Samsung C&T Corporation and Subsidiaries

Samsung C&T Corporation and Subsidiaries Interim Consolidated Financial Statements June 30, 2016 and 2015 Samsung C&T Corporation and Subsidiaries Index June 30, 2016 and 2015

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

Interim Consolidated Financial Statements

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

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

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

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

Notes to Interim Consolidated Financial Statements...... ……………...... 15 - 92 Report on Review of Interim Financial Statements

(English Translation of a Report Originally Issued in Korean)

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

Reviewed Financial Statements We have reviewed the accompanying interim consolidated financial statements of Samsung C&T Corporation (the “Company”) and its subsidiaries (collectively the “Group”). These financial statements consist of the interim consolidated statement of financial position as of June 30, 2016, and the related interim consolidated statements of comprehensive income for the three-month and six- month periods ended June 30, 2016 and 2015, and interim consolidated statements of changes in equity and cash flows for the six-month periods ended June 30, 2016 and 2015, and a summary of significant accounting policies and other explanatory notes, expressed in Korean won.

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

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

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

Conclusion Based on our reviews, nothing has come to our attention that causes us to believe the accompanying interim consolidated financial statements are not presented fairly, in all material respects, in accordance with Korean IFRS 1034, ‘Interim Financial Reporting’. Emphasis of Matters 1 Without qualifying our opinion, we draw attention to the following area of focus:

Auditor’s emphasis on area of focus on construction contracts

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

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

- Uncertainty of the estimated total contract costs

In addition, Note 5 to the interim consolidated financial statements states that changes in the estimated total contract costs by construction types for the six-month period ended June 30, 2016, amount to 1,471,457 million, which is 149% of changes in the estimated total contract revenue. It also states that impact on profit or loss for the current period and in the succeeding periods amount to 165,570 million and 318,822 million, respectively.

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

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

2 As of June 30, 2016, in respect of the uncertainty of the estimated total contract costs on the Group’s consolidated financial statements, we have performed the following review procedures. Made inquiries and performed analytical review procedures on how major components of the estimated total contract costs has changed by reporting periods. Made inquiries and performed analytical review procedures on appropriateness of estimated total contract cost component for each project. With regards to the projects where the estimated total contract costs has changed significantly, made inquiries about reasons for the significant changes in the estimated total contract costs. With regards to the projects where the ratio of estimated total contract costs to estimated total contract revenue and ratio of actual contract costs to estimated total contract revenue differ significantly, made inquiries about reasons for the difference.

- Measurement of percentage of completion

For a construction contract, it is probable that costs which do not reflect the percentage of completion and costs which are not chargeable to the customers may be incurred due to additional costs incurrence from change of circumstances, delay in the customer’s progress payment, concentration of costs incurrence for certain periods, and other reasons. There is a risk that the percentage of completion measured by reference to the costs incurred and the actual construction progress may differ significantly; therefore, we identified the Group’s measurement of percentage of completion as a significant risk.

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

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

3 progress for which costs incurred plus recognized profits (less recognized losses) exceed progress billings, and presents the gross amount due to customers for contract work as a liability for all contracts in progress for which progress billings exceed costs incurred plus recognized profits (less recognized losses).

In addition, Note 5 to the interim consolidated financial statements describes that due from customers for contract work of the Group’s construction segment amounts to 1,629,840 million, consisting 51% of total trade receivables related to contract work (including due from customers for contract work). The amount of due from customers for contract work is material to the Group, and the uncertainty in collectability has increased recently, due to delayed payment, change in terms of payment, claims, and others; therefore, we identified collectability of the gross amount due from customers for contract work as a significant risk.

For the six-month period ended June 30, 2016, we have performed the following review procedures for the projects whose due from customers for contract work have increased significantly. Made inquiries about payment terms, liquidated damages, duration of contract and other requirements. Made inquiries whether contractual due date of payment for the project has arrived, and whether the customer is financially stable.

- Accounting treatment regarding variations in contract work

As described in Note 2 to the interim consolidated financial statements, the Group recognizes contract revenue and contract costs associated with the construction contract as revenue and expense respectively based on the percentage of completion of the contract activity at the end of the reporting period when the outcome of a construction contract can be estimated reliably. Total contract revenue is measured based on the initial amount of revenue agreed in the contract. However, the measurement of contract revenue is affected by a variety of uncertainties that depend on the outcome of future event; for example, the amount of contract revenue may increase as a result of variations in contract work, claims and inventive payments, on the other hand, the amount of contract revenue may decrease as a result of penalties arising from delays caused by the Group in the completion of the contract. The change in contract revenue is recognized when it is probable that the customer will approve the increase in revenue due to the changes in contract work, or when it is probable that the Group will be able to satisfy the performance requirements, and the amount can be estimated reliably.

Note 4 to the interim consolidated financial statements describes that it is probable that the estimated total contract revenue may change due to delay in the completion of the contract, and it is also probable that the contract amount may change as a result of variations in contract work due to force majeure. These variations in contract work and liquidated damages may impact total contract revenue; therefore, we identified accounting treatment regarding variations in contract work as a significant risk.

Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Financial Position June 30, 2016 and December 31, 2015

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes June 30, 2016 December 31, 2015 June 30, 2016 December 31, 2015 (Unaudited) (Unaudited) Assets Current assets Cash and cash equivalents 7 \ 2,613,888 \ 2,066,404 $ 2,244,259 $ 1,774,194 Short-term financial instruments 7 127,759 65,705 109,693 56,414 Available-for-sale financial assets 7,11 16 1,089 14 935 Trade receivables 7,8 4,506,339 5,633,953 3,869,098 4,837,257 Other current assets 7,8 3,394,981 3,316,120 2,914,897 2,847,187 Inventories 6 1,288,332 1,386,045 1,106,149 1,190,045 Total current assets 11,931,315 12,469,316 10,244,110 10,706,032 Assets held for sale 11,12 23,533 71,816 20,205 61,661 Non-current assets Available-for-sale financial assets 7,11 15,156,298 15,975,618 13,013,049 13,716,509 Investments in associates and joint ventures 12 5,553,420 5,642,058 4,768,112 4,844,216 Property, plant and equipment 13 5,223,720 5,134,282 4,485,035 4,408,244 Investment properties 14 125,243 133,046 107,532 114,232 Biological assets 15 2,460 2,415 2,112 2,073 Intangible assets 13 1,668,966 1,840,172 1,432,958 1,579,954 Deferred income tax assets 58,378 43,096 50,123 37,002 Other non-current assets 7,8 828,921 1,049,612 711,703 901,186 Total non-current assets 28,617,406 29,820,299 24,570,624 25,603,416 Total assets \ 40,572,254 \ 42,361,431 $ 34,834,939 $ 36,371,109

6 Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Financial Position June 30, 2016 and December 31, 2015

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes June 30, 2016 December 31, 2015 June 30, 2016 December 31, 2015 (Unaudited) (Unaudited) Liabilities Current liabilities Trade payables 7 \ 1,586,756 \ 1,738,438 $ 1,362,373 $ 1,492,606 Short-term borrowings 7,16 2,192,462 2,286,528 1,882,426 1,963,191 Current portion of long-term borrowings 7,16 1,799,331 1,516,719 1,544,888 1,302,240 Income taxes payable 128,331 150,110 110,184 128,883 Other current liabilities 5,7,10,18 9,638,003 9,382,588 8,275,095 8,055,798 Total current liabilities 15,344,883 15,074,383 13,174,966 12,942,718 Non-current liabilities Debentures and long-term borrowings 7,16 3,539,243 3,943,011 3,038,759 3,385,431 Net defined benefit liability 17 163,774 121,425 140,615 104,254 Deferred income tax liabilities 3,640,409 3,942,462 3,125,619 3,384,959 Provisions 5,18 251,071 240,659 215,567 206,627 Other non-current liabilities 7,10 501,422 725,555 430,515 622,954 Total non-current liabilities 8,095,919 8,973,112 6,951,075 7,704,225 Total liabilities 23,440,802 24,047,495 20,126,041 20,646,943

7 Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Financial Position June 30, 2016 and December 31, 2015

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Notes June 30, 2016 December 31, 2015 June 30, 2016 December 31, 2015 (Unaudited) (Unaudited) Equity Share capital 20 19,132 19,132 16,427 16,427 Additional paid-in capital 10,056,463 10,039,685 8,634,381 8,619,975 Other components of equity 21 527,523 1,231,966 452,926 1,057,754 Retained earnings 4,830,983 5,210,896 4,147,835 4,474,024 Equity attributable to owners 15,434,101 16,501,679 13,251,569 14,168,180 of the Parent Company Non-controlling interests 1 1,697,351 1,812,257 1,457,329 1,555,986 Total equity 17,131,452 18,313,936 14,708,898 15,724,166 Total liabilities and equity \ 40,572,254 \ 42,361,431 $ 34,834,939 $ 36,371,109

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

The accompanying notes are an integral part of these interim consolidated financial statements.

8 Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Comprehensive Income Three-month and Six-month Periods Ended June 30, 2016 and 2015

Net sales 32 \ 7,050,747 \13,537,786 \ 1,311,489 \ 2,584,325 $ 5,966,209 $ 11,455,420 $ 1,109,757 $ 2,186,807 Cost of sales 24 6,122,306 12,247,106 926,918 1,839,734 5,180,580 10,363,271 784,341 1,556,748 Gross profit 928,441 1,290,680 384,571 744,591 785,629 1,092,149 325,416 630,059 Selling and administrative expenses 22,24 751,630 1,548,683 345,500 699,512 636,015 1,310,466 292,356 591,914 Operating Profit (loss) 26,32 176,811 (258,003) 39,071 45,079 149,614 (218,317) 33,060 38,145 Other income 23 194,051 700,173 189,300 262,796 164,202 592,473 160,182 222,373 Other expenses 23 126,090 676,739 224,058 252,484 106,695 572,644 189,594 213,647 Financial income 27 54,470 120,170 1,941 4,324 46,091 101,686 1,642 3,659 Financial expenses 27 83,897 191,126 12,669 27,571 70,992 161,727 10,720 23,330 Gain on valuation of equity method investments 12 5,275 11,271 - - 4,464 9,537 - - Loss on valuation of equity method investments 12 33,391 71,956 19,864 28,040 28,255 60,887 16,809 23,727 Profit (loss) before income tax 187,229 (366,210) (26,279) 4,104 158,429 (309,879) (22,239) 3,473 Income tax expense 28 52,645 15,843 95 19,094 44,547 13,406 80 16,157 Profit (loss) for the period \ 134,584 \ (382,053) \ (26,374) \ (14,990) $ 113,882 $ (323,285) $ (22,319) $ (12,684)

9 Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Comprehensive Income Three-month and Six-month Periods Ended June 30, 2016 and 2015

(in millions of Korean won and thousands of U.S. dollars, except earnings per share amounts (Note 3)) Notes 2016 (Unaudited) 2015 (Unaudited) 2016 (Unaudited) 2015 (Unaudited) Three Six Three Six Three Six Three Six months months months months months months months months Other comprehensive income (loss) for the period, net of tax Items that will be reclassified subsequently to profit or loss \ (305,211) \ (676,747) \ 323,016 \ (261,414) $ (258,264) $ (572,651) $ 273,330 $ (221,203) Items that will not be reclassified subsequently to loss (1,729) (1,729) (867) (1,224) (1,463) (1,463) (734) (1,036) (306,940) (678,476) 322,149 (262,638) (259,727) (574,114) 272,596 (222,239) Total comprehensive income (loss) for the period \ (172,356) \(1,060,529) \ 295,775 \ (277,628) $ (145,845) $ (897,399) $ 250,277 $ (234,923) Profit (loss) for the period attributable to: Equity holders of the Parent Company \ 154,968 \ (295,532) \ (26,041) \ (14,485) 131,131 $ (250,073) $ (22,036) $ (12,257) Non-controlling interest 1 (20,384) (86,521) (333) (505) (17,249) (73,212) (283) (427) Total comprehensive income (loss) for the period attributable to: Equity holders of the Parent Company \ (157,862) \ (979,898) \ 296,089 \ (277,150) (133,580) $ (829,170) $ 250,544 $ (234,519) Non-controlling interest (14,494) (80,631) (314) (478) (12,265) (68,229) (267) (404)

Earnings (loss) per share to the equity holders of the Company: 29 Basic earnings (loss) per share \ 915 \ (1,780) \ (225) \ (125) $ 0.77 $ (1.51) $ (0.19) $ (0.11)

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

The accompanying notes are an integral part of these interim consolidated financial statements.

10 Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Changes in Equity Six-month Periods Ended June 30, 2016 and 2015

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

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

Balance at January 1, 2015 \ 13,500 \ 575,285 \ 2,482,276 \ 2,212,000 \ 2,229 \ 5,285,290 $ 11,591 $ 493,934 $ 2,131,258 $ 1,899,202 $ 1,913 $ 4,537,898 Total comprehensive income: - - - - - Loss for the period (14,485) (505) (14,990) (12,437) - (433) (12,870) - - - - - Loss on valuation of available- for-sale financial assets - - - (259,560) - (259,560) - -- (222,856) - (222,856) Accumulated comprehensive loss of equity method investees 12 - - - (3,855) - (3,855) - -- (3,310) - (3,310) Cumulative effect of foreign currency translation from overseas operations - -- 1,974 27 2,001 - -- 1,695 23 1,718 Remeasurements of the net defined benefit liability - - (1,224) - - (1,224) - - (1,051) - - (1,051) Balance at June 30, 2015 (Unaudited) \ 13,500 \ 575,285 \ 2,466,567 \ 1,950,559 \ 1,751 \ 5,007,662 $ 11,591 $ 493,934 $ 2,117,770 $ 1,674,731 $ 1,503 $ 4,299,529

11 Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Changes in Equity Six-month Periods Ended June 30, 2016 and 2015

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

Balance at January 1, 2016 \ 19,132 \ 10,039,685 \ 5,210,896 \ 1,231,966 \ 1,812,257 \18,313,936 $ 16,427 $ 8,619,975 $ 4,474,024 $ 1,057,754 $ 1,555,986 $ 15,724,166 Total comprehensive income:

Loss for the period - - (295,532) - (86,521) (382,053) - - (253,741) - (74,286) (328,027) Loss on valuation of available- for-sale financial assets 11 - - - (689,799) - (689,799) - - - (592,255) - (592,255) Accumulated comprehensive income (loss) of equity method investees 12 - - - (34,132) 617 (33,515) - - - (29,305) 531 (28,774) Cumulative effect of foreign currency translation from overseas operations - -- 33,846 6,242 40,088 - - - 29,060 5,359 34,419 Gain (loss) on valuation of derivative instruments for hedging cash flow risks 19 - -- 6,621 (142) 6,479 - - - 5,685 (122) 5,563 Remeasurements of the net defined benefit liability - - (902) - (827) (1,729) - - (774) - (711) (1,485) Transactions with owners: Cash dividends - - (83,893) - (1,330) (85,223) - - (72,030) - (1,142) (73,172) Acquisition of treasury stock - - - (20,940) - (20,940) - - - (17,979) - (17,979) Acquisition of non-controlling interests - 16,801 -- (32,945) (16,144) - 14,425 - - (28,286) (13,861) Others - (23) 414 (39) - 352 - (19) 356 (34) - 303 Balance at June 30, 2016 (Unaudited) \ 19,132 \ 10,056,463 \ 4,830,983 \ 527,523 \ 1,697,351 \17,131,452 $ 16,427 $ 8,634,381 $ 4,147,835 $ 452,926 $ 1,457,329 $ 14,708,898

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

The accompanying notes are an integral part of these interim consolidated financial statements.

