[Annual]

□ KT&G’s 2010 annual consolidated revenue and operating income were 4.5% and 1.4% lower, respectively, than the previous year. But its net income rose 21.3% during the same period.

   [Consolidated Performance]

   ◦ Net Revenue: 3,626.4 billion won (2009); 3,461.4 billion won (2010); -4.5%
   ◦ Operating Income: 1,155.7 billion won (2009); 1,140.0 billion won (2010); -1.4%
   ◦ Net Income: 850.1 billion won (2009); 1,030.8 billion won (2010); +21.3%

□ KT&G’s 2010 annual non-consolidated revenue and operating income were 10.0% and 2.3% lower, respectively, than the previous year, but net income rose 25.0% during the same period.

   [Non-consolidated Performance(KT&G)]

   ◦ Net Revenue: 2,776.4 billion won (2009); 2,499.9 billion won (2010); -10.0%
   ◦ Operating Income: 946.6 billion won (2009); 925.0 billion won (2010); -2.3%
   ◦  Net Income: 744.9 billion won (2009); 931.1 billion won (2010); +25.0%

[4th Quarter]

□ The 4th quarter 2010 consolidated revenue declined 6.2% during the quarter while operating income and net income fell 8.1% and 2.5%, respectively, from the same period in the previous year.

   [Consolidated Performance(3 Months)]

   ◦ Net Revenue: 940.7 billion won (4Q 2009); 882.3 billion won (4Q 2010); -6.2%
   ◦ Operating Income: 238.9 billion won (4Q 2009); 219.5 billion won (4Q 2010); -8.1%
   ◦ Net Income: 168.7 billion won (4Q 2009); 164.5 billion won (4Q 2010); -2.5%

□ The 4th quarter 2010 non-consolidated revenue and operating income for KT&G alone fell 6.3% and 0.8%, respectively, from the same period in the previous year, but net income rose 6.8% during the same period.

   [Non-consolidated Performance(3 Months)]

   ◦ Net Revenue: 709.7 billion won (4Q 2009); 664.6 billion won (4Q 2010); -6.3%
   ◦ Operating Income: 194.1 billion won (4Q 2009); 192.5 billion won (4Q 2010); -0.8%
   ◦ Net Income: 137.9 billion won (4Q 2009); 147.3 billion won (4Q 2010); +6.8%

□ By business segment, KT&G’s tobacco business exports in 2010 reached 609.7 billion won, a 10.3% increase from the previous year. Domestic revenue for the same year was 1,756.5 billion won, a decline of 8.5% from 2009. As for real estate business revenue, it suffered a large setback of 61% (from 258.0 billion won to 100.5 billion won) largely due to the introduction of the International Financial Reporting Standards (IFRS), which affected in no small measure the corporate-wide performance.

□ Korea Ginseng Corporation, the KT&G subsidiary, has continued its growth in 2010 thanks to aggressive marketing efforts and strong demand for red ginseng products. The company’s annual revenue and operating income improved 12.9% and 8.9%, respectively, from the previous year while net income rose 8.3% during the same period.

   [Korea Ginseng Corporation Annual Performance]

   ◦ Net Revenue: 746.7 billion won (2009); 842.8 billion won (2010); +12.9%
   ◦ Operating Income: 209.2 billion won (2009); 227.9 billion won (2010); +8.9%
   ◦  Net Income: 162.1 billion won (2009); 175.6 billion (2010); +8.3%

□ KT&G’s performance goals for 2011 are 2,630.9 billion won in net revenue, 886.0 billion won in operating income, and 733.0 billion won in net income.