July 2014 NEWS LETTER. LG Hausys wins substantial Aluminum Curtainwall contract in Mongolia

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1 LG Hausys wins substantial Aluminum Curtainwall contract in Mongolia Our company has ramped up efforts to cultivate emerging markets around the globe by winning a substantial aluminum curtainwall contract in Mongolia. On the 24th of June, our company announced that an agreement has been made to supply aluminum curtainwall products worth approximately KRW 50 billion to the Shangri-la Hotel and the new airport construction sites located in Ulaanbaatar, Mongolia s capital city. As per the agreement, our company will supply roughly 700 tons of aluminum curtainwall products to the construction of both office and apartment buildings of the Shangri-la Hotel in Ulaanbaatar, and passenger terminal of the new airport. The projects are expected to run through September Our achievement is the very first large scale contract to supply curtainwall products to a construction project in Mongolia by a Korean company. Since winning the Mongolyn ALT Corporation s (MAK) resort project in 2012, our company has been successfully installing aluminum window systems and curtainwalls. Our construction capabilities have been recognized enough to win two new products. Especially, The Low-e Glass from our subsidiary Hausys Interpane will be used on curtainwall products. Our overseas expansion strategy of combining the glass and curtainwall businesses to create a synergy effect has already become a model success story within the industry. Meanwhile, our company has continued to expand our overseas ventures by supplying aluminum curtainwall products to Russia and Vietnam in 2012, and also Mongolia more recently. We have also continued to participate in construction material exhibitions held not only in strategic markets such as China, America, and Russia but also in emerging markets including Dubai, Turkey, Indonesia, Kazakhstan etc. to focus our efforts on achieving greater success among global emerging markets for construction materials such as curtainwalls. Sung-Ho Lee, director of window and door materials, revealed that we will strengthen our foothold in the curtainwall business overseas by finishing up this curtainwall construction project successfully in Mongolia, and also added we will continue to strengthen the competitiveness of our business by creating new markets in the aluminum door and window business as well as our curtainwall business. 1/6

2 LG Hausys launches Z:IN ZIA HU & ME eco-friendly flooring for a pristine indoor environment Our company has launched two new types of eco-friendly flooring, Z:IN ZIA HU & ME 3.0 and 2.5, aimed at providing a pristine indoor environment. The new Z:IN ZIA HU & ME applies Poly Lactic Acid (PLA), a vegetable resin extracted from corn, on the product surface, and was awarded the Outstanding grade of the HB Mark issued to eco-friendly building materials by the Korea Air Cleaning Association (KACA). Such achievement was the first among domestic linoleum flooring materials. Z:IN ZIA HU & ME satisfies the government s construction standards for health-friendly houses with stricter regulations regarding the emission of Total Volatile Organic Compounds (TVOC) and Formaldehyde (HCHO) that cause sick house syndrome. A unique technology developed in-house gives Z:IN ZIA HU & ME its standout feature a texture that emulates smooth natural silk. Also, Z:IN ZIA HU & ME is given a matte UV surface treatment which creates a micro embossed structure surface that reflects light helping the surface appear smoother and preventing dust from clinging onto the material which ultimately makes it easier to clean. Not only that, Z:IN ZIA HU & ME absorbs impact extremely well which makes it excellent for walking on and reduces living noise levels. It s also extremely durable and fights bacteria and mold effectively to offer a safe and pleasant everyday environment. 2/6

3 Gaining recognition in the medium to high-end functional flooring material market for buses in China How China LG HSC is targeting the bus flooring material market As we all know, China boasts a vast population naturally resulting in an unimaginable number of people using the public transport system. Especially, buses in metropolitan areas are notorious for being jam-packed, and accidents occur when people compete for the door when getting on or off. In spite of this, buses along with the subway are the most popular modes of public transport in China. Economic development means different districts and cities are being connected which subsequently leads to more bus routes as well as the demand for intra-city buses. To stay in tune with these changes, our company released a strategic bus flooring product which has been received well by the market. Claiming 15% of the Chinese bus flooring material market Total annual sales of commercial flooring in China by our company are approximately 80 million dollars which is good for the top spot in the market. Here, commercial flooring refers to materials used in commercial facilities including hospitals, schools, offices, buses etc. While residential flooring materials are designed to emulate wood, most commercial flooring designs are understated and made to be stain resistant. Our flooring products have the reputation of being an environmentally friendly flooring material which also offers great quality at a reasonable price compared to other imported products. In August 2003, our company entered the Chinese bus flooring material market through our branch office in Shanghai which was designated as a new strategic market in the commercial flooring sector. Since Weitong, the largest bus vehicle producer in China, started using our products we were able to establish a solid foothold and become the top foreign owned company in the medium to high-end bus flooring material market with a 15% market share worth approximately 20 million dollars. 3/6