12 Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Cash Flows Six-month Periods Ended June 30, 2016 and 2015

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Six-month period ended June 30 Notes 2016 2015 2016 2015 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Cash flows from operating activities Cash generated from operations 31 \ 1,571,058 \ 281,232 $ 1,348,895 $ 241,463 Interest received 41,398 2,077 35,544 1,784 Interest paid (115,119) (26,947) (98,840) (23,136) Dividends received 258,854 68,439 222,249 58,761 Income tax paid (143,095) (124,113) (122,861) (106,562) Net cash inflow from operating activities 1,613,096 200,688 1,384,987 172,310

Cash flows from investing activities Disposal of assets held for sale 86,093 - 73,919 - Decrease in short-term financial instruments - 30,890 - 26,522 Decrease in short-term loans 739 - 635 - Decrease in the current portion of long-term receivables 27,868 79 23,927 68 Disposal of available-for-sale financial assets 11 12,150 285 10,432 245 Disposal of investments in associates and joint ventures 12 137,342 - 117,920 - Decrease in deposits 40,924 10,402 35,137 8,931 Disposal of property, plant and equipment 13 12,607 2,217 10,824 1,904 Disposal of intangible assets 13 240 170 206 146 Disposal of investment properties 14 587 - 504 - Decrease in other non-current assets 212 - 183 - Increase in short-term financial instruments (62,352) - (53,535) - Acquisition of available-for-sale financial assets 11 (94,455) (141) (81,098) (121) Acquisition of investments in associates and joint ventures 12 (28,664) (76,242) (24,610) (65,460) Increase in overseas resources development (66) - (57) - Increase in long-term receivables (22,126) (626) (18,997) (537) Increase in deposits (25,622) (17,298) (21,998) (14,852) Acquisition of property, plant and equipment 13 (220,005) (68,950) (188,894) (59,200) Acquisition of intangible assets 13 (40,826) (9,041) (35,053) (7,762) Increase in other non-current assets (1,481) (1,431) (1,272) (1,230) Net cash outflow from investing activities (176,835) (129,686) (151,827) (111,346)

13 Samsung C&T Corporation and Subsidiaries Interim Consolidated Statements of Cash Flows Six-month Periods Ended June 30, 2016 and 2015

(in millions of Korean won and thousands of U.S. dollars (Note 3)) Six-month period ended June 30 Notes 2016 2015 2016 2015 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Cash flows from financing activities Net increase in short-term borrowings - 32,265 - 27,702 Proceeds from bonds issuance 418,679 - 359,474 - Increase in long-term borrowings 49,901 - 42,844 - Increase in non-controlling interests by stock issuance 2,450 - 2,104 - Dividends paid (83,893) - (72,030) - Net decrease in short-term borrowings (93,856) - (80,584) - Repayment of current portion of long-term borrowings (317,832) (257,260) (272,888) (220,881) Repayment of long-term borrowings (196,402) - (168,629) - Acquisition of treasury stock (675,526) - (580,000) - Acquisition of non-controlling interests (16,144) - (13,861) - Dividends paid to the non-controlling interests (1,330) - (1,142) - Net decrease in other components of equity (87) - (75) - Net cash outflow from financing activities (914,040) (224,995) (784,787) (193,179)

Net increase (decrease) in cash and cash equivalents 522,221 (153,993) 448,373 (132,215) Cash and cash equivalents at the beginning of the period 2,066,404 304,729 1,774,195 261,638 Exchange gain on cash and cash equivalents 25,263 288 21,690 245 Cash and cash equivalents at the end of the period \ 2,613,888 \ 151,024 $ 2,244,258 $ 129,668

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

The accompanying notes are an integral part of these interim consolidated financial statements.

14 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

1. General Information

These consolidated financial statements are prepared in accordance with Korean IFRS 1110, ‘Consolidated Financial Statements’. Samsung C&T Corporation (the “Company” or the “Parent Company”) has 110 subsidiaries, including Samsung BioLogics Co., Ltd.(collectively the “Group”) and 57 associates and joint ventures, including Samsung Bioepis Co., Ltd. that are subject to the equity method accounting.

1.1 The Company

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

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

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

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

15 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

1.2 Subsidiaries

(a) General information of subsidiaries as of June 30, 2016, is as follows:

Capital stock Number of Number of shares Percentage Percentage of (in millions of outstanding Samsung of ownership in Subsidiaries Primary business Korean won) shares C&T Subsidiaries Total ownership(%) Location subsidiaries

Golf course Seoul Lakeside Co., Ltd. \ 1,176 117,600 117,600 - 117,600 100.00 Korea operational service Samoo Architects & Engineers Architectural design 5,848 100,000 100,000 - 100,000 100.00 Korea Co., Ltd. service CVnet Corporation2 e-Business 3,200 6,400,000 2,569,155 - 2,569,155 40.14 Korea Production of steel Myodo Metal Co., Ltd. 3,811 1,080,000 1,080,000 - 1,080,000 100.00 Japan products Samsung C&T Japan Trading 42,104 5,000,000 5,000,000 - 5,000,000 100.00 Japan Corporation Samsung C&T America, Inc. Trading 52,259 105 105 - 105 100.00 U.S.A. Natural resources Samsung C&T America, Inc. Samsung Oil & Gas USA Corp. 78,895 83,889 75,500 8,389 83,889 100.00 U.S.A. development 10% Samsung Renewable Energy, Renewable energy 22,867 2,000 2,000 - 2,000 100.00 Canada Inc. development Renewable energy Samsung C&T America, Inc. Samsung Green Repower, LLC.1 2,863 - - - - 100.00 U.S.A. development 100% SCNT Power Norte S. de R.L. de Renewable energy 9,378 112,683,150 112,683,150 - 112,683,150 100.00 Mexico C.V. development Samsung E&C America, Inc. Construction 104 100 100 - 100 100.00 U.S.A. Samsung Solar Construction, Renewable energy Samsung C&T America, Inc. 6 - - - - 100.00 U.S.A. Inc.1 development 100% Production of steel Samsung C&T America, Inc. QSSC, S.A, de C.V. 8,616 93,758,250 56,254,950 18,751,650 75,006,600 80.00 Mexico products 20%

16 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Samsung C&T Oil & Gas Natural resources \ 59,630 1 1 - 1 100.00 U.S.A. Parallel Corp. development Natural resources Parallel Petroleum LLC.1 837,480 - - - - 51.00 U.S.A. PLL Holdings LLC. 61% development Renewable energy Samsung Renewable Energy, SRE GRW EPC GP, Inc.1 4 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE GRW EPC LP1 11 - - - - 100.00 Canada development SRE GRW EPC GP, Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE SKW EPC GP, Inc.1 4 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE SKW EPC LP1 11 - - - - 100.00 Canada Inc. 99.99%, development SRE SKW EPC GP, Inc. 0.01% Samsung C&T America Inc. Samsung C&T Automation Inc. Machinery brokerage 4,442 1,000,000 700,000 300,000 1,000,000 100.00 U.S.A. 30% Samsung C&T Canada Ltd. Construction - 1 1 - 1 100.00 Canada Natural resources Samsung C&T Oil & Gas PLL Holdings LLC.1 238,537 - - - - 83.61 U.S.A. development Parallel Corp. 83.61% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE GRW LP Holdings LP1 32,417 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE SKW LP Holdings LP1 27,630 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01%

17 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Renewable energy Samsung Renewable Energy, SRE WIND PA GP Inc.1 \ 4 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE WIND PA LP1 11 - - - - 100.00 Canada Inc. 99.99%, development SRE Wind PA GP Inc. 0.01% Natural resources Samsung C&T Oil & Gas PLL E&P LLC.1 34,733 - - - - 90.00 U.S.A. development Parallel Corp. 90% Renewable energy Samsung Renewable Energy, SRE GRS Holdings GP Inc.1 6 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE GRS Holdings LP1 3 - - - - 100.00 Canada development SRE GRS Holdings GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE K2 EPC GP Inc.1 2 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy SRE K2 EPC LP1 - - - - - 100.00 Canada Inc. 99.99%, development SRE K2 EPC GP Inc. 0.01% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE K2 LP Holdings LP1 26,552 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE KS Holdings GP Inc.1 2 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE KS Holdings LP1 515 - - - - 100.00 Canada development SRE KS Holdings GP, Inc. 0.01%

18 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Samsung Renewable Energy, SRE Belle River LP Holdings Renewable energy Inc. 99.99%, \ 11,527 - - - - 100.00 Canada LP1 development SRE Wind GP Holdings, Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Armow EPC GP Inc.1 1 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Armow EPC LP1 9 - - - - 100.00 Canada development SRE Armow EPC GP Inc. 0.01% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Armow LP Holdings LP1 42,318 - - - - 100.00 Canada development SRE Wind GP Holdings, Inc. 0.01% Samsung Renewable Energy, SRE North Kent 1 LP Holding Renewable energy Inc. 99.99%, 11,509 - - - - 100.00 Canada LP1 development SRE Wind GP Holdings, Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Wind GP Holdings, Inc.1 124 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, SRE North Kent 2 LP Holdings Renewable energy Inc. 99.99%, 147 - - - - 100.00 Canada LP1 development SRE Wind GP Holdings, Inc. 0.01% Renewable energy Samsung Renewable Energy, Mountsberg Solar GP Inc.1 - - - - - 100.00 Canada development Inc. 100%

19 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Samsung Renewable Energy, Renewable energy Inc. 99.99%, Mountsberg Solar LP1 \ 277 - - - - 100.00 Canada development Mountsberg Solar GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Windsor Holdings GP Inc.1 5 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Windsor Holdings LP1 3,292 - - - - 100.00 Canada development SRE Windsor Holdings GP Inc. 0.01% SRE Southgate Holdings GP Renewable energy Samsung Renewable Energy, 9 - - - - 100.00 Canada Inc. 1 development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Southgate Holdings LP1 7,987 - - - - 100.00 Canada development SRE Southgate Holdings GP Inc. 0.01% SRE Solar Construction Renewable energy Samsung Renewable Energy, - - - - - 100.00 Canada Management GP Inc. 1 development Inc. 100% Samsung Renewable Energy, SRE Solar Construction Renewable energy Inc. 99.99%, 9 - - - - 100.00 Canada Management LP1 development SRE Solar Construction Management GP Inc. 0.01% Renewable energy Samsung Renewable Energy, SRE Development GP Inc. 1 1 - - - - 100.00 Canada development Inc. 100% Samsung Renewable Energy, Renewable energy Inc. 99.99%, SRE Development LP1 184 - - - - 100.00 Canada development SRE Development GP Inc. 0.01%

20 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Samsung C&T Deutschland Trading \ 18,551 - - - - 100.00 Germany GmbH1 United Samsung C&T U.K. Ltd. Trading 59,415 27,950,000 27,950,000 - 27,950,000 100.00 Kingdom United Samsung C&T ECUK Limited Construction 57 33,000 33,000 - 33,000 100.00 Kingdom Industry plant United Whessoe Engineering Limited - 138 138 - 138 100.00 engineering Kingdom Production of steel Samsung C&T Deutschland POSS-SLPC S.R.O. 1 5,967 - - - - 70.00 Slovakia products GmbH 20% Renewable energy Samsung C&T Deutschland Solluce Romania 1 B.V. 1 33,517 - - - - 100.00 Netherlands development GmbH 20% Renewable energy Ecosolar OOD 15,143 27,300,300 27,300,300 - 27,300,300 100.00 Bulgaria development Renewable energy Ecoenergy Solar OOD 9,507 18,656,000 18,656,000 - 18,656,000 100.00 Bulgaria development Renewable energy Agriplam EOOD 4,290 80,041 80,041 - 80,041 100.00 Bulgaria development Renewable energy Fishtrade EOOD 6,595 79,959 79,959 - 79,959 100.00 Bulgaria development Renewable energy Manageproject EOOD 6,086 749,042 749,042 - 749,042 100.00 Bulgaria development Renewable energy Solar Park EOOD 2,353 384,002 384,002 - 384,002 100.00 Bulgaria development Renewable energy Veselinovo Energy OOD 2,732 606,050 606,050 - 606,050 100.00 Bulgaria development Samsung C&T Construction Construction 2 - - - - 100.00 Hungary Hungary Kft. 1 Samsung C&T (KL) Sdn. Bhd. Construction 3,870 1,000,000 1,000,000 - 1,000,000 100.00 Malaysia

21 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Samsung C&T Malaysia Sdn. Trading \ 6,002 15,000,000 15,000,000 - 15,000,000 100.00 Malaysia Bhd. Samsung C&T Singapore Pte. Samsung Chemtech VINA1 Trading 3,554 - - - - 100.00 Vietnam Ltd. 48.33% Samsung C&T America, Inc. 24%, S-Print 1 Production of textile 2,245 - - - - 80.00 Vietnam Samsung C&T Singapore Pte. Ltd. 16% Samsung C&T (Thailand) Co., Samsung C&T Hongkong Trading 126 409,600 180,000 54,000 234,000 57.13 Thailand Ltd. Limited 13.18% Wholesale and retail Samsung C&T Singapore Pte. PT. Insam Batubara Energy 1,037 1,000,000 900,000 100,000 1,000,000 100.00 Indonesia of coal Ltd. 10% Samsung C&T India Private Ltd. Construction 2,748 126,500,000 126,500,000 - 126,500,000 100.00 India Samsung C&T Corporation India Trading 3,455 16,500,001 16,500,001 - 16,500,001 100.00 India Private Ltd. Production of steel Samsung C&T Singapore Pte. MSSC Sdn.,Bhd. 4,928 44,974 31,482 13,492 44,974 100.00 Malaysia products Ltd. 30% Samsung C&T Singapore Pte. Trading 35,574 34,000,000 34,000,000 - 34,000,000 100.00 Singapore Ltd. Natural resources Samsung C&T Singapore Pte. S&G Bio Fuel Pte. Ltd. 45,922 46,312,500 23,400,000 5,850,000 29,250,000 63.16 Singapore development Ltd. 12.63% Natural resources PT Gandaerah Hendana 11,320 100,000,000 - 95,000,000 95,000,000 60.00 Indonesia S&G Bio Fuel Pte. Ltd. 95% development Natural resources PT Inecda 11,320 100,000,000 - 95,000,000 95,000,000 60.00 Indonesia S&G Bio Fuel Pte. Ltd. 95% development SAMSUNG C&T Mongolia LLC. 1 Construction 1,215 - - - - 70.00 Mongolia Samsung C&T Eng.&Const. Construction 598 - - - - 100.00 Mongolia Mongolia LLC. 1

22 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

S&Woo Construction Construction \ 239 9,400 3,760 - 3,760 40.00 Philippines Philippines, Inc. 2 Samsung (Tianjin) International Samsung C&T Hongkong Trading 382 - - - - 100.00 China Trading Co., Ltd. 1 Limited 100% Samsung Trading (Shanghai) Samsung C&T Hongkong Trading 498 - - - - 100.00 China Co., Ltd. 1 Limited 100% Samsung C&T Hongkong Trading 83,748 111,565 111,565 - 111,565 100.00 Hong Kong Limited Guang Dong Xingpu Steel Production of steel 15,297 10,991,000 5,666,000 - 5,666,000 51.55 China Center Co., Ltd. products Samsung C&T Taiwan Co., Ltd. Trading 361 1,000,000 1,000,000 - 1,000,000 100.00 Taiwan Samsung Precision Stainless Production of steel Samsung C&T Hongkong 82,979 - - - - 100.00 China Steel (Pinghu) Co., Ltd. 1 products Limited 45% Samsung C&T Co., Samsung C&T Hongkong Trading 466 - - - - 100.00 China (Guangzhou) Ltd. 1 Limited 100% Samsung C&T (Shanghai) Co., Construction 11,066 - - - - 100.00 China Ltd. 1 Samsung C&T Corporation Construction 2,658 - - - - 100.00 Saudi Arabia Saudi Arabia1 Samsung C&T Chile Copper Natural resources 12,918 11,535,517 11,535,517 - 11,535,517 100.00 Chile SpA development Natural resources Samsung C&T Chile Copper Pampa Camarones S.A. 1 9,324 1,492 - 1,054 1,054 70.64 Chile development SpA 70.64% SCNT Power Kelar Inversiones Thermal power 8 100 100 - 100 100.00 Chile LTDA. generation Samsung C&T Brasil Construction 2,208 - - - - 100.00 Brazil Participacoes LTDA1

23 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Production of Samsung C&T Deutschland S.C. Otelinox S.A. stainless steel plates \ 56,148 33,078,479 - 31,179,053 31,179,053 94.26 Romania GmbH 94.26% and poles Samsung Corporation Rus LLC.1 Construction 6,303 - - - - 100.00 Russia Biopharmaceutical Samsung BioLogics Co., Ltd. products 137,844 27,568,721 14,371,233 - 14,371,233 52.13 Korea manufacturing Manufacturing and Cheil Fashion Retail Co., Ltd.1 14,500 2,900,000 2,900,000 - 2,900,000 100.00 Korea selling garments Manufacturing and Natural 9 Co., Ltd. 10,000 2,000,000 1,020,000 - 1,020,000 51.00 Korea selling garments Manufacturing and Cheil Industries Corp., USA 106 1 1 - 1 100.00 U.S.A. selling garments Manufacturing and Cheil Industries Italy S.R.L. 1 8,813 - - - - 100.00 Italy selling garments Samsung Fashion Trading Co., Manufacturing and 65,993 - - - - 100.00 China Ltd. 1 selling garments Manufacturing and Cheil Industries Italy S.R.L. Colombo Via della Spiga S.R.L. 1 144 - - - - 100.00 Italy selling garments 100% Samsung Welstory Inc. Foodservice business 10,000 2,000,000 2,000,000 - 2,000,000 100.00 Korea Cheil Industries Inc. Vietnam Construction 1,143 - - - - 100.00 Vietnam Co., Ltd. 1 Welstory Vietnam Co., Ltd. 1 Foodservice business 10,007 - - - - 90.00 Vietnam Samsung Welstory Inc. 90% Samsung C&T Corporation UEM Construction 205 750,000 450,000 - 450,000 60.00 Malaysia Construction JV Sdn. Bhd. Shanghai Ever Hongjun Business Management Foodservice business 2,536 - - - - 85.00 China Samsung Welstory Inc. 85% Service Co., Ltd. 1

24 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Eight Seconds (Shanghai) Co., Samsung Fashion Trading Co., Selling garments \ 15,126 - - - - 100.00 China Ltd. 1 Ltd. 100% Eight Seconds (Shanghai) Eight Seconds (Shanghai) Co., Selling garments 7,066 - - - - 100.00 China Trading Co., Ltd. 1 Ltd. 100%

1 No share has been issued in accordance with the local laws and regulations. 2 The Group has de facto control to appoint or dismiss more than 50% of the members of board of directors even though it has less than 50% ownership interest.

