 24%, S-Print Inc.1 Production of textile 2,245 - - - - 80.00 Vietnam Samsung C&T Singapore Pte. Ltd. 16%

22 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Samsung C&T (Thailand) Co., Samsung C&T Hongkong Trading \ 126 409,600 180,000 54,000 234,000 57.13 Thailand Ltd. Limited 13.18% Wholesale and retail of Samsung C&T Singapore PT. Insam Batubara Energy 1,037 1,000,000 900,000 100,000 1,000,000 100.00 Indonesia coal Pte. Ltd. 10% Samsung C&T India Private Ltd. Construction 2,748 126,500,000 126,500,000 - 126,500,000 100.00 India Samsung C&T Corporation Trading 3,455 16,500,001 16,500,001 - 16,500,001 100.00 India India Private Ltd. Production of Samsung C&T Singapore MSSC Sdn.,Bhd. 4,928 44,974 31,482 13,492 44,974 100.00 Malaysia steel products Pte. Ltd. 30% Samsung C&T Singapore Pte. Trading 35,574 34,000,000 34,000,000 - 34,000,000 100.00 Singapore Ltd. Natural resources Samsung C&T Singapore S&G Bio Fuel Pte. Ltd. 45,922 46,312,500 23,400,000 5,850,000 29,250,000 63.16 Singapore development Pte. Ltd. 12.63% Natural resources PT Gandaerah Hendana 11,320 100,000,000 - 95,000,000 95,000,000 60.00 Indonesia S&G Bio Fuel Pte. Ltd. 95% development Natural resources PT Inecda 11,320 100,000,000 - 95,000,000 95,000,000 60.00 Indonesia S&G Bio Fuel Pte. Ltd. 95% development SAMSUNG C&T Mongolia Construction 1,215 - - - - 70.00 Mongolia LLC.1 Samsung C&T Eng.&Const. Construction 598 - - - - 100.00 Mongolia Mongolia LLC.1 S&Woo Construction Construction 239 9,400 3,760 - 3,760 40.00 Philippines Philippines, Inc.2 SAMOO DESIGNERS & Architectural design Samoo Architects & ENGINEERS INDIA 192 1,100,000 - 1,100,000 1,100,000 100.00 India service Engineers Co., Ltd. 100% PRIVATE LIMITED

23 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Samsung (Tianjin) International Samsung C&T Hongkong Trading \ 382 - - - - 100.00 China Trading Co., Ltd.1 Limited 100% Samsung Trading (Shanghai) Samsung C&T Hongkong Trading 498 - - - - 100.00 China Co., Ltd.1 Limited 100% Samsung C&T Hongkong Trading 83,748 111,565 111,565 - 111,565 100.00 Hong Kong Limited Samsung C&T Taiwan Co., Ltd. Trading 361 1,000,000 1,000,000 - 1,000,000 100.00 Taiwan Samsung Precision Stainless Production of Samsung C&T Hongkong 82,979 - - - - 100.00 China Steel (Pinghu) Co., Ltd.1 steel products Limited 45% Samsung C&T Co., Samsung C&T Hongkong Trading 466 - - - - 100.00 China (Guangzhou) Ltd.1 Limited 100% Samsung C&T (Shanghai) Co., Construction 11,066 - - - - 100.00 China Ltd.1 Samsung C&T (Xi'an) Co., Ltd.1 Construction 1,428 - - - - 100.00 China Samsung C&T Corporation Construction 2,658 - - - - 100.00 Saudi Arabia Saudi Arabia1 SAM Gulf Investment Limited Investment 12 38,912 38,912 - 38,912 100.00 Bahrain Samsung C&T Chile Copper Natural resources 12,918 11,535,517 11,535,517 - 11,535,517 100.00 Chile SpA development SCNT Power Kelar Inversiones Thermal power 42,705 100 100 - 100 100.00 Chile LTDA. generation Production of stainless Samsung C&T Deutschland S.C. Otelinox S.A. 56,148 33,078,479 - 31,179,053 31,179,053 94.26 Romania steel plates and poles GmbH 94.26% Samsung Corporation Rus Construction 6,303 - - - - 100.00 Russia LLC.1 Biopharmaceutical Samsung BioLogics Co., Ltd.3 165,413 66,165,000 28,742,466 - 28,742,466 43.44 Korea products manufacturing

24 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Manufacturing and Cheil Fashion Retail Co., Ltd. \ 10,000 2,000,000 2,000,000 - 2,000,000 100.00 Korea selling garments Manufacturing and Natural 9 Co., Ltd. 10,000 2,000,000 1,020,000 - 1,020,000 51.00 Korea selling garments Manufacturing and Cheil Industries Corp., USA 106 1 1 - 1 100.00 U.S.A. selling garments Manufacturing and Cheil Industries Italy S.R.L.1 8,813 - - - - 100.00 Italy selling garments Colombo Via della Spiga Manufacturing and Cheil Industries Italy S.R.L. 144 - - - - 100.00 Italy S.R.L.1 selling garments 100% Samsung Fashion Trading Co., Manufacturing and 65,993 - - - - 100.00 China Ltd.1 selling garments Samsung Welstory Inc. Foodservice business 10,000 2,000,000 2,000,000 - 2,000,000 100.00 Korea Cheil Industries Inc. Vietnam Construction 1,143 - - - - 100.00 Vietnam Co., Ltd.1 Welstory Vietnam Co., Ltd.1 Foodservice business 10,007 - - - - 90.00 Vietnam Samsung Welstory Inc. 90% Samsung C&T Corporation UEM Construction JV Sdn. Construction 205 750,000 450,000 - 450,000 60.00 Malaysia Bhd. Shanghai Ever Hongjun Business Management Foodservice business 2,536 - - - - 85.00 China Samsung Welstory Inc. 85% Service Co., Ltd.1 Shanghai Welstory Food Foodservice business 4,861 - - - - 70.00 China Samsung Welstory Inc. 70% Company Limited1 Eight Seconds (Shanghai) Co., Samsung Fashion Trading Selling garments 19,434 - - - - 100.00 China Ltd.1 Co., Ltd. 100%

25 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Eight Seconds (Shanghai) Samsung Fashion Trading Selling garments \ 10,525 - - - - 100.00 Trading Co., Ltd.1 Co., Ltd. 100%

1 No share has been issued in accordance with the local laws and regulations. 2 The Group has de facto control to appoint or dismiss more than 50% of the members of board of directors although it has less than 50% ownership interest. 3 Since the Group holds significantly more voting rights than any other vote holder or organized group of vote holders, and the other shareholdings are widely dispersed, the Group is deemed to have de facto control although it has less than 50% ownership interest.

26 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(b) Summarized financial information of subsidiaries as at and for the nine-month period ended September 30, 2017, is as follows:

(In millions of Korean won)

Profit Total Total Total (loss) for comprehensive Subsidiaries assets liabilities Revenue the period income (loss)

Seoul Lakeside Co., Ltd. \ 617,999 \ 304,966 \ 37,498 \ 8,200 \ 8,200 Samoo Architects & Engineers Co., Ltd. 119,890 72,753 151,678 14,401 14,487 CVnet Corporation 37,616 20,774 37,179 657 657 Myodo Metal Co., Ltd. 99,051 94,043 110,078 3,492 3,661 Samsung C&T Japan Corporation 194,724 129,230 771,080 3,318 2,329 Samsung C&T America, Inc. 508,226 279,709 714,257 15,298 4,611 Samsung Oil & Gas USA Corp. 85,406 36,608 13,099 2,218 (780) Samsung Renewable Energy, Inc. 198,069 101,689 - 831 3,668 Samsung Green Repower, LLC. 9,200 51 - (1,108) (1,277) SCNT Power Norte S. de R.L. de C.V. 51,400 41,466 - (73) (28) Samsung E&C America, Inc. 36,026 20,882 84,985 3,818 3,236 Samsung Solar Construction, Inc. 34 - - (1) (3) QSSC, S.A, de C.V. 91,704 79,680 106,008 1,068 484 Samsung C&T Oil & Gas Parallel Corp. 312,150 352,446 - (7,650) 5,702 Parallel Petroleum LLC. 662,604 44,157 52,020 11,782 (23,120) SRE GRW EPC GP, Inc. - - - (2) (2) SRE GRW EPC LP 50 - - (2) - SRE SKW EPC GP, Inc. 2 - - (2) (2) SRE SKW EPC LP 39 - - (2) (1) Samsung C&T Canada Ltd. 182,694 229,518 121,074 (5,022) (6,546) PLL Holdings LLC. 521,301 272,417 - (1,615) 12,353 SRE GRW LP Holdings LP 34,258 - - (75) 460 SRE SKW LP Holdings LP 67,255 - - 24,155 25,701 SRE WIND PA GP Inc. 1 - - - - SRE WIND PA LP 3,003 20 1,683 1,703 1,837 PLL E&P LLC. 17,720 3,744 2,233 315 (481) SRE GRS Holdings GP Inc. 3 - - (3) (3) SRE GRS Holdings LP 750 - - 345 376 SRE K2 EPC GP Inc. - - - (2) (2) SRE K2 EPC LP 872 - - (42) (17) SRE KS Holdings GP Inc. 5 - - (3) (3)

27 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(In millions of Korean won)

Profit Total Total Total (loss) for comprehensive Subsidiaries assets liabilities Revenue the period income (loss)

SRE KS Holdings LP \ 1,172 \ - \ - \ 360 \ 390 SRE Belle River LP Holdings LP 33,038 - - 255 426 SRE Armow EPC GP Inc. 3 - - (2) (2) SRE Armow EPC LP 1,149 - - (161) (131) SRE Armow LP Holdings LP 92,210 - - 19,027 21,583 SRE North Kent 1 LP Holdings LP 20,329 - - 100 463 SRE Wind GP Holdings, Inc. 115 3 - - 2 SRE North Kent 2 LP Holdings LP 201 - - - - SRE Solar Development GP Inc. 3 - - (4) (4) SRE Solar Development LP 234 - - (3) 4 SRE Windsor Holdings LP 8 - - 2 2 SRE Southgate Holdings LP 8 - - - - SRE Solar Construction Management GP Inc. 3 - - (1) (1) SRE Solar Construction Management LP 1,347 - - (221) (187) SRE Development GP Inc. 1 - - (2) (2) SRE Development LP 116 - - (11) (8) SRE BRW EPC GP Inc. 1 - - (2) (2) SRE BRW EPC LP 19,916 12,030 5,586 5,616 6,000 SRE North Kent 1 GP Holdings Inc. 19 - - - - SRE North Kent 2 GP Holdings Inc. 3 - - - - SRE Belle River GP Holdings Inc. 16 - - - - SRE NK1 EPC GP Inc. 1 - - (2) (2) SRE NK1 EPC LP 13,894 10,382 3,309 3,311 3,503 SRE Summerside Construction GP Inc. - - - - - SRE Summerside Construction LP 2,572 2,210 2,573 334 354 Samsung Solar Energy LLC. 2,564 - - (2) - Samsung Solar Energy 1 LLC. 2,565 - - (1) 11 Samsung C&T Deutschland GmbH 472,753 214,643 471,288 33,680 44,064 Samsung C&T U.K. Ltd. 47,481 33,592 115,054 697 1,160 Samsung C&T ECUK Limited 114,422 178,219 108,728 (41,539) (44,849)

Whessoe Engineering Limited 7,685 12,938 9,064 (3,777) (4,057)

POSS-SLPC S.R.O. 28,425 16,956 44,865 156 863

Solluce Romania 1 B.V. 33,014 271 - (47) (60)

28 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(In millions of Korean won)

Profit Total Total Total (loss) for comprehensive Subsidiaries assets liabilities Revenue the period income (loss)

Ecosolar OOD \ 31,452 \ 23,804 \ 4,976 \ 1,939 \ 2,581

Ecoenergy Solar OOD 20,280 15,851 3,257 1,271 1,287

Agriplam EOOD 8,309 6,622 1,427 1,271 981

Fishtrade EOOD 8,828 6,638 1,430 571 741

Manageproject EOOD 9,372 6,493 1,410 1,143 2,374

Solar Park EOOD 4,412 3,345 719 612 (1,881)

Veselinovo Energy OOD 6,463 5,639 1,426 692 18

Samsung C&T Construction Hungary Kft. 2,079 67 - 93 217

Samsung C&T (KL) Sdn. Bhd. 122,520 128,102 148,816 (26,137) (26,923)

Samsung C&T Malaysia Sdn. Bhd. 2,641 70 1,092 314 337

Samsung Chemtech VINA 42,201 39,943 97,025 1,476 1,447

S-Print, Inc. 9,353 13,279 12,611 (357) (176)

Samsung C&T (Thailand) Co., Ltd. 21,088 14,314 44,357 1,924 2,087

PT. Insam Batubara Energy 19 2,083 - 203 327

Samsung C&T India Private Ltd. 110,333 117,234 121,740 2,080 2,230 Samsung C&T Corporation India Private Ltd. 3,334 3,104 4,530 1,161 1,179

MSSC Sdn.,Bhd. 32,409 25,801 47,616 (78) (44)

Samsung C&T Singapore Pte. Ltd. 185,850 170,441 850,311 1,350 1,085

S&G Bio Fuel Pte. Ltd. 120,217 60,651 - 16,334 20,663

PT Gandaerah Hendana 25,544 30,210 31,581 7,691 6,565

PT Inecda 35,976 9,879 24,036 5,708 3,743

SAMSUNG C&T Mongolia LLC. 21,992 13,583 195 (969) (1,374)

Samsung C&T Eng.&Const. Mongolia LLC. 55,389 44,065 11,826 (609) (1,120)

S&Woo Construction Philippines, Inc. 15,600 14,973 12,006 (211) (299) SAMOO DESIGNERS & ENGINEERS INDIA PRIVATE LIMITED 119 86 - (159) (159) Samsung (Tianjin) International Trading Co., Ltd. 6,392 - - 54 23

Samsung Trading (Shanghai) Co., Ltd. 54,313 29,896 117,545 3,254 3,237

Samsung C&T Hongkong Limited 258,332 119,531 1,712,925 15,308 11,213

Samsung C&T Taiwan Co., Ltd. 4,885 52 1,093 410 453 Samsung Precision Stainless Steel (Pinghu) Co., Ltd. 82,191 11,954 49,189 4,878 4,678

Samsung C&T Co., (Guangzhou) Ltd. 728 11 - 9 (393)

Samsung C&T (Shanghai) Co., Ltd. 89,462 40,415 36,872 8,159 8,181

29 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(In millions of Korean won)

Profit Total Total Total (loss) for comprehensive Subsidiaries assets liabilities Revenue the period income (loss)

Samsung C&T (Xi'an) Co., Ltd. \ 2,686 \ 1,096 \ 2,199 \ 611 \ 624

Samsung C&T Corporation Saudi Arabia 168,238 558,688 6,341 (14,747) 5,331

SAM Gulf Investment Limited 12 64 - (6) (4)

Samsung C&T Chile Copper SpA 6,395 - - (4) (349)

SCNT Power Kelar Inversiones LTDA. 71,017 28,390 - (185) 250

S.C. Otelinox S.A. 60,785 7,289 33,844 1,752 4,282

Samsung Corporation Rus LLC. 91,081 53,795 52,497 23,424 23,610

Samsung BioLogics Co., Ltd. 7,760,584 3,281,273 298,318 (53,627) (53,627)

Cheil Fashion Retail Co., Ltd. 7,612 1,870 16,628 (2,485) (2,485)

Natural 9 Co., Ltd. 3,315 473 1,076 (1,468) (1,468)

Cheil Industries Corp., USA 940 441 1,255 20 (6)

Cheil Industries Italy S.R.L. 19,677 10,399 36,774 12 (105)

Colombo Via della Spiga S.R.L. 6,335 1,452 5,688 868 1,169

Samsung Fashion Trading Co., Ltd. 192,232 153,453 81,027 2,415 2,396

Samsung Welstory Inc. 583,340 198,999 1,298,356 65,239 65,229

Cheil Industries Inc. Vietnam Co., Ltd. 4,329 1,957 4,262 (886) (1,061)

Welstory Vietnam Co., Ltd. 31,982 19,271 67,557 2,241 1,720 Samsung C&T Corporation UEM Construction JV Sdn. Bhd. 77,680 79,428 44,487 (3,390) (3,497) Shanghai Ever Hongjun Business Management Service Co., Ltd. 12,751 8,940 40,821 859 868

Shanghai Welstory Food Company Limited 11,394 7,914 25,571 (842) (889)

Eight Seconds (Shanghai) Co., Ltd. 20,049 8,124 4,809 (2,397) (2,455) Eight Seconds (Shanghai) Trading Co., Ltd. 10,453 7,829 3,350 (5,503) (5,682)

1 Intercompany transactions, balances, and unrealized gains and losses on transactions between the Group companies are not eliminated in the summarized financial information above. Also, shares in controlled subsidiaries and associates, accounted for under the equity method which the controlled subsidiaries own, are recognized at acquisition cost.

