CJ E&M CORPORATION AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

June 30, 2015 and 2014

(Unaudited)

(With Independent Auditors’ Review Report Thereon)

Contents

Page

Independent Auditors’ Review Report 1

Condensed Consolidated Interim Statements of Financial Position 3

Condensed Consolidated Interim Statements of Comprehensive Income (Loss) 5

Condensed Consolidated Interim Statements of Changes in Equity 7

Condensed Consolidated Interim Statements of Cash Flows 9

Notes to the Condensed Consolidated Interim Financial Statements 11

Independent Auditors’ Review Report

Based on a report originally issued in Korean

The Board of Directors and Shareholders CJ E&M Corporation:

Reviewed financial statements We have reviewed the accompanying condensed consolidated interim financial statements of CJ E&M Corporation and its subsidiaries (the “Group”), which comprise the condensed consolidated interim statement of financial position as of June 30, 2015, the condensed consolidated interim statements of comprehensive income (loss) for the three- and six-month periods ended June 30, 2015 and 2014, the condensed consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2015 and 2014 and notes to the interim financial statement.

Management’s responsibility Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No. 1034, ‘Interim Financial Reporting’, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ review responsibility Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial statement 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 auditing standards generally accepted in the Republic of Korea 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 reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared, in all material respects, in accordance with K-IFRS No. 1034, ‘Interim Financial Reporting’.

Other matters The consolidated statement of financial position of the Group as of December 31, 2014, and the related consolidated statements of comprehensive income (loss), changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us and our report thereon, dated March 5, 2015, expressed an unqualified opinion. The accompanying consolidated statement of financial position of the Group as of December 31, 2014, presented for comparative purposes, is not different from that audited by us in all material respects.

Seoul, Korea August 12, 2015

This report is effective as of August 12, 2015, 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 condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any. CJ E&M Corporation and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position As of June 30, 2015 and December 31, 2014 (Unaudited)

(In won) Note June 30, 2015 December 31, 2014

Assets Cash and cash equivalents 4,6, 28 W 38,698,935,735 33,525,990,630 Accounts and notes receivable - trade 8, 28, 32 325,113,966,660 352,453,730,663 Advance payments 12 141,518,615,325 138,528,894,268 Other current financial assets 11, 28, 32 464,672,261,893 500,522,346,764 Other current assets 15 10,797,311,502 8,833,316,387 Income tax refundables 2,557,959,299 66,375,975 Inventories 7 7,256,395,729 5,243,369,241 Current assets 990,615,446,143 1,039,174,023,928

Available-for-sale financial assets 9,28 74,039,508,810 67,836,584,920 Held-to-maturity investments 28 7,329,395,000 8,529,395,000 Investments in equity method investees 10 468,442,271,165 377,297,630,661 Property and equipment 13 78,990,268,575 88,464,908,331 Intangible assets 14 696,255,307,502 694,725,260,394 Other non-current financial assets 11,28,32 23,890,719,819 21,367,208,661 Other non-current assets 15 24,879,147,912 19,470,503,910 Deferred tax assets 31 39,257,744,301 40,520,008,394 Non-current assets 1,413,084,363,084 1,318,211,500,271

Total assets W 2,403,699,809,227 2,357,385,524,199

See accompanying notes to the condensed consolidated interim financial statements.

3 CJ E&M Corporation and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position, Continued As of June 30, 2015 and December 31, 2014 (Unaudited)

(In won) Note June 30, 2015 December 31, 2014

Liabilities Accounts and notes payable – trade 28,32 W 78,905,554,864 67,690,656,180 Accounts and notes payable – other 28 131,311,000,330 147,014,765,667 Income tax payable 368,516,677 42,041,973,269 Short-term borrowings 4,16,24,28 47,043,895,000 45,470,400,301 Current portion of debentures 4,16,24,28 99,997,720,291 99,924,350,466 Current portion of long-term borrowings 4,16,24,28 1,249,990,000 2,166,703,344 Other current financial liabilities 4,17,28 96,569,378,858 138,021,900,603 Other current liabilities 18,20 44,892,391,354 37,677,454,965 Current provisions 19 781,436,111 795,738,234 Current liabilities 501,119,883,485 580,803,943,029

Debentures 4,16,24,28 149,806,714,563 149,737,504,299 Long-term borrowings 4,16,24,28 101,666,600,000 102,333,240,000 Other non-current financial liabilities 4,17,28 1,141,164,305 1,101,392,587 Other non-current liabilities 18,20 2,234,323,770 2,049,094,528 Liabilities for defined benefit obligations 20 13,598,311,241 8,868,495,171 Non-current provisions 19 649,076,133 967,139,598 Deferred tax liabilities 31 22,901,167,960 5,821,307,023 Non-current liabilities 291,997,357,972 270,878,173,206

Total liabilities 793,117,241,457 851,682,116,235

Stockholders’ equity Share capital 1,21 193,660,445,000 193,660,445,000 Share premium 969,766,994,891 969,766,994,891 Retained earnings 23 420,782,267,103 316,305,165,021 Other capital 21,22 28,967,319,842 29,639,156,509 Equity attributable to owners of the Parent Company 1,613,177,026,836 1,509,371,761,421

Non-controlling interests (2,594,459,066) (3,668,353,457)

Total equity 1,610,582,567,770 1,505,703,407,964

Total equity and liabilities W 2,403,699,809,227 2,357,385,524,199

See accompanying notes to the condensed consolidated interim financial statements.

4 CJ E&M Corporation and Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

For the three- and six-month periods ended June 30, 2015 and 2014 (Unaudited)

June 30, 2015 June 30, 2014 Three- Six- Three- Six- month month month month period period period period (In won) Note ended ended ended ended

Continuing operations Revenue 5,32 W 299,194,591,740 592,332,041,758 283,503,813,056 548,636,272,716 Cost of sales 29,32 (218,770,904,210) (445,991,577,555) (222,949,556,234) (433,384,332,922) Gross profit 80,423,687,530 146,340,464,203 60,554,256,822 115,251,939,794

Selling, general and administrative expenses 26,29,32 (62,600,046,557) (119,338,500,721) (69,079,729,442) (127,081,390,174) Operating profit (loss) 5 17,823,640,973 27,001,963,482 (8,525,472,620) (11,829,450,380)

Finance income 27 4,277,826,350 8,800,510,142 2,331,497,220 5,023,687,241 Finance costs 27 (4,725,025,982) (10,822,078,685) (5,850,268,087) (10,849,424,699) Share of profit of equity method investees 10 14,150,221,915 116,154,907,436 1,882,221,143 2,824,515,982 Share of loss of equity method investees 10 - (2,497,140,013) (294,604,025) (2,585,661,158) Other non-operating income 30 845,021,642 2,856,837,481 188,049,437 435,757,160 Other non-operating expenses 30 (11,312,940,573) (15,344,403,607) (4,225,507,555) (9,545,640,651) Profit (loss) before income tax 21,058,744,325 126,150,596,236 (14,494,084,487) (26,526,216,505)

Income tax (expense) benefit 31 (8,496,227,840) (23,226,437,485) 811,538,430 2,020,193,496 Profit (loss) from continuing operations 12,562,516,485 102,924,158,751 (13,682,546,057) (24,506,023,009)

Discontinued operations 33 Profit from discontinued operations, net of tax - - 2,465,815,209 13,084,180,997

Profit (loss) for the period W 12,562,516,485 102,924,158,751 (11,216,730,848) (11,421,842,012)

Profit (loss) attributable to: Owners of the Parent Company 13,279,296,224 104,477,102,082 (12,223,361,714) (19,266,358,907) Non-controlling interests (716,779,739) (1,552,943,331) 1,006,630,866 7,844,516,895 W 12,562,516,485 102,924,158,751 (11,216,730,848) (11,421,842,012)

See accompanying notes to the condensed consolidated interim financial statements.

5 CJ E&M Corporation and Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income (Loss), Continued

For the three- and six-month periods ended June 30, 2015 and 2014 (Unaudited)

June 30, 2015 June30, 2014 Three- Six- Three- Six- month month month month period period period period (In won) Note ended ended ended ended

Other comprehensive income (loss) Items that will not be reclassified to profit or loss subsequently: Remeasurements of the defined benefit plan W - - 7,395,156 14,559,681 Items that are or may be reclassified to profit or

loss subsequently: Foreign currency translation differences for foreign operations (393,405,206) (371,152,243) (313,492,539) (895,203,011) Changes in equity of equity method investees 10 7,365,511,071 (1,618,284,733) (662,132,997) (357,547,119) Net changes in fair value of available-for-sale financial assets 9 - 1,063,431,939 (167,052,079) (641,620,114) Total items that are or may be reclassified to profit or loss subsequently 6,972,105,865 (926,005,037) (1,142,677,615) (1,894,370,244) Total other comprehensive income (loss) 6,972,105,865 (926,005,037) (1,135,282,459) (1,879,810,563) Total comprehensive income (loss) for the period W 19,534,622,350 101,998,153,714 (12,352,013,307) (13,301,652,575)

Total comprehensive income (loss) attributable to: Owners of the Parent Company 20,497,325,734 103,849,551,677 (13,299,986,955) (20,696,235,992) Non-controlling interests (962,703,384) (1,851,397,963) 947,973,648 7,394,583,417 W 19,534,622,350 101,998,153,714 (12,352,013,307) (13,301,652,575)

Earnings per share 25

Basic earnings (loss) per share Basic earnings (loss) per share from continuing operations W 344 2,709 (330) (585) Basic earnings per share from discontinued operations - - 13 85

Diluted earnings (loss) per share Diluted earnings (loss) per share from continuing operations W 344 2,709 (330) (585) Diluted earnings per share from discontinued operations - - 13 85

See accompanying notes to the condensed consolidated interim financial statements.

6 CJ E&M Corporation and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2015 and 2014 (Unaudited)

Controlling interest Share Share Retained Other Non-controlling Total (In won) capital premium earnings capital Sub-total interests equity

Balance at January 1, 2015 W 193,660,445,000 969,766,994,891 316,305,165,021 29,639,156,509 1,509,371,761,421 (3,668,353,457) 1,505,703,407,964 Total comprehensive income (loss): Profit (loss) for the period - - 104,477,102,082 - 104,477,102,082 (1,552,943,331) 102,924,158,751 Other comprehensive income(loss) Net changes in fair value of available-for- sale financial assets - - - 1,063,431,939 1,063,431,939 - 1,063,431,939 Other comprehensive loss of equity method investees - - - (1,618,284,733) (1,618,284,733) - (1,618,284,733) Foreign currency translation differences for foreign operations - - - (72,697,611) (72,697,611) (298,454,632) (371,152,243) Total - - 104,477,102,082 (627,550,405) 103,849,551,677 (1,851,397,963) 101,998,153,714 Transactions with owners of the Parent Company, recognized directly in equity: Capital increase by subsidiaries - - - - - 2,932,389,610 2,932,389,610 Additional acquisition of investments in subsidiaries - - - (44,286,262) (44,286,262) (7,097,256) (51,383,518) Total - - - (44,286,262) (44,286,262) 2,925,292,354 2,881,006,092 Balance at June 30, 2015 W 193,660,445,000 969,766,994,891 420,782,267,103 28,967,319,842 1,613,177,026,836 (2,594,459,066) 1,610,582,567,770

See accompanying notes to the condensed consolidated interim financial statement

7 CJ E&M Corporation and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity, Continued

For the six-month periods ended June 30, 2015 and 2014 (Unaudited)

Controlling interest Share Share Retained Other Non-controlling Total (In won) capital premium earnings capital Sub-total interests equity

Balance at January 1, 2014 W 193,660,445,000 969,761,752,571 96,223,530,864 (26,052,524,612) 1,233,593,203,823 41,179,897,623 1,274,773,101,446 Total comprehensive income (loss): Profit (loss) for the period - - (19,266,358,907) - (19,266,358,907) 7,844,516,895 (11,421,842,012) Other comprehensive income(loss) Remeasurements of the defined benefit plan - - 7,363,595 - 7,363,595 7,196,086 14,559,681 Net changes in fair value of available-for- sale financial assets - - - (641,620,114) (641,620,114) - (641,620,114) Other comprehensive loss of equity

method investees - - - (357,547,119) (357,547,119) - (357,547,119) Foreign currency translation differences for foreign operations - - - (438,073,447) (438,073,447) (457,129,564) (895,203,011) Total - - (19,258,995,312) (1,437,240,680) (20,696,235,992) 7,394,583,417 (13,301,652,575) Transactions with owners of the Parent Company, recognized directly in equity: Acquisition of subsidiaries - - - - - 2,605,656,545 2,605,656,545 Capital increase by subsidiaries - - - 708,377,006 708,377,006 (739,054,856) (30,677,850) Additional acquisition of investments in subsidiaries - - - (3,849,660,329) (3,849,660,329) (320,345,661) (4,170,005,990) Reversal of share based compensation expenses - - - (898,294,593) (898,294,593) - (898,294,593) Exercise of appraisal right - - - (23,555,586) (23,555,586) - (23,555,586) Exercise of stock options - - - (847,953,873) (847,953,873) - (847,953,873) Total - - - (4,911,087,375) (4,911,087,375) 1,546,256,028 (3,364,831,347) Balance at June 30, 2014 W 193,660,445,000 969,761,752,571 76,964,535,552 (32,400,852,667) 1,207,985,880,456 50,120,737,068 1,258,106,617,524

See accompanying notes to the condensed consolidated interim financial statements.

8 CJ E&M Corporation and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the six-month periods ended June 30, 2015 and 2014 (Unaudited)

2015 2014 (In won) Cash flows from operating activities Profit (loss) for the period W 102,924,158,751 (11,421,842,012)

Adjustments for:

Income tax expense 23,226,437,485 6,635,073,752

Interest expense 7,381,889,570 8,916,216,060

Gain on valuation of financial assets held for trading, net - (87,547)

Gain on disposal of available‑for‑sale financial assets, net 956,342,768 (38,156,054)

Loss on disposal of accounts and notes receivables - trade 408,698 -

Loss (gain) on valuation of derivatives, net (235,859,718) 49,646,723

Loss (gain) on transaction of derivatives, net (6,744,594) 338,037,747

Loss (gain) on foreign exchange translation, net (277,262,013) 759,693,135

Depreciation 6,799,701,162 10,928,822,067

Amortization 152,273,712,067 135,613,202,486

Accrual for provisions 407,749,894 48,429,267

Reversal of share based compensation expense - (1,070,890,681)

Expenses for retirement benefits 5,150,074,308 7,303,783,282

Bad debt expense 2,614,743,561 6,341,160,542

Other bad debt expenses 4,424,411,765 7,208,347,933

Share of loss (gain) of equity method investees, net (113,657,767,423) ( 1,325,076,007)

Loss (gain) on disposal of property and equipment, net 925,430,628 (22,254,615)

Loss (gain) on disposal of intangible assets, net 303,941,036 (5,000,000)

Impairment loss on intangible assets 4,614,490,845 2,494,584,644

Loss on scrap of inventory 1,652,198,741 48,317,917

Loss on valuation of inventory 94,638,651 -

Other loss (gain), net (930,200,818) 278,139,581

Interest income (5,721,746,085) (4,104,349,791)

Reversal of provisions (309,393,021) (99,798,541)

Dividend income - (21,293,900)

89,687,197,507 180,276,548,000

Change in assets and liabilities:

Accounts and notes receivables - trade 24,168,397,379 2,620,059,676

Advance payments (22,547,829,271) (32,741,228,499)

Other financial assets 2,247,479,408 (14,330,851,284)

Inventories (3,718,905,054) (2,521,377,056)

Other assets 3,126,274,769 (2,933,436,983)

Income tax refundable (3,564,245,270) (166,500,814)

Accounts and notes payables (76,034,050,169) 13,774,229,446

Other financial liabilities 11,753,482,222 (22,202,971,239)

Other liabilities 18,070,228,806 (10,029,221,620)

Provisions (429,945,061) 46,259,003

Payment of retirement and severance benefits (619,451,078) (1,729,108,535)

Succession of liabilities for defined benefit - 221,803,233

Increase of plan assets - (104,244,156)

W (47,548,563,319) (70,096,588,828)

See accompanying notes to the condensed consolidated interim financial statements.