25 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(b) Summarized financial information of subsidiaries as of and for the six-month period ended June 30, 2016, is as follows:

(In millions of Korean won) Total Total Total Profit comprehensive Subsidiaries assets liabilities Revenue (loss) income (loss)

Seoul Lakeside Co., Ltd. \ 613,049 \ 317,220 \ 22,496 \ 2,786 \ 2,786 Samoo Architects & Engineers Co., Ltd. 96,207 71,703 97,817 5,104 5,182 CVnet Corporation 30,005 14,278 21,659 (60) (60) Myodo Metal Co., Ltd. 103,545 102,686 62,468 (26) 440 Samsung C&T Japan Corporation 136,834 69,519 537,672 1,347 10,759 Samsung C&T America, Inc. 385,339 184,077 384,959 (2,344) (3,492) Samsung Oil & Gas USA Corp. 97,777 57,517 16,556 (28,325) (28,638) Samsung Renewable Energy, Inc. 196,397 77,661 - (712) 1,936 Samsung Green Repower, LLC 10,365 52 - (20) (39) SCNT Power Norte S. de R.L. de C.V. 49,268 39,472 - 172 147 Samsung E&C America, Inc. 23,712 13,708 38,824 (568) (626) Samsung Solar Construction, Inc. 35 - - - (1) QSSC, S.A, de C.V. 60,764 49,803 50,776 739 665 Samsung C&T Oil & Gas Parallel Corp. 313,409 345,376 - (3,622) (2,036) Parallel Petroleum LLC 657,878 45,249 28,244 (63,368) (67,944) SRE GRW EPC GP, Inc 1 - - - - SRE GRW EPC LP 1,334 66 - (1) 76 SRE SKW EPC GP, Inc 1 - - - - SRE SKW EPC LP 168 - - - 10 Samsung C&T Automation Inc. 12,268 7,295 4,425 (1,424) (1,444) Samsung C&T Canada Ltd. 72,043 111,869 6,960 7 (2,438) PLL Holdings LLC. 518,191 269,512 - (13,167) (8,440) SRE GRW LP Holdings LP 35,038 - - 2,443 2,927 SRE SKW LP Holdings LP 48,509 - - 19,588 21,255 SRE WIND PA GP Inc. 2 - - 4 4 SRE WIND PA LP 1,303 14 655 663 709 PLL E&P LLC 9,143 4,424 1,246 2,083 1,972 SRE GRS Holdings GP Inc. 8 - - - - SRE GRS Holdings LP 2,016 - - 1,838 1,870 SRE K2 EPC GP Inc. 1 - - - - SRE K2 EPC LP 1,373 633 165 168 205

26 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(In millions of Korean won) Total Total Total Profit comprehensive Subsidiaries assets liabilities Revenue (loss) income (loss)

SRE K2 LP Holdings LP \ 28,171 \ - \ - \ (16) \ 1,695 SRE KS Holdings GP Inc. 5 - - - - SRE KS Holdings LP 2,486 - - 1,330 1,386 SRE Belle River LP Holdings LP 11,459 - - 5 (46) SRE Armow EPC GP Inc. 1 - - - - SRE Armow EPC LP 3,742 934 492 497 645 SRE Armow LP Holdings LP 70,578 - - 27,919 28,266 SRE North Kent 1 LP Holding LP 11,505 - - 4 5 SRE Wind GP Holdings, Inc. 112 3 - 2 3 SRE North Kent 2 LP Holdings LP 152 - - 4 9 Mountsberg Solar GP Inc - - - - - Mountsberg Solar LP 235 - - - 14 SRE Windsor Holdings GP Inc. 5 - - - - SRE Windsor Holdings LP 9,384 - - (30) (22) SRE Southgate Holdings GP Inc. 8 - - - - SRE Southgate Holdings LP 13,419 - - (23) 15 SRE Solar Construction Management GP Inc. 2 - - 1 1 SRE Solar Construction Management LP 9,248 - 8,665 8,883 9,823 SRE Development GP Inc. 1 - - - - SRE Development LP 125 - - (54) (59) Samsung C&T Deutschland GmbH 414,955 217,832 322,778 11,677 12,571 Samsung C&T U.K. Ltd 56,968 35,966 88,592 989 (993) Samsung C&T ECUK Limited 79,494 67,490 128,444 (6,442) (7,883) Whessoe Engineering Limited 9,627 6,085 11,829 15 (366) POSS-SLPC S.R.O 26,382 15,723 30,898 995 1,089 Solluce Romania 1 B.V. 33,008 189 - (28) (29) Ecosolar OOD 31,264 18,794 2,977 2,560 2,717 Ecoenergy Solar OOD 19,459 11,572 1,960 1,668 1,767 Agriplam EOOD 7,478 4,023 847 448 497 Fishtrade EOOD 8,822 4,169 855 381 451 Manageproject EOOD 8,425 4,248 850 349 413 Solar Park EOOD 3,977 2,284 426 190 216 Veselinovo Energy OOD 6,023 2,989 884 493 532 Samsung C&T Construction Hungary Kft. 1,980 125 - (10) 12

27 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(In millions of Korean won) Total Total Total Profit comprehensive Subsidiaries assets liabilities Revenue (loss) income (loss)

Samsung C&T (KL) Sdn. Bhd. \ 142,004 \ 111,696 \ 128,212 \ (11,799) \ (9,545) Samsung C&T Malaysia Sdn. Bhd 8,463 7,134 620 (119) (42) Samsung Chemtech VINA 12,765 12,666 12,960 210 207 S-Print 8,682 12,698 8,261 (180) (178) Samsung C&T (Thailand) Co., Ltd. 18,584 13,368 21,611 1,169 1,245 PT. Insam Batubara Energy 35 2,298 - (245) (229) Samsung C&T India Private Limited 73,813 81,905 78,424 (957) (791) Samsung C&T Corporation India Private Ltd. 1,563 2,729 1,991 (296) (273) MSSC Sdn.,Bhd. 17,903 10,538 24,264 882 1,231 Samsung C&T Singapore Pte. Ltd. 104,954 91,612 401,592 308 113 S&G Bio Fuel Pte. Ltd. 120,135 87,444 - (2,208) (1,642) PT Gandaerah Hendana 50,201 35,183 11,273 6,941 8,411 PT Inecda 35,696 17,549 8,089 2,976 4,362 SAMSUNG C&T Mongolia LLC. 53,766 35,300 (1,291) (2,072) (2,077) Samsung C&T Eng.&Const. Mongolia LLC 121,677 102,890 21,356 (4,638) (4,649) S&Woo Construction Philippines, Inc. 17,417 16,611 32,043 142 136 Samsung (Tianjin) International Trading Co., Ltd. 6,612 5 62 (928) (1,062) Samsung Trading (Shanghai) Co., Ltd. 47,516 26,775 84,850 2,072 1,597 Samsung C&T Hongkong Limited 258,024 131,187 1,135,359 3,234 2,816 Guang Dong Xingpu Steel Center Co., Ltd. 17,699 1,714 4,881 (275) (655) Samsung C&T Taiwan Co., Ltd. 4,474 345 7,230 442 485 Samsung Precision Stainless Steel (Pinghu) Co., Ltd. 113,531 50,997 30,388 3,052 1,656 Samsung C&T Co., (Guangzhou) Ltd. 10,576 461 1,603 906 675 Samsung C&T (Shanghai) Co., Ltd. 164,467 67,838 90,260 12,282 10,044 Samsung C&T Corporation Saudi Arabia 284,628 620,163 1,280 (80,169) (77,652) Samsung C&T Chile Copper SpA 12,193 - - (173) (191) Pampa Camarones S.A. 70,068 134,021 4,266 1,718 1,968

28 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(In millions of Korean won) Total Total Total Profit comprehensive Subsidiaries assets liabilities Revenue (loss) income (loss)

SCNT Power Kelar Inversiones LTDA \ 2,260 \ 2,487 \ - \ - \ 16 Samsung C&T Brasil Participacoes LTDA 1,348 1,807 1,695 198 102 S.C. Otelinox S.A. 55,765 5,492 24,502 2,205 2,732 Samsung Corporation Rus LLC 70,757 63,944 24,585 (994) 1,448 Samsung BioLogics Co., Ltd. 6,555,929 3,446,856 136,206 (59,931) (61,660) Cheil Fashion Retail Co., Ltd. 14,029 2,534 14,684 582 582 Natural 9 Co., Ltd. 5,202 263 688 (770) (770) Cheil Industries Corp., USA 505 44 898 17 14 Cheil Industries Italy S.R.L. 19,848 10,542 18,982 115 90 Colombo Via della Spiga S.R.L. 7,127 4,121 1,692 (840) (781) Samsung Fashion Trading Co., Ltd. 170,196 138,482 63,435 (1,181) (1,540) Samsung Welstory Inc. 574,624 193,360 843,824 43,745 43,739 Cheil Industries Inc. Vietnam Co., Ltd. 61,194 25,848 68,046 7,406 7,307 Welstory Vietnam Co., Ltd. 24,597 14,892 32,908 134 132 Samsung C&T Corporation UEM Construction JV Sdn. Bhd. 44,802 44,312 13,510 274 286 Shanghai Ever Hongjun Business Management Service Co., Ltd. 10,523 8,078 25,736 157 102 Eight Seconds (Shanghai) Co., Ltd. 16,638 1,791 1,216 - (279) Eight Seconds (Shanghai) Trading Co., Ltd. 7,066 - - - -

Intercompany transactions, balances and unrealized gains and losses on transactions between the Group companies are not eliminated in the summarized financial information above. Also, investments in subsidiaries, associates and joint ventures, which the controlled subsidiaries own, are recognized at acquisition cost.

29 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

1.3 Investments in Associates and Joint Ventures

General information of associates and joint ventures accounted for under the equity method as of June 30, 2016, is as follows (Note 12):

Capital stock Number of Number of shares Percentage (in millions of outstanding of ownership Associates Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location

Dongducheon Dream Power Integrated thermal power \ 330,658 66,131,621 20,600,000 - 20,600,000 31.15 Korea Co., Ltd. generation Sino-Singapore Tianjin Eco-City Investment and Property development 48,274 - - - - 40.00 China Development Co., Ltd. 1 Qurayyah Investment Construction 1,608 - - - - 35.00 Saudi Arabia Company 1 Songdo Landmark City Limited 3 Construction 67,559 13,511,814 5,936,624 - 5,936,624 43.94 Korea Chongqing Shanxia Cotton thread 77,223 - - - - 20.00 China Technology Textile Co., Ltd. 1 manufacturing Research and Samsung Bioepis Co., Ltd.4 development on 63,419 12,683,705 - 11,567,921 11,567,921 91.20 Korea medicine and pharmacy

30 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Capital stock Number of Number of shares Percentage (in millions of outstanding of ownership Joint ventures Primary business Korean won) shares Samsung C&T Subsidiaries Total (%) Location

Natural resources Korea LNG Limited \ 14 12,000 2,400 - 2,400 20.00 Oman development Renewable energy SP Armow Wind Ontario LP1,2 84,637 - - - - 50.01 Canada development Renewable energy South Kent Wind LP 1 12,335 - - - - 50.00 Canada development Renewable energy K2 Wind Ontario LP 1 91,200 - - - - 33.34 Canada development JSC Balkhash Thermal Power Internal combustion 383,810 64,170,058 32,085,530 - 32,085,530 50.00 Kazakhstan Plant 2 power plant Renewable energy LJG Green Source Energy development 29 - - - - 78.00 Romania Alpha S.R.L. 1,2 (Solar energy generation) Samsung Investment Natural resources 58,486 41,473,469 22,119,184 - 22,119,184 53.33 Netherlands Manzanilo.B.V. 2 development Terminal KMS de GNL, S. de LNG receiving 166,029 - - - - 20.00 Mexico R.L. de C.V.1 terminal

1 No share has been issued in accordance with the local laws and regulations. 2 Excluded from the scope of consolidation as it is a joint venture under a contractual arrangement. 3 Songdo Landmark City Limited is classified as an asset held-for-sale. 4 Samsung Bioepis Co., Ltd. is excluded from subsidiaries although the percentage of ownership is 91.2% since the Group holds no control considering the potential voting rights held by other entities.

31 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

1.4 Changes in Scope of Consolidation

Subsidiaries newly included in the consolidation during the six-month period ended June 30, 2016:

Subsidiaries Description

Included in the scope of consolidation 4 companies, including Eight Seconds (Shanghai) Co., Ltd. as a result of establishment

Subsidiaries excluded from the consolidation during the six-month period ended June 30, 2016:

Subsidiaries Description Excluded from the scope of 2 companies, including Samsung Corporation (Shenzhen) consolidation due to liquidation

1.5 Information about Non-Controlling Interest

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

Accumulated non-controlling interests in subsidiaries as of June 30, 2016 and December 31, 2015, are as follows:

(in millions of Korean won) June 30, 2016 December 31, 2015

Samsung BioLogics Co., Ltd. \ 1,407,301 \ 1,491,864 Others 290,050 320,393 . \ 1,697,351 \ 1,812,257

Profit or loss attributed to the non-controlling interests for the three-month and six-month periods ended June 30, 2016 and 2015, are as follows:

(in millions of Korean won) 2016 2015 Three months Six months Three months Six months

Samsung BioLogics Co., Ltd. \ (24,697) \ (56,447) \ - \ - Others 4,313 (29,235) (333) (505)

\ (20,384) \ (85,682) \ (333) \ (505)

Dividends paid to the non-controlling interests amount to ￦1,330 million during the six-month period ended June 30, 2016.

32 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Summarized financial information for each subsidiary with non-controlling interests that are material to the Group as of June 30, 2016 and December 31, 2015, and for the three-month and six-month periods ended June 30, 2016, is as follows. The subsidiary’s financial information was prepared using equity method for their associates and joint ventures.

Summarized Statements of Financial Position

(in millions of Korean won) June 30, 2016 December 31, 2015 Samsung Samsung BioLogics Co., Ltd. BioLogics Co., Ltd.

Current assets \ 239,511 \ 192,912 Non-current assets 6,147,122 6,148,453 Current liabilities 2,075,406 1,911,645 Non-current liabilities 1,371,450 1,382,452 Equity 2,939,777 3,047,268

Summarized Statement of Comprehensive Income 2016 Samsung BioLogics Co., Ltd. (in millions of Korean won) Three months Six months

Sales \ 47,537 \ 136,206 Loss for the period (53,074) (117,923) Other comprehensive income 10,817 9,557 Total comprehensive loss (42,257) (108,366)

Summarized Statement of Cash Flows 2016 (in millions of Korean won) Samsung BioLogics Co., Ltd.

Cash flows from operating activities \ (30,710) Cash flows from investing activities (92,999) Cash flows from financing activities 138,105 Increase in cash and cash equivalents 14,396 Cash and cash equivalent at the beginning of the period 34,510 Exchange gains on cash and cash equivalents 276 Cash and cash equivalent at the end of the period \ 49,182

33 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

2. Significant Accounting Policies

2.1 Basis of Preparation

The Group’s interim consolidated financial statements for the six-month period ended June 30, 2016, have been prepared in accordance with Korean IFRS 1034, Interim Financial Reporting. These interim consolidated financial statements have been prepared in accordance with Korean IFRS which is effective or has been early adopted as of June 30, 2016.

The Group newly applied the following amended and enacted standards for the annual period beginning January 1, 2016:

- Amendment to Korean IFRS 1001, Presentation of Financial Statements

Korean IFRS 1001, Presentation of Financial Statements, clarifies that the disclosed line items can be omitted, added and aggregated in the list according to their materiality. Requirements for presenting the share in the other comprehensive income of associates and joint ventures accounted for under the equity method are clarified. Also, additional requirements for disclosures in the notes and others are provided.

