Earnings Release 3Q 2012

2012. 10.25

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Disclaimer
The financial information in this document are consolidated earnings results based on K-IFRS. This document is provided for investors review before our external audit of 3Q 2012 financial results released from our headquarters. The audit outcomes may cause some parts of this document to be revised. This document contains forward-looking statements - that is, statements related to future, not past events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as expects, anticipates, intends, plans, believes, seeks, or will. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in exchange rates, interest rates and commodity prices; strategic actions including dispositions and acquisitions. These uncertainties may cause our actual results to be materially different from those expressed in this document.
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1. Financial performance

Financial summary (K-IFRS consolidated basis) Consolidated gross profit analysis Profitability analysis

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Financial summary (K-IFRS consolidated basis)

(Unit: Billion KRW)

2012 1Q~3Q 3Q Sales Gross profit SG&A Other operating profit/losses Operating profit Finance incomes/losses Equity method gains/losses Profit before income tax Profit for the quarter Equity holders of the parent Non-controlling interests 1,643.1 394.0 314.0 3.3 76.7 13.3 0.7 89.3 63.4 59.9 3.5 607.3 145.2 116.5 1.2 27.5 3.7 1.1 32.3 22.5 21.1 1.4

2011 1Q~3Q 3Q 1,186.9 309.6 244.6 1.6 66.6 14.0 0.3 80.3 60.4 58.6 1.8 452.6 112.9 90.7 0.3 22.5 5.4 0.2 28.1 22.1 21.3 0.8

% 1Q~3Q 38.4 27.3 28.4 15.2 5.0 3Q 34.2 28.6 28.4 22.2 31.5 450.0 11.2 5.0 2.2 94.4 14.9 1.8 0.9 75.0
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Consolidated gross profit analysis

Consolidated gross profit up 28.6% to 145.2B YoY Domestic gross profit up 4.2% to 47.1B YoY
- Continuous domestic business growth in a shrinking ad market Existing clients : SEC, NHN, Daewoo E&C etc.. New clients : Hanwha Group, BGF retail, Maeil dairies, etc..

Overseas gross profit up 44.9% to 98.1B YoY

- Expanded new client development and increased SEC global marketing campaigns Consolidated gross profit
28.6% 112.9
45.2
4.2%

(Unit: Billion KRW) Domestic Overseas

Domestic Vs Overseas gross profit

Domestic Overseas

145.2
47.1

32.4% 67.6%

98.1
67.7 44.9%

3Q FY11

3Q FY12

3Q FY12

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Profitability analysis
Operating profit up 22.2% to 27.5B YoY
- Due to hiring of top talents in overseas : SG&A increased 28.4% to 39.4B - Employee salary increased 32.5% to 77.1B, general expense 21.2% to 39.4B

Non-operating revenue down 14.3% to 4.8B YoY

- Finance income/expense down 31.5% - Equity-method gains/losses up 450%

Profit before income taxes up 14.9% to 32.3B YoY

Operating profit
(Unit: Billion KRW)

Profit before income taxes

(Unit: Billion KRW)

14.9% 22.2%

32.3

Operating Profit Finance Income + Equity-method gains/losses

28.1
22.2%

22.5

27.5

22.5
14.3%

27.5

4.2
3Q FY11 3Q FY12 3Q FY11

2.3
3Q FY12

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2. Business performance

Domestic business performance Overseas business performance

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Domestic business performance

Domestic ad market
- 4 traditional ad market down 12.9% to 978.0B YoY

< Domestic ad market: 4 media>

(Unit: Billion KRW)

Print

Largest ad industries: in the order of finance, IT and services Broadcasting ad market down 14.3% to 514.6B YoY (except general programming TV) Print ad market down 11.3% to 463.4B YoY

1,122.9
522.4

12.9% 978.0
46.5% 463.4

Broadcast

47.4%

600.5

53.5%

514.6

52.6%

Cheils domestic business

2Q FY11 2Q FY12

- Domestic gross profit up 4.2% to 47.1B YoY

Due to slowdown of domestic demand, 4 media ad gross profit down 9.1% to 14.9B YoY : Broadcasting ad down 8.2% to 9.0B YoY Print ad down 10.6% to 5.9B YoY