9 CJ E&M Corporation and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2015 and 2014 (Unaudited)

(In won) 2015 2014 Cash generated from operating activities W 145,062,792,939 98,758,117,160

Interest received 8,415,630,741 3,926,651,802

Dividend received 383,773,300 359,917,400

Interest paid (7,616,192,640) (9,165,602,825)

Income tax paid (46,811,393,473) (10,590,610,115)

Net cash provided by operating activities 99,434,610,867 83,288,473,422

Cash flows from investing activities Decrease of short-term financial assets 120,310,000,000 6,085,994,769

Disposal of available-for-sale financial assets 4,056,807,119 3,428,921,322

Disposal of held-to-maturity instruments 1,200,000,000 2,000,000,000

Collection of loans 1,139,917,510 2,146,278,318

Decrease of deposits 636,672,664 2,059,351,880

Disposal of other investment assets - 144,300,000

Disposal of property and equipment 38,459,818 673,954,417

Disposal of intangible assets 87,502,478 192,489,447

Disposal of investments in equity method investees 11,376,245,297 5,409,954,663

Settlement of derivatives 116,153,000 (338,745,000)

Proceeds from business combination and change in scope of - 2,620,914,535 consolidation Increase of short-term financial assets (94,000,000,000) (28,824,272,676)

Acquisition of available-for-sale financial assets (1,242,313,363) (6,751,269,167)

Acquisition of held-to-maturity instruments - (5,800,220,000)

Increase of loans (13,641,143) (3,015,747,982)

Increase of deposits (1,428,836,616) (987,163,911)

Increase of long-term financial assets (23,460,000) (118,629,000)

Acquisition of property and equipment (3,020,414,659) (19,845,384,815)

Acquisition of intangible assets (135,841,664,157) (151,735,062,119)

Net cash used in investing activities (96,608,572,052) (192,654,335,319)

Cash flows from financing activities Proceeds from short-term borrowings 24,567,476,500 19,855,658,439

Exercise of stock options - (1,362,646,787)

Cash received from capital increase by subsidiaries 2,932,389,610 27,469,568

Repayment of short-term borrowings (23,586,052,791) (9,340,325,148)

Repayment of long-term borrowings (1,583,353,344) (2,800,023,358)

Repayment of leasehold deposits (57,495,641) -

Acquisition of treasury shares - (23,555,586)

Additional acquisition of investments in subsidiary (51,383,518) (4,280,663,417)

Net cash provided by financing activities 2,221,580,816 2,075,913,711

Net increase (decrease) in cash and cash equivalents 5,047,619,631 (107,289,948,186)

Cash and cash equivalents at beginning of the period 33,525,990,630 332,310,495,486

Effect of exchange rate fluctuations on cash held 125,325,474 (1,236,378,863)

Transfer to disposal asset group classified as held for sale - (62,716,255,906)

Cash and cash equivalents at end of period W 38,698,935,735 161,067,912,531

See accompanying notes to the condensed consolidated interim financial statements.

10 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

1. Reporting entity

CJ E&M Corporation (the “Parent Company”) was established on September 1, 2010 when CJ O SHOPPING Co., Ltd. spun off its media division, and the Parent Company was incorporated on September 15, 2010 upon obtaining approval from Korea Communications Commission. On October 15, 2010, the Parent Company listed its shares on the Korean Securities Dealers’ Automated Quotations stock market, and the Parent Company changed its name from “O Media Holdings Co., Ltd.” to “CJ E&M Corporation” on December 30, 2010.

On March 1, 2011, the Parent Company merged with ON Media Corporation, CJ Internet Corp., Mnet Media Corp., CJ MEDIA, Inc. and CJ Entertainment Corp. On November 13, 2011, the Parent Company spun off its game development subsidiaries and management division for game development subsidiaries. The Parent Company also merged with Korea Baduk Television Inc., ORION CINEMA NETWORK, INC, On Game Network Inc., KMTV Corp., and International Media Genius, INC. on December 1, 2013 and spun off its game division on August 1, 2014.

As of June 30, 2015, the Parent Company’s paid-in capital amounted to W193,660 million, and the shareholders of the Parent Company are as follows:

Number Percentage of of shares ownership CJ Corporation 15,245,201 39.36% Treasury stock 158,654 0.41% Others 23,328,234 60.23% 38,732,089 100.00%

The consolidated financial statements are composed of the Parent Company, its subsidiaries (together referred to as the “Group”) and the Group’s interests in associates.

11 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

1. Reporting entity, continued

(1) The list of subsidiaries as of June 30, 2015 and December 31, 2014 are as follows:

Ownership (%) Parent June 30, December 31, company Subsidiaries Location Primary business 2015 2014

CJ E&M Corporation CJ Entertainment Japan Inc. Japan Broadcasting 60.00 60.00 CJ NGC KOREA, INC. Korea Program provision 67.00 67.00 CJ Century Entertainment & Media China Media and Consulting Co., Ltd. entertainment 100.00 100.00

CJ E&M Japan, Inc. (*1,2) Japan Program provision 46.71 46.00

CJ Entertainment America, LLC. USA Movie making 100.00 100.00 CJ E&M America, Inc. USA Management of subsidiaries 100.00 100.00 CJ E&M Tianjin Co., Ltd. China Broadcasting 100.00 100.00 MEZZOMEDIA Inc. Korea Advertising media vendors 51.00 51.00 JS PICTURES Co., Ltd. Korea Contents Provision 70.00 70.00 MMO entertainment corporation Korea Management Provision 100.00 100.00 CJ Victor Entertainment, Inc. Japan Music label business 51.00 51.00 Story Plant Co., Ltd. Korea Program production 100.00 100.00 CH Holdings Limited Hong- Management of

Kong subsidiaries 100.00 100.00 CJ E&M Vietnam Co., Ltd. (*3) Vietnam Movie making

consulting 100.00 - CJ E&M Corporation ImaginAsian Entertainment, Inc. USA Broadcasting & CJ E&M America, Inc. 70.52 70.52 CH Holdings Limited Rolemodel Entertainment Group Limited Hong- Media and

Kong entertainment 98.00 98.00 Rolemodel Shanghai Yiheya Media Co., Ltd.(*4) China Media and Entertainment entertainment Group Limited. 100.00 --

(*1) The Parent Company has control over it through the board of directors and others.

(*2) The Parent Company purchased additional 500 shares of CJ E&M Japan, Inc. As a result, the Group’s equity interest in CJ E&M Japan, Inc. increased.

(*3) The Parent Company established CJ E&M Vietnam Co., Ltd. on 2015

(*4) Rolemodel Entertainment Group Limited established Shanghai Yiheya Media Co., Ltd on 2015

(2) Changes in subsidiaries

The list of subsidiaries that were newly included in or excluded from consolidated entities during the six- month period ended June 30, 2015 is as follows:

1) Included subsidiaries

Company Reason CJ E&M Vietnam Co., Ltd. Establishment Shanghai Yiheya Media Co., Ltd. Establishment

2) Excluded subsidiaries

There are no excluded subsidiaries during the six-month period ended June 30, 2015.

12 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

1. Reporting entity, continued

(3) Condensed financial information of subsidiaries

1) Condensed financial information of subsidiaries as of and for the six-month period ended June 30, 2015 is as follows:

(In thousands of won) Comprehen- Profit sive income Parent (loss) for (loss) for the company Subsidiaries Assets Liabilities Revenue the period period

CJ E&M Corporation CJ Entertainment Japan Inc. W 1,017,362 3,088,345 955,582 (66,332) (60,032) CJ NGC KOREA, INC. 1,046,596 1,334,942 2,799,023 (405,161) (405,161) CJ Century Entertainment & Media Consulting Co., Ltd. 1,372,307 1,165,353 - (42,029) (60,386) CJ E&M Japan, Inc. 8,059,565 6,712,997 10,589,386 177,674 174,495 CJ Entertainment America, LLC. 5,381,229 8,207,386 2,135,331 (412,386) (475,067) CJ E&M America, Inc. 59,573,050 28,191,752 3,295,992 (115,866) 239,212 CJ E&M Tianjin Co., Ltd. 4,747,331 593,668 919,077 104,739 203,064 MEZZOMEDIA Inc. 66,612,158 59,969,649 11,696,803 592,569 592,569 JS PICTURES Co., Ltd. 12,834,152 3,920,121 7,120,939 12,261 12,261 MMO entertainment corporation 181,096 81,090 527,241 6,968 6,968 CJ Victor Entertainment, Inc. 7,583,406 1,295,196 2,201,494 (1,357,347) (1,455,740) Story Plant Co., Ltd. 3,828,107 3,261,367 1,679,000 (356,803) (356,803) CH Holdings Limited 7,255,256 8,704 - (8,514) 110,722 CJ E&M Vietnam Co., Ltd. 1,073,245 1,208 - (32,701) (24,462) CJ E&M Corporation ImaginAsian Entertainment, Inc. & CJ E&M America, Inc. 2,882,429 41,552,267 298,011 (2,953,485) (3,810,627) CH Holdings Limited. Rolemodel Entertainment Group Limited. 5,898,389 369,902 226,761 (505,249) (287,357) Rolemodel Shanghai Yiheya Media Co., Ltd. Entertainment Group Limited. 5,909,164 1,247,947 - (454,863) (591,334)

2) Condensed financial information of subsidiaries as of and for the year ended December 31, 2014 is as follows:

(In thousands of won) Comprehen- Profit sive income Parent (loss) for (loss) for the company Subsidiaries Assets Liabilities Revenue the year year

CJ E&M Corporation CJ Entertainment Japan, Inc W 818,684 2,829,634 1,879,267 (1,210,825) (1,191,000) CJ NGC KOREA, INC. 1,228,455 2,957,640 5,352,658 (2,236,816) (2,236,816) CJ Century Entertainment & Media Consulting Co., Ltd. 1,655,299 1,387,960 - (228) 5,317 CJ E&M Japan, Inc. 8,085,292 6,913,219 26,241,302 70,814 (36,246) Mediaweb INC. (*1) 17,550,627 3,356,144 8,222,197 644,445 644,445 CJ Entertainment America, LLC. 3,985,903 6,336,993 2,398,065 (2,308,997) (2,407,455) Netmarble Games Corporation (formerly, CJ Games Corporation) (*1) 237,050,143 44,705,807 554,070 (1,902,883) (1,901,989) CJ E&M America, Inc. 45,311,856 14,169,771 6,004,612 233,805 719,674 N2PLAY Co., Ltd. (*1) 25,241,877 2,659,391 11,483,582 6,586,920 6,596,687 CJ E&M Tianjin Co., Ltd. 5,612,673 1,662,073 303,106 (1,644,762) (1,614,394) MEZZOMEDIA Inc. 71,310,831 65,260,890 18,319,555 1,201,977 953,489

13 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

1. Reporting entity, continued

(3) Condensed financial information of subsidiaries, continued

2) Condensed financial information of subsidiaries as of and for the year ended December 31, 2014 was as follows, continued:

(In thousands of won) Comprehen- Profit sive income Parent (loss) for (loss) for the company Subsidiaries Assets Liabilities Revenue the year year

CJ E&M Corporation JS PICTURES Co., Ltd. 13,168,041 4,266,271 26,208,041 1,749,304 1,846,175 MMO entertainment corporation 190,468 97,430 828,080 7,037 7,037 CJ Victor Entertainment, Inc. 5,191,996 1,933,358 3,486,739 (1,452,983) (1,851,711) Story Plant Co., Ltd. 950,660 27,117 - (76,457) (76,457) CH Holdings Ltd. 1,103,132 687 - (2,699) 6,778 Netmarble Games Corporation ISG Co., Ltd. (*1) 5,853,909 2,390,253 8,201,685 1,282,928 1,282,928 ANI-PARK Co., Ltd. (*1) 30,271,906 22,075,285 9,497,590 (1,040,821) (1,040,821) Netmarble Monstern Inc. (*1) 43,584,643 8,977,789 26,899,385 17,039,118 17,039,118 Reborn Games Co., Ltd. (*1) 929,521 9,759,994 831,364 (2,542,388) (2,542,388) NURIEN SOFT Co., Ltd. (*1) 2,060,564 3,074,912 2,714,790 (155,863) (155,863) CJ Internet Japan Co., Ltd. (*1) 4,195,403 3,135,570 5,164,831 (916,115) (911,058) CJ Games Global Corporation. (*1) 1,183,448 32,601 68,361 (984,598) (1,029,066) Stand Best Tech Co., Ltd. (*1) 984,893 161,162 741,331 101,107 98,926 TurnOn Games Co., Ltd. (*1) 15,463,992 3,906,152 1,122,270 (1,800,741) (1,794,266) JoyBomb Entertainment Technology Co., Ltd. (*1) 12,894,200 3,969,213 15,436,014 2,713,937 1,992,321 Galaxy Network Technology Limited. (*1) 4,300,364 - - (24,570) 7,172 SHR Interaktif Servisler San. ve Tic. Ltd. Sti. (*1) 2,001,563 3,074,851 3,863,431 9,080 43,499 JOYGAME Interactive Services Ltd. (*1) 7,235,533 3,482,962 7,211,142 100,662 (37,920) CJ E&M Corporation ImaginAsian Entertainment, Inc. & CJ E&M America, Inc. 3,600,197 38,459,408 3,423,926 (11,004,303) (12,370,026) Mediaweb INC.& Netmarble PT.CJ Internet Indonesia (*1) Games Corporation 1,755,591 207,869 980,430 (487,965) (435,393) MEZZOMEDIA Inc. Embargo Inc. - - - (4,702) (4,702) Galaxy Network Beijing Galaxy Space Internet Technology Limited Technology Co., Ltd. (*1) 2,764,152 15,628 34,316 (507,218) (656,415) IGS CO., LTD. IG S&C Philippines Inc. (*1) 282,459 3,479 33,645 (27,678) (26,052) CH Holdings Ltd. Rolemodel Entertainment Group Limited. 115,148 569,640 - - -

(*1) Condensed financial information of Mediaweb INC., N2PLAY Co., Ltd. and Netmarble Games Corporation and its subsidiaries is as of and for the period ended August 1, 2014 when the Parent Company lost control over them.

14 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

2. Basis of preparation

(1) Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (“K-IFRS”), as prescribed in the Act on External Audits of Corporations of the Republic of Korea. These condensed consolidated interim financial statements were prepared in accordance with K-IFRS No. 1034, ‘Interim Financial Reporting’ as part of the period covered by the Group’s K-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended December 31, 2014.

(2) Use of estimates and judgments

1) Uncertainties of assumptions, estimates and judgement of management

The preparation of the condensed consolidated interim financial statements in conformity with K-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2014.

2) Measurement of fair value

A number of the Group’s accounting policies and disclosures require the measurement of fair value, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to the measurement of fair value. This includes all significant fair value measurements, including Level 3 fair values.

The Group regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of K-IFRS, including the level in the fair value hierarchy in which such valuations should be classified.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities - Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) - Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

15 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

2. Basis of preparation, continued

(2) Use of estimates and judgments, continued

2) Measurement of fair value, continued

If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following note:

 Note 28: Financial instruments

3. Significant accounting policies

Except as described below, the accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as of and for the year ended December 31, 2014. The following changes in accounting policies are also expected to be reflected in the Group’s consolidated financial statements as at and for the year ending December 31, 2015.

