SK Networks H

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Camilla Easter Heath
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1 SK Networks H

01 Disclaimers This material has been produced by SK Networks Co., Ltd. solely for information purposes. The information contained in this document has not been independently verified.

2 01 Disclaimers This material has been produced by SK Networks Co., Ltd. solely for information purposes. The information contained in this document has not been independently verified. No representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinion contained herein. The information contained in this document should be considered in the context of the circumstances prevailing at the time and will not be updated to reflect material developments that may occur after the date of the presentation. Neither SK Networks nor any of its affiliates, advisors or directors shall have any liability whatsoever (in negligence or otherwise) for any loss arising from any use of this document or its contents or otherwise arising in connection with this document. The document contains statements that reflect SK Networks beliefs and expectations about the future. These forward-looking statements are based on a number of assumptions about the future, some of which are beyond the company s control. SK Networks does not undertake any obligation to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation. All or any part of this material may not be taken away, reproduced, redistributed or retransmitted in any manner. By attending this presentation, you are agreeing to be bound by the foregoing restrictions.

3 02 Contents 1. Corporate Overview 2p 2. Growing Business 8p 3. Financial Statements 12p 4. Analysis 16p

4 1 Corporate Overview Business Portfolio Business Restructuring Growth Strategy

5 01 Corporate Overview Shareholders SK Group SK Networks Refinery SK Innovation Individuals 20.6% Foreigners 19.1% SK Holdings 40.2% Wireless SK Telecom Institutions 20.1% Semiconductor SK Hynix As of SK Networks Rental/Service 3

6 02 Business Portfolio Distribution Rental/Service Trading ICT Marketing - ICT Device Distribution Energy - Fuel Retail Car Life SK Car Rental - Focusing on Long-term Contract SpeedMate - Automotive Services Home Appliance SK Magic - Water/Air Purifier Rental - Kitchen Appliance Trading - Steel - Chemical/Coal Hotel & Resort Walkerhill Hotel 4

7 03 Business Restructuring (Energy Business) Refinery SK Energy Deal Price : Approx. 300bn KRW Schedule : - 8/10 BOD Announcement SK Energy - 9/26 Shareholders Meeting 1-10/31 Deal Closed Wholesale SK Networks (Wholesale) SK Energy (Wholesale) 2 1 Retail (Fuel Station) Non-SK Brands SK Franchise SK Networks (Retail) Non-SK Brands SK Franchise SK Networks (Retail) Effect on SK Networks The Revenue will decrease by 5.5tn KRW a year, Yet the operating income will be improving gradually through normalizing profitability of the retail business 5

8 04 Short-term Goal Business Status Target Energy Retail 1st Fuel Stations : Approx. 500 nationwide Enhancing Bargaining Power - Improve the profit margin based on the bargaining power Car Rental 2nd Rental Fleets : Approx. 79,000 Normalizing the Profitability - Once rental fleets reach 100,000, the profitability will improve SpeedMate 1st Automotive Service Networks : Approx. 700 nationwide Extending Services and Customer Segments - Expand the tires business and absorb luxury car owners for maintenance SK Magic 2nd Rental Accounts : Approx. 1.1M Boosting the Top-line Generating SK Group Synergy - Secure more than 2M of rental accounts ICT Marketing 1st # of Device Sales : Approx. 7~8M per year Generating Stable Cash and Diversifying its Products - Find ICT devices based on customers needs Trading - Global Branches : 20 Branches in 15 countries Globalization - Globalize our car/home appliance businesses Hotel - Walkerhill (Grand/Vista) in Seoul Recovering from the Renovation - Improve its profit while enhancing its new brand recognition 6

04 Growth Strategy Weak Synergy within the Biz PF 1st 2nd 1st M/S

ICT Marketing Globalization Focus upon Top-tier Businesses in the

Strengthen Synergy Offering Values within the

Offering Values within the Home & Lifestyle Value Chain b/t

9 04 Growth Strategy Weak Synergy within the Biz PF 1st 2nd 1st M/S Rank 2nd 1st Fuel Station Car Rental Automotive SKN Biz SK Magic ICT Marketing Globalization Focus upon Top-tier Businesses in the industry Mobility Service Platform Home ICT Service Platform Strengthen Synergy Offering Values within the Mobility/Transportation Value Chain Digital Transformation Offering Values within the Home & Lifestyle Value Chain b/t interactive businesses Car Sharing, Parking, EV Charging SK Group Biz + M&A Smart Home, AI Service, Big Data 7

10 2 Growing Business Rental Business - Home Appliance - Car Rental

01 SK Magic Biz 개요 SK 매직 Growth Strategy Penetrating the Market with Differentiated Products - In 2015, SK

tank-less water purifiers accounts for 32% of the entire water purifier market, and SK Magic, the market

(Market Share) 15 16 17 1H Tank-less / Entire Market 18% 24% 32% SK Magic / Tank-less Market 40% 42% 40%

2016, and they are leading dramatic increase in rental accounts.