30 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

1.3 Investments in Associates and Joint Ventures

General information of associates and joint ventures as at September 30, 2017, is as follows (Note 12):

Number of shares Ownership Share capital Number of interest held (in millions of outstanding Samsung by the Group Associates Primary business Korean won) shares C&T Subsidiaries Total (%) Location

Dongducheon Dream Power Co., Integrated thermal power ￦ 330,658 66,131,621 20,600,000 - 20,600,000 31.15 Korea Ltd. generation Sino-Singapore Tianjin Eco-City Investment and Development Co., Property development 48,274 - - - - 40.00 China Ltd.1 Qurayyah Investment Company1 Construction 1,608 - - - - 35.00 Saudi Arabia Songdo Landmark City Limited3 Property development 67,559 13,511,814 5,936,624 - 5,936,624 43.94 Korea Chongqing Shanxia Technology Cotton thread 77,223 - - - - 20.00 China Textile Co., Ltd.1,3 manufacturing Research and development Samsung Bioepis Co., Ltd.4 103,419 20,683,705 - 19,567,921 19,567,921 94.61 Korea on medicine and pharmacy

31 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Number of shares Ownership Share capital Number of interest held (in millions of outstanding Samsung by the Group Joint ventures Primary business Korean won) shares C&T Subsidiaries Total (%) Location

Natural resources Korea LNG Limited \ 14 12,000 2,400 - 2,400 20.00 Oman development Renewable energy Southgate Solar LP1 2,565 - - - - 49.99 Canada development Renewable energy SP Belle River LP1 64,734 - - - - 42.49 Canada development Internal combustion JSC Balkhash Thermal Power Plant2 383,810 6,417,058 3,208,530 - 3,208,530 50.01 Kazakhstan power plant Renewable energy LJG Green Source Energy Alpha development 29 - - - - 78.00 Romania S.R.L.1,2 (Solar energy generation)

1 No share has been issued in accordance with the local laws and regulations. 2 Excluded from the scope of consolidation as it is a joint venture under a contractual arrangement. 3 The investments in associates are classified as asset held for sale. 4 Although the Group holds 94.61% ownership interest of Samsung Bioepis Co., Ltd., it is classified as an associate since the Group is unable to secure enough voting right set by the shareholders agreement to make a resolution at shareholders’ meeting considering the potential voting right held by non-controlling interest (Note 19).

32 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

1.4 Changes in Scope for Consolidation

Subsidiaries newly included in the consolidation for the nine-month period ended September 30, 2017:

Subsidiaries Description

SRE Summerside Construction GP Inc. Newly established SRE Summerside Construction LP Newly established Samsung Solar Energy LLC. Newly established Samsung Solar Energy 1 LLC. Newly established SAMOO DESIGNERS & ENGINEERS INDIA Newly established PRIVATE LIMITED

Subsidiaries excluded from the consolidation for the nine-month period ended September 30, 2017:

Subsidiaries Description

Guang Dong Xingpu Steel Center Co., Ltd. Disposal Samsung C&T do Brasil Construtora LTDA. Liquidation SRE Windsor Holdings LP Liquidation SRE Southgate Holdings LP Liquidation

1.5 Information about Non-Controlling Interest

Profit or loss allocated to non-controlling interests and accumulated non-controlling interests of subsidiaries that are material to the Group, is as follows:

Accumulated non-controlling interests of subsidiaries as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) September 30, 2017 December 31, 2016

Samsung BioLogics Co., Ltd. \ 2,405,698 \ 2,477,729 Others 315,064 326,395 . \ 2,720,762 \ 2,804,124

33 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Profit or loss attributed to the non-controlling interests for the three-month and nine-month periods ended September 30, 2017 and 2016, is as follows:

(in millions of Korean won) 2017 2016 Three Three months Nine months months Nine months

Samsung BioLogics Co., Ltd. \ (21,779) \ (69,646) \ (32,436) \ (89,723) Others 2,229 14,160 8,062 (21,173)

\ (19,550) \ (55,486) \ (24,374) \ (110,896)

Dividends paid to the non-controlling interests for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016

Parallel Petroleum LLC. \ 2,442 \ - Others 1,330 2,095 . \ 3,772 \ 2,095

Summarized financial information for each subsidiary with non-controlling interests that are material to the Group as at September 30, 2017 and December 31, 2016, and for the nine-month periods ended September 30, 2017 and 2016, is as follows. The subsidiary’s financial information was prepared using equity method for their associates and joint ventures.

Summarized Statement of Financial Position

(in millions of Korean won) Samsung BioLogics Co., Ltd. September 30, December 31, 2017 2016

Current assets \ 620,826 \ 1,461,415 Non-current assets 6,780,847 6,395,883 Current liabilities 2,147,370 2,476,027 Non-current liabilities 1,000,749 1,000,563 Equity 4,253,554 4,380,708

34 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Summarized Statement of Comprehensive Income

(in millions of Korean won) Samsung BioLogics Co., Ltd. 2017 2016 Three Three months Nine months months Nine months

Sales \ 127,453 \ 298,318 \ 52,783 \ 188,989 Loss for the period (38,506) (123,137) (67,759) (185,682) Other comprehensive income 266 (4,216) (11,491) (1,934) Total comprehensive loss (38,240) (127,353) (79,250) (187,616)

Summarized Statement of Cash Flows

(in millions of Korean won) Samsung BioLogics Co., Ltd. 2017 2016

Cash flows from operating activities \ 34,775 \ (66,059) Cash flows from investing activities 394,760 (118,182) Cash flows from financing activities (343,931) 188,030 Increase in cash and cash equivalents 85,604 3,789 Cash and cash equivalents at the beginning of the period 230,338 34,510 Effects of exchange rate changes on cash and cash equivalents 96 (226) Cash and cash equivalents at the end of the period \ 316,038 \ 38,073

2. Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated interim financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1 Basis of Preparation

The Group maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (Korean IFRS). The accompanying consolidated interim financial statements have been restructured and translated into English from the Korean language financial statements.

The Group’s consolidated interim financial statements for the nine-month period ended September 30, 2017, have been prepared in accordance with Korean IFRS 1034 Interim Financial Reporting. These consolidated interim financial statements have been prepared in accordance with Korean IFRS which is effective or has been early adopted as at September 30, 2017.

35 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(a) New and amended standards adopted by the Group

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2017.

- Amendments to Korean IFRS 1007 Statement of Cash Flows

Amendments to Korean IFRS 1007 Statement of Cash flows require to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash flows.

- Amendments to Korean IFRS 1012 Income Tax

Amendments to Korean IFRS 1012 clarify how to account for deferred tax assets related to debt instruments measured at fair value. Korean IFRS 1012 provides requirements on the recognition and measurement of current or deferred tax liabilities or assets. The amendments issued clarify the requirements on recognition of deferred tax assets for unrealized losses, to address diversity in practice.

- Amendments to Korean IFRS 1112 Disclosures of Interests in Other Entities

Amendments to Korean IFRS 1112 clarify when an entity’s interest in a subsidiary, a joint venture or an associate is classified as held for sales in accordance with Korean IFRS 1105, the entity is required to disclose other information except for summarized financial information in accordance with Korean IFRS 1112.

(b) New standards and interpretations not yet adopted by the Group

Certain new accounting standards and interpretations that have been published that are not mandatory as at September 30, 2017 and have not been early adopted by the Group are set out below.

- Amendments to Korean IFRS 1028 Investments in Associates and Joint Ventures

When an investment in an associate or a joint venture is held by, or it held indirectly through, an entity that is a venture capital organization, or a mutual fund, unit trust and similar entities including investment-linked insurance funds, the entity may elect to measure that investment at fair value through profit or loss in accordance with Korean IFRS 1109. The amendments clarify that an entity shall make this election separately for each associate of joint venture, at initial recognition of the associate or joint venture. The Group will apply these amendments retrospectively for annual periods beginning on or after January 1, 2018, and early adoption is permitted. The Group does not expect the amendments to have a significant impact on the consolidated financial statements because the Group is not a venture capital organization.

36 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

- Amendments to Korean IFRS 1102 Share-based Payment

Amendments to Korean IFRS 1102 clarify accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. Amendments also clarify that the measurement approach should treat the terms and conditions of a cash-settled award in the same way as for an equity-settled award. The amendments will be effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Group does not expect the amendments to have a significant impact on the consolidated financial statements.

- Enactments to Interpretation 2122 Foreign Currency Transaction and Advance Consideration

According to these enactments, the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine a date of the transaction for each payment or receipt of advance consideration. These enactments will be effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Group does not expect the enactments to have a significant impact on the consolidated financial statements.

- Korean IFRS 1109 Financial Instruments

The new standard for financial instruments issued on September 25, 2015 are effective for annual periods beginning on or after January 1, 2018 with early application permitted. This standard will replace Korean IFRS 1039 Financial Instruments: Recognition and Measurement. The Group will apply the standards for annual periods beginning on or after January 1, 2018.

The standard requires retrospective application with some exceptions. For example, an entity is not required to restate prior period in relation to classification and measurement (including impairment) of financial instruments. The standard requires prospective application of its hedge accounting requirements for all hedging relationships except the accounting for time value of options and other exceptions.

Korean IFRS 1109 Financial Instruments requires all financial assets to be classified and measured on the basis of the entity’s business model for managing financial assets and the contractual cash flow characteristics of the financial assets. A new impairment model, an expected credit loss model, is introduced and any subsequent changes in expected credit losses will be recognized in profit or loss. Also, hedge accounting rules are amended to extend the hedging relationship, which consists only of eligible hedging instruments and hedged items, qualifies for hedge accounting.

An effective implementation of Korean IFRS 1109 requires preparation processes including financial impact assessment, accounting policy establishment, accounting system development and the system stabilization. The impact on the Group’s financial statements due to the application of the standard is dependent on judgements made in applying the standard, financial instruments held by the Group and macroeconomic variables.

37 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

The Group performed a preliminary assessment to identify the financial impacts of applying Korean IFRS 1109. The assessment was performed based on retainable information as at September 30, 2017. The Group is currently performing a detailed analysis on the impacts.

From May to September 2017, the operating and other related departments of the Group discussed, at each operating segment level, the expected impact of applying the standard on the financial statements, and a consultation from external experts was made if necessary. From October to December, the Group has been verifying the financial impacts identified during the preliminary assessment, and the Group plans to complete further detailed analysis based on the additional information during 2017.

The Group plans to disclose the result of the analysis on financial impacts of applying Korean IFRS 1109 in the notes to the financial statements during 2017. However, the result of the detailed analysis may change due to additional information that the Group may obtain in the future.

In addition, the Group is also preparing for making adjustments to the internal management process and the accounting system in relation to the implementation of Korean IFRS 1109.

a) Classification and Measurement of Financial Assets

When implementing Korean IFRS 1109, the classification of financial assets will be driven by the Group’s business model for managing the financial assets and contractual terms of cash flow. The following table shows the classification of financial assets measured subsequently at amortized cost, at fair value through other comprehensive income and at fair value through profit or loss. If a hybrid contract contains a host that is a financial asset, the classification of the hybrid contract shall be determined for the entire contract without separating the embedded derivative.

Business model for the Solely represent payments of All other contractual cash flows principal and interest characteristics

Hold the financial asset for the collection of the contractual Measured at amortized cost1 cash flows

Recognized at fair value through Hold the financial asset for the Recognized at fair value through profit or loss2 collection of the contractual other comprehensive income1 cash flows and sale

Recognized at fair value through Hold for sale profit or loss 1 A designation at fair value through profit or loss is allowed only if such designation mitigates an accounting mismatch (irrevocable). 2 Equity investments not held for trading can be recorded in other comprehensive income (irrevocable).

38 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

With the implementation of Korean IFRS 1109, the criteria to classify the financial assets at amortized cost or at fair value through other comprehensive income are more strictly applied than the criteria applied with Korean IFRS 1039. Accordingly, the financial assets at fair value through profit or loss may increase by implementing Korean IFRS 1109 and may result an extended fluctuation in profit or loss.

As at September 30, 2017, the Group owns loan and receivables of \ 8,161,386 million, financial assets available-for-sales of \ 22,471,680 million, financial assets at fair value through profit or loss of \ 12,884 million, and derivatives for hedging of \ 6,872 million.

According to Korean IFRS 1109, a debt instrument is measured at amortized cost if: a) the objective of the business model is to hold the financial asset for the collection of the contractual cash flows, and b) the contractual cash flows under the instrument solely represent payments of principal and interest. As at September 30, 2017, the Group measured loan and receivables of \ 8,161,386 million at amortized costs.

According to Korean IFRS 1109, a debt instrument is measured at fair value through other comprehensive income if the objective of the business model is achieved both by collecting contractual cash flows and selling financial assets; and the contractual cash flows represents solely payments of principal and interest on a specific date under contract terms. As at September 30, 2017, the Group holds debt instruments of \ 815 million classified as financial assets available-for-sale.

According to Korean IFRS 1109, equity instruments that are not held for trading, the Group can make an irrevocable election at initial recognition to classify the instruments as assets measured at fair value through other comprehensive income, which all subsequent changes in fair value being recognized in other comprehensive income and not recycled to profit or loss. As at September 30, 2017, the Group holds equity instruments of \ 22,470,865 million classified as financial assets available-for-sale.

According to Korean IFRS 1109, debt instruments those contractual cash flows do not represent solely payments of principal and interest and held for trading, and equity instruments that are not designated as instruments measured at fair value through other comprehensive income are measured at fair value through profit or loss. As at September 30, 2017, the Group does not hold debt and equity instruments classified as financial assets at fair value through profit or loss.

b) Classification and Measurement of Financial Liabilities

Korean IFRS 1109 requires the amount of the change in the liability’s fair value attributable to changes in the credit risk to be recognized in other comprehensive income, unless this treatment of the credit risk component creates or enlarges a measurement mismatch. Amounts presented in other comprehensive income are not subsequently transferred to profit or loss.

39 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Under Korean IFRS 1039, all financial liabilities designated at fair value through profit or loss recognized their fair value movements in profit or loss. However, under Korean IFRS 1109, certain fair value movements will be recognized in other comprehensive income and as a result profit or loss from fair value movements may change. As at September 30, 2017, there are no financial liabilities designated at fair value through profit or loss.

c) Impairment: Financial Assets and Contract Assets

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under Korean IFRS 1039. It applies to financial assets classified at amortized cost, debt instruments measured at fair value through other comprehensive income, contract assets, lease receivables, loan commitments and certain financial guarantee contracts.

Under Korean IFRS 1109 ‘expected loss’ model, a credit event (or impairment ‘trigger’) no longer has to occur before credit losses are recognized. The Group will always recognize (at a minimum) 12-month expected credit losses in profit or loss. Lifetime expected losses will be recognized on assets for which there is a significant increase in credit risk after initial recognition.

Stage1 Loss allowance 12-month expected credit losses (expected credit losses No significant increase in credit that result from those default events on the financial 1 risk after initial recognition2 instrument that are possible within 12 months after the reporting date) Significant increase in credit risk 2 after initial recognition Lifetime expected credit losses (expected credit losses that result from all possible default events over the life of 3 Credit-impaired the financial instrument)

1 A loss allowance for lifetime expected credit losses is required for a financial instrument if the credit risk on that financial instrument has increased significantly since initial recognition. It is also required for contract assets or trade receivables that are not, according to Korean IFRS 1115 Revenue from Contracts with Customers, considered to contain a significant financing component. Additionally, the Group can elect an accounting policy of recognizing lifetime expected credit losses for all contract assets and/or all trade receivables, including those that contain a significant financing component. 2 If the financial instrument has low credit risk at the end of the reporting period, the Group may assume that the credit risk has not increased significantly since initial recognition.

Under Korean IFRS 1109, the asset that is credit-impaired at initial recognition would recognize all changes in lifetime expected credit losses since the initial recognition as a loss allowance with any changes recognized in profit or loss.