(1) Changes in accounting policies

The Group has applied the following amendments to standards, with a date of initial application of January 1, 2015

1) Employee Contributions

The Group has adopted new amendments to K-IFRS 1019, ‘Employee Benefits’ since July 1, 2014. Amendments to K-IFRS 1019 introduced a practical expedient to accounting for defined benefit plan when employees or third parties pay contributions, if certain criteria are met. According to the amendments, the entity is permitted to recognize those contributions as a reduction of the service cost in the period in which the related service is rendered, instead of forecasting future contributions from employees or third parties and attributing them to periods or service as negative benefits.

The change had no significant impact on the consolidated financial statements.

16 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

4. Risk management

The objectives and policies of financial risk management and capital management applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as of and for the year ended December 31, 2014.

(1) Capital management

Liabilities to equity ratios as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won, except ratio) 2015 2014

Total liabilities (A) W 793,117,241 851,682,116 Total equity (B) 1,610,582,568 1,505,703,408 Borrowings and debentures (C) 399,764,920 399,632,197 Financial lease liabilities (D) 152,346 210,731 Cash and cash equivalents (E) 38,698,936 33,525,991 Short-term financial assets (F) 445,778,750 472,088,750 Net debt (C+D-E-F) W (84,560,420) (105,771,812)

Liabilities to equity ratio (A/B) 49.24% 56.56% Net debt to equity ratio ((C+D-E-F)/B) -5.25% -7.02%

5. Operating segments

The Group has four reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s chief operation decision maker reviews internal management reports at least on a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments:

- Media: Operates cable channels as well as develops broadcast contents - Music: Provides online music portal service and records and manages brand concerts - Performance : Produces, invests and distributes performance - Motion Pictures : Produces, invests and distributes films

Financial information for each reportable segment for the six-month periods ended June 30, 2015 and 2014 is as follows:

(In thousands of won)

June 30, 2015 June 30, 2014 Revenue Operating profit Revenue Operating profit (loss) Continuing Discontinued Continuing Discontinued Continuing Discontinued Continuing Discontinue operations operations operations operations operations operations operations d operations

Media W 401,385,014 - 22,116,025 - 379,513,918 - (5,300,530) - Music 85,068,677 - 2,228,955 - 82,984,423 - (2,623,155) - Performance 8,429,762 - 283,303 - 6,201,872 12,300,466 (5,805,168) (6,733,186) Motion Pictures 97,448,589 - 2,373,680 - 79,936,060 - 1,899,403 - Games (*) - - - - - 245,799,126 - 29,939,452 W 592,332,042 - 27,001,963 - 548,636,273 258,099,592 (11,829,450) 23,206,266

(*) On August 1, 2014, the Parent Company divided itself into two separate entities by spinning off the game division.

17 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

5. Operating segments, continued

The portion of revenue and operating profit (loss) derived from overseas is immaterial.

As information of segment assets and liabilities is not reported to the Group’s chief operating decision maker, the Group does not present this information in the consolidated financial statements.

6. Cash and cash equivalents

Details of cash and cash equivalents as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Cash on hand W 6,610 - Demand deposits 38,692,326 33,525,991 W 38,698,936 33,525,991

7. Inventories

Details of inventories as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Merchandises W 7,250,151 5,214,200 Supplies - 69 Raw materials 6,245 29,100 W 7,256,396 5,243,369

The Group has recognized write-down of inventories amounting to W95 million for the six-month period ended June 30, 2015.

8. Accounts and notes receivables - trade

(1) Accounts and notes receivables - trade are presented on a net basis after deducting allowances for doubtful accounts. The gross amount of accounts and notes receivables - trade and related allowances for doubtful accounts as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Accounts and notes receivables - trade W 368,810,260 394,891,222 Allowances for doubtful accounts (43,696,293) (42,437,491) Accounts and notes receivables – trade, net W 325,113,967 352,453,731

18 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

8. Accounts and notes receivables – trade, continued

(2) Changes of allowance for doubtful accounts for the six-month period ended June 30, 2015 and the year ended December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Beginning balance W 42,437,491 15,082,338 Change in scope of consolidation - (1,350,347) Impairment loss 2,614,744 33,099,442 Write-off (52,835) (4,380,160) Others (1,303,107) (13,782) Ending balance W 43,696,293 42,437,491

9. Available-for-sale financial assets

Available-for-sale financial assets as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won) June 30, 2015 December 31, 2014 Acquisition Carrying Acquisition Carrying costs amount costs amount

Listed shares W - - 668,284 1,056,977 Unlisted shares 7,174,645 5,074,578 8,174,645 6,074,578 Debt securities 1,410,000 30,000 1,410,000 30,000 Investments in partnership 68,934,931 68,934,931 60,675,030 60,675,030 W 77,519,576 74,039,509 70,927,959 67,836,585

The Group recognized the difference between acquisition costs and fair values of available-for-sale financial assets in other comprehensive income (loss), except for impairment losses which were recorded in profit or loss. The Group has a balance of a net cumulative unrealized loss of W1,063 million as accumulated other comprehensive loss for available-for-sale financial assets as of December 31, 2014. However, as a result of disposal of all listed stocks, the cumulative unrealized loss was reclassified to profit of loss for the six-month period ended June 30, 2015

Investments in equity instruments, except for listed shares, are measured at cost less impairment loss because they do not have a quoted market price in an active market and their fair value cannot be reliably measured or the difference between the carrying amount and the fair value is not significant.

19 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

10. Investments in equity method investees

(1) Investments in equity method investees as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won) June 30, 2015 December 31, 2014 Owner- Carrying Owner- Carrying Company Location Business ship (%) amount ship (%) amount

MBC PLUS MEDIA Co., Ltd. Korea Broadcasting 22.53% W 44,942,629 22.53% W 44,757,838 Gemini Investment No.1 Korea Fund 33.33% 31,893 33.33% 24,462 Michigan Global Contents Fund Korea Fund 20.00% 683,586 20.00% 673,968 Century- on- multimedia Investment Union,2 Korea Fund 20.00% 690,327 20.00% 690,907 CINEMA SERVICE CO., LTD Korea Filmmaking 37.10% 2,771,129 37.10% 2,905,441 ART Service Corp. Korea Advertising 41.35% 3,042,214 41.35% 2,126,995 Company K Partners Contents Investment Fund (*1) Korea Fund 30.00% 1,928,102 30.00% 4,227,106 Capital One Diversity Cinema Fund (*1) Korea Fund 20.00% 80,127 20.00% 635,605 Union Visual Contents Investment Fund Korea Fund 33.33% 5,374,208 33.33% 6,168,454 CABLE TV SEODAEGU Korea Broadcasting 49.33% - 49.33% - GRETECH Corp. Korea Software development 24.54% 12,508,787 24.54% 13,043,254 KTF-CJ Music Contents Investment Fund (*4) Korea Fund 40.00% 1,825,595 40.00% 1,825,595 Michigan Global Contents Fund 2 Korea Fund 28.00% 2,503,771 28.00% 2,759,688 Wooridull Entertainment Investment Fund Korea Fund 31.36% 1,143,955 31.36% 1,143,955 FICCJIM Asia Limited Hong- Broadcasting Kong 49.00% 1,067,201 49.00% 679,476 Ajou Culture Development Company, Inc. China Performance planning 20.00% 243,007 20.00% 50,093 Smilegate Cultural Investmant Fund. Korea Fund 25.00% 2,976,621 25.00% 2,349,086 TW Culture Investment No.14 Cinema Fund Korea Fund 25.00% 5,518,666 25.00% 5,017,948 IBK Financial Group Cultural Contents Korea Fund Investment Fund (*1) 33.33% 2,380,300 33.33% 3,172,315 Clip Service Inc. (*2) Korea Performance planning 25.24% 1,037,647 31.85% 950,209 Musicworks Co., Ltd. (*6) Korea Music 19.00% - 19.00% - Blackwell & Fuller Holdings LLC.(*3) England Music -- - 20.00% 16,104,027 JELLY FISH ENTERTAINMENT CO., LTD. (*6) Korea Music 19.00% 464,471 19.00% 259,640 M Studio Co., Ltd. China Music 49.00% 330,815 49.00% 360,024 Polaris Mnet Co., Ltd. Korea Education 50.00% 375,686 50.00% 484,112 Alive media Co., Ltd. (*4) Korea Music -- - 19.00% - Netmarble Games Corporation. (*5) Korea Management of subsidiaries 31.45% 376,521,534 34.81% 266,887,433 W 468,442,271 W 377,297,631

(*1) The Group collected W1,800 million from investment in Company K Partners Contents Investment Fund, and W1,000 million from investment in IBK Financial Group Cultural Contents Investment Fund. Also, the Group collected W551 million from investment in Capital One Diversity Cinema Fund, with W250 million of profit.

(*2) The Parent Company disposed of investment of W197 million in Clip Service Inc, with W8 million of profit.

(*3) The Group lost significant influence on Blackwell & Fuller Holdings LLC. due to the partial disposal of its shares of Blackwell & Fuller Holdings LLC. with W806 million of profit for the six-month period ended June 30, 2015. Accordingly, the Group ceased the application of equity mothod to the residual investments in Blackwell & Fuller Holdings LLC. and reclassified it into available-for-sale financial assets.

(*4) The Group disposed entire investment in Alive media Co., Ltd. with W23 million of profit.

20 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

10. Investments in equity method investees, continued

(1) Investments in equity method investees as of June 30, 2015 and December 31, 2014 are as follows, continued:

(*5) As Netmarble Games Corporation issued to a third party new shares of common stock for the six- month period ended June 30, 2015, ownership percentage of the Parent Company in Netmarble Games Corporation decreased. As a result, the carrying amount of investments in Netmarble Games Corporation increased by W93,843 million of gain from reclassification.

(*6) The Parent Company has significant influence over them through the board of directors and others.

The Group applied the equity method using the financial statements of associates and joint ventures as of and for the six-month period ended June 30, 2015.

(2) Condensed financial information of significant equity method investees as of and for the six-month period ended June 30, 2015 as of and the year ended December 31, 2014 are as follows:

(In thousands of won) June 30, 2015 Union TW IBK Financial Visual Culture Group Netmarble Games MBC PLUS Contents Investment Cultural Blackwell Corporation MEDIA Co., Investment No.14 Contents & Fuller and its Ltd. Fund GRETECH Corp. Cinema Fund Investment Fund Holdings LLC. (*2) subsidiaries

Current assets W 184,140,636 5,857,523 11,875,509 5,776,214 3,817,393 7,572,022 460,959,146 Non-current assets 39,432,138 10,265,099 9,543,798 16,303,409 3,457,397 34,482,020 615,622,238 Current liabilities 29,031,921 - 2,298,436 4,959 133,890 29,135,377 143,154,088 Non-current liabilities 1,286,959 - 5,080,000 - - - 41,411,478 Non-controlling interest ------77,194,486 Revenue 96,407,433 188,338 6,134,317 1,988,406 1,134,574 1,487,593 447,236,815 Profit (loss) (*1) 2,543,794 (2,382,738) (475,780) 2,002,874 623,954 (1,969,051) 52,569,413 Other comprehensive Income (loss) (*1) (19,708) - (1,702,319) - - 69,705 (2,440,961) Total comprehensive income (loss) (*1) 2,524,086 (2,382,738) (2,178,099) 2,002,874 623,954 (1,899,346) 50,128,452 Dividend received 383,773 ------

(*1) Profit (loss) or comprehensive income (loss) of Netmarble Games Corporation and its subsidiaries is the profit (loss) or comprehensive income (loss) attributable to owners of Netmarble Games Corporaton.

(*2) This is condensed financial information as of and for the period ended on the date on which interest was reclassified to available-for-sale financial assets in the Group’s consolidated financial statements.

21 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

10. Investments in equity method investees, continued

(2) Condensed financial information of significant equity method investees as of and for the six-month period ended June 30, 2015 as of and the year ended December 31, 2014 is as follows, continued:

(In thousands of won) December 31, 2014 Union IBK Financial Visual TW Group Black-well Netmarble MBC Contents Culture Cultural & Games PLUS Invest- Investment YJM Entertain- Contents Fuller Corporation MEDIA ment GRETECH No.14 ment Investment Holdings and its Co., Ltd. Fund Corp. Cinema Fund Co., Ltd. (*2) Fund LLC. subsidiaries.

Current assets W 199,295,862 7,041,631 12,414,020 4,574,882 20,597,396 9,786,945 7,507,753 383,710,408 Non-current assets 27,247,682 11,463,730 6,329,931 15,588,642 6,656,376 - 36,546,614 245,421,816 Current liabilities 32,363,942 - 2,524,981 91,733 10,583,242 270,000 29,236,357 123,029,735 Non-current liabilities 1,746,070 - - - 204,070 - - 37,761,425 Non-controlling interest ------47,048,461 Revenue 197,282,829 1,966,999 18,014,597 3,081,181 1,165,720 742,603 432,001 368,401,789 Profit (loss) (*1) 21,020,422 540,560 (5,489,042) (1,108,116) 617,837 466,596 (864,332) 29,151,879 Other comprehensive Income (loss) (*1) 6,214,699 - 4,105,038 - (939,576) - 590,097 (713,148) Total comprehensive income (loss) (*1) 27,235,121 540,560 (1,384,004) (1,108,116) (321,739) 466,596 (274,235) 28,438,731 Dividend received 338,624 ------

(*1) Profit (loss) or comprehensive income (loss) of Netmarble Games Corporation and its subsidiaries is the profit (loss) or comprehensive income (loss) attributable to owners of Netmarble Games Corporaton.

(*2) This is condensed financial information as of and for the period ended on the date on which interest was eliminated in the Group’s consolidated financial statements.

22 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

10. Investments in equity method investees, continued

(3) The reconciliation of significant investees’ net assets to the carrying amount of the Group’s interests in these equity method investees in the consolidated financial statements as of June 30, 2015 and December 31, 2014 is as follows:

(In thousands of won) June 30, 2015 Group’s share of

Owner- net asset Others Carrying Net asset (a) ship (b) (a×b) Goodwill Disposals (*1) amount

MBC PLUS MEDIA Co., Ltd. W 193,253,894 22.53% 43,531,496 1,411,133 - - 44,942,629 Union Visual Contents Investment Fund 16,122,622 33.33% 5,374,208 - - - 5,374,208 GRETECH Corp. 14,040,871 24.54% 3,445,381 9,063,406 - - 12,508,787 TW Culture Investment No.14 Cinema Fund 22,074,664 25.00% 5,518,666 - - - 5,518,666 IBK Financial Group Cultural Contents Investment Fund 7,140,900 33.33% 2,380,300 - - - 2,380,300 Blackwell & Fuller Holdings LLC. 12,918,665 20.00% 2,583,733 13,140,425 (6,679,360) (9,044,798) - Netmarble Games Corporation and its subsidiaries (*2) 814,821,332 31.45% 256,285,647 120,235,887 - - 376,521,534

(*1) The Group lost significant influence on Blackwell & Fuller Holdings LLC. due to the partial disposal of its shares of Blackwell & Fuller Holding LLG. As a result, the Group reclassified the residual investments in Blackwell & Fuller Holdings LLC. to available-for-sale financial assets.

(*2) Net asset of Netmarble Games Corporation and its subsidiaries was net asset attributable to owners of Netmarble Games Corporation.

(In thousands of won) December 31, 2014 Group’s Change in share of net scope of

Owner- asset consolida Carrying Net asset (a) ship (b) (a×b) Goodwill -tion amount

MBC PLUS MEDIA Co., Ltd. W 192,433,532 22.53% 43,346,704 1,411,133 - 44,757,837 Union Visual Contents Investment Fund 18,505,361 33.33% 6,168,454 - - 6,168,454 GRETECH Corp. 16,218,970 24.54% 3,979,847 9,063,406 - 13,043,253 TW Culture Investment No.14 Cinema Fund 20,071,791 25.00% 5,017,948 - - 5,017,948 YJM Entertainment Co., Ltd. (*1) 16,466,460 30.54% 5,029,462 9,722,825 (14,752,287) - IBK Financial Group Cultural Contents Investment Fund 9,516,945 33.33% 3,172,315 - - 3,172,315 Blackwell & Fuller Holdings LLC. 14,818,010 20.00% 2,963,602 13,140,425 - 16,104,027 Netmarble Games Corporation and its subsidiaries (*2) 421,292,603 34.81% 146,651,546 120,235,887 - 266,887,433

(*1) The Group’s equity interest in YJM Entertainment Co., Ltd. was calculated based on the number of ordinary shares outstanding excluding treasury stock of YJM Entertainment Co., Ltd.