Services in Bundles 3 IoT/ Smart Home Using SKT Membership Points, Customers Get Monthly Discount -

11 01 SK Magic Biz 개요 SK 매직 Growth Strategy Penetrating the Market with Differentiated Products - In 2015, SK Magic unveiled its tank-less water purifiers, and started substituting competitors products - In 2017, tank-less water purifiers accounts for 32% of the entire water purifier market, and SK Magic, the market leader, accounts for 40% of the market share. (Market Share) H Tank-less / Entire Market 18% 24% 32% SK Magic / Tank-less Market 40% 42% 40% Expanding Sales & Service Professionals - The number of our sales & service professionals increased by 39% in 2016, and they are leading dramatic increase in rental accounts H # of Professionals 680 1,564 2,178 2,465 SK Group Synergy 1 Joint Promotion with SKT 2 Services in Bundles 3 IoT/ Smart Home Using SKT Membership Points, Customers Get Monthly Discount - Attracting new customers by offering 10~20% of discounted rental rates using SKT membership rewards Offering Services Bundling with SKT/SKB - Providing rental program with wireless, internet, or TV services Connecting with Smart Home Platform(w/ SKT) 9

12 02 SK Magic Biz 개요 SK 매직 Performance Key Indicators <Rental Accounts> CAGR : New 57%, / Cumulative 29% <Revenue> (bn KRW) '14 '15 '16 <Operating Income> Rental Kitchen 1, ,107 (Thousand) '14 '15 ' H <Market Share(New Rental Accounts)> 60.0% 58.0% 53.0% 50.0% 40.0% 20.0% 12.0% 14.0% 0.0% 7.0% '14 '15 '16 New Cumulative SK A Co. B Co. C Co % 8.97% <Market Share(Kitchen Appliance)> (bn KRW) % '14 '15 '16 OP OPM 37% 39% Gas Stove 15% 13% Electirc Stove 33% 30% Oven 61% 62% 29% 20% Dish Washer Microwave

03 Car Life Growth Strategy Key Indicators Dominating the Auto Industry Value Chain <Rental Registration over New Car Market> - Gain upstream bargaining power through enhancing rental channel in the

13 03 Car Life Growth Strategy Key Indicators Dominating the Auto Industry Value Chain <Rental Registration over New Car Market> - Gain upstream bargaining power through enhancing rental channel in the new car market - Secure new car owners and lock-in the customers within SK Group by providing related services. SK Rental / SpeedMate 200 (x 10,000) % 9.1% 9.6% '14 '15 '16 New Car Registration Rental Regitration 800 (bn KRW) Manufacturing Purchase Maintenance Disposal Hyundai, Kia, GM Rental Fuel/Repair + α Used Car <Revenue> - <Operating Income> 50 (bn KRW) - Performance CAGR 24%, (Rental 37%, / SpeedMate 7%) '14 '15 ' % 5.04% % 37 '14 '15 '16 Rental SM OP OPM <Market Share(Rental Fleets)> AJ Rental Lotte Rental SKN 30.0% 26.6% 25.3% 25.3% 24.9% 12.7% 12.2% 11.6% 11.6% 9.3% 11.3% 0.0% 7.2% 11.1% '14 '15 '16 '17 1H <Rental Fleets by Segments> 80,000 72,123 78,708 50,412 63% 63% 32,506 61% 54% 25% 24% 35% 27% - '14 '15 '16 '17 1H *Rental Fleets Lotte SK AJ Long-term H 169,108 (M/S 24.9%) 78,708 (M/S 11.6%) 75,086 (M/S 11.1%) (Individuals) Long-term (Big Firms) Short-term 11

