Halla E&C IR 1H12

Halla Engineering &

Construction Corp. (014790 KS)

Oct. 2012

Halla E&C IR 1H12

-

5,000

10,000

15,000

20,000

25,000

30,000

1994 1995 1997 1998 1999 2000 2002 2003 2004 2005 2007 2008 2009 2010

Halla E&C Share Price

Capital-increase

Halla Group went

bankrupt

Mando Corp. is acquired

Capital-increase

Debt repayment

Capital-increase Shanghai-Kyeongeun was

established

Uijeongbu Songsan, Yongin

Jukjeon35, Gugal8

Suwon Dangsudong

Yongin Dongbaek

3,5,10 , Gugal 2

Namyangju Hopyeong 8

Dangjin Wondangri

Daejeon 3B/L Incheon

Cheongna

Paju A22B/L Cheongju Yongjeong

Kimpo Canal City

Halla Tianjin Co,Ltd. was established

Beijing-Hanhwa was established

Seosan Dongmundong

Lehman Brothers went

bankrupt

2

Halla E&C IR 1H12 3

Contents

This material contains forward-looking statements that include our current beliefs and expectations on

market factors and information obtained outside Halla E&C, which are subject to uncertainties. Due to the

volatility of these factors, actual results may differ from those set forth in the presented statements.

Ⅰ. Highlights

Ⅱ. 2Q12 Performance

Ⅲ. Growth and Profitability

Ⅳ. Liquidity

Ⅴ. Strategy For Growth

Ⅵ. Financial Statement

＊ Appendix

Halla E&C IR 1H12

Highlights

Financial Restructuring Plan

1) Background

- Prolonged recession in domestic construction industry

- Increasing number of construction firms with the credit crunch

2) Purpose

- A substantial improvement in financial structure

→ Anticipative, fundamental action for reducing credit risk

- The biggest shareholder’s strong will of responsibility management & support from pan-Hyundai Groups

→ Restoration of public confidence

3) Effect

- Reducing debt ratio : 250% (End of 2011) 200%

- Increasing profit : \55bn

- Reducing financial expenses : by \8bn annually

- Cash In : \185bn (Capital-increase & sale of shares in Mando Corp.)

4) Tools

- Sale of 450,000 shares (2.47%, \85.5bn) in Mando Corp. → 19.99%

- Capital-increase by the 3rd party allotment : Chairman (\30bn), Meister (\20bn), KCC (\50bn)

- Settling pending projects → Improving cash-flow and reducing PF guarantees

4

Halla E&C IR 1H12

Highlights

Settling of pending projects

5

Project Cash In PF Balance Mark

Osan Warehouse - 1,500 - Completed sale contract. Construction expenses W 120 bn collected

Pyeongtaek Warehouse 50 - - Completed sale contract(8/8), PF repayed

Yeongjong Sky-City Apartment 650 20 - Completed sale under resale condition

Dongtan Warehouse - 1,123 - Offering equity investors

Halla Hi-hill Complex - 2,070 - Sale under consultation

Cheonan sinbang Apartment 400 - - PF repayed, collecting loan receivables

Yeoju Ceragio CC 140 - - Sale to domestic group under consultation

Jeju Saint-four CC 850 510 - Sale to overseas group under consultation

Total 2,090 5,223

Diversification of business portfolio by entering into overseas market

1) Participate in tendering of SOC projects in Abu-Dhabi, Taiwan etc.

2) Establish a consortium with Mando Corp. and other major groups

3) Employ well experienced men who have overseas business, design, construction skills

(\100mn)

Halla E&C IR 1H12

2Q12 Performance Summary 2012 Income Statement (K-IFRS)

(\100mn)