(*2) Net asset of Netmarble Games Corporation and its subsidiaries was net asset attributable to owners of Netmarble Games Corporation.

23 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

10. Investments in equity method investees, continued

(4) The aggregate carrying amounts of individually insignificant associates and joint ventures as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won) June 30, 2015 Group’s share of profit (loss) and

total comprehensive income (loss) Other Carrying Profit (loss) comprehensive Total comprehensive amount for the period loss income (loss)

Individually insignificant associates W 20,820,460 2,324,706 (618,094) 1,706,612 Individually insignificant joint ventures 375,687 (108,426) - (108,426)

(In thousands of won) December 31, 2014 Group’s share of profit (loss) and

total comprehensive income (loss) Other Carrying comprehensive amount Loss for the year income Total comprehensive loss

Individually insignificant associates W 21,662,250 (1,923,544) 613,338 (1,310,206) Individually insignificant joint ventures 484,113 (1,045,491) - (1,045,491)

(5) Changes in investments in equity method investees for the six-month period ended June 30, 2015 and the year ended December 31, 2014 were as follows:

(In thousands of won) June 30, 2015 Equity Change Beginning income in Others

balance Disposal (loss) equity (*1) Ending balance

MBC PLUS MEDIA Co., Ltd. (*1) W 44,757,837 - 573,003 (4,438) (383,773) 44,942,629 Union Visual Contents Investment Fund 6,168,454 - (794,246) - - 5,374,208 GRETECH Corp. 13,043,253 - (116,748) (417,718) - 12,508,787 TW Culture Investment No.14 Cinema Fund 5,017,948 - 500,718 - - 5,518,666 IBK Financial Group Cultural Contents Investment Fund 3,172,315 (1,000,000) 207,985 - - 2,380,300 Blackwell & Fuller Holdings LLC. 16,104,027 (6,679,360) (393,810) 13,941 (9,044,798) - Netmarble Games Corporation (*2) 266,887,434 - 16,534,651 (767,755) 93,867,204 376,521,534 Individually insignificant associates 21,662,250 (2,548,402) 2,324,706 (618,094) - 20,820,460 Individually insignificant joint ventures 484,113 - (108,426) - - 375,687 W 377,297,631 (10,227,762) 18,727,833 (1,794,064) 84,438,633 468,442,271

(*1) The Group received dividends of W384 million from MBC PLUS MEDIA Co., Ltd. for the six-month period ended June 30, 2015.

24 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

10. Investments in equity method investees, continued

(5) Changes in investments in equity method investees for the six-month period ended June 30, 2015 and the year ended December 31, 2014 are as follows, continued:

(*2) Due to the issuance of new shares of Netmarble Games Corporation to a third party, W93,843 million of gain from reclassification was recognized for the six-month period ended June 30, 2015.

December 31, 2014 thousands of won) Change in Equity Change Profit from scope of

Beginning Acqui income in discontinued consolidation Others Ending balance -sition Disposal (loss) equity operations (*1) balance

MBC PLUS MEDIA Co., Ltd. W 39,210,606 - - 4,734,965 1,322,024 - - (509,758) 44,757,837 Union Visual Contents Investment Fund 5,988,267 - - 180,187 - - - - 6,168,454 GRETECH Corp. 13,382,864 - - (1,346,914) 1,007,303 - - - 13,043,253 TW Culture Investment No.14 Cinema Fund 5,294,977 - - (277,029) - - - - 5,017,948 YJM Entertainment Co., Ltd. (*2) 14,850,558 - - - (286,981) 188,710 (14,752,287) - - IBK Financial Group Cultural Contents Investment Fund 5,016,783 - (2,000,000) 155,532 - - - - 3,172,315 Blackwell & Fuller Holdings LLC. 16,158,874 - - (172,866) 118,019 - - - 16,104,027 Netmarble Games Corporation - - - 10,147,741 (248,246) - 256,987,939 - 266,887,434 Individually insignificant associates 35,668,954 23,455 (9,138,286) (2,719,305) 613,338 795,761 (3,581,667) - 21,662,250 Individually insignificant joint ventures 1,529,604 - - (1,045,491) - - - - 484,113 W 137,101,487 23,455 (11,138,286) 9,656,820 2,525,457 984,471 238,653,985 (509,758) 377,297,631

(*1) The carrying amount of investments in MBC PLUS MEDIA Co., Ltd. decreased due to dividends received and disproportionate capital increase by the entity while merging with MBC Sports Co., Ltd. In relation to disproportionate capital increase, the Group recognized W139 million of loss on partial disposal of equity method investees.

(*2) As the Parent Company spun off its game division and subsequently lost control over Netmarble Games Corporation, investments in the equity method investees were derecognized on the consolidated financial statements. Related equity income (loss) were classified as profit from discontinued operations.

(6) The unrecognized cumulative equity losses, resulted from discontinuing application of the equity method, as of and for the six-month period ended June 30, 2015 were as follows:

Unrecognized equity losses during Unrecognized the six-month cumulative equity period ended losses as of (In thousands of won) June 30, 2015 June 30, 2015

Individually insignificant associates W (145,593) (4,379,524)

25 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

11. Other financial assets

(1) Other financial assets as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won) June 30, 2015 December 31, 2014 Current Non-current Current Non-current

Accounts receivable – other W 15,834,363 - 15,814,444 - Accrued income 1,573,219 - 3,887,915 - Loans 1,250,070 3,104,393 8,595,430 1,403,390 Deposits provided - 14,452,127 - 13,653,079 Derivatives 235,860 - 135,808 - Short-term financial assets (*) 445,778,750 - 472,088,750 - Long-term financial assets (*) - 5,209,340 - 5,185,880 Other investments - 1,124,860 - 1,124,860 W 464,672,262 23,890,720 500,522,347 21,367,209

(*) Short-term and long-term financial assets which are restricted in use as of June 30, 2015 are W6,055 million.

(2) Other financial assets are presented on a net basis after deducting related allowances for doubtful accounts. Other financial assets and related allowances for doubtful accounts as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won) June 30, 2015 December 31, 2014 Non- Non- Current current Current current

Other financial assets W 483,609,891 31,890,720 523,345,900 21,367,209 Allowance for doubtful accounts: Accounts receivable - other (7,968,822) - (8,096,784) - Accrued income (1,284,361) - (1,284,362) - Loans (9,684,446) (8,000,000) (13,442,407) - (18,937,629) (8,000,000) (22,823,553) - Other financial assets, net W 464,672,262 23,890,720 500,522,347 21,367,209

(3) Changes of allowance for doubtful accounts for the six-month period ended June 30, 2015 and for the year ended December 31, 2014 were as follows:

(In thousands of won) June 30, 2015 December 31, 2014

Current Non-current Current Non- current

Beginning balance W 22,823,553 - 11,866,833 82,533 Change in scope of consolidation - - (1,004,804) (6,638) Impairment loss 4,451,894 - 9,340,718 2,624,105 Write-off (337,818) - (79,194) - Others (8,000,000) 8,000,000 2,700,000 (2,700,000) Ending balance W 18,937,629 8,000,000 22,823,553 -

26 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

12. Advance payments

(1) Advance payments are presented on a net basis after deducting related allowance. Advance payments and related allowance as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Advance payments W 175,026,908 171,905,656 Allowance for doubtful accounts (33,508,293) (33,376,762) Advance payments, net W 141,518,615 138,528,894

(2) Changes of allowance for doubtful accounts for the six-month period ended June 30, 2015 and the year ended December 31, 2014 were as follows:

June 30, December

(In thousands of won) 2015 31, 2014

Beginning balance W 33,376,762 30,073,258 Change in scope of consolidation - (7,259,583) Impairment loss (reversal of allowance) (27,483) 13,497,589 Write-off - (5,128,882) Other 159,014 2,194,380 Ending balance W 33,508,293 33,376,762

27 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

13. Property and equipment

(1) Changes in property and equipment for the six-month period ended June 30, 2015 are as follows:

Beginning Ending (In thousands of won) balance Acquisitions Disposals Depreciation Other (*) balance

Land W 4,252,129 - - - - 4,252,129 Buildings 35,447,191 - - (489,978) - 34,957,213 Structures 1,987,197 224,016 (11,733) (71,831) - 2,127,649 Machinery 230,425 26,286 (1,512) (39,396) 2,306 218,109 Broadcasting equipment 28,948,347 1,398,081 - (3,374,820) (42,431) 26,929,177 Vehicles 125,306 - - (39,264) 42,299 128,341 Tools and office equipment 8,837,154 741,455 (949,886) (1,828,547) 11,256 6,811,432 Other tangible assets 2,918,659 1,284,259 (759) (955,865) 65,605 3,311,899 Construction in progress 5,718,500 282,364 - - (5,746,544) 254,320 W 88,464,908 3,956,461 (963,890) (6,799,701) (5,667,509) 78,990,269

(*) Others are related to transfer from construction in progress, changes in exchange rates and others.

(2) Changes in property and equipment for the year ended December 31, 2014 are as follows:

Beginning Change in scope Impairment Ending (In thousands of won) balance Acquisitions Disposals of consolidation Depreciation loss Other (*) balance

Land W 13,528,655 -- (9,276,526) -- - 4,252,129 Buildings 42,829,973 1,943,007 - (17,588,707) (1,171,687) - 9,434,605 35,447,191 Structures 6,127,369 228,428 (15,938) (3,888,082) (274,987) (10,128) (179,465) 1,987,197 Machinery 8,884,462 1,996,196 (799,258) (8,005,748) (1,806,358) - (38,869) 230,425 Broadcasting equipment 33,377,489 2,768,920 - - (7,179,093) - (18,969) 28,948,347 Vehicles 170,708 55,934 (17,085) (11,449) (74,295) - 1,493 125,306 Tools and office equipment 19,276,972 4,351,196 (477,409) (7,214,686) (5,781,956) (588,332) (728,631) 8,837,154 Other tangible assets 4,792,941 80,693 (38,808) (529,832) (2,227,581) - 841,246 2,918,659 Construction in progress 6,006,120 9,147,000 - - -- (9,434,620) 5,718,500 W 134,994,689 20,571,374 (1,348,498) (46,515,030) (18,515,957) (598,460) (123,210) 88,464,908

(*) Others are related to transfer from other accounts, changes in exchange rates and others.

28 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

14. Intangible assets

(1) Changes in intangible assets for the six-month period ended June 30, 2015 are as follows:

(In thousands of won) 2015 Industrial Copy Develop- Member- Goodwill rights -rights ment cost Software License ship Others (*1) Total

Acquisition costs: Beginning balance W 189,982,417 643,770 1,317,515,338 5,671,395 5,989,698 590,000 17,391,972 123,637,004 1,661,421,594

Acquisitions - 361,086 142,249,562 - 4,416 - 8,124 2,331,040 144,954,228

Disposals - (1,718) (4,943,907) - (10,000) - - (17,144) (4,972,769)

Other (*2) - 13,574 (33,129,344) - 1,519 - 342,000 6,903,322 (25,868,929)

Ending balance W 189,982,417 1,016,712 1,421,691,649 5,671,395 5,985,633 590,000 17,742,096 132,854,222 1,775,534,124

Accumulated amortization and impairment losses:

Beginning balance W (3,072,325) (26,148) (915,800,572) (5,521,722) (5,433,355) (87,778) (4,037,254) (32,717,180) (966,696,334)

Amortization - (4,217) (147,381,441) (20,410) (127,209) (98,333) - (4,642,102) (152,273,712)

Impairment loss - - (4,614,491) - - - - - (4,614,491)

Disposals - - 2,353,435 - 7,033 - - - 2,360,468

Other (*2) - - 41,950,835 - (1,508) - - (4,074) 41,945,253

Ending balance (3,072,325) (30,365) (1,023,492,234) (5,542,132) (5,555,039) (186,111) (4,037,254) (37,363,356) (1,079,278,816)

W 186,910,092 986,347 398,199,415 129,263 430,594 403,889 13,704,842 95,490,866 696,255,308

(*1) Others include individually identifiable customer relationships which the Group recognized in connection with business combinations.

(*2) Others are related to write-off of assets which were fully amortized and transfer from other accounts.

(2) Changes in intangible assets for the year ended December 31, 2014 are as follows:

(In thousands of won) 2014 Industrial Copy Develop- Member- Goodwill rights -rights ment cost Software License ship Others(*1) Total

Acquisition costs:

Beginning balance W 268,322,895 8,424,906 1,071,473,602 62,645,506 28,583,808 37,108,123 19,215,761 123,344,595 1,619,119,196 Acquisitions - 274,884 331,712,330 1,080,154 171,430 896,367 600,440 3,583,867 338,319,472 Disposals - - (16,133,322) - - (15,005,104) (20,000) (860,831) (32,019,257) Change in scope of consolidation (79,549,644) (8,092,172) (258,984) (56,000,064) (21,906,115) (24,923,156) (1,585,790) (5,585,108) (197,901,033) Other (*2) 1,209,166 36,152 (69,278,288) (2,054,201) (859,425) 2,513,770 (818,439) 3,154,481 (66,096,784) Ending balance W 189,982,417 643,770 1,317,515,338 5,671,395 5,989,698 590,000 17,391,972 123,637,004 1,661,421,594

Accumulated amortization and impairment losses: Beginning balance W - (2,318,157) (713,995,233) (51,960,408) (22,803,678) (14,358,752) (1,942,893) (28,587,855) (835,966,976) Amortization - (353,304) (269,118,480) (1,380,079) (1,974,724) (2,679,488) - (8,315,262) (283,821,337) Impairment loss (3,072,325) - (7,556,919) - - (7,709,490) (2,422,105) (350,000) (21,110,839) Disposals - - 15,722,996 - - 14,870,185 - 609,590 31,202,771 Change in scope of consolidation - 2,645,313 105,375 47,818,765 18,571,836 9,773,570 257,167 4,054,890 83,226,916 Other (*2) - - 59,041,689 - 773,211 16,197 70,577 (128,543) 59,773,131 Ending balance (3,072,325) (26,148) (915,800,572) (5,521,722) (5,433,355) (87,778) (4,037,254) (32,717,180) (966,696,334)

W 186,910,092 617,622 401,714,766 149,673 556,343 502,222 13,354,718 90,919,824 694,725,260

(*1) Others include individually identifiable customer relationships which the Group recognized at the time of business combinations.

29 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

14. Intangible assets, continued

(2) Changes in intangible assets for the year ended December 31, 2014 were as follows, continued:

(*2) Others are related to write-off of assets which were fully amortized and transfer from other accounts.