As at September 30, 2017, the Group does not own debt investments and lease receivables carried at fair value through other comprehensive income, which classified as financial assets available-for-sales.

40 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

d) Hedge Accounting

Hedge accounting mechanics (fair value hedges, cash flow hedges and hedge of net investments in a foreign operations) required by Korean IFRS 1039 remains unchanged in Korean IFRS 1109, however, the new hedge accounting rules will align the accounting for hedging instruments more closely with the Group’s risk management practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as the standard introduces a more principles-based approach. Korean IFRS 1109 allows more hedging instruments and hedged items to qualify for hedge accounting, and relaxes the hedge accounting requirement by removing two hedge effectiveness tests that are a prospective test to ensure that the hedging relationship is expected to be highly effective and a quantitative retrospective test (within range of 80-125 %) to ensure that the hedging relationship has been highly effective throughout the reporting period.

With implementation of Korean IFRS 1109, volatility in profit or loss may be reduced as some items that were not eligible as hedged items or hedging instruments under Korean IFRS 1039 are now eligible under Korean IFRS 1109.

Furthermore, when the Group first applies Korean IFRS 1109, it may choose as its accounting policy choice to continue to apply all of the hedge accounting requirements of Korean IFRS 1039 instead of the requirements of Korean IFRS 1109.

- Korean IFRS 1115 Revenue from Contracts with Customers

The Group will apply Korean IFRS 1115 Revenue from Contracts with Customers issued on November 6, 2015 for annual reporting periods beginning on or after January 1, 2018. Earlier adoption is permitted under Korean IFRS. This standard replaces Korean IFRS 1018 Revenue, Korean IFRS 1011 Construction Contracts, Interpretation 2031 Revenue-Barter Transactions Involving Advertising Services, Interpretation 2113 Customer Loyalty Programs, Interpretation 2115 Agreements for the Construction of Real Estate and Interpretation 2118 Transfers of assets from customers.

The Group must apply Korean IFRS 1115 Revenue from Contracts with Customers within annual reporting periods beginning on or after January 1, 2018, and will elect the modified retrospective approach which will recognize the cumulative impact of initially applying the revenue standard as an adjustment to retained earnings as at January 1 2018, the period of initial application.

41 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer so the notion of control replaces the existing notion of risks and rewards. A new five-step process must be applied before revenue from contract with customer can be recognized:

 Identify contracts with customers

 Identify the separate performance obligation

 Determine the transaction price of the contract

 Allocate the transaction price to each of the separate performance obligations, and

 Recognize the revenue as each performance obligation is satisfied.

The Group is performed a preliminary assessment to identify the financial impacts of applying Korean IFRS 1115. The assessment was performed based on retainable information as at September 30, 2017. The Group is currently performing a detailed analysis on the impacts.

From May to September 2017, the operating and other related departments of the Group discussed, at each operating segment level, the expected impact of applying the standard on the financial statements, and a consultation from external experts was made if necessary. From October to December 2017, the Group has been verifying the financial impacts identified during the preliminary assessment, and plans to complete further detailed analysis based on the additional information during 2017.

The Group plans to disclose the result of the analysis on financial impacts of applying Korean IFRS 1115 in the notes to the financial statements during 2017. However, the result of preliminary assessment may change due to additional information that the Group may obtain in the future.

In addition, the Group is also preparing for making adjustments to the internal management process and the accounting system in relation to the implementation of Korean IFRS 1115. The Group performed an impact assessment to identify potential financial effects of applying Korean IFRS 1115. The assessment was performed based on retainable information as at September 30, 2017, and the results of the assessment are explained as below.

a) A bundle of goods or services

The timing of revenue recognition and the transaction price may change for export transactions. However, it will not have a material impact on the financial statements.

b) Variable consideration

The timing of revenue recognition for some transactions where the amount of consideration is dependent on the future performance is expected to change, since the standard requires to recognize revenue after constraining estimates of variable consideration. However, it will not have a material impact on the financial statements.

42 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

c) Measuring progress towards complete satisfaction of a performance obligation

For some construction contracts, such as EPC contracts, where the progress towards complete satisfaction of a performance obligation is measured by reference to the costs incurred, but the costs do not depict the performance in satisfying the performance obligation should be excluded from the measurement of the progress towards complete satisfaction of a performance obligation.

d) Incremental costs of obtaining a contract

Capitalized contract costs that were originally expensed at the beginning of the relevant construction, are expected to be amortized throughout the contract period based on the progress towards complete satisfaction of a performance obligation. However, it will not have a material impact on the financial statements. In addition, the Group is reviewing the nature of each capitalized contract cots whether these costs are eligible for capitalization.

e) Revenue recognition in the gross / net amount

Revenue from certain export and import transactions which is currently recognized in the gross amount, are expected to be recognized in the net amount in accordance with the principal versus agent guidance under the new standard. However, it will not have a material impact on the financial statements.

f) Refund liabilities

Total assets and total liabilities is expected to increase by recognizing the obligation for refund as a liability and the right to reclaim goods as an asset with regards to the products expected to be refunded.

2.2 Accounting Policies

Significant accounting policies and method of computation used in the preparation of the consolidated interim financial statements are consistent with those of the consolidated financial statements for the year ended December 31, 2016, except for the changes due to the application of amendment and enactments of standards described in Note 2.1 and the one described below.

Income tax expense for the interim period is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate is applied to the pre-tax income.

Significant accounting policies related to construction contracts are addressed below. The accounting policies and method of computation applied in the preparation of the consolidated interim financial statements are consistent with those applied in the preparation of the annual consolidated financial statements for the year ended December 31, 2016.

43 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(a) Construction contracts

A construction contract is defined by Korean IFRS 1011, Construction Contracts, as a contract specifically negotiated for the construction of an asset.

When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognized over the period of the contract by reference to the stage of completion. Contract costs are recognized as expenses based on the percentage of completion of the contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss on the construction contract is immediately recognized as an expense.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable. Variations in contract work, claims and incentive payments are included in contract revenue to the extent that may have been agreed with the customer and are capable of being reliably measured. Contract costs are recognized as an expense in the period in which they are incurred.

The Group uses the ‘percentage-of-completion method’ to determine the appropriate amount to recognize in a given period. The percentage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred during the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These amounts are recognized as inventory, advance payments or other assets.

On the statement of financial position, the Group reports the net contract position for each contract as either an asset or a liability. A contract represents an asset where costs incurred plus recognized profits (less recognized losses) exceed progress billings (due from customers for contract work); a contract represents a liability where the opposite is the case (due to customers for contract work).

3. United States Dollar Amounts

The Company and its domestic subsidiaries operate primarily in Korean won and their official accounting records are maintained in Korean won. The U.S. dollar amounts, provided herein, represent supplementary information solely for the convenience of the reader. All Korean won amounts, other than those in statements of comprehensive income, have been translated into U.S. dollars at the exchange rate of \ 1,146.70 to US$ 1, while Korean won amounts in the statements of comprehensive income have been translated into U.S. dollars at the exchange rate of \ 1,138.67 to US$ 1. Such presentation is not in accordance with generally accepted accounting principles in either the Republic of Korea or the United States, and should not be construed as a representation that the Korean won amounts shown could be readily converted, realized or settled in U.S. dollars at this or any other rate.

44 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

4. Critical Accounting Estimates and Assumptions

The preparation of financial statements requires the Group to make estimates and assumptions concerning the future. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results.

Significant accounting estimates and assumptions applied in the preparation of these consolidated interim financial statements are the same as those that applied to the consolidated financial statements for the year ended December 31, 2016, except for the estimates used to determine income tax expense.

Meanwhile, significant accounting estimates and assumptions related to construction contracts are addressed below. The accounting estimates and assumptions, and method of computation applied in the preparation of the consolidated interim financial statements are consistent with those applied in the preparation of the annual consolidated financial statements for the year ended December 31, 2016.

(a) Uncertainty of the estimated total contract revenue

Total contract revenue is measured based on the initial amount of revenue agreed in the contract. However, the measurement of contract revenue is affected by a variety of uncertainties that depend on the outcome of future event; for example, the amount of contract revenue may increase as a result of variations in contract work, claims and inventive payments, on the other hand, the amount of contract revenue may decrease as a result of penalties arising from delays caused by the Group in the completion of the contract. The change in contract revenue is recognized when it is probable that the customer will approve the increase in revenue due to the changes in contract work, or when it is probable that the Group will be able to satisfy the performance requirements, and the amount can be estimated reliably.

(b) Uncertainty of the estimated total contract revenue due to construction delay

Revenue from construction work is recognized by reference to the percentage of completion method. The stage of completion of a contract is determined in the proportion that contract costs incurred for work performed to date to the estimated total contract costs. Total contract costs are estimated based on future expectation of material costs, labor costs, construction period and others.

45 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

5. Construction Contracts

Details of recognized construction profit or loss for construction contracts for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016

Buildings \ 5,226,781 \ 4,577,738 Civil engineering 1,857,991 1,573,112 Plant 1,834,399 2,784,835 Landscaping 127,833 81,926 \ 9,047,004 \ 9,017,611

As at September 30, 2017, the Group’s remaining balance of construction contracts amounts to \ 28,491,337 million1.

1 The remaining balance of construction contracts includes the remaining balance of Kazakhstan Balkhash project amounting to \ 1,457,043 million, of which the Group is currently discussing a termination of contract with the customer. The amount will be adjusted from the remaining balance when it is certain that the project is terminated and the settlement agreement is made.

The Group provides the certificates of payment from financial institutions to the customers or reserves certain amount for guarantees for bidding, performance, repayment of advance received and warranty relating to the construction contracts mentioned above, which are presented in the statement of financial position as guarantee deposits received. As at September 30, 2017, the Group has reserves of \ 332,571 million relating to the constructions in progress.

As at September 30, 2017, the Group has accumulated revenues1 and costs1 on the ongoing construction projects amounting to \ 31,050,562 million and \ 29,157,562 million, respectively. As at September 30, 2017, the total accumulated revenues1 and costs1 incurred on all construction projects, including those completed during the current period, are \ 36,163,012 million and \ 34,093,446 million, respectively.

1 The accumulated revenues and costs include the accumulated revenues and costs of the former Samsung C&T Corporation prior to the merger.

46 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

The account balances of outstanding construction contracts as at September 30, 2017 and December 31, 2016, are summarized as follows:

December 31, (in millions of Korean won) September 30, 2017 2016 Civil Buildings engineering Plant Landscaping Total Total

Receivables from construction contracts \ 1,016,934 \ 398,671 \ 197,686 \ 66,242 \ 1,679,533 \ 2,515,582 Due from customer for construction work 623,525 355,649 323,310 27,598 1,330,082 1,522,540 Advance payments 252,518 229,272 63,695 - 545,485 443,850 Prepaid expenses 277,052 9,940 1,680 243 288,915 280,707 Guarantee deposits 98,069 129,558 104,943 1 332,571 324,239 Long-term loans 204,140 - - 2,356 206,496 355,044 Short-term loans 171,843 - - - 171,843 152,880 Advances received 119,489 367,138 97,329 - 583,956 713,206 Due to customer for contract work 1,167,671 362,457 262,146 4,990 1,797,264 2,061,994

The Group is provided with payment guarantees amounting to \ 10,621,484 million (December 31, 2016: \ 12,197,460 million), \ 1,577,686 million (December 31, 2016: \ 1,613,587 million), \ 17,866 million (December 31, 2016: \ 8,941 million), and \ 18,382 million (December 31, 2016: \ 27,897 million) from financial institutions, Construction Guarantee Cooperative, Software Guarantee Cooperative, and Engineering Guarantee Cooperative, respectively, in relation to the construction performance and others.

As at September 30, 2017, construction sites are covered by construction work insurance amounting to \ 8,457,302 million with Samsung Fire & Marine Insurance Co., Ltd. and others.

The Group arranges housing finance for the members engaged in redevelopment and reconstruction projects that the Group manages. Advances on housing finance temporarily received but not executed amount to \ 1,060,016 million. The Group has provided a joint guarantee limit of \ 3,505,100 million (balance of \ 3,358,410 million) with regard to the housing finance in accordance with the agreements with the relevant financial institutions.

Meanwhile, payment guarantees provided by the Group for borrowings of the developer as at September 30, 2017, are as follows:

(in millions of Korean won) Business Financial Maximum location institution Amount amount Details Period Type Acceptances for Oct. 30, 2015 Other PF Seoul, Korea Banks and others \ 279,300 \ 279,300 debt ~ Nov. 3 2017 loans

47 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

As at September 30, 2017, information of each contract1 where contract revenue for the nine-month period ended September 30, 2017, is more than 5% of the previous year’s revenues, is as follows:

(in millions of Korean won) Trade receivables (receivables from Due from customers construction contracts) Percentage Accumulated Contract Contractual of Gross impairment Gross Provision for date due date completion amount loss amount impairment

2 Saudi RABIGH 2 IPP Nov. 2013 Jun. 2017 94.1% \ - \ - \ 55,049 \ - Turkey Kirikkale CCPP2 Oct. 2014 Jun. 2017 89.2% - - 18,505 - 2 Pyeong-taek P-PJT May 2015 Oct. 2017 94.9% - - 117,638 - Vietnam SDC Module 3 May 2016 Dec. 2017 78.6% - - 26,826 -

Qatar FAC D IWPP May 2015 Jun. 2018 85.2% - - - -

Saudi Riyadh Metro Oct. 2013 Oct. 2018 60.3% - - 62,618 - Garak Siyoung Complex 1 Oct. 2015 Dec. 2018 43.5% - - - - Australia Westconnex Stage 1b (M4 East) Jun. 2015 Mar. 2019 51.8% - - - - Singapore Changi Airport Pkg.1 Oct. 2015 Jul. 2019 52.5% 18,825 - 16,359 -

Algeria Naama Feb. 2014 Feb. 2020 55.0% - - 25,060 - 3 Kazakhstan Balkhash Dec. 2014 Mar. 2020 4.1% 44,637 - 2,248 - Australia Westconnex Stage2 (M5 Main Tunnel) Nov. 2015 Mar. 2020 27.3% - - 25,440 - UAE nuclear power plant Mar. 2010 May 2020 86.9% 91,021 - 239 -

Algeria Mostaghanem Feb. 2014 Apr. 2021 23.8% - - - - Gangneung Anin coal-fired power plant Feb. 2014 Mar. 2022 2.3% 35,037 - 10,188 - Singapore Thomson East Coast Line T313 Mar. 2016 Feb. 2024 16.6% 21,177 - 10,653 -

India Mumbai DAICEC Dec. 2013 Sep. 2017 43.1% 4,746 - 17,871 -

Malaysia KL118 Tower Nov. 2015 Dec. 2019 10.8% 24,616 - 28 -

1 Construction projects that are practically completed as at September 30, 2017, are excluded. 2 As at September 30, 2017, the contractual due dates have passed but the construction is still in process due to the customer’s request for additional construction works. The Group is continuing the negotiation with the customer in relation to the extension of contractual due date. 3 As at September 30, 2017, the project is under negotiation with the customer for the termination of contract and the final settlement. The project will be excluded from the above major construction contracts information when it is certain that the project is terminated and the settlement agreement is made.

