MIRA INFORM REPORT

Report Date :

23.10.2013

IDENTIFICATION DETAILS

Name :	DONG WHA DUTY FREE SHOP CO., LTD.

Registered Office :	211, Sejongno, Jongno-gu, Seoul, Korea B1, Gwanghwamun Bldg.

Country :	South Korea

Financials (as on) :	31.12.2012

Date of Incorporation :	03.08.1973

Legal Form :	Co., Ltd by shares

Line of Business :	Retail sale in non-specialized large stores.

No. of Employees :	157

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Satisfactory
Payment Behaviour :	Slow but correct
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31^st, 2013

Country Name

Previous Rating

(31.12.2012)

Current Rating

(31.03.2013)

South Korea

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

SOUTH KOREA - ECONOMIC OVERVIEW

South Korea over the past four decades has demonstrated incredible growth and global integration to become a high-tech industrialized economy. In the 1960s, GDP per capita was comparable with levels in the poorer countries of Africa and Asia. In 2004, South Korea joined the trillion dollar club of world economies, and is currently the world's 12th largest economy. Initially, a system of close government and business ties, including directed credit and import restrictions, made this success possible. The government promoted the import of raw materials and technology at the expense of consumer goods, and encouraged savings and investment over consumption. The Asian financial crisis of 1997-98 exposed longstanding weaknesses in South Korea's development model including high debt/equity ratios and massive short-term foreign borrowing. GDP plunged by 6.9% in 1998, and then recovered by 9% in 1999-2000. Korea adopted numerous economic reforms following the crisis, including greater openness to foreign investment and imports. Growth moderated to about 4% annually between 2003 and 2007. Korea''s export focused economy was hit hard by the 2008 global economic downturn, but quickly rebounded in subsequent years, reaching 6.3% growth in 2010. The US-South Korea Free Trade Agreement was ratified by both governments in 2011 and went into effect in March 2012. Throughout 2012 the economy experienced sluggish growth because of market slowdowns in the United States, China, and the Eurozone. The incoming administration in 2013, following the December 2012 presidential election, is likely to face the challenges of balancing heavy reliance on exports with developing domestic-oriented sectors, such as services. The South Korean economy''s long term challenges include a rapidly aging population, inflexible labor market, and heavy reliance on exports - which comprise half of GDP

Source : CIA

Basic Information

Basic

Company Name	DONG WHA DUTY FREE SHOP CO., LTD. (Korean Company Name : “(주)동화면세점”)
Registered Address	211, Sejongno, Jongno-gu, Seoul, Korea
Building	B1, Gwanghwamun Bldg.
Zip Code	110-730
Tel	+82-2-399-3000
Fax	+82-2-399-3111~2
E-mail	webmaster@dutyfree24.com
Website	www.dutyfree24.com
Trading Address	B1, Gwanghwamun Bldg., 211, Sejongno, Jongno-gu, Seoul, Korea (New Address System : 149, Sejong-daero, Jongno-gu, Seoul, Korea)
Tel	+82-2-399-3000
Fax	+82-2-399-3111~2
Type	Export/Import
Industry	Retail Sale in Other Non-Specialized Large Stores
Main Business	Duty Free Shop Operation Services
Established (mm/dd/yyyy)	03/08/1973

The Subject Company occupies the premises of registered HQ address by leasing base.

Detailed Products

Activity	Detailed Products (UNSPSC)
Sell	Distribution(80141700)

CEO’s

Name	Shin Cheong-Hwi
Address	97, Daesagwan-ro, Seongbuk-gu, Seoul, Korea
Date of Birth	11/19/1946
Title	President & CEO
Sex	Female
Nationality	Korean

Profiles

Capital (KRW)

9,000,000,000

Employees

157

Formation

Co., Ltd by shares

Bank Details

Citibank, Korea

Shinhan Bank

Hana Bank

Woori Bank-Sejongro Branch

Corporate Registered No.

110111-0141905

Business Registered No.

102-81-06181

Permit & Licenses

Int’l Trade No.: 45264931

Shareholder Position

Name	Shares	%
KIM KI-BYUNG	1,108,050	61.56
SHIN CHEONG-HWI	388,500	21.58
KIM HAN-SUNG	142,450	7.91
LOTTE TRAVEL SERVICE CO., LTD.(110111-0134116)	141,000	7.83
DONG WHA GENERAL CORPORATION(110111-0387961)	20,000	1.11
TOTAL	1,800,000	100.00

Company History

03/08/1973 Incorporated as DONG WHA ARCADE CO., LTD.

08/05/1985 Changed company name to DONG WHA DUTY FREE SHOP DEPARTMENT CO., LTD.

