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INGREDIENTS Dr. You MAKING MORE SNACKS NUTRITIOUS

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INGREDIENTS Dr. You MAKING MORE SNACKS NUTRITIOUS ORION 2017 1 Message from the Chairman Evolving from a confectionery company into a global total Our overseas subsidiaries continued to terms of market share in South Korea’s do well, despite such ongoing challenges film industry with such box-office hits food player Dear Valued Customers and as global economic slowdowns and a as “A Violent Prosecutor,” “Tunnel,” and Shareholders: strong South Korean won. Sales in China “Luck-Key”. It is expected to continue Orion is planning to evolve from a confectionery exceeded RMB 7.7 billion, up 4.3% from its excellent performance in 2017 by company into a global total food player in 2017. In 2016, Orion recorded its largest- the previous year and despite a sluggish showing even more popular and critically- ever operating profit and net income: market for confectioneries throughout acclaimed works. Since our establishment in 1956, we have led the KRW 326.2 billion and KRW 240.8 the country. Our sales in Vietnam passed world confectionery industry by offering customers billion, respectively. This happened the KRW 200 billion level, up 24% and In 2017, Orion will retain its commitment high-quality products that are always tasty and representing a new record for us. We also to the operation of an effective and despite the challenge of worldwide popular. Now we are laying the foundations for economic slowdowns, and was mainly did very well in Russia, continuing our efficient management system guided by becoming a global total food company, while attributable to strong performances by record of growth by overcoming difficult strict and serious business principles and also retaining our commitment to honesty and our overseas subsidiaries and box office business conditions due to the continuing standards under a policy of enhancing successes by our Showbox operations. depreciation of the ruble. our key competencies with a particular transparency and the manufacture and sale of high- Our consolidated sales also increased, focus on the essentials. We will also quality products. registering KRW 2,386.3 billion in total. This year, we are planning to develop continue developing new products, and the high-end confectionery market in secure new growth drivers by diversifying Contents In the domestic confectionery business, China, adding such premium products our business interests from only Choco Pie achieved record-high annual as Real Cheese Chips in addition to Real confectioneries into foods. sales backed by the popularity of two Brownies, which we launched in 2016. exciting new products, Choco Pie We will also raise our market share by In addition, we will stress the importance 02 Management Philosophy Banana and Choco Pie Matcha Latte. expanding our sales network into inland of a fair and ethical organizational culture 04 Corporate History Our other major brands, such as Swing areas, and will lay the groundwork for by insisting on open and honest behavior 08 Business Overview Chips, Marine Boy, Choco Biscuit, and new business operations by undertaking on the part of all our employees. We will THE Xylitol grew by more than 20% exhaustive market analyses. also keep on building mutually beneficial over the year, while new products, relationships with our corporate partners. 12 South Korea including Market O Real Brownie Matcha, Our subsidiary in Vietnam will reinforce Last, but far from least, we will keep on 20 China Muddukdduk Potato Chips, and O’gamja its industry leadership by increasing its supplying our many satisfied customers 24 Vietnam Chicken also performed well. In addition, market share, and we will also continue with delicious, high-quality products at 28 Russia we started to build a premium-quality growing our subsidiaries in the ASEAN very reasonable prices. 32 Global Sales Network processed food production factory countries, the Middle East, and India. In Thank you. that will use domestically grown farm addition, our subsidiary in Russia will products in Miryang, Gyeongsangnam- strengthen its revenue base by enhancing 34 Showbox do Province. Operated in collaboration the profitability of Choco Pie and Tam Chul Kon 35 Orion Basketball Team with the National Agricultural Cooperative expanding its client base. Chairman, Orion Group Federation, this will hep to establish foundations for new emerging businesses. Showbox enjoyed another record-high 36 Financial Highlights operating profit in 2016, ranking first in 37 Share Information ORION 2017 2 Management Philosophy 3 Management Philosophy 1 Sticking to the Basics ORION Enhancing Customer Value Orion’s number one rule is that the quality of its products Orion enhances customer value must never come second to any other considerations. by selling high-quality goods at We help make our customers’ lives happier by providing WAY reasonable prices. With our efficient management based on principles them with healthy and nutritious food choices. Orion’s core beliefs include the establishment and standards, we are continuously growing in production and the level of an open, honest, and ethical corporate of trust from customers. culture. Our future growth and our ambition to evolve into a truly global company are both predicated upon the ongoing trust and loyalty of our customers. 