6

Section

Separation Consolidation

2Q12 2Q11 YoY

2Q12 2Q11 YoY

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

Sales 5,424 100.0% 4,676 100.0% 16.0% 5,641 100.0% 4,756 100.0% 18.6%

Cost 5,160 95.1% 4,138 88.5% 24.7% 5,291 93.8% 4,193 88.2% 26.2%

GP 264 4.9% 538 11.5% -50.9% 350 6.2% 564 11.8% -38.0%

OP expense 249 4.6% 369 7.9% -32.5% 272 4.8% 386 8.1% -29.6%

S&A 223 4.1% 456 9.8% -51.0% 247 4.4% 470 9.9% -47.4%

Other revenue 70 1.3% 90 1.9% -22.2% 71 1.3% 90 1.9% -20.7%

Other cost 95 1.8% 2 0.0% 4327.4% 96 1.7% 5 0.1% 1683.8%

Operation profit 16 0.3% 169 3.6% -90.8% 78 1.4% 178 3.7% -56.3%

Non OP Profit -191 -3.5% -158 -3.4% 20.9% -67 -1.2% -44 -0.9% 52.6%

Non OP income 20 0.4% 4 0.1% 433.9% 35 0.6% 4 0.1% 751.0%

Non OP cost 210 3.9% 161 3.5% 30.4% 216 3.8% 169 3.6% 28.0%

Gains on equity method

- - - 115 2.0% 121 2.5% -5.2%

IBT -175 -3.2% 12 0.3% 적전 7 0.1% 134 2.8% -94.9%

Tax -40 -0.7% 19 0.4% -311.8% 4 0.1% 39 0.8% -89.9%

Net profit -135 -2.5% -7 -0.2% 적확 3 0.1% 95 2.0% -96.9%

Halla E&C IR 1H12 7

2Q12 Performance Summary Performance by section

Section 2Q12 2Q11 YoY

Amount Ratio Amount Ratio Amount Ratio

Civil Engineering

Sales 1,487 97.9% 1,329 93.3% 158 4.9%

Cost 1,456 27.4% 1,240 28.4% 219

Profit 31 2.1% 89 6.7% - 61

Building Excl. housing

Sales 1,687 96.1% 705 91.5% 982 4.6%

Cost 1,621 31.1% 664 15.1% 957

Profit 66 3.9% 41 8.5% 25

Contracted House

Sales 1,003 93.3% 1,402 88.3% -399 5.0%

Cost 935 18.5% 1,258 30.0% - 323

Profit 68 6.7% 144 11.7% -76

In-House

Sales 937 84.5% 1,154 77.4% - 217 7.1%

Cost 792 17.3% 894 24.7% -102

Profit 145 15.5% 260 23.6% -115

Overseas

Sales 222 120.6% 84 96.2% 138 24.4%

Cost 267 4.1% 80 1.8% 187

Profit -45 -20.6% 4 3.8% -49

Etc.

Sales 90 98.5% 2 96.6% 88 1.9%

Cost 89 1.7% 2 0.0% 87

Profit 1 1.5% 0 3.4% 1

Total

Sales 5,424 95.1% 4,676 88.5% 748 6.7%

Cost 5,160 100.0% 4,138 100.0% 1,025

Profit 264 4.9% 538 11.5% -277

(\100mn)

Proportion against total sales

Halla E&C IR 1H12

F/S of each consolidated entity

8

Section Halla E&C Tianjin Mokpo Halla green

energy Halla development Consolidated F/S

Asset 23,659 1,304 95 298 215 26,634

Liability 17,768 296 55 246 34 18,364

Capital 5,891 1,008 40 52 180 8,270

Sales 9,301 401 86 - 29 9,701

Sales Cost 8,797 282 67 - 27 9,058

Gross profit 504 119 19 - 2 643

S&A expense 445 36 10 8 2 498

Other revenue 227 0 0 0 3 169

Other cost 100 2 1 0 0 102

OP profit 186 81 8 -8 3 212

Non OP profit(loss) -585 -2 0 - 0 -588

Equity investment profit 548 - - - - 512

IBT 149 79 8 -8 3 135

Tax 39 9 2 -2 1 79

Net profit(loss) 110 70 6 -6 2 56

(\100mn)

2Q12 Performance Summary

Halla E&C IR 1H12

32% 32% 40%

32% 28%

16% 26% 13%

16%

33%

49% 36%

27%

31%

18%

3%

6%

19%

20%

15%

2%

5%

'09 '10 '11 1H11 1H12

87.6% 89.0% 90.4%

88.6% 94.6%

Growth and profitability

Sales

(\ bn, %)

Sales Cost

Sales, Cost of sales-K-IFRS Separation

30% 31% 38% 31%

30% 27%

15% 25% 13% 15%

15%

33%

51%

37% 27% 31%

31%

18%

4%

7%

22% 22%

23%

17%

2%

6%

2%

4%

'09 '10 '11 '12(E) 1H11 1H12

Civil Engineering Building exc. Housing Contracted house

In-house Overseas Etc.