- Amendment to Korean IFRS 1011, Construction Contract; Korean IFRS 1037, Provisions, Contingent Liabilities and Contingent Assets; and Interpretation 2115, Arrangements for Property Construction

These standards and interpretation clarify the requirement that specific accounting estimates for contract-based industry and information relating to potential risk should be disclosed in detail classified by individual construction and operating segment.

- Amendment to Korean IFRS 1016, Property, Plant and Equipment, and Korean IFRS 1041, Agriculture and Fishing: Productive Plants

‘Bearer Plants’ are excluded from the scope of Korean IFRS 1041, Agriculture and Fishing: Productive Plants, while they are included within the scope of Korean IFRS 1016, Property, Plant and Equipment.

- Amendment to Korean IFRS 1016, Property, Plant and Equipment, and Korean IFRS 1038, Intangible assets: Amortization Based on Revenue

A depreciation or amortization method that is based on revenue is inappropriate except for intangible assets under the limited circumstances because a depreciation or amortization method that is based on revenue is affected by factors that are not directly linked to the consumption of the economic benefits of the asset such as sales volume and others.

- Amendment to Korean IFRS 1110, Consolidated Financial Statements, Korean IFRS 1112, Disclosures of Interests in Other Entities and Korean IFRS 1028, Investments in Associates and Joint Ventures

34 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

 Amendment to Korean IFRS 1110, Consolidated Financial Statements, clarifies that the exemption from preparing the consolidated financial statements can be applied to a subsidiary whose parent company is an investment entity, and clarifies that a parent company that is an investment entity does not consolidate its subsidiaries in case a subsidiary itself meets the conditions to become an investment entity and renders services related to investing activities of its parent company.

 Amendment to Korean IFRS 1028, Investments in Associates and Joint Ventures, provides the exemption that, if an entity that is not itself an investment entity has an interest in an associate that is an investment entity, the entity may, when applying the equity method, does not need to make the associate’s accounting policies conform to those of the entity.

 Amendment to Korean IFRS 1112, Disclosures of Interests in Other Entities, clarifies the scope of disclosures relating to an investment entity.

- Amendment to Korean IFRS 1111, Joint Arrangements

Korean IFRS 1111, Joint Arrangements, clarifies that an acquirer of an interest in a joint operation where the activities of the operation constitute a business is required to apply all of the principles of accounting for business combination.

- Annual Improvements to Korean IFRS 2012-2014 Cycle

 Amendment to Korean IFRS 1105, Non-current Assets Held for Sale and Discontinued Operation, clarifies that when an asset is reclassified from ‘held for sale’to ‘held for distribution’or vice versa, the existing accounting treatment should be retained.

 Amendment to Korean IFRS 1107, Financial Instruments: Disclosures, clarifies the specific guidance for transferred financial assets to help management determine whether the terms of a servicing arrangement constitute ‘continuing involvement’and also clarifies that the additional disclosures relating to 2012 amendments ‘Offsetting of Financial Assets and Financial Liabilities’ only need to be included in interim reports if required by Korean IFRS 1034, Interim Financial Reporting.

 Amendment to Korean IFRS 1019, Employee Benefits, clarifies that when determining the discount rate for post-employment benefit obligations, it is the currency in which the liabilities are denominated that is important, and not the country where they arise.

 Amendment to Korean IFRS 1034, Interim Financial Reporting, clarifies what is meant by the reference in the Standard to ‘information disclosed elsewhere in the interim financial report’ and adds a requirement to cross-reference from the interim financial statements to the location of that information.

35 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

New standards and interpretations issued, but not effective and not early adopted are enumerated below:

- Korean IFRS 1109, Financial Instruments

The new Standard issued in December 2015 regarding financial instruments replaces Korean IFRS 1039, Financial Instruments: Recognition and Measurement.

Korean IFRS 1109, Financial Instruments, requires financial assets to be classified and measured on the basis of the holder’s business model and the instrument’s contractual cash flow characteristics. The Standard requires a financial instrument to be classified and measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss, and provides guidance on accounting for related gains and losses. The impairment model is changed into an expected credit loss model, and changes in those expected credit losses are recognized in profit or loss. The new Standard is effective for the financial year initially beginning on or after January 1, 2018, but early adoption is allowed. Early adoption of only the requirements related to financial liabilities designated at fair value through profit or loss is also permitted. The Group is in the process of determining the effects resulting from the adoption of the new Standard.

- Korean IFRS 1115, Revenue from Contracts with Customers

The new Standard for the recognition of revenue issued in December 2015 will replace Korean IFRS1018, Revenue, Korean IFRS 1011, Construction Contracts, and related Interpretations.

Korean IFRS 1115, Revenue from Contracts with Customers, will replace the risk-and-reward model under the current standards and is based on the principle that revenue is recognized when control of goods or services transfer to the customer by applying the five-step process. Key changes to current practices include guidance on separate recognition of distinct goods or services in any bundled arrangement, constraint on recognizing variable consideration, criteria on recognizing revenue over time, and increased disclosures. The new Standard is effective for annual reporting beginning on or after January 1, 2018, but early application is permitted. The Group is in the process of determining the effects resulting from the adoption of the new Standard.

2.2 Accounting Policies

Significant accounting policies and method of computation applied in the preparation of the interim consolidated financial statements are consistent with those applied in the preparation of the annual consolidated financial statements for the year ended December 31, 2015, except for the changes due to the application of amended and enacted standards described in Note 2.1. and the one described below.

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

36 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Significant accounting policies related to construction contracts are addressed below. The accounting policies and method of computation applied in the preparation of the interim consolidated financial statements are consistent with those applied in the preparation of the annual consolidated financial statements for the year ended December 31, 2015.

(a) Construction contracts

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

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

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

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

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

37 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

3. United States Dollar Amounts

The Company and its domestic subsidiaries operate primarily in Korean won and their official accounting records are maintained in Korean won. The U.S. dollar amounts, provided herein, represent supplementary information solely for the convenience of the reader. All Korean won amounts, other than those in statements of comprehensive income, have been translated into U.S. dollars at the exchange rate of \ 1,164.70 to US$ 1, while Korean won amounts in the statements of comprehensive income have been translated into U.S. dollars at the exchange rate of \ 1,181.78 to US$ 1. Such presentation is not in accordance with generally accepted accounting principles in either the Republic of Korea or the United States, and should not be construed as a representation that the Korean won amounts shown could be readily converted, realized or settled in U.S. dollars at this or any other rate.

The December 31, 2015 U.S. dollar amounts, which were previously expressed at the exchange rate of \ 1,172.00 to US$ 1 (the statements of comprehensive income: \ 1,131.30 to US$ 1), the rate in effect on December 31, 2015, have been restated to reflect the exchange rate in effect on June 30, 2016.

4. Critical Accounting Estimates and Assumptions

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

Estimates and assumptions applied in the preparation of these interim financial statements are in accordance with estimates and assumptions applied in consolidated financial statements as of December 31, 2015, except the assumptions applied in estimating income tax expenses.

Significant accounting estimates and assumptions related to construction contracts are addressed below. The estimates and assumptions applied in the preparation of these interim financial statements are in accordance with estimates and assumptions applied in consolidated financial statements as of December 31, 2015.

38 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(a) Uncertainty of the estimated total contract revenue

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

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

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

39 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

5. Construction Contracts

The Group’s balances of construction contracts as of June 30, 2016 and December 31, 2015, are summarized as follows:

(in millions of Korean won) June30,2016 December31,2015 Domestic Overseas Total Total

Beginning balance \ 12,851,125 \ 18,363,007 \ 31,214,132 \ 852,848 Increase due to business - - - 28,331,148 combination

New construction contracts 2,274,999 2,913,699 5,188,698 7,187,871 Revenue recognized during (2,563,015) (3,453,254) (6,016,269) (5,157,735) the period

Ending balance \ 12,563,109 \ 17,823,452 \ 30,386,561 \ 31,214,132

The Group provides the certificates of payment from financial institutions to the customers or reserves certain amount for guarantees for bidding, performance, payment and warranty relating to the construction contracts mentioned above, presented in the statement of financial position as guarantee deposits received. As of June 30, 2016, the Group has reserves of \ 305,152 million (December 31, 2015: \277,868 million) relating to the constructions in progress.

As of June 30, 2016, the Group has accumulated revenues1 and costs 1 on the ongoing construction projects amounting to \ 31,728,008 million and \ 29,910,518 million, respectively. As of June 30, 2016, the total accumulated revenues1 and costs1 incurred on all construction projects, including those completed during the current period, are \ 40,378,715 million and \ 38,928,435 million, respectively.

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

40 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

The account balances of outstanding construction contracts as of June 30, 2016 and December 31, 2015, are summarized as follows:

(in millions of Korean won) June30,2016 December31,2015 Domestic Overseas Total Total

Accounts receivable \ 1,641,717 \ 1,568,083 \ 3,209,800 \ 3,894,339

Advance payments 83,341 362,001 445,342 491,687 Prepaid expenses 318,349 39,375 357,724 380,109 Guarantee deposits 49,444 310,808 360,252 407,579 Long-term loans 329,332 - 329,332 394,848 Short-term loans 191,069 4,101 195,170 133,541 Advances received 1,365,389 1,852,204 3,217,593 2,551,493 Payment guarantee from financial institutions 5,646,386 5,063,329 10,709,715 9,953,540 Payment guarantee from Construction Guarantee Cooperative 1,845,227 - 1,845,227 1,728,953 Payment guarantee from Korea Software Financial Cooperative 6,642 - 6,642 6,579

The Group pays commissions (0.15 - 2.31%) to Korea Housing & Urban Guarantee Corporation and others in relation to payment guarantee from financial institution. As of June 30, 2016, unbilled amount out of the trade receivables is \ 1,629,840 million (2015: \ 1,623,339 million) and overbilled amount out of the advances received is \ 1,945,180 million (2015: \ 1,327,017 million).

As of June 30, 2016, construction sites are covered by construction work insurance amounting to \ 7,322,343 million.

The Group arranges housing finance for the members engaged in redevelopment and reconstruction projects that the Group manages. Advances on housing finance temporarily received but not executed amounts to \ 1,159,069 million. The Group has provided a joint guarantee limit of \ 3,358,000 million (balance of \ 3,317,008 million) with regard to the housing finance in accordance with the agreements with the relevant financial institutions.

In addition, payment guarantees provided by the Group for borrowings of the developer as of June 30, 2016, are as follows:

(in millions of Korean won) Business Financial Maximum location institution Amount amount Details Period Type Acceptances for Oct. 30, 2015 Other PF Seoul, Korea Banks and others \ 339,300 \ 339,300 debt ∼ Nov. 3, 2017 loans

41 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Details of construction contracts whose contact revenue is more than 5% of the prior year’s revenue as of June 30, 2016, are as follows:

Due from customers (in millions of Korean won) Percentage for contract work Trade receivables Contract Contractual (%) of Impaired Impaired date due date completion Total amount amount Total amount amount Australia RH PROJECT Apr. 30, 2013 Dec. 31, 2015 100.0 \ - \ - \ 71,611 \ - Hwasung A Feb. 15, 2014 Jul. 31, 2016 98.7 37,944 --- SR-Project 2nd Aug. 15, 2013 Aug. 31, 2016 99.6 9,748 - 2,976 - Pyeong-taek P-PJT May 4, 2015 Dec. 31, 2016 51.5 - - 3,207 - Saudi RABIGH 2 IPP Nov. 30, 2013 Jun. 1, 2017 81.8 108,935 - 103,893 - Turkey Kirikkale CCPP Oct. 23, 2014 Jun. 29, 2017 71.5 - - - - Algeria Mostaghanem Feb. 19, 2014 Aug. 3, 2017 11.5 26,412 - 7,466 - Algeria Naama Feb. 19, 2014 Aug. 18, 2017 21.2 31,065 - 5,739 - Qatar FAC D IWPP May 13, 2015 Jun. 23, 2018 38.3 - - - - Qatar Doha Metro42 Jun. 20, 2013 Jun. 30, 2018 30.0 18,342 18,342 7,397 7,290 Saudi Riyadh Metro Oct. 1, 2013 Oct. 29, 2018 37.6 6,081 - 56,183 - Garak Siyoung Complex 1 Oct. 22, 2015 Dec. 31, 2018 9.3 - - - - Australia Westconnex Jun. 3, 2015 Mar. 1, 2019 8.8 - - 77,685 - Stage 1b (M4 East) Singapore Changi Airport Oct. 22, 2015 Jul. 31, 2019 5.3 - - 29,304 - Pkg.1 Kazakhstan Balkhash Dec. 12, 2014 Mar. 30, 2020 2.7 23,498 - 2,599 - Australia Westconnex Nov. 20, 2015 Mar. 31, 2020 3.3 - - 19,312 - Stage2 (M5 Main Tunnel) UAE nuclear power plant Mar. 26, 2010 May 1, 2020 71.0 227,872 --- Gangneung Anin coal-fired Feb. 12, 2014 Sep. 30, 2020 2.0 22,829 - 16,081 - power plant Singapore Thomson East Mar. 17, 2016 Feb. 28, 2024 0.3 2,328 - - - Coast Line T313

Construction projects that are practically completed as of June 30, 2016, are excluded.

42 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Details of major joint venture construction as of June 30, 2016, are as follows:

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

Hyundai Engineering & UAE nuclear power plant \ 6,246,544 \ 2,810,945 45.00 Construction Co., Ltd. Saudi Riyadh Metro 9,183,898 2,586,553 28.16 FCC Kazakhstan Balkhash 2,957,336 1,478,668 50.00 Samsung C&T Corporation Australia Westconnex Stage2 3,383,250 1,014,975 30.00 CPB (M5 Main Tunnel) Qatar Doha Metro42 1,541,458 770,729 50.00 Samsung C&T Corporation Abu Dhabi Cleveland Clinic 1,705,290 682,116 40.00 BESIX Singapore Changi Airport Pkg.1 956,213 669,349 70.00 Samsung C&T Corporation Shin-Kori nuclear power plant #5, 6 1,070,527 545,969 51.00 Samsung C&T Corporation Hong Kong Metro SCLC1109 770,088 462,053 60.00 Samsung C&T Corporation Anyang Deokcheon 702,669 456,734 65.00 Samsung C&T Corporation Bujeon-Masan DoubleTrack 414,909 295,332 71.00 Samsung C&T Corporation Electric Railway Suseo-Pyeongtaek High-speed 301,141 271,027 90.00 Samsung C&T Corporation Railway Area 5 Hyundai Engineering & Singapore TuasFinger1 817,318 228,849 28.00 Construction Co., Ltd. Canada Site C 1,553,093 582,410 37.50 Acciona S.A. Malaysia KL118 Tower 586,003 351,602 60.00 Samsung C&T Corporation United Kingdom Mersey Gateway 780,012 259,978 33.33 FCC Mongolia Shangri-La Mixed Use 258,039 180,627 70.00 Samsung C&T Corporation Phase 2 Saudi Tadawul Tower PJT 395,393 237,236 60.00 Samsung C&T Corporation

43 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Total contract revenue is measured based on contractual amount initially agreed. The contract revenue can be increased by additional contract work, claims and incentive payments in the course of construction, or decreased by the penalty when the completion of contract is delayed due to the Group’s fault. Therefore, this measurement of contract revenue is affected by the uncertainty of the occurrence of future events. The change in contract revenue is recognized when it is probable that the customer will approve the increase in revenue due to the changes in contract work, or when it is probable that the Group will be able to satisfy the performance requirements, and the amount can be estimated reliably.

Changes in the estimated total contract revenue and estimated total contract costs by construction types for contracts in progress for the six-month period ended June 30, 2016, and its impact on the Group’s profit or loss for the period and in the succeeding periods are as follows:

(in millions of Korean won) Impact on Changes in Changes in profit or loss Due from estimated estimated Impact on in the customers Reserve for Construction total contract total contract profit or loss succeeding for contract foreseeable type revenue costs for the period periods work losses Building \ 924,195 \ 962,978 \ 186,368 \ (225,151) \ 494,039 \ 48,875 Civil engineering 49,804 445,373 (301,293) (94,276) 501,485 172,473 Plant 13,052 65,225 (53,029) 856 610,140 44,161 Landscaping 14 (2,119) 2,384 (251) 24,176 - \ 987,065 \ 1,471,457 \ (165,570) \ (318,822) \ 1,629,840 \ 265,509

44 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Uncertainty of the estimated total contract revenue due to construction delay

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

As of June 30, 2016, the Group recognized \ 193,385 million as other liabilities considering the uncertainty of the estimated total contract revenue due to delay from the construction in progress. The amount is the best estimate of the damage claim the Group is likely to bear due to the delay (Note 10).