48 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

As at December 31, 2016, information of each contract1 where contract revenue for the year ended December 31, 2016, is more than 5% of the previous year’s revenues, is as follows:

Australia RH PROJECT Apr. 2013 Dec. 2015 100.0% \ - \ - \ 60,621 \ -

Hwasung A Feb. 2014 Jul. 2016 100.0% - - - -

SR-Project 2nd Aug. 2013 Oct. 2016 100.0% - - - -

Pyeong-taek P-PJT May 2015 Feb. 2017 95.0% - - 38,179 -

Saudi RABIGH 2 IPP Nov. 2013 Jun. 2017 89.6% 73,418 - - - Turkey Kirikkale CCPP Oct. 2014 Jun. 2017 80.6% - - - -

Algeria Mostaghanem Feb. 2014 Aug. 2017 14.8% 38,880 - 10,247 -

Algeria Naama Feb. 2014 Aug. 2017 35.3% 15,944 - 32,059 - Vietnam SDC Module 3 May 2016 Aug. 2017 44.5% 150,928 - 92,820 -

Qatar FAC D IWPP May 2015 Jun. 2018 63.1% - - - -

Qatar Doha Metro42 Jun. 2013 Jun. 2018 26.8% 31,482 27,191 7,676 -

Saudi Riyadh Metro Oct. 2013 Oct. 2018 47.1% 6,081 - 83,285 - Garak Siyoung Complex 1 Oct. 2015 Dec. 2018 19.3% - - - - Australia Westconnex Stage 1b (M4 East) Jun. 2015 Mar. 2019 25.0% - - 14,771 - Singapore Changi Airport Pkg.1 Oct. 2015 Jul. 2019 24.1% 5,522 - 32,228 -

Kazakhstan Balkhash Dec. 2014 Mar. 2020 3.4% 34,895 - 2,429 - Australia Westconnex Stage2 (M5 Main Tunnel) Nov. 2015 Mar. 2020 9.3% - - 17,679 - UAE nuclear power plant Mar. 2010 May 2020 78.6% 144,250 - 100 - Gangneung Anin coal-fired power plant Feb. 2014 Mar. 2022 2.0% 28,709 - 3,800 - Singapore Thomson East Coast Line T313 Mar. 2016 Feb. 2024 3.1% 4,475 - - -

India Mumbai DAICEC Dec. 2013 Sep. 2017 32.8% - - 24,680 -

Malaysia KL118 Tower Nov. 2015 Dec. 2019 5.8% 27,324 - - -

1 Construction projects that are practically completed as at December 31, 2016, are excluded.

49 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Details of major joint venture construction as at September 30, 2017, are as follows:

(in millions of Korean won) Total contract Amount of Percentage of amount the Group ownership Representative company

UAE nuclear power plant Hyundai Engineering & \ 6,404,582 \ 2,882,062 45.00% Construction Co., Ltd. Saudi Riyadh Metro 8,863,485 2,496,312 28.16% FCC Austrailia Westconnex Stage2 3,405,687 1,021,706 30.00% CPB (M5 Main Tunnel) Austrailia Westconnex Stage 2,336,499 778,755 33.33% CPB 1b (M4 East) Singapore Changi Airport 861,204 602,843 70.00% Samsung C&T Corporation Expansion Pkg.1 Shin-Kori nuclear power plant 1,097,686 559,820 51.00% Samsung C&T Corporation #5, 6 Hong Kong Metro SCLC1109 884,805 530,883 60.00% Samsung C&T Corporation Bujeon-Masan DoubleTrack 421,379 299,936 71.18% Samsung C&T Corporation Electric Railway Suseo-Pyeongtaek High-speed 298,509 268,658 90.00% Samsung C&T Corporation Railway Area 5 Singapore TuasFinger1 Hyundai Engineering & 795,132 222,637 28.00% Construction Co., Ltd. Malaysia KL118 Tower 1,484,573 890,744 60.00% Samsung C&T Corporation Canada Site C 1,534,091 575,284 37.50% Acciona S.A. United Kingdom Mersey 741,737 247,221 33.33% FCC, S.A & Petroserv L Gateway Saudi Tadawul Tower PJT 388,136 232,882 60.00% Samsung C&T Corporation

Changes in the estimated total contract revenue and estimated total contract costs by construction types for contracts in progress for the nine-month period ended September 30, 2017, and its impact on the Group’s profit or loss for the period and in the succeeding periods, changes in balances of due from customers for contract work, and provisions for construction losses are as follows:

Impact on Changes in Changes in profit or loss Changes in estimated estimated Impact on for the due from (to) Provision for total contract total contract profit or loss succeeding customers for construction Construction type revenue costs for the period period contract work losses

Buildings \ 2,068,538 \ 2,045,887 \ 59,955 \ (37,304) \ 59,955 \ 33,532

Civil engineering 251,190 438,069 (117,575) (69,304) (117,575) 40,208

Plant 133,592 122,867 (15,511) 26,236 (15,511) 31,524

Landscaping 241 (105) 498 (152) 498 -

\ 2,453,561 \ 2,606,718 \ (72,633) \ (80,524) \ (72,633) \ 105,264

50 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Uncertainty of the estimated total contract revenue due to construction delay

The measurement of contract revenue is affected by the uncertainty of the occurrence of future events. The contract revenue can be decreased by the claims of liquidated damages when the completion of contract is delayed due to the Group’s fault. Therefore, the damage claims for the delay are estimated based on historical experience in case the completion date is expected to be delayed. The Group strives to minimize damage claims by requesting extension of the completion date from the customers, and by giving evidence that the construction delay is not attributable to the Group. The Group will also undertake measures not to bear the damage claims from the delay.

For the nine-month period ended September 30, 2017, changes in provision for estimated warranty costs for the completed projects and provisions for construction losses from construction contracts are as follows:

(in millions of Korean won) Beginning Increase Decrease Ending

Provision for construction warranties \ 176,855 \ 27,398 \ (20,111) \ 184,142 Provision for construction losses 160,518 16,455 (71,709) 105,264

6. Inventories

Inventories as at September 30, 2017 and December 31, 2016, consist of the following:

September 30, 2017 December 31, 2016 (in millions of Korean won) Acquisition Valuation Book Acquisition Valuation Book cost allowance amount cost allowance amount

Merchandise ￦ 666,054 ￦ (40,646) ￦ 625,408 ￦ 465,399 ￦ (43,346) ￦ 422,053 Finished good 444,910 (52,719) 392,191 434,629 (68,312) 366,317 Raw materials 189,578 (9,010) 180,568 184,238 (10,337) 173,901 Land held for housing projects 62,697 (612) 62,085 8,971 (612) 8,359 Materials-in-transit 172,217 - 172,217 220,280 - 220,280 Semi-finished goods and work-in-progress 59,158 (2,395) 56,763 52,498 (2,426) 50,072 Others 81,472 (724) 80,748 71,847 - 71,847 ￦ 1,676,086 ￦ (106,106) ￦ 1,569,980 ￦1,437,862 ￦ (125,033) ￦ 1,312,829

51 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

7. Financial Instruments by Category

Details of financial instruments by category as at September 30, 2017, are as follows:

(in millions of Korean won) Financial assets Derivative at fair value instruments Available-for- Loans and through profit for hedging sale financial Financial assets receivables or loss activities assets Total

Cash and cash equivalents1 \ 2,657,091 \ - \ - \ - \ 2,657,091 Short-term financial instruments 81,025 - - - 81,025 Trade receivables2 3,300,302 - - - 3,300,302 Other current assets 1,461,807 12,884 6,872 - 1,481,563 Available-for-sale financial assets - - - 22,471,680 22,471,680 Other non-current assets3 661,161 - - - 661,161 \ 8,161,386 \ 12,884 \ 6,872 \ 22,471,680 \ 30,652,822

1 Cash and cash equivalents amounting to \ 909 million are subject to withdrawal restrictions in relation to termination of Mongolian railroad project. 2 Due from customer for contract work amounting to \ 1,244,090 million is excluded. 3 Bank deposits amounting to \ 97 million are subject to withdrawal restrictions in relation to the Group’s loan facility agreement.

(in millions of Korean won) Financial Derivative liabilities at fair instruments Financial Other value through for hedging liabilities at financial Financial liabilities profit or loss activities amortized cost liabilities Total

Trade payables \ - \ - \ 1,353,744 \ - \ 1,353,744 Short-term borrowings - - 1,654,477 559,875 2,214,352 Current portion of long-term debts - - 1,298,430 - 1,298,430 Other current liabilities 1,924,041 3,867 2,786,129 34,788 4,748,825 Debentures and long-term borrowings - - 2,734,161 - 2,734,161 Other non-current liabilities - - 87,820 - 87,820 \ 1,924,041 \ 3,867 \ 9,914,761 \ 594,663 \ 12,437,332

52 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Details of financial instruments by category as at December 31, 2016, are as follows:

Cash and cash equivalents1 \ 2,698,530 \ - \ - \ - \ 2,698,530 Short-term financial instruments 1,058,872 - - - 1,058,872 Trade receivables2 3,934,795 - - - 3,934,795 Other current assets 1,651,154 32,879 9,404 - 1,693,437 Available-for-sale financial assets - - - 17,499,229 17,499,229 Other non-current assets3 794,832 - - - 794,832 \ 10,138,183 \ 32,879 \ 9,404 \ 17,499,229 \ 27,679,695

1 Cash and cash equivalents amounting to \ 611 million are subject to withdrawal restrictions in relation to termination of Mongolian railroad project. 2 Due from customer for contract work amounting to \ 1,449,058 million is excluded. 3 Bank deposits amounting to \ 98 million are subject to withdrawal restrictions in relation to the Group’s loan facility agreement.

Trade payables \ - \ - \ 1,823,810 \ - \ 1,823,810 Short-term borrowings - - 1,451,566 414,249 1,865,815 Current portion of long-term debts - - 1,607,367 - 1,607,367 Other current liabilities 1,895,471 12,294 2,854,781 34,967 4,797,513 Debentures and long-term borrowings - - 3,657,278 - 3,657,278 Other non-current liabilities - - 112,189 - 112,189 \ 1,895,471 \ 12,294 \ 11,506,991 \ 449,216 \ 13,863,972

Fair value of financial instruments is the same as book amount, except for those which do not have market prices in active market and whose fair value cannot be reliably measured.

53 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

8. Trade Receivables and Other Assets

Trade receivables and other assets as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) September 30, 2017 December 31, 2016 Provision for Gross amount impairment Net amount Net amount

Trade receivables Financial instruments ￦ 3,390,963 ￦ (90,661) ￦ 3,300,302 ￦ 3,934,795 Due from customer for contract work 1,330,082 (85,992) 1,244,090 1,449,058 4,721,045 (176,653) 4,544,392 5,383,853 Other current assets Financial instruments: Short-term loans 296,573 (87,991) 208,582 149,353 Current portion of long-term receivables (Note 9) 12,196 - 12,196 139,202 Non-trade receivables 607,143 (26,618) 580,525 706,125 Accrued income 209,803 (51,925) 157,878 204,153 Deposits 535,646 (13,265) 522,381 494,604 1,661,361 (179,799) 1,481,562 1,693,437 Advance payments 810,795 (26,392) 784,403 678,858 Prepaid expenses 461,001 (172,445) 288,556 272,216 Prepaid corporate income tax 228,483 - 228,483 185,759 Others 71,824 - 71,824 51,645 3,233,464 (378,636) 2,854,828 2,881,915 Other non-current assets Financial instruments: Long-term receivables (Note 9) 728,474 (263,879) 464,595 586,638 Long-term financial instruments 563 - 563 589 Deposits 186,406 (875) 185,531 197,133 Overseas natural resources development 33,237 (22,765) 10,472 10,472 948,680 (287,519) 661,161 794,832 Others 47,541 - 47,541 54,111 996,221 (287,519) 708,702 848,943 ￦ 8,950,730 ￦ (842,808) ￦ 8,107,922 ￦ 9,114,711

54 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(in millions of Korean won) September 30, 2017 December 31, 2016 Provision for Gross amount impairment Net amount Net amount

Third party receivables ￦ 8,468,321 ￦ (834,788) ￦ 7,633,533 ￦ 8,686,998 Related party receivables 482,409 (8,020) 474,389 427,713

￦ 8,950,730 ￦ (842,808) ￦ 8,107,922 ￦ 9,114,711

As at September 30, 2017, trade receivables amounting to ₩ 559,875 million (December 31, 2016: ₩ 414,249 million), which were transferred to financial institutions but have not matured yet, are recognized as trade receivables and collateralized borrowings, respectively, due to a recourse in the event the debtor fails to pay (Note 16).

Changes in provision for impairment for the nine-month period ended September 30, 2017, are as follows:

(in millions of Korean won) Impairment loss September 30, January 1, 2017 (reversal) Write-off Others1 2017

Trade receivables ￦ 192,561 ￦ 6,326 ￦ (22,114) ￦ (120) ￦ 176,653 Other current assets Financial instruments: Short-term loans 87,827 138 - 26 87,991 Non-trade receivables 30,788 (84) (3,424) (662) 26,618 Accrued income 41,831 10,231 - (137) 51,925 Deposits 6,472 6,793 - - 13,265 166,918 17,078 (3,424) (773) 179,799 Advance payments 25,926 539 - (73) 26,392 Prepaid expenses 159,555 12,890 - - 172,445 352,399 30,507 (3,424) (846) 378,636 Other non-current assets Financial instruments: Long-term receivables 285,735 (288) (21,468) (100) 263,879 Deposits 875 - - - 875 Overseas natural resources development 22,765 - - - 22,765 309,375 (288) (21,468) (100) 287,519 ￦ 854,335 ￦ 36,545 ￦ (47,006) ￦ (1,066) ￦ 842,808

1 Others include exchange differences, changes in scope of consolidation..

55 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Changes in provision for impairment for the nine-month period ended September 30, 2016, are as follows:

September January 1, Impairment loss 30, (in millions of Korean won) 2016 (reversal) Write-off Others1 2016

Trade receivables \ 133,095 \ 17,766 \ (4,414) \ (2,451) \ 143,996 Other current assets Financial instruments: Short-term loans 94,831 4,074 - (74) 98,831 Non-trade receivables 31,383 (308) (183) 75,152 106,044 Accrued income 31,913 7,293 (1,294) (120) 37,792 Deposits 14,571 (153) - - 14,418 172,698 10,906 (1,477) 74,958 257,085 Advance payments 25,875 - - (106) 25,769 Prepaid expenses 167,145 (25,225) - - 141,920 365,718 (14,319) (1,477) 74,852 424,774 Other non-current assets Financial instruments: Long-term receivables 300,312 (13,764) (9,934) (224) 276,390 Deposits 925 - - - 925 Overseas natural resources development 22,682 83 - - 22,765 323,919 (13,681) (9,934) (224) 300,080 \ 822,732 \ (10,234) \ (15,825) \ 72,177 \ 868,850

1 Others include exchange differences, changes in scope of consolidation and others.

Impairment losses from trade receivables and other receivables are included in selling and administrative expenses, and other operating expenses, respectively, in the consolidated statement of comprehensive income. Amounts charged to the provision account are generally written off when there is no expectation of recovering additional cash.

As at September 30, 2017 and December 31, 2016, fair values of trade receivables, other current assets and other non-current assets are equal to their book amount. The maximum exposure of trade and other receivables to credit risk is the book amount of each class of receivables mentioned above.

56 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

9. Long-Term Receivables

Details of long-term receivables (including current portion) as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) September 30, 2017 December 31, 2016

Loans for others ￦ 121,866 ￦ 27,093 Loans for redevelopment and reconstruction projects 354,971 548,505 Proceeds from disposal of shares1 - 142,129 Other long-term receivables 21,724 30,342 Less: Present value discount (21,770) (22,229) 476,791 725,840 Less: Current portion of long-term receivables (12,196) (139,202) ￦ 464,595 ￦ 586,638

1 During the nine-month period ended September 30, 2017, the Group wholly collected the long-term receivables related to the disposal of shares of Hanwha General Chemical Co., Ltd. (formerly Samsung General Chemicals Co., Ltd.) and Hanwha Techwin Co., Ltd. (formerly Samsung Techwin Co., Ltd.).

57 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

10. Other Liabilities

Details of other liabilities as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) September 30, 2017 December 31, 2016

Other current liabilities Financial instruments: Non-trade payables ￦ 2,998,002 ￦ 2,762,892 Accrued expenses 837,776 1,108,303 Finance guarantee contract 34,788 34,967 Guarantee deposits received 878,259 891,351 4,748,825 4,797,513 Advances received 3,759,964 4,210,170 Withholdings 234,237 264,745 Provisions (Note 18) 52,189 55,909 Others 44,775 28,092 8,839,990 9,356,429 Other non-current liabilities Financial instruments: Long-term non-trade payables 87,270 111,621 Leasehold deposits received 550 568 87,820 112,189 Contingent liabilities 169,278 244,856 Long-term unearned revenue 1,256 1,447 258,354 358,492 ￦ 9,098,344 ￦ 9,714,921

58 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

11. Available-for-sale Financial Assets

Changes in available-for-sale financial assets for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016

Beginning balance ￦ 17,499,229 ￦ 15,976,708 Acquisition 9,229 100,885 Disposal and others (7,247) (12,380) Impairment losses (2,211) (8,300) Transfer - 4,612 Changes in the fair value 4,972,767 461,272 Exchange differences (87) 278 Ending balance ￦ 22,471,680 ￦ 16,523,075 Current portion 247 4,537 Non-current portion 22,471,433 16,518,538

Details of available-for-sale financial assets as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) Detail September 30, 2017 December 31, 2016

Listed equities (1) ￦ 22,101,577 ￦ 17,135,811 Non-listed equities (2) 369,288 360,531 Debt securities 815 2,887 ￦ 22,471,680 ￦ 17,499,229 Current portion 247 2,033 Non-current portion 22,471,433 17,497,196

59 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(1) Listed equities

Listed equities, including preferred shares, as at September 30, 2017 and December 31, 2016, consist of the following:

December 31, (in millions of Korean won) September 30, 2017 2016 Number of Percentage shares of ownership Acquisition Market Book Book owned (%) cost value amount amount

Samsung Electronics Co., Ltd. 5,976,362 4.03 ￦ 6,484,353 ￦ 15,323,392 ￦ 15,323,392 ￦ 10,769,404 Samsung Life Insurance Co., Ltd. 38,688,000 19.34 34,819 4,371,744 4,371,744 4,352,400 Samsung SDS Co., Ltd. 13,215,822 17.08 3,396,466 2,226,866 2,226,866 1,843,607 Samsung Heavy Industries Co., Ltd. and others 199,921 179,575 179,575 170,400

￦ 10,115,559 ￦ 22,101,577 ￦ 22,101,577 ￦ 17,135,811

The difference between the acquisition cost and market value of the above listed equities are recognized as changes in the fair value of available-for-sale financial assets of accumulated other comprehensive income item after tax effect.