1,616 1,503

1,418 1,337

Sales growth on increase of government-ordered building projects and overseas projects

COGS increase on large portion of government-ordered projects and worsen profitability at housing division

(\ bn, %)

9

※ 2009 performances on K-GAAP non-consolidated basis, since 2010 performances on K-IFRS separated basis

1,686

1,523

1,836

768

930

680

880

Halla E&C IR 1H12

28

13

1H11 1H12

3.5%

1.4%

19

6

1H11 1H12

Growth and profitability

Operation income

(\ bn, %)

IBT Net income

S&A, Operating income, IBT, Net income- K-IFRS Consolidation

36

21

1H11 1H12

4.6%

2.2%

2.4%

0.6%

Slipping margins on increase of COGS and losses regarding housing projects

Gains on disposal of securities occurred from sales of Mando stake on Jan. 2012

10

OP Cost

59

43

1H11 1H12

7.5%

4.4%

(\ bn, %) (\ bn, %) (\ bn, %)

Halla E&C IR 1H12

Liquidity

346 309 379 362

236 417 589 593

'09 '10 '11 '12.06

Long Short

Borrowings (\ bn)

Section ’07 ‘08 ‘09 ‘10 ‘11 Total

Land 110 75 192 145 - 522

Acquisition of Mando

- 170 - - - 170

SOC etc. 17 9 9 35 76 146

Loan etc. - - - - 355 355

Total 127 254 201 180 431 1,193

Expense Breakdown (\ bn)

Section Balance

(As of end-1H12)

’12 ’13~

3Q 4Q 1H13 2H13~

Long Borrowings 8.9 8.9

Bond 355 355

Short

Bank 102.5 10 5 87.5

CP 172 78.5 89.5 4

Etc. 26.8 26.8

Bond 290 50 240

Total 955.2 115.3 144.5 331.5 363.9

Cash inflow from in-house projects 130 154 181 283

Redemption schedule (\ bn)

Borrowings

968

582 726

11

955

Halla E&C IR 1H12

148

(16%)

169

(18%)

121

(13%)

482

(51%)

20

(2%)

House(planned) House(On-going)

House(Completed) Excl. house(On-going)

Excl. house(Completed)

271 224 222 280 266

831 784

680 383

105

688

455

322

277

272

2009 2010 2011 2012.09 12(E)

Seoul Greater Seoul Province

PF guarantees stood at \940.5bn as of Sep. 2012

84% of total PF guarantees is for on-going projects

Liquidity PF Guarantees

12

1,463

644

PF guarantees forecast by periods and regions

(\ bn, %)

PF guarantees breakdown

(\ bn, %)

2 3 9

1,790 3 2 2

1,174

296

438

502

940

234

Halla E&C IR 1H12

Strategy for growth New growth engine

13

Strengthening overseas business

- Continuing projects in China - Winning orders from Middle East, Asia,

Vietnam Entering redevelopment, reconstruction market Establishing plant division

Civil : Building excl. house : Housing : Overseas

→ 26% : 25% : 45% : 4%

Stable order flow from pan-Hyundai groups*

and our affiliates

Strengthening new business field

Stable portfolio

+

Diversifying business fields

Groundwork for sustainable growth

Synergy with affiliates

New growth engine

28% 19%

33%

26%

34%

37%

5% 18%

1H12 2015(E)

Civil engineering Building excl. house

Housing Overseas

* HHI, Hyundai fire&marine, Hyundai department

Store, Mando Etc.

Halla E&C IR 1H12

29% 35%

25% 17%

50% 20%

19%

20%

32%

38%

31%

22%

32%

24%

16% 41%

5%

32%

19% 16%

26%

8%

8%

5%

1%

4%

7%

18%

'08 '09 '10 '11 1H12 '12(E)

Civil Building excl. house Contracted house In-house Overseas

Strategy for growth Orders and order backlogs

New orders

(\ bn, %)

Order backlogs

2,223

2,438

2,110

38% 38% 33%

29%

9%

12% 20% 27%

35%

29%

24%

28%

19%

18%

20%

12%

3%

3% 3%

'08 '09 '10 '11

Civil Building excl. house Contracted house In-house Overseas

3,919

4,743

5,352

Order by Hyundai family will be steady, expecting new orders in plant, redevelopment, reconstruction and

overseas projects

14

1,841

5,507

2,500

694

(\ bn, %)

Halla E&C IR 1H12

Financial Statement Balance sheet

Section K-IFRS(Consolidated) K-IFRS(Separated)

2011 1H12 2011 1H12

Asset 2,610 2,663 2,277 2,366

Current Asset 1,803 1,856 1,611 1,697

Non Current Asset

806 807 666 669

Liability 1,874 1,836 1,782 1,777

Current Liability 1,443 1,397 1,358 1,361

Non Current Liability

431 439 423 416

Capital 736 827 495 589

Paid-in Capital 100 137 100 137

Others 636 690 395 452

15

(\ bn)

Halla E&C IR 1H12

39

200

301

74 94

337

77

145

3 0

13

'06 '07 '08 '09 '10 '11

Building excl. house Civil engineering

3.1% 16.1%

20.1% 3.2% 4.5%

19%

306

186

68

128 94

83

94

12

23

1

'08 '09 '10 '11 '1H12

Building excl. house Civil engineering

28.5%

17.3%

5.3% 8.9% 10.2%

16

Appendix Sales from Pan-Hyundai Groups

New orders from pan-Hyundai Groups Sales

(\ bn, %)

39

277

446

77 94

350

389

280

80

150

proportion against total sales

※ Pan-Hyundai: HHI, Hyundai Department store, Hyundai fire & marine, Mando etc.