< Cheils domestic gross profit by media>

(Unit: Billion KRW)

45.2

4.2%

47.1 19.9 42.3% 5.9 6.4 5.9 9.0

12.5% 13.6% 12.5% 19.1%

Marketing services Internet CATV Print Broadcast

17.6 38.9% 6.2 5.0 6.6 9.8

13.7% 11.1% 14.6% 21.7%

CATV, marketing services gross profit up : CATV G.P. up 28.0% to 6.4B YoY Marketing services G.P. up 13.1% to 19.9B YoY

3Q FY11

3Q FY12

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Domestic business performance

Successful new account development
- 3Q 47.3B, 125.3B KRW YTD

Hanwha Group(PR), Orion, Korea Land&Housing etc..

Proved world class creativity by winning international ad awards

- Awarded Korea's first Spikes Asia Grand-Prix

Samsung Electronics Insight , Emart Sunny Sale The largest number of awards by winning 26

- Ad Stars 2012 in Busan

Successful ad campaigns and marketing activities

- SEC Gold Rush, NHN Appisode, Samsung Life Insurance Bridge of the life, Dong A Bacchus etc..

<New domestic clients>

<SEC GoldRush>

<NHN Appisode> 9

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Overseas business performance

New overseas clients development : 6.63M USD
* Revenue based

- Continuous new clients due to strengthened global competiveness

Deutsche Bahn(Germany), Vodafone(Turkey), Ralf Ringer(Russia) etc.

Expanded overseas offices

- Incorporated in the Philippines - Portugal and Romania in process
<New overseas clients development>

Olympics marketing & Global Exhibitions, Events

- SEC London Olympics marketing : Ads, On-site promotion, Hospitality etc. - Exhibitions : Samsung Mobile Unpacked 2012(Berlin), IFA (Berlin), Photokina (Koeln) - Global events : Big Bang Alive Galaxy Tour, Galaxy Note II Tour etc.

<SEC London Olympics Marketing>

<IFA 2012>

<Big Bang Alive Galaxy Tour>

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3. Further outlook for FY2012

Advertising market Cheil Worldwide in 4Q FY2012

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Advertising market
Global ad market: small growth expected despite economic slowdown
- Global ad market is expected to grow +3.8% to $501.5B (a decrease from Junes expectation of +4.3%)

US ad market is expected to grow +4.3%, EU 0.7% , and Asia Pacific +6.2% 4 traditional media is expected to grow +2.3%, and digital 15.1%
(Source: ZenithOptimedia 12 October)

TV, Radio, Newspaper, Magazine

Domestic ad market: small growth expected due to seasonality

- Small growth expected in 4th quarter (peak season to terrestrial TV advertising)

KAI 115.0 in 4Q (over 100 indicates that advertisers will increase marketing spend) in Nov : Terrestrial TV 102.5, Cable TV 103.7, Newspaper103.9, Internet 106.0

KAI projection (Korean Ad Index)

- Forecasting ad market by industries

Increase : household electronics(139.8), groceries(132.1), computer & communications(131.4) Decrease : pharmaceuticals & medical service (82.8), fashion(78.2), cosmetics(67.7), transportations(62.4)
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Cheil Worldwide in 4Q 2012

Domestic ad campaigns expected to rise by seasonality

SEC : Smartphone (GalaxyNote II, S3 Mini), Smart PC(ATIV series), New smart TV, etc.

IT (SEC, KT, etc..), Food & beverage (Dongsuh Foods, CJ, etc..)

Expected to expand non-Samsung clients

-

More media-only clients expected due to change in Korean media environment

Media-only new clients in 2012 : Maeil Dairies, Kiwoom securities, etc.

Expansion of integrated solution including consulting and BTL campaigns

Expected to enhance global marketing campaigns with newly acquired companies

- China : collaboration of Cheil- OTC - Bravo Asia (automobile clients and etc.) - US : collaboration of Cheil- McKinney (non-Samsung projects and etc.)

New opportunities through expansion to global markets

- Acquiring new clients through foreign local leaderships - Increase of profit by expanding to new retail business

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