60 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(2) Non-listed equities

Non-listed equities as at September 30, 2017 and December 31, 2016, consist of the following:

December (in millions of Korean won) September 30, 2017 31, 2016 Number of Percentage Fair value or shares of ownership Acquisition Net asset Book Book owned (%) cost value amount amount Domestic Companies

HAN ALL Co., Ltd. 1,128,011 16.11 ￦ 11,280 ￦ 12,809 ￦ 12,809 ￦ 12,809 SECUI Co., Ltd. 1,000,000 8.70 500 13,594 13,594 13,594 The Korea Economic Daily1 1,187,563 6.35 7,095 13,895 7,656 7,656 Samsung Economics Research Institute1 120,000 1.00 903 772 903 903 Oil Hub Korea and others1 52,825 61,907 50,445 51,951 72,603 102,977 85,407 86,913 Overseas Companies Korea Ras laffan LNG Ltd. 2,783,333 10.00 80,279 96,499 96,499 96,499 iMarket Asia 772,657 19.32 8,941 18,967 18,967 18,967 Samsung SDI (Hongkong) Limited1 5,500,000 2.44 4,477 11,640 4,477 4,477 Posco India Delhi Steel Processing Centre.PVT.LTD and others1 122,555 141,733 120,009 110,665 216,252 268,839 239,952 230,608 Equity Contribution Korea Construction Financial Cooperative 28,717 0.73 39,569 41,177 41,177 40,368 Others1 2,676 3,644 2,752 2,642 42,245 44,821 43,929 43,010 ￦ 331,100 ￦ 416,637 ￦ 369,288 ￦ 360,531

1 Non-listed equities that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost.

61 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

As at September 30, 2017 and December 31, 2016, the debt securities amounting to \ 815 million and \ 2,887 million, respectively, are composed of convertible bonds, national and municipal bonds, which have rates of return of 1.25% to 2.5% per annum.

As at September 30, 2017, the maximum amount exposed to credit risk, relating to available-for-sale financial assets, is equal to the book amount.

Changes in the fair value of available-for-sale financial assets for the nine-month period ended September 30, 2017, recorded as other component of equity, consist of the following:

(in millions of Korean won) Balance at Balance at Change for the Income tax September 30, January 1, 2017 period allocated 2017

Gain (loss) on valuation of available-for-sale financial assets ￦ 4,846,982 ￦ 4,972,767 ￦ (1,203,349) ￦ 8,616,400

62 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

12. Investments in Associates and Joint Ventures

Details of investments in associates and joint ventures as at September 30, 2017 and December 31, 2016, are as follows (Note 1.3):

(in millions of Korean won) Percentage September 30, 2017 December 31, 2016 of ownership Acquisition Book Acquisition Book

Location (%) cost Net assets amount cost Net assets amount

Associates

Dongducheon Dream Power Co., Ltd.2 Korea 31.15 ￦ 81,191 ￦ 76,013 ￦ 50,863 ￦ 81,191 ￦ 79,024 ￦ 53,874 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. China 40.00 10,968 13,040 10,806 10,968 12,937 10,386

Songdo Landmark City Limited 3 Korea 43.94 20,522 20,522 20,522 20,522 20,522 20,522

KST POWER NORTE S.A. DE C.V. Mexico 34.00 6,229 23,693 22,403 6,229 19,509 18,157 Chongqing Shanxia Technology Textile Co., Ltd.5 China 20.00 30,461 29,487 29,105 30,461 29,444 29,444

Samsung Bioepis Co., Ltd.4 Korea 94.61 5,208,496 487,161 4,907,583 5,008,482 357,053 4,780,772

Others 360,589 269,851 356,930 359,742 435,730 361,518

5,718,456 919,767 5,398,212 5,517,595 954,219 5,274,673

Joint ventures

Korea LNG Limited Oman 20.00 83,507 52,234 52,234 83,507 52,713 52,713

Southgate Solar LP Canada 49.99 3,971 2,417 1,836 13,141 9,382 7,976

SP Belle River LP Canada 42.49 26,243 30,673 27,542 26,243 28,291 27,504

Others 455,896 375,381 378,363 435,620 437,509 357,365

569,617 460,705 459,975 558,511 527,895 445,558

6,288,073 1,380,472 5,858,187 6,076,106 1,482,114 5,720,231

Less : Asset held for sale

Songdo Landmark City Limited3 Korea 43.94 (20,522) (20,522) (20,522) (20,522) (20,522) (20,522) Chongqing Shanxia Technology Textile Co., Ltd.5 China 20.00 (30,461) (29,487) (29,105) - - -

￦ 6,237,090 ￦ 1,330,463 ￦ 5,808,560 ￦ 6,055,584 ￦ 1,461,592 ￦ 5,699,709

63 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

1 The investments in associates and joint ventures are all non-listed. 2 As at September 30, 2017, investments in Dongducheon Dream Power Co., Ltd., (Acquisition cost: \ 81,191 million), are pledged as collateral to a financial institution against the borrowings (total borrowing limit of \ 1,285,000 million) of Dongducheon Dream Power Co., Ltd. (Note 30). In addition, the Group provides fund supplement commitment on expected working capital deficit of Dongducheon Dream Power Co., Ltd. up to \ 8,100 million. 3 The Group has entered into a contract to sell equity interests, receivables, and others of Songdo Landmark City Limited to joint venture partners and classified the investee as asset held for sale. 4 Samsung Bioepis Co., Ltd. is included in associates although the percentage of ownership is 94.61% since the Group holds no control considering the potential voting rights held by other entities (Note 19). 5 The investment in the associate was reclassified to an asset held for sale since the Group entered into an agreement to dispose the investment during the nine-month period ended September 30, 2017.

Changes in investments in associates and joint ventures for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016

Beginning balance \ 5,699,709 \ 5,642,058 Acquisition 248,709 36,240 Disposal and others (36,700) (32,924) Share of profit (31,098) (50,337) Others1 (72,060) (133,323) Ending balance \ 5,808,560 \ 5,461,714

1 Others include dividends, transfer, exchange differences, and others.

64 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Summarized financial information of major associates and joint ventures, including dividends received by the Group, as at and for the nine-month period ended September 30, 2017, is as follows:

(in millions of Korean won) Summarized financial information Total Non- Profit (loss) Other comprehen- Current Non-current Current Non-current controlling for the comprehensive income Dividends assets assets liabilities liabilities interests Revenue period sive income (loss) received

Associates Dongducheon Dream Power Co., Ltd. \ 129,355 \1,479,171 \ 317,091 \1,074,255 \ - \ 578,853 \ (25,991) \ - \ (25,991) \ - Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 34,725 2 2,125 - - - 416 - 416 -

KST POWER NORT E S.A. DE C.V. 79,488 511,261 68,841 452,223 - 96,179 13,181 - 13,181 - Chongqing Shanxia Technology Textile Co., Ltd. 357,274 94,411 301,726 2,526 - 118,870 721 - 721 - Samsung Bioepis Co., Ltd.1 584,671 614,737 539,898 144,570 - 207,284 (67,603) (1) (67,604) - Joint ventures Korea LNG Limited 436 260,802 6 61 - 26,561 24,806 11,250 36,056 4,977 Southgate Solar LP 11,308 149,044 9,275 146,241 - 12,444 3,543 1,655 5,198 - SP Belle River LP 23,841 280,044 38,749 192,947 - 1,096 (486) 4,096 3,610 -

1 Based on consolidated financial information.

65 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Summarized financial information of major associates and joint ventures, including dividends received by the Group, as at December 31, 2016 and for the nine-month period ended September 30, 2016, is as follows:

(in millions of Korean won) Summarized financial information December 31, 2016 2016 Total Non- Profit (loss) Other comprehen- Current Non-current Current Non-current controlling for the comprehensive income Dividends assets assets liabilities liabilities interests Revenue period sive income (loss) received

Associates Dongducheon Dream Power Co., Ltd. \ 178,590 \1,505,413 \ 403,362 \1,054,858 \ - \ 600,021 \ (37,052) \ - \ (37,052) \ - Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 34,476 2 2,135 - - 8,978 472 - 472 - KST POWER NORT E S.A. DE C.V. 55,542 541,281 54,565 484,895 - 73,853 15,301 - 15,301 - Chongqing Shanxia Technology Textile Co., Ltd. 354,566 96,203 284,305 19,244 - 129,256 1,051 - 1,051 - Samsung Bioepis Co., Ltd.1 437,924 570,868 540,272 85,876 - 88,904 (66,868) - (66,868) - Joint ventures Korea LNG Limited 20,442 262,828 19,650 54 - 24,715 23,912 - 23,912 1,327 Southgate Solar LP 15,341 141,158 27,829 109,906 - - (133) (2,631) (2,764) - SP Belle River LP 20,897 122,071 73,915 2,470 - - 14 - 14 -

1 Based on consolidated financial information.

66 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Reconciliation of financial information to book amount of the major investments in associates and joint ventures as at September 30, 2017 and December 31, 2016, is as follows:

September 30, 2017 (in millions of Korean won) Difference Percentage between the cost of of the investment ownership Share in and share in the Intergroup Net assets (%) net assets investee’s equity transactions Book amount

Associates Dongducheon Dream Power Co., Ltd.1 \ 217,180 31.15 \ 76,013 \ (1,175) \ (23,975) \ 50,863 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 32,601 40.00 13,040 (2,234) - 10,806 KST POWER NORTE S.A. DE C.V. 69,686 34.00 23,693 - (1,290) 22,403 Samsung Bioepis Co., Ltd. 514,940 94.61 487,161 4,420,422 - 4,907,583 Joint ventures Korea LNG Limited 261,171 20.00 52,234 - - 52,234 Southgate Solar LP 4,835 49.99 2,417 2,792 (3,373) 1,836 SP Belle River LP 72,189 42.49 30,673 - (3,131) 27,542

1 Since the disproportionate capital increase by the other investor was classified as financial liabilities, the Group applied 35% of ownership interest when calculating share of profit or loss of the associate.

67 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

December 31, 2016 (in millions of Korean won) Difference Percentage between the cost of of the investment ownership Share in and share in the Intergroup Net assets (%) net assets investee’s equity transactions Book amount

Associates Dongducheon Dream Power Co., Ltd.1 \ 225,783 31.15 \ 79,024 \ - \ (25,150) \ 53,874 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 32,343 40.00 12,937 - (2,551) 10,386 KST POWER NORTE S.A. DE C.V. 57,378 34.00 19,509 - (1,352) 18,157 Chongqing Shanxia Technology Textile Co., Ltd. 147,220 20.00 29,444 - - 29,444 Samsung Bioepis Co., Ltd. 382,644 93.31 357,053 4,423,719 - 4,780,772 Joint ventures Korea LNG Limited 263,566 20.00 52,713 - - 52,713 Southgate Solar LP 18,764 49.99 9,384 2,792 (4,198) 7,978 SP Belle River LP 66,583 42.49 28,291 - (787) 27,504

68 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

13. Property, Plant and Equipment, and Intangible Assets

Changes in property, plant and equipment for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 Buildings and Animals& Construction in Land structures plants Others progress Total Beginning balance Acquisition cost ￦ 2,232,229 ￦ 2,211,981 ￦ 72,042 ￦ 1,792,328 ￦287,496 ￦ 6,596,076 Accumulated impairment and depreciation - (575,226) (4,459) (731,932) - (1,311,617) Beneficiary's share of construction cost - - - (3,250) - (3,250) 2,232,229 1,636,755 67,583 1,057,146 287,496 5,281,209 Changes during the period Acquisition 14,036 5,499 1,331 64,169 422,523 507,558 Disposal (8,041) (5,859) (126) (48,810) (400) (63,236) Depreciation - (48,230) (1,869) (144,783) - (194,882) Transfer (384,165) (36,561) 79 50,697 (208,769) (578,719) Impairment (7,349) - - - - (7,349) Others 1 (117) 4,806 (2,097) 14,966 52 17,610 1,846,593 1,556,410 64,901 993,385 500,902 4,962,191 Ending balance Acquisition cost 1,846,593 2,168,233 71,050 1,845,532 500,902 6,432,310 Accumulated impairment and depreciation - (611,823) (6,149) (849,098) - (1,467,070) Beneficiary's share of construction cost - - - (3,049) - (3,049) ￦ 1,846,593 ￦ 1,556,410 ￦ 64,901 ￦ 993,385 ￦500,902 ￦ 4,962,191

1 Others include exchange differences, changes in scope of consolidation and others.

69 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(in millions of Korean won) 2016 Buildings and Animals& Construction in Land structures plants Others progress Total Beginning balance Acquisition cost ￦ 2,247,048 ￦ 2,090,638 ￦ 63,995 ￦ 1,131,765 ￦ 485,443 ￦ 6,018,889 Accumulated impairment and depreciation - (432,184) (2,116) (446,799) - (881,099) Beneficiary's share of construction cost - - - (3,508) - (3,508) 2,247,048 1,658,454 61,879 681,458 485,443 5,134,282 Changes during the period Acquisition 22,099 16,136 459 163,226 123,036 324,956 Disposal (3,971) (4,131) (55) (20,348) - (28,505) Depreciation - (50,822) (1,863) (131,514) - (184,199) Transfer 11,985 65,433 916 340,303 (372,698) 45,939 Others 1 (2,227) (6,654) 2,927 (5,289) (1,849) (13,092) 2,274,934 1,678,416 64,263 1,027,836 233,932 5,279,381 Ending balance Acquisition cost 2,274,934 2,220,176 68,174 1,722,569 233,932 6,519,785 Accumulated impairment and depreciation - (541,760) (3,911) (691,425) - (1,237,096) Beneficiary's share of construction cost - - - (3,308) - (3,308) ￦ 2,274,934 ￦ 1,678,416 ￦ 64,263 ￦ 1,027,836 ￦ 233,932 ￦ 5,279,381

1 Others include exchange differences, changes in scope of consolidation and others.

70 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Changes in intangible assets for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 Mineral Right to use Customer Orders on rights Memberships Software property Goodwill relationships Brands hand Others Total

Beginning balance ￦ 543,519 ￦ 81,307 ￦ 118,837 ￦ 7,116 ￦ 60,758 ￦ 53,939 ￦ 189,553 ￦ 484,608 ￦ 61,666 ￦ 1,601,303 Acquisition 27,030 52 4,934 - - - - - 12,078 44,094 Disposal - (53,743) (52) (7) - - - - (396) (54,198) Amortization (15,140) (9) (49,316) (855) - (4,116) (598) (77,853) (15,521) (163,408) Impairment - (363) ------(363) Reversal - 27,114 ------27,114 Transfer - (16) 11,474 - - - - - (2,813) 8,645 Others 1 (45,007) (483) (32) (39) (315) - 48 - 733 (45,095) Ending balance ￦ 510,402 ￦ 53,859 ￦ 85,845 ￦ 6,215 ￦ 60,443 ￦ 49,823 ￦ 189,003 ￦ 406,755 ￦ 55,747 ￦ 1,418,092

1 Others include exchange differences, changes in scope of consolidation and others.

71 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(in millions of Korean won) 2016 Mineral Right to use Customer Orders on rights Memberships Software property Goodwill relationships Brands hand Others Total

Beginning balance ￦ 594,057 ￦ 82,143 ￦ 143,204 ￦ 8,264 ￦ 61,524 ￦ 59,427 ￦ 190,940 ￦ 617,813 ￦ 82,800 ￦ 1,840,172 Acquisition 11,813 646 10,759 - - - - - 28,586 51,804 Disposal - (94) (33) (8) - - - - (50) (185) Amortization (17,604) - (43,361) (863) - (4,116) (1,301) (108,978) (20,134) (196,357) Impairment1 (90,200) ------(90,200) Transfer 27,423 - 11,089 - - - - - (16,538) 21,974 Others 2 (51,978) (1,031) 1,906 (46) (1,328) - 425 - (4,635) (56,687) Ending balance ￦ 473,511 ￦ 81,664 ￦ 123,564 ￦ 7,347 ￦ 60,196 ￦ 55,311 ￦ 190,064 ￦ 508,835 ￦ 70,029 ￦ 1,570,521

1 The Group reduced its production plan for oil fields in the United States, considering the economic feasibility under the current market price, which resulted in a decrease in the recoverable amount of mining rights. In this regards, the Group recorded impairment loss of \ 90,200 million in relation to mining rights of the oil fields. 2 Others include exchange differences, changes in scope of consolidation and others.