95

(\ bn, %)

Halla E&C IR 1H12

Appendix Tianjin Project

Location •Donglim, Tianjin (north side of Tianjin)

Scale of Business

• Land purchasing : 73,918,000.- (Incl. tax) • Total revenue : 375,710,000.- • Development Profit : 40,270,000.- (10.7%)

Funding • Local subsidiary’s Paid in capital : 70mil (local profit re-investment 19mil, Contribution 51mil )

Project dimension

• Apartment : 198,000㎡ • Office : 6,000㎡ • Shopping area and attached facilities : 16,000㎡

Scale of construction

• Apartment : 31buildings of 13 floors, 1,986 of

housing unit

• Shopping center : 3 floors

• Office : 1 building of 9 floors

Work calendar

• Apartment

- 1B/L : Jun.09 ~ Dec. 10 (668 units, Started sales in Jun. 09)

- 2B/L : Dec. 09 ~ Dec. 11 (650 units, Started sales in Jan. 11)

- 3B/L : May. 12 ~ Mar. 14 (668 units, Scheduled in Nov. 12)

• Shopping Center – Dec. 10 ~ Dec. 11

• Office – Dec. 10 ~ Mar. 13

Sales ※ As of : 2012.10.07 • 1B/L 666/668(99.7%)

• 2B/L 452/650(69.5%)

• Tianjin Project is located along the city development line between Tianjin city and Binhai New Area-which is one of 3

Special economic zones with Shanghai and Shenzhen

(USD)

17

Halla E&C IR 1H12

Status Project name Lead Manager Contract

amount

Halla

portion

Investme

nt

amount

Halla

share Remarks

Completed

Mokpo New Port ＃1 Halla E&C 71.6 19.00 80.00% Disposed

Mokpo New Port ＃2 Halla E&C 26.8 10.53 100.00%

Gwangju Beltway #2 Kumho E&C 41.6 6.39 12.75%

Pohang Yeongil Newport Daelim Inderstrial 45.5 10.55 13.53%

Ulsan Institute of Technology Hyundai E&C 230.1 14.7 0.16 0.64%

Under

Construction

Seosuwon-Uiwang Highway Doosan E&C 223.9 22.1 1.98 4.15% To be completed in 2012

Pyeongtaek-siheung Highway Halla E&C 623.5 106.0 4.66 4.76% To be completed in 2013

Suwon-Gwang Myeong Highway Korea Development 920.0 59.8 5.57 6.50% To be completed in 2015

Youngdong Highway #2 Hyundai E&C 998.3 99.8 4.82 10.00% To be completed in 2015

Sosa-wonsi railway Daewoo E&C 1,273.5 63.7 0.68 5.00% To be completed in 2016

Bibong-maesong road Hyundai-amco 160.5 32.6 0.94 20.30% To be completed in 2016

Incheon-Kimpo Highway Posco E&C 1,132.3 114.4 4.48 10.00% To be completed in 2017

Approved Busan Newport Rear Road #2 Lotte E&C 427.5 26.9 0.48 6.30% To be completed in 2015

Proposed

Seoul outer Beltway #2

(Songsan-Bongdam) Hanwha E&C 300.0 30.6

Daegok-sosa railways Hyundai E&C 1,000.0 35.0

Gwacheon-songpa road Posco E&C 266.3 39.9

Appendix Private funded SOC

(\ bn)

Private funded SOC Projects We have a competitive edge in building harbors thanks to years of experience.

We participate through consortiums rather than independently.

Undecided

18

Halla E&C IR 1H12 19

Appendix Corporate Governance

Halla Group

Largest

Ghareholder

25%

KCC

14%

Foundation

Baedal

3%

Hyundai

weldinf 1%

Meister

5%

Etc

52%

Governance of Halla E&C

Cheong Mong Won

Halla E&C

Mando Corp.

Halla Encom

Mokpo newport

Halla Tiangin

Halla I&C

Mando-Hella electronics

Halla Stackpole Meister Overseas Subsidiaries

(14 Companies)

100%

100% 70% 50%

24.2%

19.9% 7.5%

100%

100%

46.7%

5.4% Halla

development

Halla green energy

51%

90%