For the six-month period ended June 30, 2016, changes in provision for estimated warranty costs for the completed projects and reserve for foreseeable losses from construction contract are as follows:

(in millions of Korean won) Beginning Increase Decrease Ending

Provision for estimated warranty costs \ 171,984 \ 15,555 \ (12,317) \ 175,222

Reserve for foreseeable losses 63,207 270,229 (67,927) 265,509

6. Inventories

Inventories as of June 30, 2016 and December 31, 2015, consist of the following:

June30,2016 December31,2015 (in millions of Korean won) Inventory Inventory Acquisition valuation Carrying Acquisition valuation Carrying cost allowance amount cost allowance amount

Merchandise \ 467,062 \ (30,396) \ 436,666 \ 452,266 \ (31,539) \ 420,727

Finished good 376,344 (30,123) 346,221 383,340 (32,121) 351,219

Raw materials 177,726 (7,029) 170,697 135,671 (5,740) 129,931

Land held for housing projects 4,671 (612) 4,059 1,737 (612) 1,125

Materials-in-transit 182,684 - 182,684 349,131 - 349,131 Semi-finished goods and work-in-progress 76,588 (3,837) 72,751 67,638 (2,144) 65,494

Others 75,254 - 75,254 68,418 - 68,418

\ 1,360,329 \ (71,997) \ 1,288,332 \ 1,458,201 \ (72,156) \ 1,386,045

45 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

7. Financial Instruments by Category

Details of financial instruments by category as of June 30, 2016, are as follows:

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

Cash and cash equivalents \ 2,613,888 \ - \ - \ - \ 2,613,888 Short-term financial instruments 127,759 - - - 127,759

Trade receivables1 2,894,841 - - - 2,894,841

Other current assets 1,897,257 36,826 18,796 - 1,952,879 Available-for-sale financial assets -- - 15,156,314 15,156,314

Other non-current assets2 768,242 - - - 768,242

\ 8,301,987 \ 36,826 \ 18,796 \ 15,156,314 \ 23,513,923

1 Due from customer for contract work amounting to \ 1,611,498 million is excluded. 2 Bank deposits amounting to \ 107 million are subject to withdrawal restrictions in relation to the Group’s loan facility agreement.

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

Trade payables \ - \ - \ 1,586,756 \ - \ 1,586,756

Short-term borrowings -- 1,747,422 445,040 2,192,462 Current portion of long-term debts -- 1,799,331 - 1,799,331

Other current liabilities 1,882,669 36,915 2,547,574 307,763 4,774,921 Debentures and long-term borrowings -- 3,539,243 - 3,539,243 Other non-current liabilities -- 101,567 - 101,567

\ 1,882,669 \ 36,915 \ 11,321,893 \ 752,803 \ 13,994,280

46 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Details of financial instruments by category as of December 31, 2015, are as follows:

Cash and cash equivalents \ 2,066,404 \ - \ - \ - \ 2,066,404 Short-term financial instruments 65,705 - -- 65,705

Trade receivables1 4,010,614 - -- 4,010,614

Other current assets 1,737,241 33,579 4,098 - 1,774,918 Available-for-sale financial assets -- - 15,976,708 15,976,708

Other non-current assets2 988,462 - -- 988,462

\ 8,868,426 \ 33,579 \ 4,098 \ 15,976,708 \ 24,882,811

1 Due from customer for contract work amounting to \ 1,623,339 million is excluded. 2 Bank deposits amounting to \ 109 million are subject to withdrawal restrictions in relation to the Group’s loan facility agreement.

Trade payables \ - \ - \ 1,738,438 \ - \ 1,738,438

Short-term borrowings - - 1,676,774 609,754 2,286,528 Current portion of long-term debts - - 1,516,719 - 1,516,719

Other current liabilities 1,830,345 29,858 2,981,495 308,466 5,150,164 Debentures and long-term borrowings - - 3,943,011 - 3,943,011 Other non-current liabilities - 1,214 83,796 - 85,010

\ 1,830,345 \ 31,072 \ 11,940,233 \ 918,220 \ 14,719,870

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

47 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

8. Trade Receivables and Other Assets

Trade receivables and other assets as of June 30, 2016 and December 31, 2015, are as follows:

(in millions of Korean won) June30,2016 December31,2015 Provision for Gross amount impairment Net amount Net amount

Trade receivables Financial instruments \ 3,031,533 \ (136,692) \ 2,894,841 \ 4,010,614 Due from customer for contract work 1,629,840 (18,342) 1,611,498 1,623,339 4,661,373 (155,034) 4,506,339 5,633,953 Other current assets Financial instruments: Short-term loans 291,493 (99,234) 192,259 121,719 Current portion of long-term receivables (Note 9) 175,566 - 175,566 12,179 Non-trade receivables 883,710 (32,633) 851,077 901,830 Accrued revenues 253,768 (37,717) 216,051 294,198 Deposits 532,497 (14,571) 517,926 444,992 2,137,034 (184,155) 1,952,879 1,774,918 Advance payments 641,215 (25,865) 615,350 701,847 Prepaid expenses 638,941 (162,539) 476,402 445,938 Prepaid corporate income tax 289,252 - 289,252 236,973 Others 61,098 - 61,098 156,442 3,767,540 (372,559) 3,394,981 3,316,118 Other non-current assets Financial instruments: Long-term receivables (Note 9) 831,184 (291,762) 539,422 740,848 Long-term financial instruments 580 - 580 850 Deposits 218,586 (925) 217,661 236,185 Overseas natural resources development 33,329 (22,749) 10,580 10,580 1,083,679 (315,436) 768,243 988,463 Others 60,678 - 60,678 61,149 1,144,357 (315,436) 828,921 1,049,612 \ 9,573,270 \ (843,029) \ 8,730,241 \ 9,999,683

48 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(in millions of Korean won) June30,2016 December31,2015 Provision for Gross amount impairment Net amount Net amount

Third party receivables \ 8,841,491 \ (831,953) \ 8,009,538 \ 8,483,606

Related party receivables 731,779 (11,076) 720,703 1,516,077 \ 9,573,270 \ (843,029) \ 8,730,241 \ 9,999,683

As of June 30, 2016, trade receivables amounting to \ 445,040 million (December 31, 2015: \ 609,754 million), which were transferred to financial institutions but have not matured yet, are recognized as trade receivables and collateralized borrowings, respectively, due to a recourse in the event the debtor fails to pay (Note 16).

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

Bad debts January 1, expense (in millions of Korean won) 2016 (reversal) Write-off Others1 June 30, 2016

Trade receivables \ 133,095 \ 24,146 \ (880) \ (1,327) \ 155,034 Other current assets Financial instruments: Short-term loans 94,831 4,404 - (1) 99,234 Non-trade receivables 31,383 955 (169) 464 32,633 Accrued revenues 31,913 6,497 (610) (83) 37,717 Deposits 14,571 -- - 14,571 172,698 11,856 (779) 380 184,155 Advance payments 25,875 -- (10) 25,865 Prepaid expenses 167,145 (4,606) - - 162,539 365,718 7,250 (779) 370 372,559 Other non-current assets Financial instruments: Long-term receivables 300,312 (8,542) - (8) 291,762 Deposits 925 -- - 925 Overseas natural resources development 22,682 67 - - 22,749 323,919 (8,475) - (8) 315,436 \ 822,732 \ 22,921 \ (1,659) \ (965) \ 843,029

1 Others include translation differences, consolidation adjustments and others.

49 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Changes in provision for impairment for the six-month period ended June 30, 2015, are as follows:

Bad debts January 1, expense (in millions of Korean won) 2015 (reversal) Others1 June 30, 2015

Trade receivables \ 70,648 \ (2,028) \ (3) \ 68,617 Other current assets Financial instruments: Non-trade receivables 506 (7) - 499 506 (7) - 499 Other non-current assets Financial instruments: Long-term receivables 575 46 - 621 \ 71,729 \ (1,989) \ (3) \ 69,737

1 Others include translation differences, consolidation adjustments and others.

Bad debts expenses (reversal) from trade receivables are included in selling and administrative expenses, and other bad debts expenses (reversal) are included in other operating expenses (income) in the statement of consolidated comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

As of June 30, 2016 and December 31, 2015, fair values of trade receivables, other current assets and other non-current assets are equal to their carrying value. The maximum exposure of trade and other receivables to credit risk is the carrying value of each class of receivables mentioned above.

50 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

9. Long-Term Receivables

Details of long-term receivables (including current portion) as of June 30, 2016 and December 31, 2015, are as follows:

(in millions of Korean won) June30,2016 December31,2015

Renault Samsung Motors Co., Ltd.1 \ 44,810 \ 58,494 Loans for others 21,394 28,550 Loans for redevelopment and reconstruction projects 507,505 518,264 Proceeds from disposal of shares2 143,913 143,550 Other long-term receivables 35,141 44,726 Less: Present value discount (37,775) (40,557) 714,988 753,027 Less: Current portion of long-term receivables (175,566) (12,179) \ 539,422 \ 740,848

1 The collectability of the contingent receivables from Renault Samsung Motors Co., Ltd. amounting to \ 44,810 million depends on the results of its future operations. Although management believes that the collectability is uncertain, it does not, however, expect this to result in a material adverse impact on the Group’s financial position.

2 The amount comprises proceeds from the sale of shares of Hanwha General Chemical Co., Ltd. (formerly Samsung General Chemicals Co., Ltd.) and Hanwha Techwin Co., Ltd. (formerly Samsung Techwin Co., Ltd.).

51 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

10. Other Liabilities

Details of other liabilities as of June 30, 2016 and December 31, 2015, are as follows:

(in millions of Korean won) June30,2016 December31,2015

Other current liabilities Financial instruments: Non-trade payables \ 2,738,890 \ 3,265,883 Accrued expenses 846,293 665,323 Finance guarantee contract 307,763 308,466 Guarantee deposits received 881,975 910,492 4,774,921 5,150,164 Advances received 4,481,289 3,907,166 Withholdings 297,019 189,780 Provisions (Note 18) 44,049 418 Others 40,725 135,060 9,638,003 9,382,588 Other non-current liabilities Financial instruments: Long-term non-trade payables 80,274 66,957 Leasehold deposits received 21,293 18,053 101,567 85,010 Contingent liabilities 398,278 638,958 Long-term unearned revenue 1,577 1,587 501,422 725,555 \ 10,139,425 \ 10,108,143

52 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

11. Available-for-sale Financial Assets

Changes in available-for-sale financial assets for the six-month periods ended June 30, 2016 and 2015, are as follows:

(in millions of Korean won) 2016 2015

Beginning balance \ 15,976,708 \ 4,569,012 Acquisition 94,455 141 Disposal and others (11,329) (285) Impairment loss (6,231) (105) Transfer 3,576 105 Loss on valuation, net (899,901) (342,427) Other changes (742) - Loss on translation of foreign currency, net (222) - Ending balance \ 15,156,314 \ 4,226,441 Current portion 16 876 Non-current portion 15,156,298 4,225,565

Details of available-for-sale financial assets as of June 30, 2016 and December 31, 2015, are as follows:

(in millions of Korean won) Detail June 30, 2016 December 31, 2015 Listed equities (1) \ 14,712,880 \ 15,530,283 Non-listed equities (2) 440,515 440,237 Debt securities 2,919 6,188 \ 15,156,314 \ 15,976,708

Current portion 16 1,090 Non-current portion 15,156,298 15,975,618

53 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(1) Listed equities

Listed equities, including preferred stock, as of June 30, 2016 and December 31, 2015, consist of the following:

December 31, (in millions of Korean won) June 30, 2016 2015 Number of Percentage shares (%) of Acquisition Market Carrying Carrying owned ownership cost value amount amount

Samsung Electronics Co., Ltd. 5,976,362 3.64 \ 6,484,353 \ 8,516,316 \ 8,516,316 \ 7,530,216 Samsung Life Insurance Co., Ltd. 38,688,000 19.34 34,819 3,888,144 3,888,144 4,255,680 Samsung SDS Co., Ltd. 13,215,822 17.08 3,396,466 1,896,470 1,896,470 3,356,819 Cheil Worldwide Inc. 14,539,350 12.64 253,712 245,715 245,715 300,965 Samsung Fine Chemicals Co., Ltd.1 - - - - - 51,335 Samsung Engineering Co., Ltd. 13,668,989 6.97 168,466 140,107 140,107 45,457 iMarketKorea Inc. 817,667 2.27 20,217 9,485 9,485 20,687 Samsung Heavy Industries Co., Ltd. - - 10,188 16,643 16,643 20,459 and others 10,368,221 14,712,880 14,712,880 15,581,618 Less: Asset held-for-sale Samsung Fine Chemicals Co., Ltd.1 - - - - - (51,335) \ 10,368,221 \ 14,712,880 \ 14,712,880 \ 15,530,283

1 The Group sold all the equity shares of Samsung Fine Chemicals Co., Ltd., which were classified as assets held-for-sale, to Lotte Chemical Corporation on February 29, 2016.

The difference between the acquisition cost and the market value of above listed equities are recognized as gain or loss on valuation of available-for-sale securities in the accumulated other comprehensive income and loss, net of income tax directly applied to the equity.

54 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(2) Non-listed equities

Non-listed equities as of June 30, 2016 and December 31, 2015, consist of the following:

December 31, (in millions of Korean won) June 30, 2016 2015 Number of Percentage Fair value or shares (%) of Acquisition net asset Carrying Carrying owned ownership cost value amount amount Domestic Companies Busan Newport Co., Ltd. 14,905,167 12.91 \ 115,712 \ 115,712 \ 115,712 \ 115,712 HAN ALL Co., Ltd. 1,128,011 16.11 11,280 16,428 16,428 16,428 SECUI Co., Ltd. 1,000,000 8.70 500 14,351 14,351 14,351 The Korea Economic Daily 1,187,563 6.35 7,095 7,656 7,656 7,656 Samsung Economics Research 120,000 1.00 903 903 903 903 Institute1 Oil Hub Korea and others1 - - 83,540 95,230 54,008 55,767 219,030 250,280 209,058 210,817 Overseas Companies Korea Ras laffan LNG Limited 2,783,333 10.00 80,279 67,461 67,461 67,461 Beijing Samsung Real Estate Co., - 10.00 63,843 55,020 55,020 52,142 Ltd. iMarket Asia Co., Ltd. 772,657 19.32 8,941 13,721 13,721 14,856 Samsung SDI (Hongkong) Limited1 5,500,000 2.44 4,477 4,477 4,477 4,477

Posco India Delhi Steel Processing - - 85,407 51,372 47,777 47,711 Centre.PVT.LTD and others1 242,947 192,051 188,456 186,647 Equity Contribution Korea Construction Financial 28,717 0.73 39,569 40,368 40,368 40,368 Cooperative Others1 - - 2,556 3,055 2,633 2,405 42,125 43,423 43,001 42,773 \ 504,102 \ 485,754 \ 440,515 \ 440,237

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

55 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

As of June 30, 2016 and December 31, 2015, the debt securities amounting to \ 2,919 million and \ 6,188 million, respectively, are composed of convertible bonds, national and municipal bonds, which have rates of return of 1.5% to 4.5% per annum.

As of June 30, 2016, the maximum amount exposed to credit risk, relating to available-for-sale financial assets, is equal to the book value.