15. Other assets

(1) Other assets as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won) June 30, 2015 December 31, 2014

Current Non-current Current Non-current

Prepaid expenses W 9,584,937 10,216,859 8,574,438 11,493,338 Prepaid value added tax 1,119,626 - 9,162 - Other quick assets 92,749 - 249,716 - Long-term advance payments - 14,662,289 - 7,977,166 W 10,797,312 24,879,148 8,833,316 19,470,504

(2) Long-term advance payments are presented on a net basis after deducting related allowance. Long-term advance payments and related allowance as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Long-term advance payments W 15,106,420 8,616,252 Allowances for doubtful accounts (444,131) (639,086)

Long-term advance payments, net W 14,662,289 7,977,166

(3) Changes of allowance for doubtful accounts for the six-month period ended June 30, 2015 and for the year ended December 31, 2014 are as follows:

(In thousands of won) 2015 2014

Beginning balance W 639,086 4,118,279 Impairment loss - 2,474,554 Change in scope of consolidation - (6,592,833) Others (194,955) 639,086 Ending balance W 444,131 639,086

30 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

16. Borrowings and debentures

(1) Borrowings and debentures as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014 Current liabilities:

Short-term borrowings in Korean won W 12,400,000 8,400,000 Short-term borrowings in foreign currency 34,643,895 37,070,400 Current portion of debentures 99,997,720 99,924,350 Current portion of long-term borrowings in Korean won 1,249,990 2,166,703 W 148,291,605 147,561,453 Non-current liabilities: Debentures 149,806,715 149,737,504 Long-term borrowings in Korean won 101,666,600 102,333,240 W 251,473,315 252,070,744

(2) Debentures as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) Maturity Interest rate (%) 2015 2014

2nd non-guaranteed public offering Jan 30, 2017 4.34 W 100,000,000 100,000,000 rd 3 - 1 non-guaranteed public offering Jul 06, 2015 3.62 100,000,000 100,000,000 rd 50,000,000 50,000,000 3 - 2 non-guaranteed public offering Jul 06, 2016 3.67 250,000,000 250,000,000

Less: discount (195,565) (338,146)

Less: current portion of long-term borrowings (99,997,720) (99,924,350)

W 149,806,715 149,737,504

(3) Short-term borrowings in Korean won as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won)

June 30, December 31, Lender Interest rate (%) 2015 2014

Hana Bank 3.93 ~ 4.49 W 2,500,000 1,900,000 Kookmin Bank 3.69 3,000,000 1,500,000 Woori Bank 3.74 ~ 3.96 6,900,000 5,000,000 W 12,400,000 8,400,000

31 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

16. Borrowings and debentures, continued

(4) Short-term borrowings in foreign currencies as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won)

December 31, June 30, 2015 Lender Interest rate (%) 2014

Shinhan Bank Japan 1.80 W 2,292,875 2,300,350 1.68 ~ 1.69 3,668,600 3,680,560 Sumitomo Mitsui Banking Corporation 1.60 917,150 920,140 Woori Bank, LA 3month Libor+1.5% - 16,488,000 1.46 - 5,496,000 Bank of America 1.30 27,765,270 8,079,120 Individual loan - - 106,230 W 34,643,895 37,070,400

(5) Long-term borrowings in Korean won as of June 30, 2015 and December 31, 2014 are as follows:

(In thousands of won)

June 30, December 31, Lender Interest rate (%) 2015 2014

Kookmin Bank 6.94 ~ 7.93 W - 33,333

Shinhan Bank 1.89 ~ 2.61 1,416,650 1,666,640

Woori Bank 1.89 ~ 2.61 1,499,940 1,749,970

Hana Bank 2.75 - 1,050,000 NH Investment & Securities (formerly, Woori Investment & Securities) 2.92 ~ 3.13 100,000,000 100,000,000 102,916,590 104,499,943

Less: current portion of long-term borrowings (1,249,990) (2,166,703) W 101,666,600 102,333,240

(6) Changes of borrowings for the six-month period ended June 30, 2015 is as follows:

Carrying (In thousands of won) Interest rate (%) Maturity Face value amount

Beginning balance 0.00 ~ 7.93 2015 ~ 2018 W 149,970,343 149,970,343

Proceeds from borrowing 1.30 ~ 4.49 2016 24,567,477 24,567,477

Repayments 0.00 ~ 7.93 2015 (25,169,406) (25,169,406)

Changes in exchange rates 592,071 592,071

Ending balance 1.30 ~ 4.49 2015 ~ 2018 W 149,960,485 149,960,485

32 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

16. Borrowings and debentures, continued

(7) Repayment schedule of debt principal as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) Interest rate (%) Maturity 2015 2014

Unsecured bank borrowings 1.60 ~ 4.18 2015 W 2,500,500 47,637,104

1.30 ~ 4.49 2016 ~ 2018 147,459,985 102,333,240

Debentures 3.62 2015 100,000,000 100,000,000

3.67 2016 50,000,000 50,000,000

4.34 2017 100,000,000 100,000,000

W 399,960,485 399,970,344

17. Other financial liabilities

(1) Other financial liabilities as of June 30, 2015 and December 31, 2014 are as follows:

June 30, 2015 December 31, 2014

Non- Non- (In thousands of won) Current current Current current

Accrued expenses W 45,196,345 36,364 39,056,233 36,364 Leasehold deposits received 738,614 962,248 738,614 952,248 Investment deposits received 50,599,572 - 98,066,681 - Finance lease liabilities 9,794 142,552 97,950 112,781 Derivative instrument liabilities - - 26,400 - Others 25,054 - 36,023 - W 96,569,379 1,141,164 138,021,901 1,101,393

18. Other liabilities

(1) Other liabilities as of June 30, 2015 and December 31, 2014 are as follows:

June 30, 2015 December 31, 2014

Non- Non- (In thousands of won) Current current Current current

Advance received W 7,803,075 - 10,712,083 - Deposits received 6,075,176 - 5,468,494 - Value added tax payable 4,324,290 - 5,916,516 - Unearned revenue 14,876,983 - 7,843,192 - Deferred revenue 40,123 553,945 7,707 628,106 Liabilities for employee benefits 11,772,744 1,680,379 7,729,463 1,420,989 W 44,892,391 2,234,324 37,677,455 2,049,095

33 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

19. Provisions

(1) Details of provisions as of June 30, 2015 and December 31, 2014 are as follows:

June 30, 2015 December 31, 2014

Non- Non- (In thousands of won) Current current Current current

Restoration W 5,000 279,000 500,000 279,000 Return 281,436 - 295,738 - Mileage - 333,573 - 355,768 Others - 36,503 - 332,372 W 781,436 649,076 795,738 967,140

(2) Changes in provisions for the six-month period ended June 30, 2015 are as follows:

Restoration Return Mileage (In thousands of won) (*1) (*2) (*3) Others

Beginning balance W 779,000 295,738 355,768 332,372 Accrual - - 407,750 - Payments - - (429,945) - Reversals - (13,524) - (295,869) Others (*4) - (778) - - Ending balance W 779,000 281,436 333,573 36,503

(*1) The Group recognized the restoration provision using the best estimate of expenditure required to restore leased broadcast studio to the original state.

(*2) The provision relates to expected costs for returned products, which is estimated by using past experience. The relevant returns are expected to incur within one year from end of reporting period.

(*3) The Group runs CJ ONE card mileage program with CJ CGV Co., Ltd., etc. The provision relates to the costs of expected redemption of CJ ONE card points which were collected by card holders free of charge when no purchases of the Group’s product or services were made.

(*4) Others are related to foreign currency translation.

(2) Changes in provisions for the year ended December 31, 2014 are as follows:

Unused (In thousands of won) cash Restoration Return Mileage Others

Beginning balance W 9,882 423,730 52,807 363,918 36,503 Accrual 1,199 500,000 306,239 1,000,462 295,869 Payments - (40,000) - (908,794) - Reversals (69) (104,730) (43,536) - - Change in scope of consolidation (11,012) - - (99,818) - Others - - (19,772) - - Ending balance W - 779,000 295,738 355,768 332,372

34 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

20. Employee benefits

(1) Expenses for employee benefits for the six-month period ended June 30, 2015 and 2014 are as follows:

(In thousands of won) 2015 2014 Wages and salaries ￦ 64,161,987 63,584,716 Social security contributions 5,010,079 5,439,948 Contributions to defined contribution plans 360,710 384,169 Expenses related to defined benefit plans 4,770,001 3,755,160 Employment termination benefits 19,363 180,660 Share-based payment - 91 ￦ 74,322,140 73,344,744

(2) Liabilities for employee benefits as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014 Present value of defined benefit obligations ￦ 38,919,993 37,933,448 Fair value of plan assets (25,321,682) (29,064,953) Net defined benefit liability 13,598,311 8,868,495 Liabilities for compensated absence 4,091,234 4,756,132 Liabilities for performance-based bonus 9,361,888 4,394,320 Total liabilities for employee benefits ￦ 27,051,433 18,018,947

The Group’s defined benefit plans are administrated by Woori Bank, Samsung Fire & Marine Insurance Co., Ltd. and etc.

These defined benefit plans expose the Group to actuarial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

35 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

20. Employee benefits, continued

(3) The following table shows reconciliation from the opening balance to the ending balances for net defined benefit liability and its components.

Defined benefit Fair value of Net defined (In thousands of won) obligations plan assets benefit liabilitie 2015 2014 2015 2014 2015 2014 Beginning balance ￦ 37,933,448 43,215,253 (29,064,953) (22,597,025) 8,868,495 20,618,228

Current service cost 4,823,385 10,839,964 - - 4,823,385 10,839,964 Interest cost (income) 477,584 1,202,655 (379,695) (648,173) 97,889 554,482 Subtotal 5,300,969 12,042,619 (379,695) (648,173) 4,921,274 11,394,446 Included in OCI: Remeasurements loss (gain): - Actuarial loss (gain) arising from: - demographic assumptions - 1,124,570 - - - 1,124,570 - financial assumptions - 1,576,758 - - - 1,576,758 - experience adjustment - 2,811,370 - - - 2,811,370 - Return on plan assets excluding interest income - - - 252,665 - 252,665 Subtotal - 5,512,698 - 252,665 - 5,765,363 Other: Contribution paid by the employer - - - (16,634,793) - (16,634,793) Benefits paid (2,834,804) (5,728,475) 2,643,614 4,373,750 (191,190) (1,354,725) Transfer with affiliated companies, net (1,479,352) (231,836) 1,479,352 426,337 - 194,501 Foreign currency differences, net (268) (30,775) - (14,674) (268) (45,449) Subtotal (4,314,424) (5,991,086) 4,122,966 (11,849,380) (191,458) (17,840,466) Change in scope of consolidation - (16,846,037) - 5,776,960 - (11,069,077) Ending balance ￦ 38,919,993 37,933,448 (25,321,682) (29,064,953) 13,598,311 8,868,495

(4) Details of plan assets as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014 Cash and deposits ￦ 25,321,682 29,064,953

(5) Actuarial assumptions

Principal actuarial assumptions as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, 2015 2014 Discount rate 2.71% ~ 3.50% 2.71% ~ 3.50%

Weighted average rate of future salary increases 5.25% ~ 7.80% 5.25% ~ 7.80%

36 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

21. Share capital and other capital

(1) Share capital as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In won, except share data) 2015 2014

Number of shares authorized 100,000,000 100,000,000 Par value per share W 5,000 5,000 Number of shares issued 38,732,089 38,732,089 Share capital W 193,660,445,000 193,660,445,000

(2) Change of number of shares issued for the six-month period ended June 30, 2015 and the year ended December 31, 2014 are as follows:

2015 2014 Out- Out- shares Treasury standing shares Treasury standing (In shares) issued shares shares issued shares shares

Number at the beginning 38,732,089 (158,790) 38,573,299 38,732,089 (173,657) 38,558,432

Exercise of appraisal right - 136 136 - 14,867 14,867

Number at the ending 38,732,089 (158,654) 38,573,435 38,732,089 (158,790) 38,573,299

(3) Other capital as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Treasury stock W (5,066,010) (5,070,332) Gain on sales of treasury stock 3,332,450 3,332,450 Loss on sales of treasury shares (2,277,771) (2,277,771) Stock option 233,268 416,444 Unrealized change in fair value of available-for-sale financial assets - (1,063,432) Foreign currency translation differences for foreign operations (1,216,282) (1,143,586) Changes in equity of equity method investees (1,204,766) 413,519 Other capital adjustments 35,166,431 35,031,865 W 28,967,320 29,639,157

37 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

22. Share-based payments

(1) Share option

The Group established share option programs that entitle key management personnel to purchase shares of the Parent Company.

The terms and conditions related to granted share options are as follows:

Vesting Exercisable Grant date Option conditions period Mar 10, 2006 Equity-settled 2 years' service 9 years Mar 20, 2009 Equity-settled 4 years' service 10 years

Options are to be settled by physical delivery of shares.

(2) Assumptions and methodology for measurement of the fair values at grant date

The fair values of share options at grant date were measured based on the Black-Scholes formula by using the following assumptions and inputs:

(In won) Equity-settled 2006.3.10 2009.3.20 Fair value of share options W 58,880 34,511 Exercise price W 116,000 49,000 Risk-free interest rate 5.04% 4.38% Expected life 6 years 7 years Expected volatility 64.00% 59.00% Expected dividends 2.04% 2.64%

(3) Change in the number of share options granted for the six-month period ended June 30, 2015 and for the year ended December 31, 2014 are as follows:

(In won) 2015 2014 Weighted Weighted average average Number of exercise Number of exercise options price options price

Beginning 9,861 W 70,138 328,082 W 39,096

- - (92,720) 24,032 Exercised Expired (3,111) 116,000 (4,601) 73,500

- - (220,900) 1,905 Change in scope of consolidation Ending 6,750 W 49,000 9,861 W 70,138

38 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

23. Retained earnings

(1) Retained earnings as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Unappropriated retained earnings W 420,782,267 316,305,165

(2) Changes of unappropriated retained earnings for the six-month period ended June 30, 2015 and for the year ended December 31, 2014 are as follows:

(In thousands of won) 2015 2014

Beginning balance W 316,305,165 96,223,531 Remeasurements loss of defined benefit plans - (4,436,069) Change in scope of consolidation - 8,523 Profit (loss) for the period 102,924,159 233,417,605 Add (less): non-controlling interests 1,552,943 (8,908,425) Ending balance W 420,782,267 316,305,165

24. Commitments and contingencies

(1) Borrowing agreements between the Group and financial institutions as of June 30, 2015 are as follows:

Credit Borrowed (In thousands of won) Financial institution limit amount

Overdraft Woori Bank and others W 220,000,000 - General loan Kookmin Bank and others 45,558,145 42,458,145 Policy loan Shinhan Bank and others 2,916,590 2,916,590 Loans on electric receivables collateral Shinhan Bank Japan and others 4,585,750 4,585,750 Commercial paper NH Investment & Securities 100,000,000 100,000,000 Public debenture KB Investment & Security Co., 250,000,000 250,000,000 Ltd. and others Century Tokyo Leasing Corp 152,346 152,346 Finance leases and others.

(2) Payment guarantee

As of June 30, 2015, the Group is provided with payment guarantees of W32,222 million from the Seoul Guarantee Insurance Company, Woori bank, and Kookmin Bank related to the performance of contracts, payment of accounts payable-trade and others.

39 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

24. Commitments and contingencies, continued

(3) Litigation in progress

The Group is a defendant in six litigations, with claiming damages amounting to W1,818 million and as a plaintiff in five lawsuits for alleged damages amounting to W3,914 million as of June 30, 2015. The Group’s management believes that the outcome of these legal actions would not result in a material effect on the Group’s financial position, operating result or cash flows.

(4) Other contingencies

In April 2014, the Parent Company received advance notice of payment for taxes of W33,470 million according to the result of tax audit performed by National Tax Service, and appealed through tax procedures such as review system of the legality before taxation and tax tribunal. The Parent Company paid tax amount of W27,931 million, which was determined according to results of these procedures, and recognized it as income tax expense. However, in relation to some items of tax payment, the Parent Company lodged an appeal against the above decision to Board of Audit and Inspection and Tax Tribunal. Final tax payable is to be determined by the conclusion of these appeal procedures.

(5) Joint surety over the liabilities before spin-off

1) The Parent Company was established as CJ O SHOPPING CO., Ltd. spun off its media division as of September 1, 2010 and has joint surety, according to the first clause of Article 530-9 of the Commercial Law, with CJ O SHOPPING CO., Ltd. over the liabilities of CJ O SHOPPING CO., Ltd. that existed before the Parent Company was spun off from CJ O SHOPPING CO., Ltd.