72 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Goodwill is monitored by the management at the operating segment level. The following is a summary of goodwill allocation for each operating segment (cash-generating unit or groups of cash-generating units) as at September 30, 2017 and December 31, 2016:

(in millions of Korean won) September 30, 2017 December 31, 2016

Fashion segment: acquisition of fashion business segment of Samsung SDI Co., Ltd. \ 56,262 \ 56,262 Others 4,181 4,496 \ 60,443 \ 60,758

The Group entered into a Collateral Trust Agreement with KB Real Estate Trust Co., Ltd., which the Group provided its land and building located in Yongin-si, Gyeonggi-do as trust property. Simultaneously, the Group pledged the primary beneficiary certificate of the trust property as collateral to Woori Bank in relation to the short-term borrowings.

14. Investment Properties

Changes in investment properties for the nine-month periods ended September 30, 2017 and 2016, are as follows:

2017 2016 (in millions of Korean won) Land Building Total Land Building Total

Beginning balance ￦ 88,197 ￦ 28,084 ￦ 116,281 ￦ 95,239 ￦ 37,807 ￦ 133,046 Disposal - (527) (527) - (1,208) (1,208) Depreciation - (2,787) (2,787) - (785) (785) Transfer 384,528 174,616 559,144 - - - Others 1 - (788) (788) (2,968) (4,469) (7,437) Ending balance ￦ 472,725 ￦ 198,598 ￦ 671,323 ￦ 92,271 ￦ 31,345 ￦ 123,616

1 Others include adjustments due to exchange difference.

As at September 30, 2017, the Group provided land and buildings, which are located in Seocho-gu, Seoul, Republic of Korea, as collateral to Samsung Fire & Marine Insurance Co., Ltd. and Samsung Life Insurance Co., Ltd. for establishment of the right to collateral security according to lease agreements, with total secured amount of \ 31,037 million.

73 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

15. Biological Assets

Changes in biological assets for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016

Beginning balance \ 2,505 \ 2,415 Exchange differences (140) (67) Ending balance \ 2,365 \ 2,348

16. Debentures and Borrowings

Details of debentures and borrowings as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) September 30, 2017 December 31, 2016

Current liabilities Short-term borrowings \ 2,214,352 \ 1,865,815 Current portion of long-term borrowings 128,932 367,824 Current portion of debentures 1,170,000 1,240,000 Less: Discount on debentures (502) (457) 3,512,782 3,473,182 Non-current liabilities Long-term borrowings 1,227,050 1,282,092 Debentures 1,510,000 2,380,000 Less: Discount on debentures (2,889) (4,815) 2,734,161 3,657,277 \ 6,246,943 \ 7,130,459

74 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Short-term borrowings as at September 30, 2017 and December 31, 2016, consist of the following:

(in millions of Korean won) Annual interest September 30, December 31, Creditors rate (%) 2017 2016

Samsung C&T and domestic subsidiaries Loans in local currency 1 Woori Bank and others 1.40 - 2.50 \ 580,523 \ 494,223 Loans in foreign currency SMBC and others 1.96 – 2.91 175,276 147,452 Banker’s usance Woori Bank and others L+0.4 - 1.60 47,145 73,622 Secured loans (Note 8) Woori Bank and others L+0.4 - 1.95 559,875 411,425 1,362,819 1,126,722 Foreign subsidiaries General loans Citibank and others 0.87 - 1.37 851,533 736,269 Secured loans (Note 8) BTMU and others - - 2,824 851,533 739,093 \ 2,214,352 \ 1,865,815

1 In relation to the borrowings, the land and building of the Group are provided as collaterals to Woori Bank. (Note 13).

As at September 30, 2017, the Group has entered into bank overdraft facility agreements amounting to ₩ 158,500 million and credit facility agreements amounting to ₩ 818,000 million with ten banks, including Woori Bank. Also, the Group has entered into credit agreements using its notes receivables which are guaranteed, as collateral for up to ₩ 154,000 million with three banks, including Shinhan Bank.

75 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Debentures as at September 30, 2017 and December 31, 2016, consist of the following:

(in millions of Korean won) Annual interest September 30, December 31, Issue date Maturity rate (%) 2017 2016 Non-guaranteed and publicly listed No. 99-2 Feb. 3, 2012 Feb. 3, 2017 - \ - \ 280,000 No. 100-2 Nov. 22, 2012 Nov. 22, 2017 3.31 200,000 200,000 No. 101-2 Mar. 8, 2013 Mar. 8, 2018 3.17 150,000 150,000 No. 102-1 Jul y 23, 2013 July 22, 2018 3.64 50,000 50,000 No. 102-2 Jul y 23, 2013 July 23, 2018 3.64 50,000 50,000 No. 103-2 Sep t. 5, 2013 Sept. 5, 2018 3.71 120,000 120,000 No. 104-1 Mar. 7, 2014 Mar. 7, 2017 - - 250,000 No. 104-2 Mar. 7, 2014 Mar. 7, 2019 3.59 150,000 150,000 No. 105-1 Oct. 6, 2014 Oct. 6, 2017 2.43 100,000 100,000 No. 105-2 Oct. 6, 2014 Oct. 6, 2019 2.69 150,000 150,000 No. 106-2 1 Apr. 25, 2013 Apr. 25, 2018 2.90 150,000 150,000 No. 107-2 1 Aug. 29, 2013 Aug. 29, 2018 3.52 350,000 350,000 No. 108-1 1 Apr. 3, 2014 Apr. 3, 2017 - - 240,000 No. 108-2 1 Apr. 3, 2014 Apr. 3, 2019 3.41 260,000 260,000 No. 109-1 Dec. 1, 2015 Dec. 1, 2018 2.24 100,000 100,000 No. 109-2 Dec. 1, 2015 Dec. 1, 2020 2.50 100,000 100,000 No. 110-1 Jun e 16, 2016 June 16, 2019 1.74 200,000 200,000 No. 110-2 Jun e 16, 2016 June 16, 2021 1.89 100,000 100,000 No. 111-1 Nov. 3, 2016 Nov. 3, 2019 1.99 210,000 210,000 No. 111-2 Nov. 3, 2016 Nov. 3, 2021 2.19 190,000 190,000 Private bonds Oct. 24, 2014 Oct. 24, 2019 3.48 50,000 50,000 Private bonds Jan. 28, 2016 Jan. 28, 2017 - - 40,000 Private bonds Mar.31, 2016 Mar.31, 2017 - - 80,000 Private bonds Aug.12, 2016 Aug.12, 2017 - - 50,000 2,680,000 3,620,000 Less: Current portion of debentures (1,170,000) (1,240,000) \ 1,510,000 \ 2,380,000

1 Publicly listed debentures of former Cheil Industries Inc. (numbered from No. 42 to No. 44) were renamed as publicly listed debentures of Samsung C&T Corporation, numbered from No. 106 to No. 108, due to business combination and change of the Company’s name.

76 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Long-term borrowings (including foreign currency) as at September 30, 2017 and December 31, 2016, consist of the following:

(in millions of Korean won) Annual interest September 30, December 31, Creditors rate (%) 2017 2016

Denominated in Korean won Samsung C&T and domestic subsidiaries KEB Hana Bank and others - \ - \ 22,701 (Energy facility loans) Korea Development Bank and others 2.28 – 3.57 380,800 490,800 (Facility loans) Korea Housing & Urban Guarantee Corporation - 7,537 7,815 (Working capital loans) Shinhan Bank and others (Long-term commercial 1.84 - 1.97 400,000 300,000 paper) 788,337 821,316 Less: Current portion of long-term borrowings (6,528) (150,278) 781,809 671,038

Denominated in foreign currency Samsung C&T and domestic subsidiaries Korea National Oil Corporation 0.75 - 5.00 33,411 37,236 (Condition loans) Mizuho Corporate Bank Libor + 0.80 113,803 119,936 (General borrowings) SMBC Libor + 0.70 175,445 329,921 (General borrowings) The Export-Import Bank of Korea and others Libor + 1.50 26,956 132,339 (Facility loans) Foreign subsidiaries SC Bank and others 0.80 - 4.51 218,030 209,168 (General borrowings) 567,645 828,600 Less: Current portion of long-term borrowings (122,404) (217,546) 445,241 611,054 \ 1,227,050 \ 1,282,092

77 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

The annual maturities of long-term debts outstanding (excluding current portion) as at September 30, 2017, are as follows:

(in millions of Korean won) Borrowings in Debentures Borrowings in foreign (Face value) Korean Won currencies Total

October 1, 2018 ~ September 30, 2019 \ 710,000 \ 415,479 \ 296,176 \ 1,421,655 October 1, 2019 ~ September 30, 2020 410,000 354,429 49,777 814,206 October 1, 2020 ~ September 30, 2021 200,000 5,479 5,854 211,333 After October 1, 2021 190,000 6,422 93,434 289,856 \ 1,510,000 \ 781,809 \ 445,241 \ 2,737,050

Long-term borrowings and debentures by currencies as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) Long-term borrowings Debentures September 30, December 31, September 30, December 31, 2017 2016 2017 2016

US Dollars \ 349,097 \ 547,803 \ - \ - Korean Won 781,809 671,037 1,507,111 2,375,185 Japanese Yen 7,755 7,715 - - Others 88,389 55,537 - - \ 1,227,050 \ 1,282,092 \ 1,507,111 \ 2,375,185

Details of the non-guaranteed listed debentures that are issued by the Group on November 3, 2017, after the end of the reporting period, are as follows:

(in millions of Korean won) Annual interest Redemption Face Value Issue date Maturity rate (%) schedule Non-guaranteed and publicly listed No. 112-1 \ 50,000 Nov. 3, 2017 Nov. 3, 2020 2.59 At maturity No. 112-2 \150,000 Nov. 3, 2017 Nov. 3, 2022 2.94 At maturity

78 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

17. Net Defined Benefit Liabilities

Details of net defined benefit liabilities as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) September 30, 2017 December 31, 2016

Defined benefit obligation \ 741,581 \ 715,702 Less: Plan assets (586,784) (614,100) Less: Contribution to National Pension Fund (816) (915) \ 153,981 \ 100,687

The Group under defined benefit plans is required to pay post-employment benefits to any employee who has provided one year or more of services as at reporting date, in accordance with the Group's policies on payment of post-employment benefits (in accordance with local regulations for overseas subsidiaries). Additionally, as at September 30, 2017, the Group is under contracts with Samsung Life Insurance Co., Ltd. and others for operations management and asset management of their defined benefit pension plans.

Details of defined benefit liabilities recognized in the consolidated statements of financial position as at September 30, 2017 and December 31, 2016, are determined as follows:

(in millions of Korean won) September 30, 2017 December 31, 2016

Present value of funded defined benefit obligations \ 741,581 \ 715,702 Fair value of plan assets1 (587,600) (615,015) Net defined benefit liabilities \ 153,981 \ 100,687

1 The amount includes contributions to the National Pension Fund of ₩ 816 million (December 31, 2016: ₩ 915 million).

79 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

The amounts recognized in the statements of comprehensive income for the three-month and nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016 Three months Nine months Three months Nine months

Defined benefit plan Current service cost \ 24,470 \ 73,446 \ 29,660 \ 80,464 Interest expense 5,361 16,083 5,364 16,189 Return on plan assets (excluding amounts included in interest expenses/income) (4,309) (13,141) (4,227) (13,146) Defined contribution plan Post-employment benefits 692 2,065 450 2,427 Others (retirement bonus and others) 11,835 79,704 41,450 141,790 \ 38,049 \ 158,157 \ 72,697 \ 227,724

Details of allocation of expenses for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016

Cost of sales \ 55,500 \ 110,642 Selling and administrative expenses (post-employment benefits) 90,639 98,784 Selling and administrative expenses (research and development) 9,110 12,259 Other assets 2,908 6,039 \ 158,157 \ 227,724

80 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

18. Provisions

Changes in provisions for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 Construction warranties1 Restoring cost2 Others Total

January 1, 2017 \ 176,855 \ 43,078 \ 114,268 \ 334,201 Additional provisions 27,398 6,099 41,144 74,641 Used and reversal (19,073) (446) (62,184) (81,703) Exchange differences (1,038) (2,156) (4,071) (7,265) September 30, 2017 \ 184,142 \ 46,575 \ 89,157 \ 319,874 Current (Note 10) - - 52,189 52,189 Non-current 184,142 46,575 36,968 267,685

1 The Group recognizes expenses, which are expected to be spent for future repairs, as a provision based on historical experience.

2 The Group recognizes amounts discounted at present value, which are expected to be spent for future dismantling and removing of the equipment of oil and gas subsidiaries or restoring the site, as a provision.

(in millions of Korean won) 2016 Construction warranties1 Restoring cost2 Others Total

January 1, 2016 \ 171,984 \ 44,613 \ 24,480 \ 241,077 Additional provisions 21,954 8,426 210,610 240,990 Used and reversal (18,239) (6,478) (152,670) (177,387) Other changes (2,411) (2,960) (823) (6,194) September 30, 2016 \ 173,288 \ 43,601 \ 81,597 \ 298,486 Current (Note 10) - - 40,751 40,751 Non-current 173,288 43,601 40,846 257,735

1 The Group recognizes expenses, which are expected to be spent for future repairs, as a provision based on historical experience.

81 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

19. Contingencies and Commitments

As at September 30, 2017, the Group has agreements with several financial institutions, including Woori Bank, for the guarantees of letters of credit related to the Group’s export and import, totaling USD 439,827 thousand, for the guarantee of the performance of export contracts amounting to USD 262,814 thousand and for the guarantee of various trade finance with a limit of USD 2,314,967 thousand. The receivables from export transactions sold to financial institutions, which amount to USD 529,039 thousand, are not yet due as at September 30, 2017.

As at September 30, 2017, the Group has provided a note amounting to ₩ 500 million, and 21 blank checks and notes as collateral to related institutions for borrowings, performance guarantees, construction payment guarantees, and others.

As at September 30, 2017, the Group is contingently liable for loan guarantees, principally for foreign associates and joint ventures amounting to USD 157,905 thousand (Note 30).The Group provides performance guarantees on the construction contracts of its foreign operations limited to USD 130,497 thousand, and the Group provides guarantees for the performance of other construction companies’ projects amounting to \ 670,552 million. Conversely, other construction companies provide guarantees for the performance of the Group’s projects amounting to \ 1,205,306 million.

As at September 30, 2017, the Group has short-term export insurance with Korea Trade Insurance Corporation. The certificates issued by Korea Trade Insurance Corporation (insured amount of ₩ 155,269 million) relating to guarantees provided by financial institutions are pledged as collateral.

As at September 30, 2017, the Group has been named as a defendant in certain lawsuits brought against it in the normal course of business. The aggregate amount of 143 claims brought against the Group, is approximately ₩ 369,796 million and USD 369,381 thousand. The Group also files 87 counterclaims amounting to ₩ 467,480 million and USD 731,011 thousand. The Group's management believes that the ultimate resolution of these cases will not have a material adverse effect on the operations or financial position of the Group.