04/1991 Changed company name to Changed company name to the present name

01/30/1993 Moved to the present HQ address from 211-1, Sejongno, Jongno-gu, Seoul, Korea

12/29/2001 Increased capital to 9,000,000,000 KRW from 7,000,000,000 KRW

Detailed Information

Management

Job Description	Title	Name	Sex	Nationality	Inauguration Date
Co-President & CEO	M/S.	Shin Cheong-Hwi	Female	Korean	05/08/1994
Co-President & CEO	Mr.	Cho Kwang-Hee	Male	Korean	02/24/2003
Director	Mr.	Kim Han-Sung	Male	Korean	09/07/2007
Director	Mr.	Kim Ki-Byung	Male	Korean	03/16/1992
Director	Mr.	Seo Yoon-Rok	Male	Korean	03/31/2003
Director	Mr.	Lee Min-Joong	Male	Korean	05/07/2008
Director	Mr.	Cha Jung-Ho	Male	Korean	05/22/2013
Auditor	Mr.	Park Si-Hwan	Male	Korean	01/05/2006

Financials

Year / Unit : KRW	Sales	Assets	Net Income
2012	234,993,938,724	155,204,950,877	-8,305,656,935
2011	212,767,577,733	168,302,093,478	3,055,290,477
2010	194,424,927,648	143,839,692,671	4,152,352,925
2009	186,530,971,418	145,233,094,250	4,509,599,921
2008	132,132,802,693	136,690,792,021	1,654,302,658
2007	110,923,006,860	70,605,486,309	256,289,590
2006	111,299,819,026	70,506,165,656	996,243,985
2005	105,343,456,220	63,398,870,925	3,038,910,075
2004	105,570,674,030	59,439,357,971	2,638,383,025

Financial Description

Authorized Capital(KRW)	15,000,000,000
Paid-Up Capital(KRW)	9,000,000,000
Total Issued Shares	1,800,000

Balance Sheet

Unit : Korean Won	As of 12/31/2012	As of 12/31/2011	As of 12/31/2010
Total Assets	155,204,950,877	168,302,093,478	143,839,692,671
Current Assets	63,890,760,332	63,360,854,005	46,844,951,867
-Quick Assets	15,331,365,080	19,423,387,940	9,322,663,633
-Inventories	48,559,395,252	43,937,466,065	37,522,288,234
Fixed Assets	91,314,190,545	104,941,239,473	96,994,740,804
-Investment	41,335,932,230	54,025,430,090	53,282,076,275
-Tangibles	41,646,486,214	43,743,427,929	39,262,948,494
-Intangibles	8,331,772,101	7,172,381,454	4,449,716,035
Total Liabilities	99,399,950,778	101,683,310,545	67,554,356,399
Current Liabilities	36,956,258,872	75,470,927,982	59,299,548,051
Fixed Liabilities	62,443,691,906	26,212,382,563	8,254,808,348
Capital Stock	9,000,000,000	9,000,000,000	9,000,000,000
Capital Surplus
Profit Surplus	-3,990,019,567	6,235,366,368	2,880,589,506
Capital Adjustment	50,795,019,666	51,383,416,565	64,404,746,766
Total Equity	55,805,000,099	66,618,782,933	76,285,336,272
Liab. & Shareholder’s Equity	155,204,950,877	168,302,093,478	143,839,692,671

Current Liabilities	36,956,258,872	75,470,927,982	59,299,548,051
Trade Payables	13,133,099,533	15,645,347,773	10,720,075,453
Short-Term Borrowings	13,000,000,000	42,500,000,000	31,403,116,020
Short-Term Borrowings-Foreign Currency	5,376,080,303	7,259,488,688	9,681,977,740
Account Payables	521,395,442	948,253,686	707,040,023
Advance Receipts	23,055,479	28,480,591	24,837,476
Withholdings	89,416,635	169,120,010	151,507,750
Accrued Expenses	1,931,591,782	3,245,433,216	2,282,987,062
Current Portion of Long-Term Debts	2,800,000,000	4,630,600,000	3,444,440,000
Accrued Income Tax	51,619,698	1,034,204,018	883,566,527
Accrued Dividends	30,000,000	10,000,000
Fixed Liabilities	62,443,691,906	26,212,382,563	8,254,808,348
Long-Term Borrowings	47,700,000,000	11,278,400,000	8,000,000,000
Long-Term Account Payables	10,017,073	17,532,277	4,808,348
Provision for Severance & Retirement	-	-	-
Leasehold Deposit Received	250,000,000	250,000,000	250,000,000
Deferred Income Taxes	14,483,674,833	14,666,450,286