2) On November 13, 2011, the Parent Company divided itself into two separate entities by spinning off the game division into a new company called Netmarble Games Corporation (newly established company). According to the spin-off plan, any liabilities that arose after the spin-off or any liabilities that arose after the spin-off but omitted in the spin-off plan for reasonable causes, are imposed on the responsible party according to its origination of business division. If the originated business division is uncertain, it is allocated to the Parent Company and the newly established company by the proportional rate of net assets at the time of the spin-off.

3) On August 1, 2014, the Parent Company divided itself into two separate entities by spinning off the game division (“Spun-off business division”). According to the spin-off plan, any liabilities that arose after the spin-off or any liabilities that arose after the spin-off but omitted in the spin-off plan for reasonable causes, are vested to the responsible party according to its origination of business division. If liabilities are caused by both spunoff business division and the other ones, it is allocated to the Parent Company and the newly established company by the proportional rate of net assets at the time of the spin-off.

40 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

25. Earnings (loss) per share

(1) Basic earnings (loss) per share

1) Basic earnings (loss) per share for the three- and six-month periods ended June 30, 2015 and 2014 are as follows:

(In won, except share data) 2015 2014 Three-month Six-month Three-month Six-month period period period period ended ended ended ended

Profit (loss) attributable to owners of the Parent Company: Continuing operations W 13,279,296,224 104,477,102,082 (12,711,374,440) (22,556,723,144)

Discontinued operations - - 488,012,726 3,290,364,237

Weighted average number of ordinary shares outstanding 38,573,435 38,573,367 38,569,590 38,565,074 Earnings (loss) per share:

Continuing operations W 344 2,709 (330) (585)

Discontinued operations W - - 13 85

2) Weighted average number of ordinary shares outstanding for the three- and six-month periods ended June 30, 2015 and 2014 are as follows:

2015 2014 Three- Six- Three- Six- month month month month (In number of shares) period period period period ended ended ended ended Issued 38,732,089 38,732,089 38,732,089 38,732,089 Treasury shares (158,654) (158,722) (162,499) (167,015) Outstanding 38,573,435 38,573,367 38,569,590 38,565,074

(2) Diluted earnings per share As there is no diluting effect, for the three- and six-month periods ended June 30, 2014 and 2015, the diluted earnings (loss) per share are same as the basic earnings (loss) per share.

(3) The following potential ordinary shares were excluded from the calculation of diluted earnings per share as they are anti-dilutive for the six-month period ended June 30, 2015, but the shares could have dilutive effect in future periods.

Ordinary shares (In won, except share data) Par value Exercise period to be issued

Stock option W 5,000 Mar 20, 2013 ~ Mar 19, 2019 6,750

41 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

26. Selling, general and administrative expenses

Details of selling, general and administrative expenses for the three- and six-month periods ended June 30, 2015 and 2014 are as follows:

June 30, 2015 June 30, 2014 Three-month Six-month Three-month Six-month (In thousands of won) period ended period ended period ended period ended

Salaries W 14,261,329 29,216,282 16,642,523 30,951,569

Expenses for defined benefit obligations 1,256,791 2,479,054 1,108,741 2,378,894

Employee fringe benefits 2,318,871 4,102,677 2,543,452 4,532,228

Share compensation - - 91 91

Fixtures - - 2,046 3,927

Conference 485,990 954,462 410,695 885,583

Event 2,545 35,409 982 3,331

Travel 595,048 1,078,782 547,966 1,134,835

Communications 180,455 387,566 309,211 621,707

Taxes and dues 334,751 581,184 1,242,172 1,839,859

Printing 89,998 206,208 68,388 160,831

Water, light and heat 23,539 57,521 19,214 41,819

Research 769,482 1,445,210 882,433 1,509,959

Repairs and maintenance 4,606 8,631 3,837 7,690

Rent 2,765,829 5,555,312 3,183,935 6,547,562

Building maintenance - - 29,134 59,845

Entertainment 1,696,721 3,424,747 1,689,900 3,428,288

Sundry supplies 107,341 209,907 168,516 282,149

Depreciation 1,812,802 3,748,964 1,834,050 3,685,447

Amortization 1,766,004 3,467,739 1,668,183 3,216,422

Insurance 46,191 110,527 74,939 153,291

Fees and charges 22,989,306 43,116,868 23,154,312 42,164,582

Education and training 754,677 1,223,063 530,843 1,156,811

Freight 71,105 121,899 40,485 76,995

Advertisement 6,273,280 12,832,503 9,566,489 17,754,404

Vehicle maintenance 161,504 348,078 201,436 389,322

Sales promotion 1,098,058 2,005,021 1,655,930 2,762,467

Reversal of provision - - - (99,730)

bad dent expense 2,731,131 2,614,744 1,314,772 1,200,096

Miscellaneous 2,693 6,143 185,054 231,116

W 62,600,047 119,338,501 69,079,729 127,081,390

42 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

27. Finance income and finance costs

(1) Finance income

1) Finance income for the three- and six-month periods ended June 30, 2015 are as follows:

Three-month period ended June 30, 2015

Financial Financial assets at fair liabilities value Available-for- Held-to- measured Loans and through sale financial maturity at amortized (In thousands of won) receivables profit or loss assets investments cost Total

Interest income W 2,696,491 - - 12,921 - 2,709,412 Gains on foreign currency transactions 239,551 - - - 337,709 577,260 Gains on foreign exchange translations 768,525 - - - 18,875 787,400 Gain on disposal of available-for-sale financial 24,541 24,541 assets - - - - Gain on valuation of derivatives 111,739 111,739 instruments - - - - Gain on transaction of derivatives instruments - 67,474 - - - 67,474 W 3,704,567 179,213 24,541 12,921 356,584 4,277,826

Six-month period ended June 30, 2015

Financial Financial assets at fair liabilities value Available-for- Held-to- measured Loans and through sale financial maturity at amortized (In thousands of won) receivables profit or loss assets investments cost Total

Interest income W 5,708,825 - - 12,921 - 5,721,746 Gains on foreign currency transactions 405,520 - - - 815,100 1,220,620 Gains on foreign exchange translations 1,039,333 - - - 99,708 1,139,041 Gain on disposal of available-for-sale financial assets - - 365,636 - - 365,636 Gain on valuation of derivatives instruments - 235,860 - - - 235,860 Gain on transaction of derivatives instruments - 117,607 - - - 117,607 W 7,153,678 353,467 365,636 12,921 914,808 8,800,510

43 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

27. Finance income and finance costs, continued

(1) Finance income, continued

2) Finance income for the three- and six-month periods ended June 30, 2014 were as follows:

Three-month period ended June 30, 2014

Financial Available-for- Held-to- liabilities Loans and sale financial maturity measured at (In thousands of won) receivables assets investments amortized cost Total

Interest income W 1,107,154 9,023 251 - 1,116,428 Gains on foreign currency 456,667 - - 469,026 925,693 transactions Gains on foreign exchange 13,015 - - 255,067 268,082 translations Dividends income - 21,294 - - 21,294 W 1,576,836 30,317 251 724,093 2,331,497

Six-month period ended June 30, 2014

Financial Financial assets at fair liabilities value Available-for- Held-to- measured Loans and through sale financial maturity at amortized (In thousands of won) receivables profit or loss assets investments cost Total

Interest income W 2,566,201 - 15,219 4,513 - 2,585,933 Gains on foreign currency 747,284 - - 759,164 1,506,448 transactions - Gains on foreign exchange 73,003 - - 457,971 530,974 translations - Gain on disposal of available-for-sale financial - - 368,000 - 368,000 assets - Dividends income - - 21,294 - - 21,294 Gain on valuation of derivatives - 3,047 - - 3,047 instruments - Gain on transaction of - 7,991 - - 7,991 derivatives instruments - W 3,386,488 11,038 404,513 4,513 1,217,135 5,023,687

44 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

27. Finance income and finance costs, continued

(2) Finance costs

1) Finance costs for the three- and six-month periods ended June 30, 2015 were as follows:

Three-month period ended June 30, 2015 Financial Financial liabilities at fair liabilities Loans and value through measured at (In thousands of won) receivables profit or loss amortized cost Total

Interest expenses W - - 3,655,557 3,655,557 Losses on foreign currency transactions 162,622 - 365,581 528,203 Losses on foreign exchange translations - - 449,992 449,992 Loss on transaction of derivatives - 91,274 - 91,274 W 162,622 91,274 4,471,130 4,725,026

Six-month period ended June 30, 2015

Financial Financial Available-for- liabilities at fair liabilities Loans and sale financial value through measured at (In thousands of won) receivables assets profit or loss amortized cost Total

Interest expenses W - - - 7,381,890 7,381,890 Losses on foreign currency transactions 333,151 - - 812,011 1,145,162 Losses on foreign exchange translations 256,743 - - 605,035 861,778 Loss on disposal of available-for-sale financial assets - 1,321,978 - - 1,321,978 Loss on valuation of derivatives - - 110,862 - 110,862 Loss on disposal of accounts and notes receivables-trade. 409 - - - 409 W 590,303 1,321,978 110,862 8,798,936 10,822,079

2) Finance costs for the three- and six-month periods ended June 30, 2014 were as follows:

Three-month period ended June 30, 2014

Financial Financial Available-for- liabilities at fair liabilities Loans and sale financial value through measured at (In thousands of won) receivables assets profit or loss amortized cost Total

Interest expenses W - - - 3,394,394 3,394,394 Losses on foreign currency transactions 202,736 - - 283,183 485,919 Losses on foreign exchange translations 1,292,424 - - - 1,292,424 Loss on disposal of available-for-sale financial assets - 329,844 - - 329,844 Loss on valuation of derivatives - - 44,427 - 44,427 Loss on disposal of accounts and notes receivables-trade. - - 303,260 - 303,260 W 1,495,160 329,844 347,687 3,677,577 5,850,268

45 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

27. Finance income and finance costs, continued

(2) Finance costs, continued

2) Finance costs for the three- and six-month periods ended June 30, 2014 were as follows, continued:

Six-month period ended June 30, 2014

Financial Financial Available-for- liabilities at fair liabilities Loans and sale financial value through measured at (In thousands of won) receivables assets profit or loss amortized cost Total

Interest expenses W - - - 7,070,481 7,070,481 Losses on foreign currency transactions 541,730 - - 778,394 1,320,124 Losses on foreign exchange translations 1,528,559 - - 201,695 1,730,254 Loss on disposal of available-for-sale financial assets - 329,844 - - 329,844 Loss on valuation of derivatives - - 52,694 - 52,694 Loss on transaction of derivatives - - 346,028 - 346,028 W 2,070,289 329,844 398,722 8,050,570 10,849,425

28. Financial instruments

(1) Credit risk

1) Exposure to credit risk

The carrying amount of financial assets represents the maximum account of credit exposure. Cash in hand and equity investments in available-for-sale financial assets are not exposed to credit risks according to definition of credit risk. The maximum exposure to credit risk as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Cash and cash equivalents W 38,692,326 33,525,991 Accounts and notes receivable - trade 325,113,967 352,453,731 Available-for-sale financial assets 30,000 30,000 Held-to-maturity financial assets 7,329,395 8,529,395 Other financial assets 488,562,982 521,889,555 W 859,728,670 916,428,672

46 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(1) Credit risk, continued

2) Impairment loss

The aging of loans and receivables and the analysis of impairment loss of loans and receivables as of June 30, 2015 and December 31, 2014, excluding cash and cash equivalents, are as follows:

June 30, 2015 December 31, 2014 Carrying Impair Carrying Impair (In thousands of won) amount -ment amount -ment

Not past due W 808,511,771 9,810,458 879,024,527 16,428,908 Past due less than 6 months 20,471,073 10,993,842 15,912,662 8,093,357 Past due 6 ~ 12 months 17,776,470 13,304,548 20,721,367 17,994,817 More than one year 37,315,697 36,525,074 23,809,966 22,743,962 W 884,075,011 70,633,922 939,468,522 65,261,044

Changes in the allowance for doubtful accounts in respect of loans and receivables for the six-month period ended June 30, 2015 and the year ended December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Beginning balance W 65,261,044 27,031,704 Change in scope of consolidation - (2,361,789) Impairment loss (reversal of allowance) 7,066,638 45,064,264 Write-off (390,653) (4,459,353) Others (1,303,107) (13,782) Ending balance W 70,633,922 65,261,044

3) Financial assets classified as loans and receivables, excluding cash and cash equivalents, that are past due but not impaired as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014

Past due less than 6 months W 9,477,231 7,819,305 Past due 6~12 months 4,471,922 2,726,550 More than one year 790,623 1,066,004 W 14,739,776 11,611,859

47 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(2) Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements, as of June 30, 2015 and December 31, 2014.

June 30, 2015

(In thousands of won) Contractual cash flows

1 year Book value Total or less 1 ~ 5 years

Accounts and notes payable - trade W 78,905,555 78,905,555 78,905,555 - Accounts payable - other 131,311,000 131,311,000 131,311,000 - Short-term borrowings 47,043,895 47,517,717 47,517,717 - Debentures 249,804,435 260,793,750 107,080,000 153,713,750 Long-term borrowings 102,916,590 102,994,944 1,296,845 101,698,099 Other financial liabilities 97,710,543 97,710,543 96,569,379 1,141,164 W 707,692,018 719,233,509 462,680,496 256,553,013

December 31, 2014

(In thousands of won) Contractual cash flows

1 year Book value Total or less 1 ~ 5 years

Accounts and notes payable - trade W 67,690,656 67,690,656 67,690,656 - Accounts payable - other 147,014,766 147,014,766 147,014,766 - Short-term borrowings 45,470,400 46,103,512 46,103,512 - Debentures 249,661,855 263,604,167 107,985,000 155,619,167 Long-term borrowings 104,499,943 104,722,085 2,260,525 102,461,560 Other financial liabilities 139,123,294 139,123,294 138,021,901 1,101,393 W 753,460,914 768,258,480 509,076,360 259,182,120

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

48 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(3) Currency risk

1) Exposure to currency risk

① The Group’s exposure to foreign currency risk as of June 30, 2015 is as follows:

(in thousands of won) June 30, 2015 Accounts Accounts Cash and and notes and notes Finance cash receivable Short-term Other payable Other lease Net equivalents - trade loans receivable - trade payable liabilities Borrowings exposure

USD W 6,330,521 16,896,526 2,364,542 431,993 (2,615,181) (21,951,755) - (27,765,270) (26,308,624) EUR - 896,828 - - - (59,589) - - 837,239 JPY 8,799,256 6,335,677 - 215,679 (499,036) (862,951) (152,346) (6,878,625) 6,957,654 CNH 7,193,707 24,360,540 - 3,436,031 - (5,864,682) - - 29,125,596 TWD - 63,149 ------63,149 MYR - 29,552 - 33,580 - (34,497) - - 28,635 HKD 720,400 8,420 - 51,203 (24,669) (17,571) - - 737,783 IDR - - - - - (7,704) - - (7,704) SGD - 1,670 ------1,670 AUD - - - - - (198) - - (198) GBP - - - - - (2,113) - - (2,113) VND 602,105 973,983 - 11,157 - (77) - - 1,587,168

Exchange rates applied as of and for the six-month period ended June 30, 2015 are as follows:

(In won) USD EUR JPY CNH TWD MYR HKD IRD SGD AUD GBP VND

Reporting date rate 1,124.10 1,260.51 9.17 181.09 36.38 297.03 145.00 8.42 834.96 862.86 1,768.15 0.05 Average rate 1,098.99 1,226.23 9.14 176.55 35.24 301.86 141.73 8.48 814.09 859.41 1,674.01 0.05

② The Group’s exposure to foreign currency risk as of December 31, 2014 is as follows:

(in thousands of won) June 30, 2015 Accounts Accounts Cash and and notes and notes Finance cash receivable Long-term Other payable Other lease Net equivalents - trade loans receivable - trade payable liabilities Borrowings exposure

USD W 12,592,309 12,489,942 1,783 36,702 (2,718,848) (9,174,981) - (17,517,980) (4,291,073) EUR 16,890 21 - - - (37,951) - - (21,040) JPY 7,692,217 7,417,984 9,541 753,353 (2,643,030) (466,578) (308,824) (8,539,610) 3,915,053 CNH 6,616,955 1,531,377 - 2,020,831 - (124,472) - - 10,044,691 TWD 5,456,390 576,332 - 1,101,525 (23,036) (68,119) - - 7,043,092 MYR - 1,249 ------1,249 THB 128,692 140,568 9,359 12,813 (98,842) (686) - - 191,904 HKD 35,098 96,831 - - - (236,229) - - (104,300) IDR 1,149,893 231,949 3,653 12,209 - (273,608) - - 1,124,096 SGD - 6 ------6 PHP - 9 ------9 AUD 5,793 ------5,793 TRY 2,512,666 2,932,393 - 22,402 (5,645,087) (1,198,274) - (9,878) (1,385,778) GBP 213,527 - - - - (8,135) - - 205,392

49 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(3) Currency risk, continued

1) Exposure to currency risk, continued

② The Group’s exposure to foreign currency risk as of December 31, 2014 is as follows, continued:

Exchange rates applied as of and for the year ended December 31, 2014 are as follows:

(In won) USD EUR JPY CNH TWD MYR THB HKD IDR SGD PHP AUD TRY GBP

Reporting date rate 1,055.30 1,456.26 10.05 174.09 35.32 320.32 32.14 136.09 0.09 832.75 23.78 939.96 497.24 1,740.66 Average rate 1,095.04 1,453.56 11.23 178.10 36.90 348.01 35.70 141.17 0.11 875.20 25.85 1,060.36 576.89 1,711.45

2) Sensitivity analysis

A strengthening or weakening of the won, as indicated below, against foreign currencies at June 30, 2015 and December 31, 2014 would have affected profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the reporting date. The analysis assumes that all other variables, in particular interest rates, remain constant.