As at September 30, 2017, the Group has 1,186 forward exchange contracts amounting to USD 484,100 thousand, JPY 98,591 thousand, EUR 15,246 thousand, SGD 2,378 thousand, GBP 216 thousand, SAR 15 thousand, CNY 848 thousand, CHF 25 thousand and SEK 2,487 thousand, and four interest rate swap contracts with financial institutions whose contracts amount to \ 400,000 million and USD 50,000 thousand. These forward exchange contracts and interest rate swap contracts are intended to hedge foreign exchange risk and interest risk exposures of the Group. In addition, the Group has entered into two currency swap contracts with contract prices amounting to USD 99,244 thousand and 108 commodity futures contracts with financial institutions with contract prices amounting to USD 89,039 thousand. For the nine-month period ended September 30, 2017, realized gains and losses from the contracts mentioned above, included in ‘foreign exchange gain(other income) and loss(other expenses)’, amount to approximately ₩ 70,904 million and ₩ 78,553 million, respectively.

82 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

As at September 30, 2017, details of gain (loss) on valuation of derivative instruments are as follows:

(in millions of Korean won) Other Gain on Loss on comprehensive valuation valuation income

Currency forward contracts \ 14,018 \ (7,863) \ (65) Interest swap contracts - - (581) Currency swaps contracts 68 (6,251) 16 Commodity futures contracts 3,049 808 -

As at September 30, 2017, the Group has corporate purchase card agreements and collateral loan agreements using the trade receivables with a limit of ₩ 375,000 million with financial institutions, including Woori Bank.

On February 14, 2012, the Group entered into a share purchase agreement with JSC Samruk-Energy to purchase its shares related to the construction of and business investment in the coal-fired electrical power plant located in Kazakhstan. On August 31, 2016, the Group exercised the put option against JSC Samruk-Energy to re-sell the shares purchased from JSC Samruk-Energy considering the uncertainty of the investment (exercise price amount to USD 192,452 thousand). In addition, on August 31, 2016, the Group notified the customer for contract work of a contract termination considering the uncertainty of the business. The Group is continuing the negotiation with the customer in relation to the termination of contract, and the outcome cannot be estimated reliably.

On April 30, 2015, the former Samsung C&T Corporation sold 22.99% of equity shares of Hanwha General Chemicals Co., Ltd. (formerly Samsung General Chemical Co., Ltd.) to Hanwha Chemical Co., Ltd. and Hanwha Energy Corporation (collectively “Acquirers”). According to the Share Purchase Agreement, the Group has the right to receive additional proceeds depending on the subsequent operating performance of Hanwha Total Petrochemical Co., Ltd. (formerly Samsung Total Petrochemical Co., Ltd.). The Group also has a priority right to request the Acquirers to purchase the remaining equity shares when Hanwha General Chemicals Co., Ltd. is publically listed. However, if Hanwha General Chemicals Co., Ltd. is not listed within 6 years (7 years if requested by Acquirers) from the closing date of the transaction, the Group and the Acquirers have the right to exercise put option and call option, respectively, on the remaining equity shares. In addition, the Acquirers have the right of first refusal when the Group attempts to dispose of the remaining equity shares. Also, if the Acquirers attempt to dispose of the equity shares of Hanwha General Chemicals Co., Ltd., the Group and the Acquirers respectively have tag-along right and drag-along right.

83 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

In accordance with the joint venture agreement between Biogen Idec Therapeutics Inc. and the Group, Biogen Idec Therapeutics Inc. has an option to purchase additional shares of Samsung BioEpis Co., Ltd. that would allow Biogen Idec Therapeutics Inc. to increase its ownership interest up to 49.99%. The option can be exercised until the end of 2018, and the exercise price of the option is a sum of the acquisition price of the investment and the cumulative interests on the investment. The fair value of the option can vary significantly depending on the market condition and the exercisability of the option. In relation to this contract that may be settled in the Group’s own equity instruments, the Group recognizes option liability of \ 1,910,372 million as at September 30, 2017. However, if Biogen Idec Therapeutics Inc. does not exercise the option until its maturity, the Group’s assessment on the existence of control over Samsung Bioepis Co., Ltd. may be changed.

In relation to the land lease agreement with Incheon Metropolitan City(“Incheon”), the Group receives exemption of rent from Incheon since the Group fulfilled the requirements set by the Public Property Management Ordinance of Incheon. The Group recognizes the fair value of exempt rent as intangible assets, and at the same time, the Group recognizes the same amount of government grants as deduct of the carrying amount of the asset. Details of the lease agreement are as follows:

(a) Period

With the total lease period of 50 years, the initial lease period is 20 years from May 1, 2011, and can be extended on a 10-year basis.

(b) Exemption requirement

In order to maintain exemption of rent, the Group has to maintain foreign direct investment of USD 20 million for the first 5 years of the lease period. Afterwards, the Group has to fulfill other requirements while remaining as foreign investment enterprise, including average number of employees to be over 300.

84 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

20. Share Capital

The Group is authorized to issue 500 million shares with a par value of ₩ 100 per share. As at September 30, 2017, 189,690,043 shares of ordinary share and 1,627,440 shares of preferred share are issued and outstanding.

On September 14, 2015, the Group issued 56,317,483 shares (54,690,043 shares of ordinary share and 1,627,440 shares of preferred share) of new share for the merger with the former Samsung C&T Corporation.

As authorized in its Articles of Incorporation, the Group is able to issue convertible bonds which can be converted into ordinary shares and preferred shares of the Group, and bonds with warrants which grant the right to purchase new preferred shares to the amount of ₩ 850 billion each. As at September 30, 2017, there are no convertible bonds and bonds with warrants issued under these terms.

Details of treasury shares as at September 30, 2017 and December 31, 2016, are as follows:

September 30, 2017 December 31, 2016 (in millions of Korean won, Preferred Ordinary Preferred Ordinary except number of shares) share share share share

Number of shares 159,849 26,225,503 159,849 26,225,503 Acquisition cost ₩ 16,978 ₩ 1,895,517 ₩ 16,978 ₩ 1,895,517

21. Other Components of Equity

Other components of equity as at September 30, 2017 and December 31, 2016, consist of:

(in millions of Korean won) September 30, 2017 December 31, 2016

Treasury shares (Note 20) ₩ (1,912,495) ₩ (1,912,495) Other capital adjustments (245,045) (245,045) Changes in the fair value of available-for-sale financial assets, net (Note 11) 8,616,400 4,846,982 Share of other comprehensive income of associates and joint ventures 34,093 14,046 Share of other comprehensive loss of associates and joint ventures (73,569) (67,967) Exchange differences (86,731) (51,634) Gain (loss) on valuation of derivative instruments, net (412) 324 ₩ 6,332,241 ₩ 2,584,211

85 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

22. Selling and Administrative Expenses

Selling and administrative expenses for the three-month and nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016 Three months Nine months Three months Nine months

Salaries and others ₩ 131,491 ₩ 526,741 ₩ 211,139 ₩ 652,398 Welfare 23,883 77,333 29,885 93,564 Depreciation 46,417 137,059 46,995 138,112 Travel 12,070 35,494 14,451 42,933 Commission 196,343 580,410 207,264 601,972 Rent 48,100 156,950 50,609 167,909 Freight 70,429 202,608 63,922 192,488 Taxes and dues 9,704 31,766 11,383 41,890 Advertising 12,944 33,853 18,532 50,080 Research and development 26,560 78,505 27,218 79,385 Impairment loss (Note 8) (6,927) (19,459) 978 25,124 Computational service fee 12,201 38,077 14,708 40,455 Sales promotion cost 8,656 26,184 8,068 28,586 Others 47,546 148,968 59,135 158,074 ₩ 639,417 ₩ 2,054,489 ₩ 764,287 ₩ 2,312,970

86 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

23. Other Income and Expenses

Other income and expenses for the three-month and nine-month periods ended September 30, 2017 and 2016, consist of:

(in millions of Korean won) 2017 2016 Three months Nine months Three months Nine months

Other income Share of profit of associates and joint ventures (Note 12) \ 7,680 \ 63,870 \ 3,985 \ 62,086 Dividend income 42,314 308,812 7,049 218,154 Foreign exchange gain 66,061 221,021 131,608 357,363 Gain on translation of foreign currency 28,259 113,161 13,713 73,475 Gain on disposal of investments 2,022 8,295 157,979 190,068 Gain on disposal of property, plant and equipment 2,837 4,002 883 5,419 Reversal of impairment loss on intangible assets 27,114 27,114 - - Gain on disposal of intangible assets 15 2,374 - 39 Reversal of provision for impairment (Note 8) 2,173 8,385 34,740 57,433 Gain on insurance settlement 7 69 77 114 Others 36,741 94,690 23,544 109,599 \ 215,223 \ 851,793 \ 373,578 \ 1,073,750

Other expenses Share of loss of associates and joint ventures (Note 12) \ 1,754 \ 7,464 \ 302 \ 6,414 Foreign exchange loss 76,358 255,274 140,678 396,525 Loss on translation of foreign currency 44,936 141,584 22,904 123,433 Impairment loss on investments (90) 2,211 2,039 8,336 Loss on disposal of investments 2,011 3,254 1,141 1,421 Impairment loss on property, plant and equipment - 7,349 - - Loss on disposal of property, plant and equipment 18,282 30,850 7,734 10,986 Impairment loss on intangible assets 363 363 - 90,200 Loss on disposal of intangible assets 44 132 9 9 Loss on disposal of trade receivables 6,959 14,498 3,542 10,198 Donations 4,504 15,165 7,643 26,496 Other impairment loss (Note 8) 11,166 37,206 607 22,075 Others 40,443 177,940 51,197 218,442 \ 206,730 \ 693,290 \ 237,796 \ 914,535

87 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

24. Breakdown of Expenses by Nature

Expenses recorded by nature as cost of sales, selling and administrative expenses in the consolidated statements of comprehensive income for the three-month and nine-month periods ended September 30, 2017 and 2016, consist of:

(in millions of Korean won) 2017 2016 Three months Nine months Three months Nine months

Changes in finished goods and work-in-process \ 3,826,114 \ 10,939,590 \ 3,293,290 \ 10,413,436 Construction outsourcing 1,724,908 4,510,352 1,470,606 4,326,176 Employee benefit expenses 529,829 1,802,625 703,491 2,014,104 Commission 418,012 1,226,011 269,017 1,057,509 Freight 71,342 205,842 65,913 199,801 Research and development 26,561 78,498 27,218 79,385 Heavy construction equipment usage 54,633 149,775 45,764 139,375 Rent 81,294 263,119 79,198 278,889 Taxes and dues 34,092 131,842 34,583 139,466 Depreciation and amortization 110,090 329,319 67,445 274,025 Insurance 15,524 47,673 15,819 42,605 Outsourcing fee 138,089 336,610 159,999 406,455 Others 241,977 880,307 202,394 859,300 \ 7,272,465 \ 20,901,563 \ 6,434,737 \ 20,230,526

25. Employee Benefits

Employee benefits for the three-month and nine-month periods ended September 30, 2017 and 2016, consist of:

(in millions of Korean won) 2017 2016 Three months Nine months Three months Nine months

Wages and salaries \ 411,355 \ 1,396,954 \ 540,973 \ 1,527,460 Welfare 83,374 259,532 98,155 277,219 Post-employment benefits 35,100 146,139 64,363 209,425 \ 529,829 \ 1,802,625 \ 703,491 \2,014,104

88 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

26. Adjusted Operating Profit and Loss

Details of adjusted operating profit that are voluntarily classified based on the Group’s own criteria by adjusting other income or expense items reflecting the operating performance of the Group from items that are not included within operating profit in the consolidated statements of comprehensive income for the three-month and nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016 Three months Nine months Three months Nine months

Operating profit(loss) in the consolidated statement of comprehensive income \ 220,179 \ 612,628 \ 186,749 \ (71,254) Share of profit of associates and joint ventures (other income/ expenses) 5,926 56,406 3,683 55,672 Dividends income 42,314 308,812 7,049 218,154 Foreign exchange gain (loss) (10,297) (34,253) (9,070) (39,162) Gain (loss) on translation of foreign currency (16,677) (28,423) (9,191) (49,958) Impairment loss on investments 90 (2,211) (2,039) (8,336) Gain (loss) on disposal of investments 11 5,041 156,838 188,647 Impairment loss on property, plant and equipment - (7,349) - - Gain (loss) on disposal of property, plant and equipment (15,445) (26,848) (6,851) (5,567) Reversal of impairment loss on intangible assets 27,114 27,114 - - Impairment loss on intangible assets (363) (363) - (90,200) Gain (loss) on disposal of intangible assets (29) 2,242 (9) 30 Reversal of provision for impairment (other impairment loss) (8,993) (28,821) 34,133 35,358 Donations (4,504) (15,165) (7,643) (26,496) Loss on disposal of trade receivables (6,959) (14,498) (3,542) (10,198) Others (3,695) (83,181) (27,576) (108,729) Adjusted operating profit \ 228,672 \ 771,131 \ 322,531 \ 87,961

89 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

27. Financial Income and Expenses

Financial income and expenses for the three-month and nine-month periods ended September 30, 2017 and 2016, consist of:

(in millions of Korean won) 2017 2016 Three months Nine months Three months Nine months

Interest income: Deposits in bank \ 7,014 \ 29,666 \ 3,092 \ 12,367 Securities 1,176 3,527 1,176 3,571 Loans 2,749 13,910 4,379 13,289 Overdue interest 3 21 10 103 Present value discounts 785 2,485 8,422 13,633 Others 4,877 16,216 44,767 59,610 Foreign exchange gain 5,725 30,638 7,249 30,103 Gain on translation of foreign currency 10,501 54,492 53,300 109,889 Total financial income 32,830 150,955 122,395 242,565

Interest expenses: Short-term borrowings 12,371 37,580 13,677 37,897 Long-term borrowings 6,126 20,833 9,699 30,595 Debentures 19,422 63,337 29,077 88,657 Others 9,520 16,479 363 8,538 Capitalized interests (3,785) (8,933) (1,679) (6,129) Foreign exchange loss 9,674 22,484 5,607 23,955 Loss on translation of foreign currency 8,669 60,246 43,674 108,031 Total financial expenses 61,997 212,026 100,418 291,544 Financial expenses, net \ 29,167 \ 61,071 \ (21,977) \ 48,979

90 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

28. Income Tax Expense

Income tax expense is recognized based on the best estimate of the weighted average annual income tax rate expected for the full financial year.

29. Earnings (Loss) per Share

Basic earnings (loss) per ordinary share for the nine-month periods ended September 30, 2017 and 2016, is as follows:

(in Korean won and in shares) 2017 2016

Profit (loss) for the period 1 \ 491,612 million \ (126,585) million Profit (loss) for the period attributable to ordinary shares 487,183 million (125,512) million Weighted average number of ordinary shares outstanding 163,464,540 shares 164,215,430 shares Basic earnings (loss) per ordinary share \ 2,980 \ (764)

1 The amount is the profit or loss attributable to the owners of the Parent Company for the period.

Basic earnings (loss) per preferred share for the nine-month periods ended September 30, 2017 and 2016, is as follows:

(in Korean won and in shares) 2017 2016

Profit (loss) for the period 1 \ 491,612 million \ (126,585) million Profit (loss) for the period attributable to preferred shares 4,429 million (1,073) million Weighted average number of preferred shares outstanding 1,467,591 shares 1,467,591 shares Basic earnings (loss) per preferred share \ 3,018 \ (731)

1 The amount is the profit or loss attributable to the owners of the Parent Company for the period.

Since there is no dilutive potential ordinary share, the diluted earnings (loss) per ordinary share and the basic earnings (loss) per ordinary share are the same for the nine-month periods ended September 30, 2017 and 2016, respectively.

30. Related Party Transactions

As at September 30, 2017, the Group's related parties consist of 51 associates and joint ventures, including Samsung Bioepis Co., Ltd. and other related parties (Note 1.3). Meanwhile, the Enterprise Group, which the Group belongs to, in accordance with the Monopoly Regulation and Fair Trade Act of the Republic of Korea, consists of 62 entities including Samsung Electronics Co., Ltd., as at September 30, 2017.

