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CONTENTS

CONTENTS. 1. About Company. 2. Management Strategy for Year 2002. 3. Mid-and Long-Term Management Strategy. 4. VISION. About Company. History of Growth Market Position Restructuring Operational Performance Financial Condition. History of Growth. Successful Transformation.

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CONTENTS

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  1. CONTENTS 1. About Company 2. Management Strategy for Year 2002 3. Mid-and Long-Term Management Strategy 4. VISION

  2. About Company • History of Growth • Market Position • Restructuring • Operational Performance • Financial Condition

  3. History of Growth Successful Transformation ElectronicChemical Materials Chemicals • Put EMC on the • Market • 1999. Developed 9 New • Products • Completed Gumi • IT Production • Plant Fashion • Completed ABS • and PS Plant • Launched the • Artificial Marble • Biz Textile 1983. Started Fashion Biz 1999. Took over Apparel Biz from Samsung Corporation 1954. Founded 1995. Established Local Textile Company in Tianjin, China About Company 2000’s 1990’s 1980’s 1954 ~ 1970’s W209bn(12%) W747bn (43%) W740bn (43%) W40bn (2%) Sales in FY2001 : W1,736bn

  4. Market Position (2001) High Level M/S Textile Fashion Chemicals Electronic Chemical Materials • World’s largest textile maker (18mn m/year) • Korea’s best total • fashion company • Second largest maker • in Korea • Special product-oriented • business structure • Korea’s largest business • structure in electronic • chemical materials Status • 12% in business suits • textile in USA • 13% in business suit • textile in Japan (#1) • 36% for Monitor (#1) • 46% in FR ABS for Monitor (#1) • 12% for Color TV (#2) • 12% for Refrigerator (#2) • 10% in Artificial Marble (#3) GlobalM/S Domestic M/S • 53% in business suits • textile (#1) • 38% in EMC (#1) • 40% in EMS • for cellular phone • (#1) • 40% in high quality business suits (#1) • ‘Bean Pole’ : best-known traditional casual brand • in Korea • 23% in all ABS products • (#2) • 50% in Cellular Phone Resin (#1) • 36% in Artificial Marble(#1) About Company

  5. Restructuring Successful Restructuring 1997 2001 Employee Reduction - 41% 3,727 2,197 Employees Sound Financial Condition through Sale of Assets - 186%p 294 % 108 % D/E Ratio Separation of Part of Production Lines and Sales units Risk management through minimization of fixed costs Business Structure Reform Profit-making in all biz and brands Closure of Non-Profitable Biz Take over of Fashion Biz from Samsung Corp. Build-up of stable basis for making profits through synergy effect About Company

  6. Operational Performance • Successful Restructuring • Increasing Sales of High Value Added products Sales RP (margin) ( \bn ) ( \bn ) ECM Chemicals (5%) (5%) (4%) ’98 ’99 ’00 ’01 Fashion (-5%) Textile ’99 ’98 ’00 ’01 About Company Record Best Performance for Two Consecutive Years

  7. Financial Condition • Successful Restructuring • Increased Profitability D/E Ratio Borrowings (%) ( \bn ) ’99 ’99 ’98 ’00 ’01 ’98 ’00 ’01 About Company Sound Financial Condition

  8. Management Strategy For Year 2002 • Sales • Operating Profit • Recurring Profit • Management Strategy by Divisions

  9. Sales Sales Growth : 7% Sales Sales by Division (Ratio) ( \bn ) ECM 90 (5%) Textile 200 (11%) Chemicals 800 (43%) Fashion 760 (41%) ’99 ’00 ’01 ’02(E) Management Strategy for Year 2002

  10. Operating Profit Operating Profit Growth : 25% Operating Profit OP by Division (Margin) ( \bn ) ECM 19 (21%) Textile 42 (21%) Chemicals 72 (9%) Fashion 87 (11%) ’99 ’00 ’01 ’02(E) Management Strategy for Year 2002

  11. Recurring Profit Recurring Profit Growth : 46% Recurring Profit RP by Division (Margin) ( \bn ) ECM 15 (17%) Chemicals 46 (6%) Textile 17 (9%) Fashion 42 (6%) ’99 ’00 ’01 ’02(E) Management Strategy for Year 2002

