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2Q 2016 BUSINESS PERFORMANCE

Premium Lifestyle Leading Company DISCLAIMER This material has been prepared for investors’ convenience, based on 2Q16 financial statements that have not yet been officially audited, which could alter final data. Actual results may differ from forecasts herein given the unpredictability of future performances; will therefore not revise or update this material. CONTENTS 01 CORPORATE OVERVIEW 1

02 BUSINESS PERFORMANCE AND OUTLOOK 8

03 APPENDIX 13 CORPORATE OVERVIEW INTRODUCTION VISION / HISTORY / AWARDS 01 BUSINESS PORTFOLIO BUSINESS SITE OVERVIEW INTRODUCTION

THE SHILLA is an affiliated company of the Group, providing the premium customer service in the service business.

Heavy-Industry Service Electronics Finance &

ELECTRONICS LIFE INSURANCE THE SHILLA C&T (Trading) HEAVY-INDUSTRIES

DISPLAY FIRE&MARINE INSURANCE C&T (Fashion) C&T (Resort) ENGINEERING

SDI CARD WORLDWIDE S-1 C&T (Construction)

ELECTRO-MECHANICS SECURITIES SERI MEDICAL CENTER

SDS ASSET MANAGEMENT BIOLOGICS BIOEPIS

Major Shareholders of The Shilla: 8.0%, 5.1%, Samsung Securities 3.1%, 1.3%, Samsung SDI 0.1%

2 VISION

Hotel Shilla aspires to become a Premium Lifestyle TRAVEL Leading Company that offers clients the best options based on dignity and trust.

LEISURE HOTEL The company will provide optimal services across its PREMIUM LIFESTYLE business range, including travel retail, hotel, leisure, LEADING COMPANY F&B, and business travel management(BTM) to improve the lifestyles of clients.

BTM F&B

3 HISTORY AWARDS

1979 Hotel open 2006 Presidential Award at Korea Retail Ceremony

1986 Seoul Duty Free open 2008 Gazette, The Best hotel in Seoul 1989 Jeju Duty Free open Institutional Investor, The world’s Top 100 Hotel(1st in Asia) LHW Leader’s Club, Golden award 1990 Jeju Hotel open JALPAK, The Best Hotel 1991 IPO() 2009 Zagat, The Best Hotel in service sector Jinji Lake Hotel() open 2006 TTG Travel Award, The Best City Hotel in Seoul 2008 Int’l Duty Free open Institutional Investor, The World’s Top 100 Hotels

2010 Cheongju Int’l Duty Free open 2010 Institutional Investor, The Best Hotel in Seoul

2011 Gimpo Int’l Duty Free open 2011 NCSI, No.1 Hotel in service sector L/V at Incheon airport open 2012 Travel+Leisure, The World’s Best Award Asia 16th 2012 SweetMay in Macao open 2013 KCSI, The Best Duty Free Store 2013 Changi Int’l Duty Free(Singapore) open 2014 NCSI, The Best Company 2014 Shilla Stay Co., Ltd established Macao Int’l Duty Free open 2015 Interbrand, The Best Korea 2015 2015 HDC Shilla Co., Ltd. established NSCI, No.1 Hotel in hotel sector Shilla I Park Duty Free established 2016 4 MILESTONE

5 BUSINESS PORTFOLIO

TR (Travel Retail) Hotel & Leisure

Seoul Downtown DF Seoul Jeju Downtown DF Jeju

Shilla I Park Downtown DF Jinji Lake Shilla Hotel in China (Management)

Internet DF Geoje Samsung Hotel (Management)

Incheon Int’l Airport DF Shilla Stay (Management) Gimpo Int’l Airport DF BTM Changi Int’l Airport DF in Singapore CFC Macao Int’l DF Leports SweetMay in Macao, Hongkong

6 BUSINESS SITE OVERVIEW

TR Business HOTEL & LEISURE Business Seoul DF Seoul BTM 375 Brands | 7,177sqm 463 Rooms (43.3sqm per room) CFC Jeju DF 7 Banquets | 7 Restaurants demarq Seoul Hotel 256 Brands | 6,294sqm Seoul DF Jeju Leports Gimpo DF Incheon DF Shilla I park DF 429 Rooms VANTT Incheon DF 384 Brands | 3,263sqm (44.6sqm per room) Seocho Reports Center 6 Banquets | 6 Restaurants Gimpo DF 84 Brands | 400sqm SINGAPORE Changi DF Jinji Lake, China Samsung Hotel Changi DF SweetMay Samsung Hotel, 205 Brands | 5,808sqm Hong Kong Jeju Hotel Geoje Macau Jeju DF Macao DF DF 210 Brands | 1,098sqm Shilla Stay SINGAPORE Jinji Lake SINGAPORE Dongtan, Yeoksam, Jeju, Shilla I Park DF Seodaemun, , Mapo, 577 Brands | 11,170sqm Gwanghwamun, Guro

7 BUSINESS PERFORMANCE BUSINESS PERFORMANCE AND 02 AND OUTLOOK OUTLOOK BY BUSINESS SEGMENT BUSINESS PERFORMANCE (2Q 2016) Non-consolidated