Changes in gain or loss on valuation of available-for-sale financial assets for the six-month period ended June 30, 2016, recorded as other component of equity, are as follows:

Balance at Change for the Income tax Balance at (in millions of Korean won) January 1, 2016 period allocated June 30, 2016

Gain (loss) on valuation of available-for-sale financial assets \ 3,486,069 \ (899,901) \ 210,102 \ 2,796,270

56 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

12. Investments in Associates and Joint Ventures

Details of major investments in associates and joint ventures as of June 30, 2016 and December 31, 2015, are as follows (Note 1.3):

Percentage June 30, 2016 December 31, 2015 (%) of Acquisition Acquisition (in millions of Korean won) Location ownership cost Net assets Book value cost Net assets Book value

Associates Dongducheon Dream Power Co., Ltd.2 Korea 31.15 \ 81,191 \ 87,189 \ 63,214 \ 81,191 \ 92,910 \ 75,187 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. China 40.00 10,968 10,475 10,475 10,968 10,911 10,911 Songdo Landmark City Limited 3 Korea 43.94 20,522 20,522 20,522 20,522 20,522 20,522 Chongqing Shanxia Technology Textile Co., Ltd. China 20.00 30,461 29,471 29,471 30,461 30,216 30,216 Samsung Bioepis Co., Ltd.4 Korea 91.20 4,808,578 4,665,873 4,665,873 4,808,578 4,693,732 4,693,732 Others 364,471 431,576 373,074 364,471 366,355 364,958 5,316,191 5,245,106 5,162,629 5,316,191 5,214,646 5,195,526 Joint ventures Korea LNG Limited Oman 20.00 83,507 61,088 61,088 83,507 51,547 51,547 SP Armow Wind Ontario LP 5 Canada 50.01 19,419 -- 19,419 18,034 12,295 South Kent Wind LP Canada 50.00 69,311 50,466 50,466 69,311 79,689 71,009 K2 Wind Ontario LP Canada 33.34 13,365 20,426 20,426 28,448 34,927 29,321 JSC Balkhash Thermal Power Plant 5 Kazakhstan 50.00 153,795 107,315 107,315 153,795 109,352 109,353 LJG Green Source Energy Alpha S.R.L.5 Romania 78.00 23,297 21,412 21,412 23,297 21,770 21,770 Others 169,733 161,197 150,606 144,247 151,167 171,759 532,427 421,904 411,313 522,024 466,486 467,054 5,848,618 5,667,010 5,573,942 5,838,215 5,681,132 5,662,580 Less : Asset held-for-sale Songdo Landmark City Limited 3 Korea 43.94 (20,522) (20,522) (20,522) (20,522) (20,522) (20,522)

\ 5,828,096 \ 5,646,488 \ 5,553,420 \ 5,817,693 \ 5,660,610 \ 5,642,058

1 The investment shares in associates are all non-listed.

2 As of June 30, 2016, investments in Dongducheon Dream Power Co., Ltd., (Acquisition cost: \ 81,191 million), are pledged as collateral to a financial institution against the borrowings (total borrowing limit of \ 1,285,000 million) of Dongducheon Dream Power Co., Ltd. (Note 30).

3 The Group has entered into a contract to sell equity interests, receivables, and others of Songdo Landmark City Limited to joint venture partners and thus classified the investee as an asset held-for-sale.

57 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

4 Samsung Bioepis Co., Ltd. is excluded from subsidiaries although the percentage of ownership is 91.2% since the Group holds no control considering the potential voting rights held by other entities.

5 These companies are excluded from subsidiaries since they are joint ventures under the joint arrangement although the percentage of ownership is over 50%.

Changes in investments in associates and joint ventures for the six-month periods ended June 30, 2016 and 2015, are as follows:

(in millions of Korean won) 2016 2015

Beginning balance \ 5,642,058 \ 367,286 Acquisition 28,664 76,242 Disposal and others (18,442) - Share of profit (8,695) (28,040) Others1 (90,165) (3,855) Ending balance \ 5,553,420 \ 411,633

1 Others include dividends, transfer, changes in foreign currency exchange rates and others.

58 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Summarized financial information of major associates and joint ventures, including dividends received, as of and for the six-month period ended June 30, 2016, is as follows:

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

Associates

Dongducheon Dream Power Co., Ltd. \ 135,704 \ 1,471,278 \ 269,541 \ 1,088,331 \ - \ 392,544 \ (18,741) \ - \ (18,741) \ -

Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 30,104 3 3,920 - - 9,191 416 - 416 -

Chongqing Shanxia Technology Textile Co., Ltd. 338,023 100,091 271,804 18,953 - 22,054 68 - 68 - Samsung Bioepis Co., Ltd.1 261,487 5,403,460 479,126 69,732 - 87,100 (22,520) - (22,520) -

Joint ventures

Korea LNG Limited 31,663 292,759 18,936 43 - 19,301 18,687 - 18,687 1,327 SP Armow Wind Ontario LP 47,833 506,279 33,659 520,453 - 34,924 13,464 (26,976) (13,512) 27,883 South Kent Wind LP 28,990 731,811 38,682 621,187 - 59,407 24,163 (23,318) 845 19,265 K2 Wind Ontario LP 42,826 841,054 38,449 784,167 - 54,334 20,575 - 20,575 - JSC Balkhash Thermal Power Plant 13,642 256,062 55,074 - - - (544) - (544) - LJG Green Source Energy Alpha S.R.L. 19,089 97,207 12,181 76,664 - 5,836 (727) - (727) -

The above summarized financial information represents the amounts after fair value adjustments arising on the acquisition of equity shares. 1 Based on consolidated financial information.

59 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Summarized financial information of major associates and joint ventures, including dividends received, as of December 31, 2015, and for the six-month period ended June 30, 2015, is as follows:

(in millions of Korean won) Summarized financial information

December 31, 2015 June 30, 2015 Other Total Non- comprehen- comprehen- Current Non-current Current Non-current controlling Profit(loss) for sive sive Dividends assets assets liabilities liabilities interests Revenue the period income(loss) income(loss) received

Associates

Dongducheon Dream Power Co., Ltd. \ 157,415 \ 1,504,837 \ 209,198 \ 1,187,597 \ - \ 379,414 \ 20,431 \ - \ 20,431 \ -

Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. 38,465 3 11,191 - - 5,475 (1,158) - (1,158) -

Chongqing Shanxia Technology Textile Co., Ltd. 314,331 107,700 246,245 24,708 - 96,656 4,371 - 4,371 - Samsung Bioepis Co., Ltd.1 133,535 5,373,892 279,515 81,276 ------Allat Corporation 34,382 3,401 22,688 81 - 18,728 855 - 855 - Gimcheon Enervix Co., Ltd. 4,678 40,159 3,656 35,860 - 4,893 618 - 618 -

Joint ventures

Korea LNG Limited 582 257,191 3 34 - 40,198 39,151 (9) 39,142 7,791 SP Armow Wind Ontario LP 31,432 454,159 59,278 390,252 - - (376) (4,577) (4,953) - South Kent Wind LP 41,159 728,651 32,958 577,474 - 59,900 22,036 (4,970) 17,066 - K2 Wind Ontario LP 67,755 817,887 40,496 740,385 - 7,993 1,761 - 1,761 - JSC Balkhash Thermal Power Plant 8,307 209,396 41,555 - - 2 (1,169) - (1,169) - LJG Green Source Energy Alpha S.R.L. 16,543 98,664 10,215 77,083 - 5,496 (244) - (244) -

The above summarized financial information represents the amounts after fair value adjustments arising on the acquisition of equity shares. 1 Based on consolidated financial information.

60 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

13. Property, Plant and Equipment, and Intangible Assets

Changes in property, plant and equipment for the six-month periods ended June 30, 2016 and 2015, are as follows:

(in millions of Korean won) 2016 Buildings and Construction Land structures Animals&Plants2 Others in progress Total Beginning balance Acquisition cost \ 2,247,048 \ 2,090,638 \ 63,995 \ 1,131,765 \ 485,443 \ 6,018,889 Accumulateddepreciation - (432,184) (2,116) (446,799) - (881,099) Beneficiary's share of construction cost - - - (3,508) - (3,508) 2,247,048 1,658,454 61,879 681,458 485,443 5,134,282 Changes during the period Acquisition 21,315 15,301 459 101,756 78,582 217,413 Disposal (1,748) (4,075) (44) (5,456) - (11,323) Depreciation - (32,992) (1,297) (85,692) - (119,981) Transfer 11,739 48,610 1,035 344,958 (416,671) (10,329) Other changes1 (923) 6,186 4,007 4,502 (114) 13,658 Ending balance 2,277,431 1,691,484 66,039 1,041,526 147,240 5,223,720 Acquisition cost 2,277,431 2,236,362 69,450 1,706,699 147,240 6,437,182 Accumulateddepreciation - (544,878) (3,411) (661,798) - (1,210,087) Beneficiary's share of construction cost - - - (3,375) - (3,375) \ 2,277,431 \ 1,691,484 \ 66,039 \ 1,041,526 \ 147,240 \ 5,223,720

1 Other changes include asset transfer, adjustment on changes in foreign currency exchange rates and scope of consolidation. 2 As bearer plants are excluded from the scope of Korean IFRS 1041, Agriculture and Fishing: Productive Plants from January 1, 2016, while they are included

61 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

within the scope of Korean IFRS 1016, Property, Plant and Equipment, the bearer plants amounting to \ 36,233 million were retroactively accounted for as property, plant and equipment (Plants). (in millions of Korean won) 2015 Buildings and Construction Land structures Animals&Plants Others in progress Total Beginning balance Acquisition cost \ 912,516 \ 1,264,601 \ 26,220 \ 620,592 \ 46,467 \ 2,870,396 Accumulateddepreciation - (387,912) (2,243) (344,722) - (734,877) Beneficiary's share of construction cost - - - (3,732) - (3,732) 912,516 876,689 23,977 272,138 46,467 2,131,787 Changes during the period Acquisition 18 1,276 38 12,242 55,741 69,315 Disposal (60) (381) (33) (4,753) - (5,227) Depreciation - (18,729) (127) (38,436) - (57,292) Transfer 36 6,781 - 10,228 (21,034) (3,989) Other changes1 - 25 - (1) - 24 Ending balance 912,510 865,661 23,855 251,418 81,174 2,134,618 Acquisition cost 912,510 1,272,262 26,092 630,877 81,174 2,922,915 Accumulateddepreciation - (406,601) (2,237) (375,854) - (784,692) Beneficiary's share of construction cost - - - (3,605) - (3,605) \ 912,510 \ 865,661 \ 23,855 \ 251,418 \ 81,174 \ 2,134,618

1 Other changes include asset transfer, adjustment on changes in foreign currency exchange rates and scope of consolidation.

62 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Changes in intangible assets for the six-month periods ended June 30, 2016 and 2015, are as follows:

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

Beginning balance \ 594,057 \ 82,143 \ 143,204 \ 8,264 \ 61,524 \ 59,427 \ 190,940 \ 617,813 \ 82,800 \ 1,840,172 Acquisition 7,732 605 8,153 - - - - - 24,337 40,827 Disposal - (72) (23) (5) - - - - (102) (202) Amortization (13,280) - (29,178) (576) - (2,744) (1,067) (73,952) (12,540) (133,337) Impairment1 (90,200) ------(90,200) Transfer 27,423 - 8,328 - - - - - (17,635) 18,116 Other changes2 (5,631) (975) 858 - (835) - 770 - (597) (6,410) Ending balance \ 520,101 \ 81,701 \ 131,342 \ 7,683 \ 60,689 \ 56,683 \190,643 \ 543,861 \ 76,263 \ 1,668,966

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

63 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(in millions of Korean won) 2015 Right to use Memberships Software property Goodwill Brands Others Total

Beginning balance \ 38,143 \ 116,538 \ 1,379 \ 56,262 \ 57,974 \ 4,454 \ 274,750 Acquisition - 1,374 - 859 - 7,190 9,423 Disposal (170) - - - - - (170) Amortization - (19,020) (91) - (1,067) (510) (20,688) Transfer - 5,214 - - - (1,226) 3,988 Other changes1 2 6 - (21) - (60) (73) Ending balance \ 37,975 \ 104,112 \ 1,288 \ 57,100 \ 56,907 \ 9,848 \ 267,230

1 Other changes include adjustment on changes in foreign currency exchange rates and scope of consolidation.

Goodwill is monitored by the management at the operating segment level. The following is a summary of goodwill allocation for each operating segment (cash-generating unit or groups of cash-generating units) as of June 30, 2016 and December 31, 2015:

(in millions of Korean won) June 30, 2016 December 31, 2015

Fashion segment: acquisition of fashion \ 56,262 \ 56,262 business segment of Samsung SDI Co., Ltd. Others 4,427 5,262 \ 60,689 \ 61,524

14. Investment Properties

Changes in investment properties for the six-month periods ended June 30, 2016 and 2015, are as follows:

2016 2015 (in millions of Korean won) Land Building Total Land Building Total

Beginning balance \ 95,239 \ 37,807 \ 133,046 \ 5,458 \ 2,847 \ 8,305 Disposal - (556) (556) - - - Depreciation - (540) (540) - (43) (43) Other changes 1 (2,967) (3,740) (6,707) - - - Ending balance \ 92,272 \ 32,971 \ 125,243 \ 5,458 \ 2,804 \ 8,262

1 Other changes include adjustments due to changes in foreign currency exchange rates.

64 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

15. Biological Assets

Changes in biological assets for the six-month periods ended June 30, 2016 and 2015, are as follows:

(in millions of Korean won) 2016 2015

Beginning balance1 \ 2,415 \ - Changes in foreign currency exchange rates 45 - Ending balance \ 2,460 \ -

1 As bearer plants are excluded from the scope of Korean IFRS 1041, Agriculture and Fishing: Productive Plants from January 1, 2016, while they are included within the scope of Korean IFRS 1016, Property, Plant and Equipment, the bearer plants amounting to \ 36,233 million were retroactively accounted for as property, plant and equipment (Plants).

16. Borrowings

Details of borrowings as of June 30, 2016 and December 31, 2015, are as follows:

(in millions of Korean won) June 30, 2016 December 31, 2015

Current liabilities Short-term borrowings \ 2,192,462 \ 2,286,528 Current portion of long-term borrowings 330,183 637,260 Current portion of debentures 1,470,000 880,000 Less: Discount on debentures (852) (542) 3,991,793 3,803,246 Non-current liabilities Long-term borrowings 1,263,823 1,198,206 Debentures 2,280,000 2,750,000 Less: Discount on debentures (4,580) (5,195) 3,539,243 3,943,011 \ 7,531,036 \ 7,746,257

65 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Short-term borrowings as of June 30, 2016 and December 31, 2015, consist of the following:

Annual interest June 30, December 31, (in millions of Korean won) Creditors rate (%) 2016 2015

Samsung C&T and domestic subsidiaries Korea Construction Loans in local currency Financial Cooperative 1.40 - 2.70 \ 633,023 \ 453,123 and others

Loans in foreign currency SMBC and others 1.23 - 4.40 164,665 144,023 Banker’s usance Woori Bank and others L+0.4 - 1.3 168,859 185,093

Secured loans (Note 8) Woori Bank and others L+0.4 - 1.8 444,874 609,192

1,411,421 1,391,431 Foreign subsidiaries

General loans Citibank and others 0.44 - 8.85 780,875 894,535 Secured loans (Note 8) BTMU and others 1.5 166 562

781,041 895,097 \ 2,192,462 \ 2,286,528

As of June 30, 2016, the Company has bank overdraft facility agreements amounting to \ 158,500 million and credit facility agreements amounting to \ 568,000 million with ten banks, including Woori Bank. Also, the Company has entered into credit agreements using its notes receivable which are guaranteed, as collateral for up to \ 180,000 million with four banks, including Shinhan Bank.