  12. Management Strategy by Divisions • Stabilization through Sales Growth (Sales Plan: \90bn ) • Increase in Sales of Present products (EMC, Electrolyte, EMS, Paste, OPC, Ink) • Early Sale of New Products (CMP Slurry, CR) • Increase in Exports by Reinforcing Overseas Marketing Activities • Strategic Alliance with Leading Foreign Makers E C M • Strengthening of Profit-oriented Biz Structure (Sales Plan: \800bn) • <Chemical Resins> • Increase in Sales of High Value Added Products • (FR, Extrusion, Transparent ABS, etc.) • Strengthening of Cost Competitiveness through Reinforcement of • Production power by improving Work Process • Increase in Exports to China • <Artificial Marble> • Increase in Exports to USA by Reinforcing Marketing Activities in USA • Maintaining No. 1 M/S in Korea • Strengthening of Sales Power through Extension of Related Biz Chemicals Management Strategy for Year 2002

  13. Management Strategy by Divisions • Profit-oriented Business Structure (Sales Plan: \760bn) • Brand Value-First Management • Weight Increase in Casual Wear Business • Regularized Overseas Market Entry of Independent Brands - Establishment of Sales Company in China • Expansion of Non-discounted Brands • Entry into New Markets through Line Extension of Core Brands • Build-up of Overseas Sourcing Base of Design and Production Fashion • Business Structure with Stable Profitability (Sales Plan: \200bn) • Expansion of High Quality Products • Diversification of Markets as Expanding shares in Japanese Market • Specialization of Production by Gradually Moving Local Production Lines to China • (Gumi Plant: High Quality Products, Tianjin Plant: Medium Quality Products)` Textile Management Strategy for Year 2002

  14. Mid-and Long-term Management Strategy • Electronic Chemical Materials • Chemicals • Fashion • Textile

  15. E C M Leading Business in 21C Semiconductor Materials DisplayMaterials FunctionalMaterials Secondary Li-ion Battery Materials EMC, Liquid Encapsulant, CMP Slurry, PR, Low-K CR, PI, ACF Polarizer Films, Organic EL, FCCL Electrolyte, Active Material EMS, Paste, OPC, INK 2005Sales Plan \80bn \50bn \140bn \150bn Mid-and Long-term Management Strategy Sales in FY2005 : W420bn Cultivation of High Growth & High Profit Biz

  16. E C M ECM Business Line-up Semiconductors Future Plan Display Devices Secondary Li-ion Batteries Business Start Low-k Mass Production P R Liquid Encapsulant Organic E L FED Paste Polymer Electrolyte LCD PR Films CMP Slurry PDP Paste Functional & OpticalDevices Color Printing Active material Alignment Layer PI Electrolyte EMC C R Digital Printing INK E M S O P C Wave Guide Paste 2003~ 1996~ 2000~ INK Mid-and Long-term Management Strategy

  17. E C M Global Market Semiconductor US$ 22bn Display Market Size Related to Cheil Industries US$ 10bn US$ 15bn ElecrtronicProducts US$ 500bn Electric Components Materials US$ 12bn PCB Materials US$ 13bn Others US$ 11bn TotalUS$ 73bn Sales Realization of 8 items in 2002 Mid-and Long-term Management Strategy

  18. E C M Present ECM Market Korean Market ( \bn, as of 2001) Japanese Maker (75%) (60%) (57%) (70%) Others Mid-and Long-term Management Strategy Global Market Japanese Makers Hold 80% M/S ※ Figures indicate the markets into which Cheil Industries has entered. Japanese Majors : Shin-etsu, Sumitomo, Mitsubishi, Toray, TOK, Hitachi, Chisso, JSR

  19. E C M Making it Korea’s largest ECM Business Today Strategy Tomorrow Growing into Korea’s No. 1 Integrated ECM Maker • sales: 420bn Won, Recurring Profit : 100bn Won in 2005 Holding More Than 10% Global M/S in Major Products • CMP Slurry, Electrolyte, EMS, PI, etc. Compared to Growth of IT Business, Basis of Local ECM Business is Weak • Japanese Makers Control Global Market Increasing of Needs to Develop ECM Business by Samsung Group Level • Basic Technology to Develop IT and Electronic Business is Required Concentrating All the Company’s Investment Abilities on the Business • Investment of 140bn Won for Coming 4 Years Reinforcing of R&D • Concentrating Manpower & Investment in Development of Core Technology, Obtaining Advanced Technology (Scouting Foreign Experts) • Co-R&D with Samsung Affiliates Mid-and Long-term Management Strategy