14 3 Financial Statements Statement of Income Statement of Financial Position

15 01 Statement of Income (In bn KRW) 16 2Q 17 1Q 17 2Q YoY QoQ Revenue 4,516 5,058 5, (11.9%) 6 ( 0.1%) Gross Profit (18.5%) 9 (3.1%) SG&A (31.7%) 19 (7.6%) Operating Income ( 49.9%) 10 ( 34.2%) Equity Method Gain/Loss Interest (Net) FX Gain/Loss Miscellaneous Earnings before Taxes Turn to Loss 30 Turn to Loss Net Income Turn to Loss 25 Turn to Loss 13

16 02 Revenue/Operating Profit by Divisions (In bn KRW) 16 2Q 17 1Q 17 2Q YoY QoQ Revenue 4,516 5,058 5, (11.9%) 6 ( 0.1%) Mobile Device 1,059 1,088 1, (12.5%) 103 (9.5%) Energy Marketing 1,908 1,890 1, ( 4.8%) 74 ( 3.9%) Car-Life (25.1%) 9 (4.6%) Trading 1,318 1,709 1, (25.1%) 60 ( 3.5%) Walkerhill ( 6.2%) 11 (25.4%) SK Magic (3.7%) Others ( 63.4%) 0 ( 0.8%) Operating Income ( 49.9%) 10 ( 34.2%) Mobile Device (7.7%) 0 (0.7%) Energy Marketing ( 9.6%) 4 (23.7%) Car-Life (39.7%) 6 (105.3%) Trading (36.3%) 1 ( 8.8%) Walkerhill Turn to Loss 6 (92.8%) SK Magic ( 35.3%) Others ( 119.5%) 22 ( 81.6%) 14

17 03 Statement of Financial Position (In Billion KRW) H Change Assets 8,620 7, Cash & Cash Equivalents Accounts Receivable 1,436 1, Inventory PP&E 4,090 3, Others 1,848 1, Liabilities 6,215 5, Accounts Payable 2,601 2, Debt 2,745 2, Net Debt 2,048 1, Others Equity 2,406 2, Debt/Equity Ratio 258% 230% 28% 15

18 4 Analysis

19 ICT Marketing / Trading <ICT Marketing> <Trading> Revenue / Operating Profit (In Billion KRW) Revenue / Operating Profit (In Billion KRW) REV OP 1,116 1, , ,088 1, REV OP 1,222 1,318 1, , ,709 1, '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q Mobile Phone Sales (In Thousand Units) Steel / Chemicals Sales (In Thousand Tons) Total 1,905 Smartphone 1,712 2,180 2,119 1,759 1,682 1,045 Chemicals 905 Steel ,032 1,797 1,613 1,374 1,669 1,650 1,322 '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q Analysis Generating stable operating income while recovering from the Galaxy Note7 situation in 3Q 2016 Analysis The overall business performance has been improving due to gradual increase of sales in the Middle East region 17

20 Energy Marketing & Car Life <Energy Marketing > <Car Life> Revenue / Operating Profit (In Billion KRW) Revenue / Operating Profit (In Billion KRW) REV OP REV OP 1,811 1,908 1,928 1,895 1,890 1, '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q # of Fuel Station Revenue Breakdown (In Billion KRW) Car Rental Automotive Service Direct 16.2Q 17.1Q 17.2Q YoY QoQ Own Rent Sub Total Franchise 2,393 2,326 2, Total 2,901 2,836 2, '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q Analysis The overall performance has been weakened due to decrease in sales and the margin, yet it will recover by improving profitability of the retail business Analysis After becoming 2 nd player in the industry in 1Q 2017, the overall performance has been improving 18

21 Walkerhill / SK Magic <Walkerhill> <SK Magic> Revenue / Operating Profit (In Billion KRW) Revenue / Operating Profit (In Billion KRW) REV 48 OP REV 101 OP '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q Revenue Breakdown (In Billion KRW) Revenue Breakdown (In Billion KRW) Hotel Lease(Paradise) Others Rental Kitchen Appliance '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q '16.1Q '16.2Q '16.3Q '16.4Q '17.1Q '17.2Q Analysis The overall performance will be improving after the renovation in 1H 2017 Analysis The rental accounts has been increasing yet the margin has been shrunk due to increase in marketing expenses 19

22 End of document

Investor Briefing Q Results. SK Telecom (K-IFRS, Non-audited)

Investor Briefing Q Results. SK Telecom (K-IFRS, Non-audited) 2018. 2Q Results (K-IFRS, Non-audited) SK Telecom 2018. 7. 27 0 Disclaimer This presentation contains forward-looking statements with respect to the financial condition, results of operations and business