66 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Debentures as of June 30, 2016 and December 31, 2015, consist of the following:

Annual interest June 30, December 31, (in millions of Korean won) Issue date Maturity rate (%) 2016 2015

Non-guaranteed and publicly listed No. 98-2 Oct. 17, 2011 Oct. 17, 2016 4.56 \ 250,000 \ 250,000 No. 99-2 Feb. 3, 2012 Feb. 3, 2017 4.29 280,000 280,000 No.100-2 Nov.22,2012 Nov. 22, 2017 3.31 200,000 200,000 No. 101-1 Mar. 8, 2013 Mar. 8, 2016 - - 150,000 No. 101-2 Mar. 8, 2013 Mar. 8, 2018 3.17 150,000 150,000 No.102-1 Jul.23,2013 Jul. 23, 2018 3.64 50,000 50,000 No.102-2 Jul.23,2013 Jul. 23, 2018 3.64 50,000 50,000 No. 103-1 Sep. 5, 2013 Sep. 5, 2016 3.31 180,000 180,000 No. 103-2 Sep. 5, 2013 Sep. 5, 2018 3.71 120,000 120,000 No. 104-1 Mar. 7, 2014 Mar. 7, 2017 3.20 250,000 250,000 No. 104-2 Mar. 7, 2014 Mar. 7, 2019 3.59 150,000 150,000 No.105-1 Oct.6,2014 Oct. 6, 2017 2.43 100,000 100,000 No.105-2 Oct.6,2014 Oct. 6, 2019 2.69 150,000 150,000 No. 106-1 1 Apr. 25, 2013 Apr. 25, 2016 - - 150,000 No. 106-2 1 Apr. 25, 2013 Apr. 25, 2018 2.90 150,000 150,000 No. 107-1 1 Aug. 29, 2013 Aug. 29, 2016 3.19 150,000 150,000 No. 107-2 1 Aug. 29, 2013 Aug. 29, 2018 3.52 350,000 350,000 No. 108-1 1 Apr. 3, 2014 Apr. 3, 2017 3.11 240,000 240,000 No. 108-2 1 Apr. 3, 2014 Apr. 3, 2019 3.41 260,000 260,000 No.109-1 Dec.1,2015 Dec. 1, 2018 2.24 100,000 100,000 No.109-2 Dec.1,2015 Dec. 1, 2020 2.50 100,000 100,000 No.110-1 Jun.16,2016 Jun. 16, 2019 1.74 200,000 - No.110-2 Jun.16,2016 Jun. 16, 2021 1.89 100,000 - Non-guaranteed and private Oct. 24, 2014 Oct. 24, 2019 3.48 50,000 50,000 Non-guaranteed and private Jan. 28, 2016 Jan. 28, 2017 2.38 40,000 - Non-guaranteed and private Mar. 31, 2016 Mar. 31, 2017 2.28 80,000 - 3,750,000 3,630,000 Less: Current portion of debentures (1,470,000) (880,000) \ 2,280,000 \ 2,750,000

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

67 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Long-term borrowings (including foreign currency) as of June 30, 2016 and December 31, 2015, consist of the following:

(in millions of Korean won) Annual interest June 30, December 31, Creditors rate (%) 2016 2015

Denominated in Korean won Samsung C&T and domestic subsidiaries KEB Hana Bank and others 1.50 - 2.75 \ 26,644 \ 80,638 (Energy facility loans) Korea Development Bank and others - - 50,109 (General borrowings) Korea Development Bank and others 2.82 - 4.16 531,800 481,000 (Facility loans) Korea Housing & Urban Guarantee Corporation - 9,294 8,095 (Working capital loans) Korea Investment & Securities Co., Ltd. and 2.01 - 2.04 300,000 300,000 others (Long-term commercial paper) 867,738 919,842 Less: Current portion of long-term borrowings (279) (317,725) 867,459 602,117

Denominated in foreign currency Samsung C&T and domestic subsidiaries Korea National Oil Corporation 0.75 - 5.00 36,452 37,277 (Condition loans) Mizuho Corporate Bank Libor + 0.80 115,589 116,314 (General borrowings) SMBC Libor + 0.70, 317,966 319,960 (General borrowings) 2.66 ANZ Bank and others 1.98 - 2.54 127,543 100,792 (Facility loans) Foreign subsidiaries SC Bank and others 1.35 – 5.00 128,718 341,281 (General borrowings) 726,268 915,624 Less: Current portion of long-term borrowings (329,904) (319,535) 396,364 596,089 \ 1,263,823 \ 1,198,206

68 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

The maturities of long-term debts (excluding current portion) as of June 30, 2016, are as follows:

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

July 1, 2017~ \ 600,000 \ 93,524 \ 186,410 \ 879,934 June 30, 2018 July 1, 2018~ 1,280,000 467,058 31,468 1,778,526 June 30, 2019 July 1, 2019~ 200,000 274,742 139,767 614,509 June 30, 2020 After July 1, 2020 200,000 32,135 38,719 270,854 \ 2,280,000 \ 867,459 \ 396,364 \ 3,543,823

Long-term borrowings and debentures by currencies as of June 30, 2016 and December 31, 2015, are as follows:

(in millions of Korean won) Long-term borrowings Debentures (amortized cost) June 30, December 31, June 30, December 31, 2016 2015 2016 2015

US Dollars \ 379,574 \ 587,180 \ - \ -

Korean Won 867,459 602,117 2,275,420 2,744,805 Japanese Yen 9,238 8,909 -- Others 7,552 - -- \ 1,263,823 \ 1,198,206 \ 2,275,420 \ 2,744,805

69 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

17. Net Defined Benefit Liabilities

The amounts recognized on the consolidated statements of financial position as of June 30, 2016 and December 31, 2015, are as follows:

(in millions of Korean won) June30,2016 December31,2015

Defined benefit obligation \ 722,037 \ 726,439

Less: Plan assets (557,261) (603,900) Less: Contribution to National Pension Fund (1,002) (1,114) \ 163,774 \ 121,425

The Group under defined benefit plans is required to pay retirement benefits to any employee who has provided one year or more of services as of reporting date, in accordance with the Group's policies on payment of retirement benefits (in accordance with local regulations for overseas subsidiaries). Additionally, as of June 30, 2016, the Group is under contracts with Samsung Life Insurance Co., Ltd. and others for operations management and asset management of its defined benefit pension plans.

Details of defined benefit liabilities in the statements of financial position as of June 30, 2016 and December 31, 2015, are determined as follows:

(in millions of Korean won) June30,2016 December31,2015

Present value of funded defined obligations \ 579,396 \ 584,071

Fair value of plan assets1 (558,263) (605,014)

21,133 (20,943) Present value of unfunded defined obligations 142,641 142,368 \ 163,774 \ 121,425

1 The amount includes contributions to the National Pension Fund of \ 1,002 million (2015: \ 1,114 million) as of June 30, 2016.

70 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

The amounts recognized in the statements of comprehensive income for the three-month and six-month periods ended June 30, 2016 and 2015, are as follows:

(in millions of Korean won) 2016 2015 Three months Six months Three months Six months

Defined benefit plan Current service cost \ 23,650 \ 50,804 \ 8,855 \ 17,715 Interest expense 5,254 10,825 1,815 3,631 Return on plan assets (excluding amounts included in interest expense/income) (4,460) (8,919) (1,669) (3,338) Defined contribution plan Severance benefits 1,325 1,977 259 259 Other 29,203 100,340 (854) 1,667 \ 54,972 \ 155,027 \ 8,406 \ 19,934

Details of allocation of expenses for the six-month periods ended June 30, 2016 and 2015, are as follows:

(in millions of Korean won) 2016 2015

Cost of sales \ 77,025 \ 8,128 Selling and administrative expenses (severance benefits) 68,037 11,806 Selling and administrative expenses (research and development) 10,391 - Other assets (426) - \ 155,027 \ 19,934

71 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

18. Provisions

Changes in provisions for liabilities and charges for the six-month periods ended June 30, 2016 and 2015, are as follows:

(In millions of Korean won) 2016 Construction warranties1 Restoring cost2 Other Total

January 1, 2016 \ 171,984 \ 44,613 \ 24,480 \ 241,077 Additional provisions 15,555 8,317 196,348 220,220 Used and reversal (12,533) (6,258) (147,342) (166,133) Other changes 216 (279) 19 (44) June 30, 2016 \ 175,222 \ 46,393 \ 73,505 \ 295,120 Current (Note 10) - - 44,049 44,049 Non-current 175,222 46,393 29,456 251,071

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

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

(In millions of Korean won) 2015 Construction warranties1 Other Total

January 1, 2015 \ 3,857 \ 2,126 \ 5,983 Additional provisions 1,960 1,886 3,846 Used and reversal (1,824) (2,603) (4,427) Other changes - - - June 30, 2015 \ 3,993 \ 1,409 \ 5,402 Current - 611 611 Non-current 3,993 798 4,791

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

72 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

19. Contingencies and Commitments

As of June 30, 2016, the Company has agreements with several financial institutions, including Woori Bank, for the guarantees of letters of credit related to the Company’s export and import, totaling USD 523,947 thousand, for the guarantee of the performance of export contracts amounting to USD 211,064 thousand and for the guarantee of various trade finance with a limit of USD 2,364,141 thousand. The receivables from export transactions sold to financial institutions, which amount to USD 421,973 thousand, are not yet due as of June 30, 2016.

As of June 30, 2016, the Group has provided a note amounting to \ 500 million, and 32 blank checks and notes as collateral to related institutions for borrowings, performance guarantees, construction payment guarantees, and others.

As of June 30, 2016, the Group is contingently liable for loan guarantees, principally for foreign associates and joint ventures amounting to USD 252,168 thousand (Note 30).The Group provides performance guarantees on the construction contracts of its foreign operations limited to USD 178,547 thousand, and the Group provides guarantees for the performance of other construction companies’ projects amounting to \ 1,607,723 million. Conversely, other construction companies provide guarantees for the performance of the Group’s projects amounting to \ 2,852,306 million.

As of June 30, 2016, the Group has short-term export insurance with Korea Trade Insurance Corporation. The certificates issued by Korea Trade Insurance Corporation (insured amount of \ 320,978 million) relating to guarantees provided by financial institutions are pledged as collateral.

As of June 30, 2016, the Group has been named as the defendant in certain lawsuits brought against it in the normal course of business. The aggregate amount of 134 lawsuits filed against the Group, amounted to approximately \ 235,374 million and USD 245,517 thousand. The Group also filed 83 lawsuits amounting to \ 361,303 million and USD 1,659,398 thousand. The Group's management believes that the ultimate resolution of these cases will not have a material adverse effect on the operations or financial position of the Group.

As of June 30, 2016, the Group has 1,704 forward exchange contracts amounting to USD 1,751,881 thousand, JPY 1,905,911 thousand, EUR 6,690 thousand, SGD 213 thousand, GBP 4,628 thousand, KWD 105 thousand and SAR 120 thousand, and four interest rate swap contracts with financial institutions whose contracts amount to \ 300,000 million and USD 120,000 thousand. These forward exchange contracts and interest rate swap contracts are intended to hedge foreign exchange risk and interest risk exposures of the Group. In addition, the Group has entered into two currency swap contracts with contract prices amounting to USD 99,244 thousand and 108 commodity futures contracts with financial institutions with contract prices amounting to USD 98,188 thousand. For the six-month period ended June 30, 2016, realized gains and losses from the contracts mentioned above, included in foreign exchange gain and loss (other income and expenses), amount to approximately \ 68,553 million and \ 70,587 million, respectively.

73 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

As of June 30, 2016, details of gain (loss) on valuation of derivative instruments are as follows:

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

Currency forward contracts \ 21,944 \ (22,288) \ 937 Interest swap contracts - - (4,834) Currency swap contracts 5 (1,498) (169) Commodity futures contracts 1,288 (5,024) -

As of June 30, 2016, the Company has an electronic credit sales agreement and collateral loan agreements using the accounts receivable amounting to \ 415,000 million with financial institutions, including Woori Bank.

On February 14, 2012, the Group entered into a share purchase agreement with JSC Samruk-Energy to purchase its shares related to the construction of and business investment in the coal-fired electrical power plant located in Kazakhstan. The Group retains the right to re-sell the shares purchased from JSC Samruk-Energy, which also retains the right to re-purchase the sold shares.

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

In accordance with the joint venture agreement between Biogen Idec Therapeutics Inc. and the Group, Biogen Idec Therapeutics Inc. has an option to purchase additional stock in Samsung BioEpis Co., Ltd. that would allow Biogen Idec Therapeutics Inc. to increase its percentage of ownership up to 49.99%. In relation to this contract that may be settled in the Group’s own equity instruments, the Group recognizes option liability of \ 1,853,368 million as of June 30, 2016.

74 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

20. Share Capital

The Company is authorized to issue 500 million shares with a par value of \ 100 per share. As of June 30, 2016, 189,690,043 shares of common stock and 1,627,440 shares of preferred stock are issued and outstanding.

The Company issued 56,317,483 shares (54,690,043 shares of common stock and 1,627,440 shares of preferred stock) of new stock for the merger with the former Samsung C&T Corporation on September 14, 2015.

As authorized in its Articles of Incorporation, the Company is able to issue convertible bonds which can be converted into common shares and preferred shares of the Company, and bonds with warrants which grant the right to purchase new preferred shares to the amount of \ 850 billion each. As of June 30, 2016, there are no convertible bonds and bonds with warrants issued under these terms.

Details of treasury stock as of June 30, 2016 and December 31, 2015, are as follows:

June30,2016 December31,2015 (in millions of Korean won, Preferred Common Preferred Common except number of shares) stock stock stock stock

Number of shares 159,849 26,225,503 159,849 23,518,346 Acquisition cost \ 16,978 \ 1,895,517 \ 16,978 \ 1,438,898

21. Other Components of Equity

Other components of equity as of June 30, 2016 and December 31, 2015, consist of:

(in millions of Korean won) June 30, 2016 December 31, 2015

Treasury stock (Note 20) \ (1,912,495) \ (1,455,876) Other capital adjustments (245,046) (680,686) Gain on valuation of available-for-sale financial 2,796,270 3,485,492 assets, net (Note 11) Gain on valuation of available-for-sale financial - 577 assets, net – asset held-for-sale (Note 11) Gain on valuation of investment in associates 16,872 2,024 Loss on valuation of investment in associates (154,701) (105,721) Cumulative effect of foreign currency translation of 30,456 (3,390) overseas operations Loss on valuation of (3,833) (10,454) derivative instruments, net (Note 19) \ 527,523 \ 1,231,966

75 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

22. Selling and Administrative Expenses

Selling and administrative expenses for the three-month and six-month periods ended June 30, 2016 and 2015, are as follows:

2016 2015 (in millions of Korean won) Three months Six months Three months Six months

Salaries and others \ 168,151 \ 441,259 \ 71,799 \ 148,039 Employee benefits 29,254 63,679 12,724 22,206 Depreciation 45,218 91,117 21,159 41,964 Travel 14,889 28,482 3,862 7,736 Commission 187,993 394,708 129,522 245,252 Rent 57,396 117,300 47,993 98,230 Freight 68,457 128,566 7,825 17,751 Taxes and dues 15,901 30,507 3,402 6,333 Advertising 17,993 31,548 12,868 22,819 Research and development 44,372 52,167 - - Bad debts expense (Note 8) 25,545 24,146 (88) (1,989) Computational service fee 12,870 25,747 12,168 23,573 Sales promotion 9,463 20,518 (2,190) 19,607 Others 54,128 98,939 24,456 47,991 \ 751,630 \ 1,548,683 \ 345,500 \ 699,512

76 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

23. Other Income and Expenses

Other income and expenses for the three-month and six-month periods ended June 30, 2016 and 2015, consist of:

2016 2015 (in millions of Korean won) Three months Six months Three months Six months

Other income Gain on valuation of equity method investments \ 33,041 \ 58,101 \ - \ - Dividend income 192 211,105 390 68,439 Foreign exchange gain 108,892 225,755 2,693 5,351 Gain on translation of foreign currency (15,065) 59,762 627 1,535 Gain on disposal of investments 1,352 32,089 - - Gain on disposal of property, plant and equipment 1,206 4,536 543 651 Gain on disposal of intangible assets - 40 - - Reversal of allowance for doubtful accounts (Note 8) 14,403 22,693 - - Gain on insurance settlement 19 37 181,800 181,800 Others 50,011 86,055 3,247 5,020 194,051 700,173 189,300 262,796

Other expense Loss on valuation of equity method investments 266 6,112 - - Foreign exchange losses 125,254 255,847 2,275 4,646 Loss on translation of foreign currency 25,156 100,529 424 901 Impairment loss on investments 4,597 6,297 (105) - Loss on disposal of investments 280 280 88 105 Impairment loss on property, plant and equipment - - 162 162 Loss on disposal of property, plant and equipment 1,450 3,252 1,775 2,805 Impairment loss on intangible assets (26,740) 90,200 - - Loss on disposal of trade receivables 2,110 6,656 - -

Donations 7,060 18,853 9,062 12,794 Other bad debts expense (Note 8) 6,021 21,468 - - Casualty loss - - 209,765 209,765 Others (19,364) 167,245 612 21,306 \ 126,090 \ 676,739 \ 224,058 \ 252,484

77 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

24. Expenses by Nature

Expenses recorded by nature as cost of sales, selling and administrative expenses in the statements of comprehensive income for the three-month and six-month periods ended June 30, 2016 and 2015, consist of:

2016 2015 (in millions of Korean won) Three months Six months Three months Six months

Changes in finished goods and work-in-process \ 3,598,972 \ 7,120,146 \ 375,250 \ 718,708 Construction outsourcing 1,553,402 2,855,570 231,521 459,858 Employee benefit expenses 561,466 1,310,613 175,846 341,862 Commission 421,057 788,492 137,516 279,786 Freight 71,155 133,888 9,115 17,980 Research and development 44,372 52,167 - - Heavy construction equipment usage 45,695 93,611 3 96 Rental 99,362 199,691 57,985 116,366 Taxes and dues 60,652 104,883 12,940 14,732 Depreciation and amortization 103,682 206,580 41,863 80,706 Insurance 10,417 26,786 7,509 8,533 Outsourcing fee 100,061 246,456 74,078 142,572 Others 203,643 656,906 148,792 358,048 \ 6,873,936 \ 13,795,789 \ 1,272,418 \ 2,539,247

25. Employee Benefits

Employee benefits for the three-month and six-month periods ended June 30, 2016 and 2015, consist of:

2016 2015 (in millions of Korean won) Three months Six months Three months Six months

Wages and salaries \ 431,559 \ 986,487 \ 144,808 \ 274,139 Welfare 80,326 179,064 25,337 44,761 Retirement benefit obligation 49,581 145,062 5,701 22,962 \ 561,466 \ 1,310,613 \ 175,846 \ 341,862