① Effects on profit (loss) as a result of change in exchange rate as of June 30, 2015 are as follows:

June 30, 2015 10% 10% (In thousands of won) Strengthening Weakening

USD W (2,630,862) 2,630,862 EUR 83,724 (83,724) JPY 695,765 (695,765) CNH 2,912,560 (2,912,560) TWD 6,315 (6,315) MYR 2,864 (2,864) HKD 73,778 (73,778) IDR (770) 770 SGD 167 (167) AUD (20) 20 GBP (211) 211 VND 158,717 (158,717) W 1,302,027 (1,302,027)

50 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(3) Currency risk, continued

2) Sensitivity analysis, continued

② Effects on profit (loss) as a result of change in exchange rate as of December 31, 2014 are as follows:

December 31, 2014 10% 10% (In thousands of won) Strengthening Weakening

USD W 11,702,060 (11,702,060) EUR 25,687 (25,687) JPY 609,190 (609,190) CNH 2,395,958 (2,395,958) TWD 344 (344) MYR 3,239 (3,239) THB 265 (265) HKD (8,389) 8,389 SGD 294 (294) AUD 15,797 (15,797) GBP 9,391 (9,391) CAD 1,941 (1,941) W 14,755,777 (14,755,777)

(4) Interest rate risk

1) The Group’s interest-bearing financial assets (liabilities) as of June 30, 2015 and December 31, 2014 are as follows:

June 30, December 31, (In thousands of won) 2015 2014 Fixed rate instruments:

Financial assets W 491,410,399 515,919,538 Financial liabilities (362,428,928) (373,004,985) 128,981,471 142,914,553 Variable rate instruments: Financial assets 2,624,478 4,879,903 Financial liabilities (37,488,338) (26,837,943) W (34,863,860) (21,958,040)

2) Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

51 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(4) Interest rate risk, continued

3) Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis was performed on the same basis for 2014.

Profit (loss)

100 bp 100 bp (In thousands of won) increase decrease

June 30, 2015: Variable rate financial assets 26,245 (26,245) Variable rate financial liabilities (374,883) 374,883 Cash flow sensitivity, net W (348,638) 348,638

December 31, 2014: Variable rate financial assets 48,799 (48,799) Variable rate financial liabilities (268,379) 268,379 Cash flow sensitivity, net W (219,580) 219,580

52 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(5) Fair values risk

1) The fair values of financial instruments, together with the carrying amounts as of June 30, 2015 are as follows:

Carrying amount Fair value Financial assets or liabilities at Financial fair value Available-for- Held-to- liabilities through Loans and sale financial maturity measured at (In thousands of won) profit or loss receivables assets investments amortized cost Total Level 1 Level 2

Financial assets: W Financial assets measured at fair value Derivative financial assets 235,860 - - - - 235,860 - 235,860 Subtotal 235,860 - - - - 235,860 - 235,860

Financial assets not measured at fair value Cash and cash equivalents - 38,698,936 - - - 38,698,936 - - Accounts and notes receivable- trade (*1) - 325,113,967 - - - 325,113,967 - - Available-for-sale financial assets (*2) - - 74,039,509 - - 74,039,509 - - Held-to-maturity investments (*1) - - - 7,329,395 - 7,329,395 - - Others (*1) - 488,327,122 - - - 488,327,122 - - Subtotal - 852,140,025 74,039,509 7,329,395 - 933,508,929 - - Total W 235,860 852,140,025 74,039,509 7,329,395 - 933,744,789 - 235,860

Financial liabilities: Financial liabilities not measured at fair value (*1) Accounts and notes payable - trade W - - - - 78,905,555 78,905,555 - - Account payable - other - - - - 131,311,000 131,311,000 - - Debentures and Borrowings - - - - 399,764,920 399,764,920 - - Others - - - - 97,710,543 97,710,543 - - Subtotal - - - - 707,692,018 707,692,018 - - Total W - - - - 707,692,018 707,692,018 - -

(*1) As carrying amounts of financial assets and liabilities are considered to approximate fair values, their fair value are not disclosed.

(*2) As equity investments do not have a quoted market price in an active market and their fair value cannot be reliably measured, they are measured at cost.

53 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(5) Fair values risk, continued

2) The fair values of financial instruments, together with the carrying amounts as of December 31, 2014 are as follows:

Carrying amount Fair value Financial assets or liabilities at Financial fair value Available-for- Held-to- liabilities through Loans and sale financial maturity measured at (In thousands of won) profit or loss receivables assets investments amortized cost Total Level 1 Level 2

Financial assets: W Financial assets measured at fair value Available-for-sale financial assets - - 1,056,977 - - 1,056,977 1,056,977 - Derivative financial assets 135,808 - - - - 135,808 - 135,808 Subtotal 135,808 - 1,056,977 - - 1,192,785 1,056,977 135,808

Financial assets not measured at fair value (*1) Cash and cash equivalents - 33,525,991 - - - 33,525,991 - - Accounts and notes receivable- trade - 352,453,731 - - - 352,453,731 - - Available-for-sale financial assets (*2) - - 66,779,608 - - 66,779,608 - - Held-to-maturity investments - - - 8,529,395 - 8,529,395 - - Others - 521,753,748 - - - 521,753,748 - - Subtotal - 907,733,470 66,779,608 8,529,395 - 983,042,473 - - Total W 135,808 907,733,470 67,836,585 8,529,395 - 984,235,258 1,056,977 135,808

Financial liabilities: Financial liabilities measured at fair value Derivative financial liabilities W 26,400 - - - - 26,400 - 26,400

Financial liabilities not measured at fair value (*1) Accounts and notes payable - trade - - - - 67,690,656 67,690,656 - - Account payable - other - - - - 147,014,766 147,014,766 - - Debentures and Borrowings - - - - 399,632,198 399,632,198 - - Others - - - - 139,096,894 139,096,894 - - Subtotal - - - - 753,434,514 753,434,514 - - Total W 26,400 - - - 753,434,514 753,460,914 - 26,400

(*1) As carrying amounts of financial assets and liabilities are considered to approximate fair values, their fair value are not disclosed.

(*2) As equity investments do not have a quoted market price in an active market and their fair value cannot be reliably measured, they are measured at cost.

54 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

28. Financial instruments, continued

(6) Other market risk

The Group doesn`t possess quoted equity instruments among the available-for-sale financial assets as of June 30, 2015. Thus, fluctuations in price of quoted equity instruments cannot affect other comprehensive income (gain or loss on valuation of available-for-sale securities).

29. Nature of Expenses

Details of nature of expenses for the six-month periods ended June 30, 2015 and 2014 are as follows:

2015 2014 Selling, Selling, general and general and Cost of administra- Cost of administra- (In thousands of won) sales tive expenses Total sales tive expenses Total

Changes in inventories W 5,682,091 - 5,682,091 9,123,976 - 9,123,976 Employee benefits expense 37,616,725 31,695,336 69,312,061 34,574,242 33,330,463 67,904,705 Depreciation 3,050,737 3,748,964 6,799,701 3,707,384 3,685,447 7,392,831 Amortization 148,805,973 3,467,739 152,273,712 125,297,282 3,216,422 128,513,704 Fees and charges 13,992,287 43,116,868 57,109,155 10,645,726 42,164,582 52,810,308 Others 236,843,765 37,309,594 274,153,359 250,035,723 44,684,476 294,720,199 W 445,991,578 119,338,501 565,330,079 433,384,333 127,081,390 560,465,723

30. Other non-operating income and expenses

(1) Details of other non-operating income for the three- and six-month periods ended June 30, 2015 and 2014 are as follows:

June 30, 2015 June 30, 2014 Three- Six- Three- Six- month month month month period period period period (In thousands of won) ended ended ended ended

Gains on disposal of property and equipment W 11,921 11,921 - 16,919 Reversal of provisions - 295,868 - - Commission - - 712 59,413 Miscellaneous income 833,101 2,549,048 187,337 359,425 W 845,022 2,856,837 188,049 435,757

55 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

30. Other non-operating income and expenses, continued

(2) Details of other non-operating expenses for the three- and six-month periods ended June 30, 2015 and 2014 are as follows:

(In thousands of won) June 30, 2015 June 30, 2014 Three- Six- Three- Six- month month month month period period period period ended ended ended ended

Other bad debt expenses W 2,575,119 4,424,412 2,375,902 5,442,642 Losses on disposal of property and equipment 63,283 937,351 37,665 40,093 Losses on disposal of intangible assets 300,974 303,941 - - Impairment losses on intangible assets 3,814,238 4,614,491 779,341 1,424,775 Losses on inventory obsolescence 1,648,282 1,652,199 48,318 48,318 Donations 476,236 881,125 725,577 1,807,319 Miscellaneous losses 2,434,809 2,530,885 258,705 782,494 W 11,312,941 15,344,404 4,225,508 9,545,641

31. Income tax expense

(1) The components of income tax expense for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In thousands of won) 2015 2014

Current tax expense W 1,958,841 7,546,183 Origination and reversal of temporary differences 18,342,125 (4,399,841) Income tax recognized in other comprehensive income 134,470 175,900 Adjustment for prior period 2,791,001 3,312,832 Total income tax expense W 23,226,437 6,635,074

Income tax expense (benefit) from continuing operations 23,226,437 (2,020,193) Income tax expense from discontinued operations - 8,655,267 23,226,437 6,635,074

32. Related parties

(1) The ultimate controlling party of the Group is CJ Corporation and details of related parties of the Group as of June 30, 2015 are as follows:

Related parties

Associates 24 companies including MBC PLUS MEDIA Co., Ltd. and Netmarble Games Corporation Others CJ CHEILJEDANG CORP., CJ O SHOPPING Co., Ltd., CJ CGV Co., Ltd., and so on

56 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

32. Related parties, continued

(2) Significant transactions which occurred in the normal course of business with related parties for the six- month period ended June 30, 2015 are as follows:

(In thousands of won) 2015

Acquisition of Acquisition property and of intangible Dividend Relationship Name Sales Purchases equipment assets income

The ultimate CJ Corporation controlling party W 100,142 2,194,049 - - - Associates ART Service Corp. 88,401 26,613 - - - GRETECH Corp. 197,063 - - - - MBC PLUS MEDIA Co., Ltd. 1,200 130,000 - - 383,773 CINEMA SERVICE CO., LTD. 8,843 - - - - JELLY FISH ENTERTAINMENT. CO., LTD. 41,000 4,101,652 - - - Netmarble Games Corporation 853,380 1,351,114 - - - Clip Service Inc. 47,500 9,126 - - - FICCJIM Asia Limited 756,967 87,153 - - - Other related parties Netmarble Monstern Inc. (formely, SEED9 Games Inc.) - 158 - - - Netmarble Neo Inc. (*) 168,520 225,500 - - - IGS Co., Ltd. - 7,000 - - - CJ Cheiljedang Corp. 3,855,705 7,192,479 - - - CJ Freshway Corporation 20,000 22,947 - - - CJ Foodville Co., Ltd. 403,285 1,184,937 - - - CJ O SHOPPING Co.,Ltd. 682,653 19,628 - - - CJ HelloVision Co., Ltd. 15,828,288 2,560,717 - - - CJ telenix co.,Ltd. - 228,226 - - - CJ PowerCast Inc. 245 15,535,827 - 22,000 - CJ CGV CO.,LTD. 25,505,361 2,309,756 - 100,000 - D-CINEMA KOREA CO., LTD. - 1,724,730 - - - CJ OliveNetworks Co., Ltd. 2,542,938 5,252,327 2,386,492 1,458,191 - CJ Development Co., Ltd. 16,345 342,245 - - - CJ korea express Corporation - 74,739 - - - CJ MD1 Corp. 93,000 - - - - CJ Hellovision Daegu Donggu Broadcasting Co.,Ltd. 177,271 3,633 - - - CJ Hellovision Daegu Suseong Broadcasting Co.,Ltd. 217,221 2,100 - - - CJ Hellovision Ara Broadcasting Co.,Ltd. 1,239,300 12,088 - - - CJ HelloVision Honam Broadcasting Co.,Ltd. 437,586 5,200 - - - CJ HelloVision Kangwon Broadcasting Co.,Ltd. 398,810 2,948 - - - CJ HealthCare Corporation 595,000 - - - - SUPERRACE, INC. 370,000 - - - - Enprani Co.,Ltd. 450,000 - - - - CJ 4DPLEX AMERICA, INC. 728,781 - - - - CJ CGV (Shanghai) Enterprise Management Co., Ltd. - 149,164 - - - CJ CGV America LA, LLC. 1,221,758 230 - - - CJ America,Inc. - 9,735 - - - CJ Japan Corp. 46,009 171,763 - - - CJ VIETNAM COMPANY LIMITED - 22,447 - - - JOY RENT A CAR - 289,614 - - - C&I Leisure Industry Corp. - 3,956,861 - - -

57 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

32. Related parties, continued

(2) Significant transactions which occurred in the normal course of business with related parties for the six- month period ended June 30, 2015 were as follows, continued:

(In thousands of won) 2015 Acquisition of Acquisition property and of intangible Dividend Relationship Name Sales Purchases equipment assets income

Other related parties J S communications - 10,000 - - - W 57,092,572 49,216,706 2,386,492 1,580,191 383,773

(*) On June 1, 2015, TurnOn Games Co., Ltd., NURIEN SOFT Co., Ltd and Reborn Games Co., Ltd were merged and the merged entity changed its company name to Netmarble Neo Inc.