91 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Significant transactions between the Parent Company and related parties (associates, joint ventures and other related party) for the nine-month periods ended September 30, 2017 and 2016, and the related account balances as at September 30, 2017 and December 31, 2016, consist of the following:

(in millions of Korean won) Sales Purchases Receivables Payables September December September December 2017 2016 2017 2016 30, 2017 31, 2016 30, 2017 31, 2016

Associates Samsung Bioepis Co., Ltd. \ 12,189 \ 145 \ - \ - \ 2,235 \ 45 \ - \ - Waris Gigih Engineering & Technology Sdn. Bhd. 168 555 ------Chongqing Shanxia Technology Textile Co., Ltd. - 44,206 - 238 - 19,468 - - Dongducheon Dream Power Co., Ltd. 119 28,229 860 - 30,817 - - - Busan Green Energy Co., Ltd. 30,916 73,289 - - - 8,370 - - Others 434 1,207 1,600 31,841 864 93 - 362

Joint ventures FCC Saudi LLC 9,979 19,977 84 - 82 137 - - Others 122 110 - - 666 1,163 - -

Other related party Samsung Electronics Co., Ltd.2 2,046,311 1,401,523 107,131 24,362 277,419 268,839 222,505 207,463

Others1,2 Samsung Display Co., Ltd. 347,089 103,925 22,895 864 33,277 60,411 22,647 22,748 Samsung Heavy Industries Co., Ltd. 7,919 71,341 7 2 119 3,599 4,398 4,398 Samsung Life Insurance Co., Ltd.3 24,496 50,215 3,224 4,800 8,754 30,108 41,767 41,767 Others 71,661 153,961 140,747 199,940 441,205 1,242,439 205,748 235,481

1 The entities are not included in the scope of related parties in accordance with Korean IFRS 1024, but are included in the scope of Enterprise Group in accordance with the Monopoly Regulation and Fair Trade Act of the Republic of Korea. 2 Unbilled revenue from construction contracts based on the percentage of completion of \ 325,897 million (2016: \ 228,321 million) is excluded from sales. In addition, Due from customer for contract work amounting to \ 334,635 million (December 31, 2016: \ 124,421 million) and due to customers for contract work amounting to \ 171,171 million (December 31, 2016: \ 236,703 million) are excluded from receivables and payables, respectively. 3 As at September 30, 2017, the Group deposited \ 440,624 million (December 31, 2016: \ 476,129 million) in Samsung Life Insurance Co., Ltd. as plan assets.

92 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Significant transactions between the Group and related parties (associates, joint ventures and other related parties) (the above transactions are excluded) for the nine-month periods ended September 30, 2017 and 2016, and the related account balances as at September 30, 2017 and December 31, 2016, consist of the following:

(in millions of Korean won) Sales Purchases Receivables Payables September December September December 2017 2016 2017 2016 30, 2017 31, 2016 30, 2017 31, 2016

Associates Samsung Bioepis Co., Ltd. \ 12,844 \ 9,637 \ 1 \ - \ 1,005 \ 1,819 \ - \ - Chongqing Shanxia Technology Textile Co., Ltd. - 41 - 3 - - - 59 KST POWER NORTE S.A. DE C.V. 1,517 1,561 - - 39,854 40,383 - - Others 103 79 - 45 2 - - -

Joint ventures South Kent Wind LP 342 340 - - 45 43 - - SP Belle River LP 6,005 - - - 1,199 9,714 - - Windsor Solar LP 73 8,666 - - 9 12 - - LJG Green Source Energy Alpha S.R.L. 1,055 1,117 - - 19,525 17,382 - - Kelar S.A. 1,536 - - - 28,437 - - - Others 10,896 2,045 - - 1,079 1,991 - -

Other related party Samsung Electronics Co., Ltd. 298,252 230,785 12,823 43,598 71,151 58,254 8,645 9,852

Others1 Samsung Display Co., Ltd. 70,279 63,910 54 66 18,313 17,675 482 472 Samsung Heavy Industries Co., Ltd. 149,497 296,522 9 35 37,360 60,032 360 360 Samsung Life Insurance Co., Ltd.2 11,737 9,479 5,509 5,779 4,546 1,012 1,410 1,410 Others2 290,536 267,310 307,254 171,915 42,599 36,929 116,399 114,180

1 The entities are not included in the scope of related parties in accordance with Korean IFRS 1024, but are included in the scope of Enterprise Group in accordance with the Monopoly Regulation and Fair Trade Act of the Republic of Korea. 2 As at September 30, 2017, the Group (except for the Parent Company) deposited \ 125,650 million (December 31, 2016: \ 117,389 million) and \ 20,504 million (December 31, 2016: \ 20,577 million) as plan assets in Samsung Life Insurance Co., Ltd. and Samsung Fire & Marine Insurance Co., Ltd., respectively.

93 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Major fund transactions with a related party for the nine-month periods ended September 30, 2017 and 2016, are as follows:

(in millions of Korean won) 2017 2016 Loans Repayments Loans Repayments Joint venture Kelar S.A. ￦ 27,495 ￦ - ￦ - ￦ - Associate - 810 - 1,902 LLC.Uglegorskugol

Payment guarantees for the liabilities of associates and joint ventures provided by the Group as at September 30, 2017 are as follows:

(in thousands of U.S. dollars)

Principal debtor Guaranteed period Guaranteed amount

Associates Terminal KMS de GNL, S. de R.L. de

C.V. Santander and others Sep. 1, 2029 $ 89,783 KST Electric Power Company, SAPI de KEB Hana Bank and Oct. 1, 2018 12,992 C.V. others Joint venture Kelar S.A. BTMU and others Apr. 30, 2031 34,654 $ 137,429

As at September 30, 2017, investments in Dongducheon Dream Power Co., Ltd., (Acquisition cost: \ 81,191 million), are pledged as collateral to a financial institution against the borrowings (total borrowing limit of \ 1,285,000 million) of Dongducheon Dream Power Co., Ltd. (Note 12). In addition, the Group provides fund supplement commitment on expected working capital deficit of Dongducheon Dream Power Co., Ltd. up to \ 8,100 million.

The Company recognized salaries and post-employment benefits for the key management as expenses, amounting to \ 3,592 million and \ 725 million, respectively. The key management includes directors (executive and non-executive), auditors and other managements. Meanwhile, the Group introduced long-term incentive plans for its executives based on a three-year management performance criteria and has made a provision for the cumulative estimated incentive cost for the past periods. For the nine-month period ended September 30, 2017, the Company recognized expenses amounting to \ 1,866 million.

94 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

31. Cash Generated from Operations

Reconciliation between operating profit and net cash inflow (outflow) from operating activities is as follows:

(in Korean won) 2017 2016

Profit (loss) for the period \ 436,125,433,433 \ (237,481,272,295) Addition Income tax expense 186,431,339,924 170,453,718,868 Interest expense 129,296,745,170 159,557,761,911 Depreciation and amortization 361,077,386,351 381,340,798,731 Post-employment benefits 76,388,194,372 83,507,126,884 Impairment loss (19,459,020,532) 25,123,866,414 Other impairment loss 37,205,767,047 22,074,608,085 Transfer in provision for construction losses 16,454,989,721 167,557,642,183 Transfer in provision for construction warranties 27,398,182,246 21,953,783,824 Loss on foreign currency translation 201,829,468,618 231,465,264,267 Loss on disposal of investments 3,253,974,531 1,420,526,869 Impairment loss on investments 2,211,381,668 8,335,630,431 Loss on disposal of property, plant and equipment 30,850,064,833 10,985,560,553 Impairment loss on property, plant and equipment 7,348,500,000 - Loss on disposal of intangible assets 132,258,853 9,742,649 Impairment loss on intangible assets 363,333,333 90,200,000,000 Share of loss of associates and joint ventures 110,472,255,862 126,318,571,048 Others expenses 23,247,120,282 208,452,047,288 1,194,501,942,279 1,708,756,650,005 Deduction Interest income (65,825,667,961) (102,572,031,823) Dividend income (308,812,030,441) (218,153,956,070) Gain on foreign exchange translation (167,652,165,639) (183,364,849,139) Reversal of provision for construction losses (71,708,427,882) (183,513,165,828) Reversal of provision for impairment (8,384,867,664) (57,433,491,830) Gain on disposal of investments (8,294,755,528) (190,428,607,721) Gain on disposal of property, plant and equipment (4,002,037,605) (5,418,645,159) Gain on disposal of intangible assets (2,374,416,867) (39,015,279) Reversal of impairment loss on intangible assets (27,114,000,000) (180,817,496) Share of profit of associates and joint ventures (79,374,605,205) (75,981,297,527) Other income (16,668,782,006) (223,611,607,309) (760,211,756,798) (1,240,697,485,181)

95 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(in Korean won) 2017 2016

Changes in operating assets and liabilities Decrease in trade receivables 852,452,129,031 1,395,733,994,004 Decrease (increase) in other current assets (112,074,640,433) 188,256,075,648 Decrease (increase) in inventories (209,068,114,072) 34,693,854,995 Decrease in trade payables (445,047,287,933) (194,141,644,795) Increase (decrease) in other current liabilities (460,831,620,037) 131,033,272,255 Decrease in provisions for construction warranties (19,072,746,940) (18,239,498,981) Increase in long-term unearned income - 859,872,668 Increase (decrease) in long-term non-trade payables (32,101,037,238) 19,133,417,003 Payment of defined benefit liability (63,424,561,450) (107,356,435,575) Decrease in plan assets 40,571,505,233 87,013,955,398 Transfer in (out) of defined benefit liability 43,808,330 (253,319,750) Others 14,655,952,108 510,736,211 (433,896,613,401) 1,537,244,279,081 Cash generated from operations \ 436,519,005,513 \ 1,767,822,171,610

96 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

32. Segment Information

The strategic steering committee is the Group’s chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the strategic steering committee for the purposes of allocating resources and assessing performance.

Also, a summary of information on the Group’s operations by business segment as at and for the nine-month periods ended September 30, 2017 and 2016, is prepared after elimination of intercompany transactions in operating profit, and liabilities of operating segments are not included as those are not periodically reported to the Group’s management.

Summary of information on the Group’s operations by business segment as at and for the nine-month periods ended September 30, 2017 and 2016, is as follows:

(in millions of Korean won) 2017 Food and Construction Trading Fashion Resort beverages Bio Common Total

External sales \ 9,043,838 \ 11,217,477 \ 1,307,453 \ 536,634 \ 1,432,305 \ 298,318 \ - \ 23,836,025 Internal sales (43,625) (2,149,823) (67,031) (2,850) (58,505) - - (2,321,834) Net sales 9,000,213 9,067,654 1,240,422 533,784 1,373,800 298,318 - 21,514,191 Operating profit (loss) 348,838 134,763 (4,872) 57,298 95,513 (18,912) - 612,628 Adjusted operating profit (loss) 354,008 246,477 38,140 104,551 85,181 (57,226) - 771,131 Total assets1 9,572,416 4,112,883 1,300,692 2,461,064 610,652 7,401,672 22,410,346 47,869,725

1 For total assets, the common amount is separately presented.

97 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(in millions of Korean won) 2016 Food and Construction2 Trading Fashion Resort beverages Bio Common Total

External sales \ 9,049,538 \ 9,632,634 \ 1,347,601 \ 502,555 \ 1,380,478 \ 188,989 \ - \ 22,101,795 Internal sales (57,340) (1,798,393) (41,936) (708) (44,146) - - (1,942,523) Net sales 8,992,198 7,834,241 1,305,665 501,847 1,336,332 188,989 - 20,159,272 Operating profit (loss) (143,305) 26,014 (5,342) 32,251 83,229 (64,101) - (71,254) Adjusted operating profit (loss) (158,538) 197,963 29,857 44,321 73,061 (98,703) - 87,961 Total assets1 9,357,981 3,450,143 1,409,022 2,508,530 608,753 6,408,021 16,616,907 40,359,357

1 For total assets, the common amount is separately presented. 2 Construction segment of the former Samsung C&T Corporation and that of the former Cheil Industries Inc. were integrated during the nine-month period ended September 30, 2016.

98 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Summary of information on the Group’s operations by geographic areas for the nine-month periods ended September 30, 2017 and 2016, is as follows:

(in millions of Korean won) 2017 Domestic Asia Europe The Americas Total

Total revenue \ 17,135,863 \ 4,508,598 \ 892,449 \ 1,299,115 \ 23,836,025 Intercompany revenue (1,553,518) (568,306) (197,887) (2,123) (2,321,834) Revenue from external customers \ 15,582,345 \ 3,940,292 \ 694,562 \ 1,296,992 \ 21,514,191

(in millions of Korean won) 2016 Domestic Asia Europe The Americas Total

Total revenue \ 16,037,583 \ 4,189,505 \ 934,324 \ 940,383 \ 22,101,795 Intercompany revenue (1,228,051) (516,968) (189,791) (7,713) (1,942,523) Revenue from external customers \ 14,809,532 \ 3,672,537 \ 744,533 \ 932,670 \ 20,159,272

33. Financial Risk Management

33.1 Financial Risk Management

The Group is exposed to various financial risks such as market risk, credit risk and liquidity risk while performing various activities. Market risk arises from currency risk, fair value interest rate risk, cash flow interest rate risk and price risk.

As these interim financial statements do not include all the financial risk management and disclosures required for the annual financial statements, please refer to the December 31, 2016 annual financial statements.

There has been no significant change in the risk management department and other risk management policy of the Group since December 31, 2016.

99 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

33.2 Fair Value Measurement

Fair value hierarchy classifications of the financial instruments that are measured at fair value as at September 30, 2017 and December 31, 2016, are as follows:

(in millions of Korean won) September 30, 2017 Level 1 Level 2 Level 3 Total Assets measured at fair value Available-for-sale financial assets: Equity securities \ 22,101,577 \ - \ 183,046 \ 22,284,623 Debt securities - 815 - 815 Derivative instruments for hedging activities: Derivative financial assets - 6,872 - 6,872 Financial instruments measured at fair value through profit or loss: Derivative financial assets - 12,884 - 12,884 \ 22,101,577 \ 20,571 \ 183,046 \ 22,305,194 Liabilities measured at fair value Derivative instruments for hedging activities: Derivative financial liabilities \ - \ 3,867 \ - \ 3,867 Financial instruments measured at fair value through profit or loss: Derivative financial liabilities - 13,669 1,910,372 1,924,041 \ - \ 17,536 \ 1,910,372 \ 1,927,908

100 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

(in millions of Korean won) December 31, 2016 Level 1 Level 2 Level 3 Total Assets measured at fair value Available-for-sale financial assets: Equity securities \ 17,135,811 \ - \ 182,237 \ 17,318,048 Debentures - 2,887 - 2,887 Derivative instruments for hedging activities: Derivative financial assets - 9,404 - 9,404 Financial instruments measured at fair value through profit or loss: Derivative financial assets - 32,879 - 32,879 \ 17,135,811 \ 45,170 \ 182,237 \ 17,363,218 Liabilities measured at fair value Derivative instruments for hedging activities: Derivative financial liabilities \ - \ 12,294 \ - \ 12,294 Financial instruments measured at fair value through profit or loss: Derivative financial liabilities - 21,000 1,874,471 1,895,471 \ - \ 33,294 \ 1,874,471 \ 1,907,765

. Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). . Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (Level 2). . Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

During the nine-month period ended September 30, 2017, there has been no significant change in the business or economic circumstances that affect the fair value of the entity's financial assets and financial liabilities.

There are no reclassification of the financial assets during the nine-month period ended September 30, 2017.

101 Samsung C&T Corporation and Subsidiaries Notes to the Consolidated Interim Financial Statements September 30, 2017 and 2016 (Unaudited), and December 31, 2016

Valuation techniques and the inputs used in the fair value measurement related to recurring and non-recurring fair value measurements categorized within Level 2 and Level 3 of the fair value hierarchy and disclosed fair value are as follows:

(in millions of Korean won) Fair value Level Fair value measurements Inputs

Available-for-sale financial assets Net asset value method, discounted Growth rate, discount rate Energy industry equities \ 96,499 3 cash flow method and others and others Net asset value method, discounted Growth rate, discount rate Cooperative contribution 41,177 3 cash flow method and others and others Net asset value method, discounted Growth rate, discount rate Other equities 45,370 3 cash flow method and others and others Counterparty credit risk Investment bonds 815 2 Discounted cash flow method and others Derivatives (assets) Currency forwards and Currency forwards rate , 19,756 2 Market approach others discount rate and others Derivatives (liabilities) Currency forwards and Currency forwards rate , 53,437 2 Market approach others discount rate and others Fair value of underlying Option 1,910,372 3 Binomial option pricing model asset (Samsung Bioepis Co., Ltd.)

Valuation process of fair value measurements classified in level 3

The finance department of the Group’s divisions is responsible for fair value measurements which contain fair value measurement categorized in Level 3 for the purpose of financial report and the said department reports periodically the fair value valuation process and its outcome on reporting schedule at the end of every reporting period.

102