2 Establishing an Open, Honest, and Ethical Corporate Culture Orion is committed to an organizational culture that is open, honest, and ethical. This includes establishing mutually beneficial relationships with our partner firms, and sharing our good fortunes with the people living in the communities in which we operate. ONLY 3 ORION Laying the Foundations for Future Growth Originality is the key to all the ideas, Orion enhances its product competiti- actions, and successes of the Orion veness by leveraging R&D collaboration family of fine food products. in South Korea, China, Vietnam, and Russia. In addition, we secure new FAIR growth engines by evolving from a confectionery company into a global total food player and establishing a series of marketing strategies custom- QUALITY tailored to reflect the demands of both our domestic and overseas markets. Everything we sell is backed by our We also raise our profitability through commitment that the quality of our products improved cost efficiencies. will always have priority over any other considerations. ORION 2017 4 Corporate History 5 Corporate History Orion will celebrate its sixty-first anniversary in 2017 by evolving from a confectionery company into a global total food player. 1950s 1960s A National Confectionery Business Takes Root Technology Development 1956 • July: Acquired Pungkook Confectionery 1960 • Launched Mommy Biscuit • September: Company name changed to Tongyang 1962 • Started selling Fruits Drops, Chewnut Candy, Confectionery Corporation Happy Biscuits, and Orion Crackers 1957 • June: Built South Korea’s first state-of-the-art candy 1965 • Started developing premium-level products manufacturing facility 1967 • Started selling Choco Candy • December: Started selling Orion King Drops 1968 • August: Switched to automatic candy packaging 1958 • September: Began using automatic molding machine • September: Started selling chocolate bars, for the making of soft biscuits including No. 1 Chocolate and Nimege Chocolate 1956 2017 1956 The Original ORION, a World-class Company Orion: Differentiated from the Beginning Orion was founded in 1956 when the company’s founder and chairman, Mr. Lee Yang-gu, acquired Pungkook Confectionery. Since then, the company has led the country’s confectionery market with such popular products as caramels and candies. It also pioneered many of South Korea’s manufacturing facilities for confectioneries, and developed a wide range of new, exciting, and innovative products. Only ORION, ORION Way Orion leads the market by creating and developing unique brand value through innovative ideas and methods. Orion is vigorously advancing toward becoming a world-class company through the competitiveness of “Only ORION,” which conveys its sincerity to customers and creates new, unique values. ORION 2017 6 Corporate History 7 1970s 1980s 1990s 2000 and After Opening the age of Choco Pie Second Stage of Growth Transitioning and Advancing Growing into a Global Player 1974 • April: Launched Choco Pie 1983 • Began production of Diget 1993 • January: Mr. Tam Chul Kon appointed Vice Chairman 2001 • Established Orion Group 1975 • June: Conducted 1.66 million share IPO 1985 • Established industry’s first marketing department • February: Established office in Beijing 2002 • Built manufacturing facility in Shanghai 1976 • Began exporting chewing gum 1987 • July: Established Orion-Frito Lay Co., Ltd., a joint venture • September: Began exporting Choco Pies to Russia 2003 • Company name changed to Orion Corporation • August: Started producing Cuttlefish Peanut Balls with PepsiCo of the United States 1994 • April: Received plaque from Minister of Education for 2004 • Parted ways with PepsiCo. and changed name to Orion 1977 • May: Introduced South Korea’s first-ever automatic 1988 • Launched Pocachip help in replacing old desks and chairs in elementary Snack International biscuit packaging process 1989 • Launched “Jeong” Choco Pie advertisement series schools on remote islands and rural areas in South 2006 • Built manufacturing facilities in Beijing, My Phuoc, • Launched Flavano, South Korea’s first breath refreshment gum Korea. The program was carried out to mark the Vietnam, and Tver, Russia 1989 • December: Mr. Tam Chul Kon appointed President and CEO twentieth anniversary of the introduction of
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