(3) Significant transactions which occurred in the normal course of business with related parties for the six- month period ended June 30, 2014 are as follows:

(In thousands of won) 2014

Acquisition of Acquisition property and of intangible Dividend Relationship Name Sales Purchases equipment assets income

The ultimate CJ Corporation controlling party W 1,238,404 3,276,437 - - - Associates ART Service Corp. 87,200 59,300 - - - GRETECH Corp. 214,230 - - - - MBC PLUS MEDIA Co., Ltd. - 266,000 - - 338,624 CINEMA SERVICE CO., LTD 140,000 - - - - JELLY FISH ENTERTAINMENT.CO., LTD 40,000 2,547,145 - - - YJM Entertainment Co., Ltd. - 939,550 - - - Clip Service Inc. - 763,398 - - - FICCJIM Asia Limited 620,926 - - - - Other related parties CJ Cheiljedang Corp. 3,906,500 7,235,658 - - - CJ Freshway Corporation 201,755 259,957 - - - CJ Foodvill Co., Ltd. 996,505 1,163,489 - - - CJ O SHOPPING Co.,Ltd. 2,690,635 33,463 - - - CJ Worldis Co., Ltd. - 759 - - - CJ HelloVision Co., Ltd. 19,054,464 4,243,615 - - - CJ telenix co.,Ltd. . - 349,028 - - - CJ Olive Young Co., Ltd. 471,970 10,167 - - - CJ PowerCast Inc 2,650 15,867,919 - - - CJ CGV CO.,LTD 28,791,621 3,073,238 - 960,000 - D-CINEMA KOREA CO., LTD. - 1,542,480 - - - CJ 4DPLEX Co.,Ltd. 55,387 - - - - CJ Systems Co., Ltd. 443,896 6,756,288 1,704,613 1,719,734 - CJ Development Co., Ltd. - 166,567 10,013,000 - - CJ HelloVision Silla Broadcasting Co.,Ltd. 642,222 9,922 - - - CJ korea express Corporation 2,500 71,809 - - - CJ Educations Corporation 4,800 - - - -

58 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

32. Related parties, continued

(3) Significant transactions which occurred in the normal course of business with related parties for the six- month period ended June 30, 2014 were as follows, continued:

(In thousands of won) 2014

Acquisition of Acquisition property and of intangible Dividend Relationship Name Sales Purchases equipment assets income

Other related parties CJ MD1 Corp. W 78,764 - - - - CJ Hellovision Daegu Donggu Broadcasting Co.,Ltd. 184,321 7,272 - - - CJ Hellovision Daegu Suseong Broadcasting Co.,Ltd. 222,559 8,449 - - - CJ Hellovision Ara Broadcasting Co.,Ltd. 1,204,932 120,593 - - - CJ HELLOVISION YOUNGDONG BROADCASTING SYSTEM., LTD 726,924 100,723 - - - JEONBUK CATV Co 298,352 680 - - - CJ HELLOVISION Youngseo Broadcasting Network Co., Ltd. 559,458 9,678 - - - CJ HelloVision Honam Broadcasting Co.,Ltd. 412,743 350 - - - CJ HelloVision Kangwon Broadcasting Co.,Ltd. 69,184 - - - - CJ 4DPLEX AMERICA, INC. 56,594 - - - - KOREA EXPRESS U.S.A. INC. - 1,126 - - - CJ CGV America LA LLC. 751,533 1,978 - - - CJ America, Inc. - 6,929 - - - CJ CGV (Shanghai) Enterprise Management Co., Ltd. 187,044 CJ Foodville Japan Co., Ltd. - 1,470 - - - CJ Japan Corp. - 420,895 - - - JOY RENT A CAR - 370,089 - - - C&I Leisure Industry Corp. - 3,703,016 - - - JS communications - 174,275 - - -

W 64,171,029 53,750,756 11,717,613 2,679,734 338,624

(4) Account balances with related companies as of June 30, 2015 are as follows:

(In thousands of won) June 30, 2015 Accounts Accounts and notes Accounts and notes receivable receivable - Advance Other payable - Accounts Other Relationship Name - trade other payments receivable trade payable - other payable

The ultimate CJ Corporation controlling party W 27,398 71,905 - - - 405,187 - Associates ART Service Corp. 163,267 - - - - 993,897 - GRETECH Corp. 46,496 ------MBC PLUS MEDIA Co., Ltd. 1,100 ------CINEMA SERVICE CO., LTD - 2,442,943 1,456,150 - - - 440,674 Clip Service Inc. - - - - - 11,000 - JELLY FISH ENTERTAINMENT. CO., LTD - - 400,000 - - 273,888 179,137 FICCJIM Asia Limited 1,670 - - - - 32,905 - Netmarble Games Corporation 46,804 15 - - - 1,392 - Other related Netmarble Monstern Inc. parties (formely, SEED9 Games Inc.) - - - - - 12 - Netmarble Neo Inc. (*) 70,663 ------CJ Cheiljedang Corp. 2,175,057 6,564 - 1,617,985 83,153 1,755,180 5,884 CJ Freshway Corporation 11,396 - - - - 5,797 - CJ Foodville Co., Ltd. 231,061 3,586 - - - 631,855 -

59 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

32. Related parties, continued

(4) Account balances with related companies as of June 30, 2015 are as follows, continued:

(In thousands of won) June 30, 2015 Accounts Accounts and notes Accounts and notes receivable receivable - Advance Other payable - Accounts Other Relationship Name - trade other payments receivable trade payable - other payable

Other related parties CJ O SHOPPING Co.,Ltd. W 408,555 2,203 - - - 135,707 33,398 CJ HelloVision Co., Ltd. 3,345,692 658 - 349,219 970,340 660,950 1,187 CJ telenix co.,Ltd. 9,855 - - - - 37,815 - CJ PowerCast Inc. 1,075 - - - 299,000 6,355,853 - CJ CGV CO.,LTD. 1,413,172 10,439 - 613,120 12 1,293,712 186 D-CINEMA KOREA CO., LTD. - - - - - 438,108 - CJ OliveNetworks Co., Ltd 805,154 3,807 - 1,322,411 3,071,590 3,087,390 602,503 CJ Development Co., Ltd. 1,615 15 - 4,086,238 553,300 8,470 700 CJ korea express Corporation 200 1 - - 303 25,497 - CJ MD1 Corp. 40,405 ------CJ Hellovision Daegu Donggu Broadcasting Co.,Ltd. 32,971 - - - - 458 - CJ Hellovision Daegu Suseong Broadcasting Co.,Ltd. 39,507 - - - - 642 - CJ Hellovision Ara Broadcasting Co.,Ltd. 242,511 - - - 7 2,738 - CJ HelloVision Honam Broadcasting Co.,Ltd. 83,950 - - - - 1,927 - CJ HelloVision Kangwon Broadcasting Co.,Ltd. 74,610 - - - - 2,554 - CJ HealthCare Corporation 16,520 ------CJ Worldis Co., Ltd. 335 19 - - - 24,272 - SUPERRACE, INC. 132,000 ------CJ 4DPLEX Co.,Ltd. 580 ------Simuline Inc 470 ------CJ CGV America LA, LLC. 593,796 1,406 - - 235 - - CJ Foodville USA, Inc 5,564 - - - 88,064 - - CJ 4DPLEX AMERICA, INC. 183,548 19,798 - - - - - CJ Japan Corp. - - - 157,359 - - - CJ CGV(Shanghai) Enterprise Management Co., Ltd. ------76,018 CJ America, Inc. - 185 - - 10,550 - - JOY RENT A CAR - - - - - 42,957 4,026 C&I Leisure Industry Corp. 160 ------WONJI CO., LTD 280 ------W 10,207,437 2,563,544 1,856,150 8,146,332 5,076,554 16,230,163 1,343,713

(*) On June 1, 2015, TurnOn Games Co., Ltd., NURIEN SOFT Co., Ltd and Reborn Games Co., Ltd were merged and the merged entity changed its company name to Netmarble Neo Inc.

60 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

32. Related parties, continued

(5) Account balances with related companies as of December 31, 2014 are as follows:

(In thousands of won) December 31, 2014 Accounts and Accounts notes Accounts and notes Accounts receivable - receivable - Advance Other payable - payable - Other Relationship Name trade other payments receivable trade other payable

The ultimate CJ Corporation controlling party W 55,000 - - - - 763,091 - Associates ART Service Corp. 295,722 - - - - 922,322 - GRETECH Corp. 341,931 ------MBC PLUS MEDIA Co., Ltd. 2,200 ------CINEMA SERVICE CO., LTD - - 1,548,959 - - - 510,316 Clip Service Inc. 879,902 - 140,982 - - 134,211 - JELLY FISH ENTERTAINMENT CO, LTD - 29,391 426,891 - - 2,126,652 313,204 FICCJIM Asia Limited 1,045,047 - - - - 130,704 - Netmarble Games Corporation 53,603 4 - - - 1,765 - Other related parties IGS CO., LTD. 555 ------

SEED9 Games Inc. - - - - - 27 - Mediaweb INC. - - - - 249,576 - - NURIEN SOFT Co., Ltd 50,056 - - - - - 146,844 CJ Cheiljedang Corp. 2,821,946 371 - 1,617,985 - 1,704,391 7,191 CJ HealthCare Corporation 113,300 ------CJ Freshway Corporation - - - - - 15,140 - CJ Foodville Co., Ltd. 22,365 4,637 - 115,420 - 1,296,580 - CJ O SHOPPING Co.,Ltd. 3,484,003 9,128 - - 124 46,265 25,560 CJ Worldis Co., Ltd. 370 3 - - - 233,788 - CJ HelloVision Co., Ltd. 2,884,284 562 - 349,219 1,739,905 1,137,479 1,008 CJ telenix co.,Ltd. 9,870 - - - - 50,781 - CJ korea express Corporation 66,160 - - - - 111,407 31 CJ Educations Corporation 10 9 - - - - - CJ PowerCast Inc. 960 - - - 465,550 5,803,385 - CJ CGV CO.,LTD. 8,494,135 16,675 - 613,120 - 1,298,157 - D-CINEMA KOREA CO., LTD. - - - - - 16,786 - CJ 4DPLEX Co.,Ltd. 565 ------Simuline Inc 465 ------CJ Hellovision Daegu Suseong Broadcasting Co.,Ltd. 39,657 - - - - 314 - CJ Hellovision Daegu Donggu Broadcasting Co.,Ltd. 31,158 - - - - 207 - CJ Hellovision Ara Broadcasting Co.,Ltd. 225,630 - - - 7 22,524 - JEONBUK CATV Co 59,945 - - - - 356 - CJ HELLOVISION Youngseo Broadcasting Network Co., Ltd. 139,520 - - - - 436 -

61 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

32. Related parties, continued

(5) Account balances with related companies as of December 31, 2014 are as follows, continued:

(In thousands of won) December 31, 2014 Accounts Accounts and notes Accounts and notes Accounts receivable - receivable - Advance Other payable - payable - Relationship Name trade other payments receivable trade other Other payable

Other related CJ HelloVision Honam

parties Broadcasting Co.,Ltd. W 182,622 - - - - 683 -

CJ HelloVision Kangwon Broadcasting Co.,Ltd. 463,700 - - - - 1,976 - CJ OliveNetworks Co., Ltd (formerly, CJ Systems Co., Ltd.) 1,160,099 3,659 - 1,322,411 2,430,695 2,617,091 602,098 CJ Development Co., Ltd. 2,625 40 - 3,990,000 220,000 8,990 1,380 CJ MD1 Corp. 38,799 ------SUPERRACE, INC. 110,000 ------CJ Foodville USA, Inc. 5,441 - - - 86,114 - - CJ 4DPLEX AMERICA, INC. 328,710 ------CJ CGV America LA, LLC. 740,200 ------CJ America, Inc. 2,100 - - - - 3,788 - CJ Japan Corp. - - - 156,455 - - - JOY RENT A CAR - - - - - 57,242 - JS communications - - - - - 9,056 - W 24,152,655 64,479 2,116,832 8,164,610 5,191,971 18,515,594 1,607,632

(6) Key management personnel compensation for each of the following categories for the six-month periods ended June 30, 2015 and 2014 were as follows:

(In thousands of won) 2015 2014

Short-term salaries W 2,631,386 4,795,502 Expenses for defined benefit obligations 751,783 896,120 Share-based payment - 16,105 W 3,383,169 5,707,727

The Group considers key management as executives and non-executive directors who have significant authority and responsibility over planning, operating and controlling of the Group or perform a managing role in each business unit.

(7) As of June 30, 2015, W27,765 million out of the Group`s total borrowings is the borrowings from the Bank of America through the deposit collateral provided by other related party, CJ America Inc.

62 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

33. Spin-offs and discontinued operation

(1) Spin-offs

On May 15, 2014, the board of directors decided to divide the Parent Company into two separate entities by spinning off its game division. The decision of the board of directors was approved at the general shareholders’ meeting held on June 30, 2014. On August 1, 2014, the spin-off process was completed according to spin-off plan described as following:

Plan Details

Spin-off methodology Vertical spin-off

Remaining company CJ E&M Corporation

Newly established company CJ NETMARBLE Corporation

Date of spin-off August 1, 2014

(2) Discontinued operation

On July 8, 2014, the board of directors of the Parent Company decided to transfer entire shares of CJ NETMARBLE Corporation, the company to be established after spinning off game division, to Netmarble Games Corporation. The share purchase agreement was also signed on the same date. On August 1, 2014, CJ NETMARBLE Corporation was newly established as the Parent Company spun off its game division. On August 11, 2014, the Parent Company transferred entire shares of newly established company, CJ NETMARBLE Corporation, to Netmarble Games Corporation.

On August 7, 2014, the Parent Company sold a total of 6,400 shares of the common stock of the Netmarble Games Corporation to HAN RIVER INVESTMENT PTE. LTD. which is wholly owned by Han River Investment Holdings Ltd., a wholly owned subsidiary of Tencent Holdings Ltd. Furthermore, Netmarble Games Corporation issued to a third party a total of 68,889 new shares of common stock. As a result, the ownership percentage of the Parent Company in Netmarble Games Corporation decreased to 35.86% from 50% and the Parent Company lost control over Netmarble Games Corporation.

In addition, in 2014, the Parent Company decided to discontinue joint investment business of performance division in order to strengthen core capabilities of performance production business using copyrights owned by the Parent Company.

In the consolidated statements of comprehensive income (loss), the discontinued operation is separately presented from continuing operation and comparative information of the consolidated statement of comprehensive income (loss) for the six-month period ended June 30, 2014 was restated. Note 33 (3) shows financial information that is related with discontinued operation for the three- and six-month period ended June 30, 2014.

63 CJ E&M Corporation and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2015 (Unaudited)

33. Spin-offs and discontinued operation, continued

(3) Comprehensive income (loss) from discontinued operation for the three- and six-month periods ended June 30, 2014 are as follows:

2014 Three-month Six-month (In thousands of won) Period ended Period ended

Discontinued operations Revenue W 120,611,087 258,099,592 Cost of sales (84,060,578) (175,527,479) Gross profit 36,550,509 82,572,113

Selling, general and administrative expenses (28,198,213) (59,365,847) Operating profit 8,352,296 23,206,266

Finance income 1,817,726 2,625,420 Finance costs (1,398,651) (2,650,950) Share of profit of equity method investees 991,487 1,086,221 Other non-operating income 764,647 850,481 Other non-operating expenses (1,574,326) (3,377,990) Profit before income tax 8,953,179 21,739,448

Income tax expense (6,487,364) (8,655,267) Profit for the period W 2,465,815 13,084,181

Remeasurements of the defined benefit plan 7,395 14,560 Foreign currency translation differences for foreign operations (728,570) (1,141,338) Loss on valuation of available-for-sale financial assets (106,653) (449,838) Other comprehensive loss for the period (827,828) (1,576,616)

Total comprehensive income for the period W 1,637,987 11,507,565

(4) Cash flows from discontinued operations for the six-month period ended June 30, 2014 are as follows:

(In thousands of won) 2014

Cash flows from operating activities W 27,987,260 Cash flows from investing activities (48,163,323) Cash flows from financing activities (1,765,050)

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