Income Statement

Unit : Korean Won	As of 12/31/2012	As of 12/31/2011	As of 12/31/2010
Sales	234,993,938,724	212,767,577,733	194,424,927,648
Cost of Sold Goods	161,017,416,672	144,409,557,174	137,213,730,951
Gross Profit	73,976,522,052	68,358,020,559	57,211,196,697
Selling & Admin. Expenses	69,090,659,479	60,133,763,395	47,700,949,302
Operating Income	4,885,862,573	8,224,257,164	9,510,247,395
Non-Operating Income	2,496,622,954	3,213,275,381	2,123,265,327
Non-Operating Expenses	17,444,195,400	7,171,939,580	5,738,970,076
Income Before Taxes	-10,061,709,873	4,265,592,965	5,894,542,646
Income Taxes Expenses	-1,756,052,938	1,210,302,488	1,742,189,721
Net Income	-8,305,656,935	3,055,290,477	4,152,352,925

Cash Flows

Unit : Korean Won	As of 12/31/2012	As of 12/31/2011	As of 12/31/2010
Cash Flows from Operating	-5,975,892,400	5,619,507,032	6,662,108,644
-Net Income	-8,305,656,935	3,055,290,477	4,152,352,925
-Exp. without Cash Outflow	16,846,404,122	4,924,645,563	4,170,444,300
-Revenue without Cash Inflows	-125,886,752	-264,098,689	-184,324,082
-Changes in Asset/ & Liability	-14,390,752,835	-2,096,330,319	-1,476,364,499
Cash Flows from Investing	-3,118,719,437	-11,089,037,801	1,913,325,886
-Cash Inflow from Investing	65,934,046,240	60,103,730,299	33,621,341,106
-Cash Outflows for Investing	-69,052,765,677	-71,192,768,100	-31,708,015,220
Cash Flows from Financing	1,438,830,795	12,299,648,905	-9,302,167,748
-Cash Inflows from Financing	74,281,140,427	45,343,297,343	35,608,581,011
-Cash Outflows from Financing	-72,842,309,632	-33,043,648,438	-44,910,748,759
Increase/Decrease in Cash	-7,655,781,042	6,830,118,136	-726,733,218
Cash at the Beginning of Year	8,895,848,354	2,065,730,218	2,792,463,436
Cash at the End of Year	1,240,067,312	8,895,848,354	2,065,730,218

Products, Technologies, Services Description

Main Products & Services	Duty Free Shop Operation Services
Detailed Products Spec.
Technologies Acquired

Trade Partners & Competitors

Suppliers

MERCEDES BENZ FINANCIAL SERVICES KOREA, LIMITED(110111-2614786), SAMSUNG CARD CO., LTD(110111-0346901) and HYUNDAI CAPITAL SERVICES, INC.(110111-0995378) provide the vehicle leasing services to the subject company.

Customers

Competitors

AK GLOBAL CO., LTD.

INCHEON INTERNATIONAL AIRPORT PASSENGER TERMINAL, P.O.BOX 35, 2851, UNSEO-DONG, JUNG-GU, INCHEON, KOREA

TEL:+82-32-743-2468 FAX:+82-32-743-2417

PARADISE GLOBAL CO., LTD.

1408-5, JUNG 1-DONG, HAEUNDAE-GU, BUSAN, KOREA

TEL:+82-51-749-3335 FAX:+82-51-742-9992

CHANEL DUTY FREE LTD.

8TH FL., DONGHWA BLDG., 58-7, SEOSOMUN-DONG, JUNG-GU, SEOUL, KOREA

TEL:+82-2-3708-2700 FAX:+82-2-777-1209

Related Parties (Subsidiaries, Joint-Venture & Affiliates)

Affiliates

DONG WHA INVESTMENT DEVELOPMENT CO., LTD.(110111-0025331)

(20.71% held by the subject company)

LOTTE TOUR DEVELOPMENT CO., LTD.(110111-0115504)

DONG WHA LIQUOR CO., LTD.(110111-0547450)

LOTTE TRAVEL SERVICE CO., LTD.(110111-0134116)

(24.71% held by the subject company)

DUTY FREE 24 CO., LTD.(110111-2104373)

Cooperative Enterprise

-Insured company

SAMSUNG FIRE & MARINE INSURANCE CO., LTD.(110111-0005078)

Sales by Region (Activity & Markets)

News Clipping

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.78
UK Pound	1	Rs.99.66
Euro	1	Rs.84.49

INFORMATION DETAILS

Report Prepared by :

NIS

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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