■ Sales increased by 11.8% YoY, OP decreased by △29.5% YoY

(KRWb) Sales OP

2Q15 2Q16 YoY 1Q16 QoQ

Sales 734.9 821.3 11.8% 752.0 9.2% 821.3 TR 662.3 736.4 11.2% 675.2 9.1% -29.5% 9.2% Hotel&Leisure 72.6 84.9 16.9% 76.8 10.5% 11.8% 752.0 43.1 734.9 OP 43.1 30.4 -29.5% 27.2 11.8%

TR 45.4 27.7 -39.0% 35.0 -20.9% 30.4 11.8%

Hotel&Leisure -2.3 2.7 Turnaround -7.8 Turnaround 27.2

OP Margin 5.9% 3.7% - 3.6% -

2Q15 2Q16 1Q16 2Q15 2Q16 1Q16

9 BUSINESS PERFORMANCE (2Q 2016) Consolidated

■ Sales increased by 13.0% YoY, OP decreased by △36.4% YoY

(KRWb) Sales OP

2Q15 2Q16 YoY 1Q16 QoQ

Sales 844.7 954.1 13.0% 888.9 7.3% 954.1 7.3% TR 766.6 857.7 11.9% 803.1 6.8% 13.0% -36.4% 888.9 Hotel&Leisure 78.1 96.4 23.4% 85.8 12.4% 844.7 29.4 -3.1% OP 29.4 18.7 -36.4% 19.3 -3.1% 19.3 TR 31.7 15.4 -51.4% 27.8 -44.6% 18.7

Hotel&Leisure -2.3 3.3 Turnaround -8.5 Turnaround

OP Margin 3.5% 2.0% - 2.2% --

2Q15 2Q16 1Q16 2Q15 2Q16 1Q16

10 TRAVEL RETAIL BUSINESS Consolidated

■ Sales Increased by 6.7% YoY and OP decreased by △35.3% YoY 2Q Review ■ 2Q16 downtown sales recorded 538.2 KRWb (29.0%↑yoy) Sales (KRWb) OP (KRWb) based on the in/outbound traffic growth.

■ 2Q16 airport sales recorded 319.5 KRWb (△8.6%↓yoy) due to 857.7 766.6 803.1 31.7 the 3rd period started at the Incheon airport with the smaller space. 319.5 27.8 316.1 349.6 3Q Outlook Profitability of the TR business will gradually improve based on an increase in 15.4 ■ 538.2 travel demands as the vacation season and the Mid-Autumn Festival in China. 487.0 417.0

2Q15 2Q16 1Q16 2Q15 2Q16 1Q16

Downtown Airport

11 HOTEL & LEISURE BUSINESS Consolidated

■ Sales increased by 23.4% YoY & OP turned into profit-making 2Q Review ■ The turnaround of Hotel & Leisure business in 2Q16 resulted from Sales (KRWb) OP (KRWb) a good all-round performance with the sales of 96.4 KRWb (23.4%↑yoy)

96.4 ■ Quartely Rate of Occupancy

17.5 858 2014 2015 2016 78.1 20.2 3.3 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 16.7 21.5 Seoul 63% 66% 50% 61% 60% 67% 52% 75% Jeju 89% 85% 81% 76% 90% 84% 81% 89% 9.6 20.6 19.0 16.0 14.7 -2.3 3Q Outlook 35.8 38.4 30.3 ■ The omnidirectional improvement expected by continuation of the better performance by strengthening its products and efficiency at the Shilla Seoul, the betterment by vacation season at the Shilla Jeju, -8.5 growth in sales by the grand open of Shilla Stay Cheoan. 2Q15 2Q16 1Q16 2Q15 2Q16 1Q16

Seoul Jeju Others Leisure

12 APPENDIX INVESTMENT PERFORMANCE AND MAJOR FINANCIAL RATIOS 03 OWNERSHIP STRUCTURE (KRWb)

ANNUAL CAPEX Y2014 Y2015 2Q2016

Capex 106.8 103.3 38.2

﹡ Non-Consolidated, Accrued in period (KRWb) Debt Equity Current Assets Current Liabilities MAJOR FINANCIAL Y2013 Y2014 1Q2016 Debt/Equity Ratio 161% 193% 235% RATIOS 1,521.4 Liabilities 1,177.5 1,432,8 1,521.4 1,432.8

Equity 730.0 743,9 648.1 1,177.5 1,023.6 1,032.0 Current Ratio 189% 176% 136% 823.0 Current Assets 823.0 1023,6 1,032.0 756.6

Current Liabilities 435.2 582,8 756.6 730.0 743.9 648.1 EBITDA/Sales 7.0% 4.6% 3.9% 582.8

EBITDA 202.8 151,2 37.2 435.2

Sales 2.909.0 3,251,7 954.1

Y 2014 Y 2015 2Q 2016 ﹡ Consolidated

14 OWNERSHIP STRUCTURE

NPS 10.5% Affiliates 17.6%

Foreign Investors 18.0%

Others 53.9%

As of June 30, 2016 THANK YOU

Premium Lifestyle Leading Company