  20. E C M Aiming for World’s Best Technology ( \bn ) (\bn) 2002 2003 2004 2005 R&D 10.4 14.3 19.7 29.7 Capex. 10.8 28.5 40.0 76.0 Total 21.2 42.8 59.7 105.7 (case) Domestic Overseas Country basis 320 65 USA 19, Japan 18, Taipai 9, China 7, the others 12 Application Registration 85 20 USA 9, Japan 9, Taipai 2 Total 405 85 (person) Total R & D Ratio No. of Employees 230 107 47% Mid-and Long-term Management Strategy Mid- and Long-term Investment plan Patents R & D Personnel

  21. Chemicals No. 1 Global M/S in High Value Added ABS, PS High Value Added Business Structure Improved CompetitivenessMaximization of Profit Development of Next Generation Technologies & Products Concentration on Specialty Products Extension of Artificial Marble Business • Reinforcing of R&D Investment • Sale of Revolutionary New Products • No. 1 Domestic M/S • Global M/S of 30% • Expansion of Transparent ABS • Increase in Sales in Sheet ABS, FR PS • Dramatic Increase in Productivity • No. 1 Global M/S in 3 Products (FR ABS, FE PS, Extrusion ABS) Mid-and Long-term Management Strategy

  22. Fashion Growing into a Top Class Total Fashion Maker • Brand Value-First Management • Expansion of Non- Discounted Brand • Expansion of Core Brand Business Build-up of Global Business System Active Coping with Fashion Trend • Build-up of Optimal Business Structure by Weight Increase in Casual Wear Business • Overseas Market Entry of Independent Brands • Rise in Cost Competitiveness through Global Out-sourcing Mid-and Long-term Management Strategy

  23. Textile Reinforcing its Position as Global Woolen Textile Maker Achieving World’s No. 1 Quality Raising quality to the level of Loropiana & E.Zegna Technology Manpower Complimentary System Special hiring of world’s top quality technical experts World BestWoolen texitileProducer(Quality,Profitability & Capability) Gumi Plant : high quality products for domestic demand Tianjin Plant: medium quality products for export World’s Largest Production (18mn m/year) Increasing profitability Specialization of Production by Plant 10% in RP to sales ratio Mid-and Long-term Management Strategy

  24. VISION • Core Strategy • Cheil Industries in the Future • Goal of Income • Financial Structure

  25. Core Strategy Developing World’s Top Class Products by Businesses Textile Fashion Chemicals ECM • World’s No. 1 • in Production • Only One Integrated ECM Maker in Korea • World’s Top FR product Maker • Korea’s Second Largest ABSㆍPS Maker • Korea’s Largest • Fashion Maker • 40% M/S in High Quality Business Suits Present Status • Achieving 10% Global M/S in CMP, Electrolyte, EMS, PI Future Plan(Year 2005) • World’s No. 1 Quality & Productivity • RP Margin : 10% • Making its Brands World-level • Making ‘Bean Pole’ Total Family Brand • Growing into World’s Top #5 ABS Maker with Production Capacity of 0.5mn ton/year • 30% Global M/S in Artificial Marble (#2) VISION

  26. Cheil Industries in the Future Successful Change of the Company Global Top Class ECM & Total Fashion Maker Hi-Tech Chemicals & Total Fashion Chemical Materials & Total Fashion ( \bn ) 2,620 418 (16%) 300 (12%) 65% 1,736 177 (10%) 82 (5%) 108% 2,100 286 (14%) 180 (9%) 87% Sales Operating Profit (Margin) Recurring Profit (Margin) D/E Ratio FY2003 FY2001 FY2005 VISION

  27. Goal of Income Maximization of Profitability with High Value Added Business Structure Profit Sales (\bn) (16%) (\bn) ECM (12%) (14%) Chemicals (9%) (10%) Fashion (5%) Textile VISION Operating Profit Margin 16% Recurring Profit Margin 12% 420 180 40 1,000 880 740 1,000 840 747 200 209 200 2001 2003 2005

  28. Financial Structure Strong Financial Condition VISION

  29. Cheil Industries serves for Customers all over the World IR Team, Cheil Industries TEL : 82-2-527-2042~3 Web Site : www.cii.samsung.com/ir/eng E-mail : ircii@samsung.com

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