78 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

26. Adjusted Operating Profit

The operating profit adjusted to reflect the performance of the Group by including and excluding the other income or expenses not included within operating profit in the statements of consolidated comprehensive income for the three-month and six-month periods ended June 30, 2016 and 2015, is as follows:

(In millions of Korean won) 2016 2015 Three months Six months Three months Six months Operating profit (loss) in the statement of consolidated comprehensive- income \ 176,811 \ (258,003) \ 39,072 \ 45,079 Gain on valuation of equity method investment 32,775 51,989 - - Dividends income 192 211,105 390 68,439 Foreign exchange gain (loss) (16,362) (30,092) 418 705 Gain (loss) on translation of foreign currency (40,222) (40,767) 203 634 Impairmentlossoninvestments (4,597) (6,297) 105 - Gain (loss) on disposal of investments 1,072 31,809 (105) (105) Impairment loss on property, plant andequipment - - (145) (162) Gain (loss) on disposal of property, plantandequipment (244) 1,284 (1,232) (2,154) Impairment loss on intangible assets 26,740 (90,200) - - Gain on disposal of intangible assets - 40 - - Reversal of allowance for bad debts (Other bad debt expense) 8,382 1,225 - - Donations (7,060) (18,853) (9,062) (12,794) Loss on disposal of trade receivables (2,110) (6,656) - - Others 69,394 (81,153) 2,635 (16,286) Adjusted operating profit (loss) \ 244,771 \ (234,569) \ 32,279 \ 83,356

79 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

27. Financial Income and Expenses

Financial income and expenses for the three-month and six-month periods ended June 30, 2016 and 2015, consist of:

2016 2015 (in millions of Korean won) Three months Six months Three months Six months

Interest income: Deposits in bank \ 4,455 \ 9,275 \ 621 \ 1,644

Securities 1,189 2,395 16 34 Loans 8,008 8,910 2 90 Overdue interest 36 93 - - Present value discounts 2,034 5,211 1,296 2,542 Others 7,774 14,843 6 14 Foreign exchange gain 12,237 22,854 - - Gain on translation of foreign currency 18,737 56,589 - -

Total financial income 54,470 120,170 1,941 4,324

Interest expense: Short-term borrowings 12,285 24,220 851 1,979 Long-term borrowings 9,943 20,896 1,026 2,764 Debentures 29,060 59,580 10,796 21,589 Others 6,550 8,175 (4) 1,239 Capitalized interests (1,691) (4,450) - -

Foreign exchange loss 9,773 18,348 - - Loss on translation of foreign currency 17,977 64,357 - -

Total financial expenses 83,897 191,126 12,669 27,571

Financial expenses, net \ 29,427 \ 70,956 \ 10,728 \ 23,247

80 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

28. Income Tax Expense

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

29. Earnings (Loss) per Share

Basic earnings (loss) per ordinary share for the six-month periods ended June 30, 2016 and 2015, is as follows:

(in Korean and in shares) 2016 2015

Loss for the period 1 \ (295,532) million \ (14,485) million Loss for the period attributable to ordinary shares (292,953) million (14,485) million Weighted average number of ordinary shares outstanding 164,595,001 shares 115,966,200 shares Basic loss per ordinary share \ (1,780) \ (125)

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

Basic earnings (loss) per preferred share for the six-month periods ended June 30, 2016 and 2015, is as follows:

(in Korean won and in shares) 2016 2015

Loss for the period 1 \ (295,532) million \ (14,485) million

Loss for the period attributable to preferred shares (2,579) million - Weighted average number of preferred shares outstanding 1,467,561 shares - Basic loss per preferred share \ (1,757) \ -

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

Since there is no dilutive potential ordinary share, the diluted earnings per ordinary share and the basic earnings per ordinary share are the same for the six-month periods ended June 30, 2016 and 2015.

81 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

30. Related Party Transactions

As of June 30, 2016, the Group's related parties consist of 57 associates and joint ventures including Samsung Bioepis Co., Ltd. and other related party (Note 1.3).

Significant transactions between the Company and associates, joint ventures and other related party for the six-month periods ended June 30, 2016 and 2015, and the related account balances as of June 30, 2016 and December 31, 2015, consist of the following:

Samsung Bioepis Co., Ltd. 115 378 - - 8 690 - - Waris Gigih Engineering & 522 ------Technology Sdn. Bhd. Chongqing Shanxia 23,624 - 243 - 18,131 23,379 178 124 Technology Textile Co., Ltd. Allat Corporation -- 658 360 -- 58 87 Gimcheon Enervix Co., Ltd. 283 277 2 2 218 91 - - Others -- 38 ---- - Other related party Samsung Electronics Co., 1,101,903 312,785 10,422 2,063 646,041 162,741 219,370 186,665 Ltd.

82 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Significant transactions between the Group and associates and joint ventures (the above transactions are excluded) for the six-month periods ended June 30, 2016 and 2015, and the related account balances as of June 30, 2016 and December 31, 2015, consist of the following:

(in millions of Korean won) Sales Purchases Receivables Payables June 30, June 30, June 30, June 30, June 30, December June 30, December 2016 2015 2016 2015 2016 31, 2015 2016 31, 2015 Associates Samsung Bioepis Co., Ltd. \ 6,802 \ - \ - \ - \ 487 \ 232 \ - \ - Chongqing Shanxia Technology Textile 41 - 41 - 41 - 105 109 Co., Ltd. KST Electric Power 1,055 --- 37,868 32,439 -- Company, SAPI de C.V. Others 58 - 15 -- 3 - 4

Joint ventures South Kent Wind LP 229 --- 86 43 -- SP Armow Wind Ontario LP 492 --- 165 12,190 -- Windsor Solar LP 8,728 --- 12 8 -- LJG Green Source Energy 767 --- 15,805 16,695 -- Alpha S.R.L. Others 530 --- 1,841 1,865 --

Major fund transactions with related parties for the six-month period ended June 30, 2016, are as follows:

(in millions of Korean won) 2016 Loan transactions Borrowing transactions Loans Repayments Borrowings Repayments

LLC. Uglegorskugol \ - \ 1,902 \ - \ -

83 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Payment guarantees for the liabilities of foreign associates and joint venture provided by the Group as of June 30, 2016, are as follows:

Amount Actual Guaranteed (in thousands of US dollars) Guarantor Guaranteed period borrowings amount

Associates Terminal KMS de GNL, S. de R.L. Santander and September 1, 2031 de C.V. others $ 88,842 $ 88,842 KST Electric Power Company, KEB Hana Bank September 15, 2016 SAPI de C.V. and others 12,992 12,992 Joint venture Kelar S.A. BTMU and others April 30, 2031 63,262 90,619 $ 165,096 $ 192,453

As of June 30, 2016, investments in Dongducheon Dream Power Co., Ltd. amounting to \ 81,191 million were pledged as collateral to a financial institution related to the construction of Dongducheon combined cycle power plant for the borrowings (total borrowing limit of \ 1,285,000 million) of the Dongducheon Dream Power Co., Ltd. (Note 12).

For the six-month period ended June 30, 2016, the Company recognized expenses for short-term benefits amounting to \ 2,218 million and retirement benefits amounting to \ 484 million as key management compensation. Key management includes executive officers who have significant authorities and responsibilities with the respect to planning, operating and controlling of the Company’s business activities.

Also, the Company introduced long-term incentive plans for its executives based on a three-year management performance criteria and has made a provision for the cumulative estimated incentive cost for the past periods. For the six-month period ended June 30, 2016, the Company recognized expenses amounting to \ 724 million.

84 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

31. Cash Generated from Operations

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

(in Korean won) June 30, 2016 June 30, 2015

Loss for the period \ (382,053,475,145) \ (14,990,430,940)

Addition

Income tax expense 15,842,843,548 19,094,014,869 Interest expense 108,420,335,721 27,570,732,373 Depreciation and amortization 253,857,808,263 78,023,163,548 Retirement benefits 52,710,093,418 18,008,380,837 Bad debts expense 24,145,975,833 (1,989,061,013) Other bad debts expense 21,467,958,296 - Transfer in provision for construction losses 102,814,567,418 - Transfer in provision for construction warranties 15,554,870,010 - Loss on foreign currency translation 164,886,732,046 900,819,800 Loss on disposal of investments 278,157,071 - Impairment loss on investments 6,297,365,076 104,502,806 Loss on disposal of property, plant and equipment 3,252,119,532 2,804,927,146 Impairment loss on property, plant and equipment - 161,668,553 Loss on disposal of intangible assets 1,404,346 - Impairment loss on intangible assets 90,200,000,000 - Loss on valuation of equity method investments 78,066,930,159 28,040,266,863 Casualty loss - 209,764,523,695 Others expenses 20,102,616,640 23,846,433,155

957,899,777,377 406,330,372,632 Deduction

Interest income (40,727,392,198) (4,323,978,902) Dividend income (211,105,282,474) (68,439,064,966) Gain on foreign exchange translation (116,350,723,339) (1,534,601,526) Reversal of provision for construction losses (67,927,584,737) - Reversal of allowance for doubtful accounts (22,693,223,267) - Gain on disposal of investments (32,088,749,114) - Gain on disposal of property, plant and equipment (4,535,527,677) (651,019,968)

85 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Gain on disposal of intangible assets (39,938,896) - Reversal of impairment loss on intangible assets (57,854,727) - Gain on valuation of equity method investments (69,371,794,208) - Gain on insurance settlement (19,574,954) (181,792,438,736) Other income (3,294,767,644) -

(568,212,413,235) (256,741,104,098) Changes in operating assets and liabilities

Decrease in trade receivables 1,098,682,806,514 242,765,241,675 Increase in other current assets (55,528,777,677) (7,087,354,444) Decrease in inventories 115,074,215,294 13,582,997,481 Decrease in trade payables (178,254,584,382) (51,713,436,063) Increase (decrease) in other current liabilities 605,267,432,319 (48,653,447,772) Decrease in provisions for construction warranties (12,532,977,323) (4,422,218,954) Decrease in long-term unearned income (8,691,324) - Increase in long-term non-trade payables 13,162,414,624 - Payment of defined benefit liability (67,966,943,371) (9,111,975,580) Decrease in plan assets 55,005,949,793 439,000,000 Transfer in (out) of defined benefit liability (307,743,949) 8,141,010,678 Others (9,168,899,311) 2,693,008,057

1,563,424,201,207 146,632,825,078 Cash generated from operations \ 1,571,058,090,204 \ 281,231,662,672

86 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

32. Segment Information

The strategic steering committee is the Group’s chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the strategic steering committee for the purposes of allocating resources and assessing performance. Also, a summary of information on the Group’s operations by business segment as of and for the six-month periods ended June 30, 2016 and 2015, is prepared after elimination of intercompany transactions in operating profit, and liabilities of operating segments are not included as those are not periodically reported to the Group’s management.

Summarized information on the Group’s operations by business segment as of and for the six-month periods ended June 30, 2016 and 2015, is as follows:

(in millions of Korean won) 2016

Food and Construction2 Trading Fashion Resort beverages Bio Common Total

External sales \ 6,055,548 \ 6,515,059 \ 936,829 \ 301,553 \ 902,467 \ 136,206 \ - \14,847,662

Internal sales (40,576) (1,223,829) (20,906) (459) (24,106) - - (1,309,876) Net sales 6,014,972 5,291,230 915,923 301,094 878,361 136,206 - 13,537,786 Operating profit (loss) (296,091) 12,635 8,748 (9,159) 64,825 (38,961) - (258,003) Adjusted operating profit (loss) (282,149) 18,513 41,307 2,210 56,976 (71,426) - (234,569) Total assets1 \ 10,649,544 \ 3,778,851 \ 1,318,759 \ 2,511,970 \ 577,737 \ 6,386,633 \ 15,348,760 \40,572,254

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

87 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(in millions of Korean won) 2015

Food and Construction Fashion Resort beverages Common Total

External sales \ 730,459 \ 870,600 \ 186,215 \ 832,630 \ - \ 2,619,904

Internal sales (5,483) (10,603) - (19,493) - (35,579) Net sales 724,976 859,997 186,215 813,137 - 2,584,325 Operating profit (loss) 22,115 (3,529) (35,119) 61,612 - 45,079 Adjusted operating profit (loss) 18,087 (2,085) 14,223 53,131 - 83,356 Total assets1 \ 674,619 \ 1,311,151 \ 1,609,122 \ 584,435 \ 4,592,885 \ 8,772,212

1 For total assets, common segment is separately presented.

88 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

Summarized information on the Group’s operations by geographic areas for the six-month periods ended June 30, 2016 and 2015, is as follows:

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

Total revenue \ 10,727,424 \ 548,828 \ 2,910,308 \ 661,103 \ 14,847,663

Intercompany revenue (820,642) (8,963) (349,873) (130,399) (1,309,877) Revenue from external customers \ 9,906,782 \ 539,865 \ 2,560,435 \ 530,704 \ 13,537,786

2015 (in millions of Korean won) Domestic Asia Europe The Americas Total

Total revenue \ 2,377,081 \ 546 \ 226,105 \ 16,172 \ 2,619,904

Intercompany revenue (35,908) (546) 16,414 (15,539) (35,579) Revenue from external customers \ 2,341,173 \ - \ 242,519 \ 633 \ 2,584,325

89 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

33. Financial Risk Management

33.1 Financial Risk Management

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

As these interim financial statements do not include all the financial risk management and disclosures required for the annual financial statements, please refer to the December 31, 2015 annual financial statements.

There has been no significant change in the risk management department and other risk management policy of the Group since December 31, 2015.

33.2 Fair Value Measurement

Fair value hierarchy classifications of the financial assets and financial liabilities that are measured at fair value or its fair value is disclosed as of June 30, 2016 and December 31, 2015, are as follows:

(In millions of Korean won) June 30, 2016 Level 1 Level 2 Level 3 Total

Assets measured at fair value Available-for-sale financial assets: Equity securities \ 14,712,880 \ - \ 347,711 \ 15,060,591 Debtsecurities - 2,919 - 2,919 Derivative instruments for hedge risk: Derivative financial assets - 18,796 - 18,796 Financial instruments at fair value through profit or loss: Derivative financial assets - 36,826 - 36,826 \ 14,712,880 \ 58,541 \ 347,711 \ 15,119,132 Liabilities measured at fair value Derivative instruments for hedge risk: Derivative financial liabilities \ - \ 36,915 \ - \ 36,915 Financial instruments at fair value through profit or loss: Derivative financial liabilities - 1,882,669 - 1,882,669 \ - \ 1,919,584 \ - \ 1,919,584

90 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

(In millions of Korean won) December 31, 2015 Level 1 Level 2 Level 3 Total

Assets measured at fair value Available-for-sale financial assets: Equity securities \ 15,530,283 \ - \ 345,968 \ 15,876,251 Debtsecurities - 6,187 - 6,187 Derivative instruments for hedge risk: Derivative financial assets - 4,098 - 4,098 Financial instruments at fair value through profit or loss: Derivative financial assets - 33,579 - 33,579 \ 15,530,283 \ 43,864 \ 345,968 \ 15,920,115 Liabilities measured at fair value Derivative instruments for hedge risk: Derivative financial liabilities \ - \ 29,858 \ - \ 29,858 Financial instruments at fair value through profit or loss: Derivativefinancialliabilities - 1,830,345 - 1,830,345 \ - \ 1,860,203 \ - \ 1,860,203

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

During the six-month period ended June 30, 2016, there has been no significant change in the business or economic circumstances that affect the fair value of the entity's financial assets and financial liabilities.

There are no reclassification of the financial assets during the six-month period ended June 30, 2016.

91 Samsung C&T Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements June 30, 2016 and 2015 (Unaudited), and December 31, 2015

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

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

Available-for-sale financial assets Net asset value method, discounted Growth rate, discount rate Energy industry equities \ 67,574 3 cash flow method and others and others Net asset value method, discounted Growth rate, discount rate Cooperative contribution 40,368 3 cash flow method and others and others Shipping-investment Growth rate, discount rate industry equities 2,471 3 Net asset value method and others and others Growth rate, discount rate SOC equities 115,712 3 Discounted cash flow method and others Net asset value method, discounted Growth rate, discount rate Others 121,586 3 cash flow method and others and others Counterparty credit risk Debt securities 2,919 2 Discounted cash flow method and others

Derivatives (assets) Currency forwards and Currency forwards rate , others 55,622 2 Market approach discount rate and others Derivatives (liabilities) Currency forwards and Currency forwards rate , others 1,919,584 2 Market approach discount rate and others

Valuation process of fair value measurements classified in level 3

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