4 Staying on top of the complex local business structure and product imitation/pricing aggression Supplying materials to buses in China involves going through different levels of complex organizations such as bus operating companies, bus vehicle producers, parts manufacturers, the Ministry of Transportation etc. which makes it difficult to cultivate relationship with clients. Also, Chinese local products are both cheap and quick to imitate other products therefore responding to these challenges is the key point in conducting business in the Chinese bus flooring market. In response, our company is appealing to the Chinese market with the Felt Delight product and Eltrans known locally as a Geumgang company product of the great value for money our products can offer.. Compared to other imports, our company offers similar quality at competitive prices, while compared to local products, our company offers better quality at a higher but reasonable price. This is the strategy to solidify our product identity in the market. Planning to focus on the medium to high-end functional bus market through the development of differentiated products The bus market in China continues its steady growth thanks to the expansion of public infrastructure. Companies have been engaged in an intense pricing competition with local Chinese companies and foreign flooring corporations jumping into the market to take advantage of the booming situation. Our company will attempt to break from the price driven low cost bus material market and will focus on targeting the medium to high-end functional bus market. As part of these efforts, our company participated in the China (Shanghai) international bus and parts exhibition from the 11th to 13th of June with Eltrans to promote the excellence of our company s products. LG HSC refused to stay satisfied with the conventional commercial market and pioneered into new markets i.e. the bus flooring market. We hope LG HSC continues to grow in the medium to high-end functional bus market in China. 4/6

5 LG Hausys opens a grand HI-MACS exhibition center in the heart of Southeast Asia Singapore HI-MACS exhibition center Luxx New House Solid Surface Museum in Singapore with our partner Luxx New House. Singapore is a small country located in the middle of Southeast Asia. Although a small city state, it is an economic powerhouse home to advanced buildings and infrastructure. Singapore was chosen as the main outlet to help our company advance into the Southeast Asian market as it possessed the most advanced construction market within the region. Our chief client in Singapore, Luxx New House, opened a grand HI-MACS exhibition center Luxx New House Solid Surface Museum this May, and displayed various products of the HI-MACS range (synthetic marble products) for our clients as our full-fledged advance in the Southeast Asian market began. The first grand HI-MACS exhibition center opened in Southeast Asia HI-MACS, a range of synthetic marble products, offers great processability which makes it possible to be used in a variety of ways. But so far, they have mostly been used for surfaces of kitchen furniture etc. In Singapore, however, synthetic marble is utilized in a much diverse manner as it is applied to a variety of places such as walls, trimmings, bathroom sinks, lighting fixtures etc. of condominiums, a type of high-end apartment. For this reason, architects or designers in Singapore have greater interest in synthetic marble compared to those in other Southeast Asian countries. In line with such interest, our chief business partner in Singapore Luxx New House opened the very first grand HI-MACS exhibition center, Luxx New House Solid Surface Museum in the furniture complex in northeast Singapore. The Luxx New House Solid Surface Museum displays a wide range of products made of HI-MACS such as lighting fixtures, commercial desk and countertops, kitchen, bed, and bathroom sink components, as well as art sculptures made of HI-MACS. 5/6

6 HI-MACS museum where you can see all HI-MACS products at once The first thing that catches your attention when you enter the Luxx New House Solid Surface Museum is the central area where it seems like a sculpture exhibition. Here you can see the images of all the well-known buildings that apply HI-MACS products. In parts of the exhibition center, you can meet unique products that could not be found in other HI-MACS exhibition centers. A table with embedded LED lighting that displays Hi Mac s transparency, entire bathrooms and ceilings decorated using HI-MACS, a case applied as the surface of Snaidero (high class Italian kitchen furniture brand), an island type kitchen and doors made of HI-MACS etc. are also housed within the Museum. Also, a sculpture produced using a CNC machine which mimics the work of Michelangelo, and a sculpture resembling a rock mound where the concept was borne from Chinese hieroglyphs are on display. All in one place, various spaces made of HI-MACS and their purposes are on display for construction workers, architects, designers. The museum explains how these HI-MACS products can be applied which makes it easier for customers to understand. Premiere event for the World Interior Day, as an opening salvo for the Singaporean/Southeast Asian market On the 31st of May, the opening ceremony of Luxx New House Solid Surface Museum took place to welcome the World Interior Day. The opening ceremony was attended by more than 100 dignitaries including Kyeong-Ju Hwang, head of our overseas business division, head of the Design Singapore Council, and design personnel from the government, celebrating our company s expansion in earnest into Singapore and the opening of the Luxx New House Solid Surface Museum. Director Kyeong-ju Hwang said at the event this holds significance in that you can see all product solutions possible with HI-MACS in one exhibition, and since Singapore is the center of Southeast Asia, we will do our best to transform this into a platform to expand into neighboring markets. Our company will host a variety of events for our customers such as HI-MACS design seminars in order to become the unequivocal leader in the Singaporean market with the Luxx New House Solid Surface Museum. Also we will solidify our image as a company that offers differentiated design solutions compared to our competitors to our customers in the Southeast Asian region. 6/6