Annual Report 2018 Download

Go Global! Annual Report Global Hyundai! 2017-2018 ELEVATING VALUES FOR THE FUTURE Annual Report Annual Report Hyundai Elevator Hyundai Elevator rises higher Annual Report and higher every day. In line with 2017-2018 the evolving trends of urban architecture, 1 2 our elevators, escalators and Our Review of the Year Our Achievements moving walks deliver the best-possible C2 Company History 20 Major Achievements mobility services to ensure that people LEAP06 CEO Message enjoy speedy, convenient and 08 Governance safe rides. 10 Company Profile 11 Performance Highlight 2017 5 14 News Highlight 2017 Mobility is about connecting the dots 16 Vision and Strategy Financial and among the places and people in your Non-Financial Statements 1 2 daily life. It is our belief that we can 76 Major Consolidated Financial Statements add speed and efficiency to this mobility. INTO 80 Financial Management Discussion & Analysis 84 Non-Financial Management Discussion & Analysis In Hyundai Elevator, you will find 92 Independent Auditor’s Report a reliable partner that presents the value 94 Global Network 3 96 UNGC & SDGs INDEX Hyundai Elevator 2017-2018 of innovative mobility in Korea and across the world through advanced Our Business & Competences mobility solutions. 38 Our Business 42 Services 46 R&D 50 Production 52 Quality Hyundai Elevator 2017-2018 Hyundai Elevator THE3 4 4 Our Sustainability

58 Ethics Management 60 Risk Management 62 Human Resource Development 66 Environment, Health and Safety Management 69 Social Contributions FUTURE72 Win-Win Management

5 6

2 3 COMPANY HISTORY 1 2 Our Review of the Year Our Achievements

C2 Company History 20 Major Achievements Since 1980s 2000s 2010s LEAP06 CEO Message Establishment Growth Go Global! 08 Governance 10 Company Profile 1984~1989 2001~2009 2010~2018 11 Performance Highlight 2017 5 14 News Highlight 2017 May 1984 Founded Hyundai Elevator Co., Ltd. Jul. 2001 Became the first Korean company to Jun. 2010 Became the first Korean company to be rated Sep. 2016 Declared Vision 2020 at the Shanghai May 1985 Completed the Icheon Elevator obtain the CE Mark (European safety A under the German elevator energy efficiency corporation 16 Vision and Strategy Financial and Factory (Factory 1) standards) for elevators (DNV) certification program (TÜV, Germany) Oct. 2016 Surpassed the 20,000 mark in the number Non-Financial Statements Sep. 1986 Completed the Icheon Escalator Sep. 2004 Awarded with the Golden Tower Industrial Dec. 2011 Reached KRW 100 billion in service business of HRTS (Hyundai Real Time Service) units 1 2 Factory and Elevator Test Tower Medal at the 28th National Productivity sales Oct. 2016 Became the first elevator maker to 76 Major Consolidated Financial Statements Jul. 1988 Completed the Icheon Escalator Innovation Competition (granted by the Feb. 2012 Awarded at the iF Product Design Award 2012 for obtain the global carbon management 80 Financial Management Discussion & Analysis Factory 2 President) the Destination Selecting System certification (CARBON TRUST Standard) INTO 84 Non-Financial Management Discussion & Analysis Feb. 2005 Awarded with the Top Prize at the Most Mar. 2013 Set a record in Korea in exceeding the injury-free Nov. 2016 Launched world’s first LED glass-adopted 92 Independent Auditor’s Report Admired Business and Businessmen target by 15 times (remained injury-free for 5.4 elevators and escalators 94 Global Network Awards 2005 (Federation of Korean million hours, Korea Occupational Health and Dec. 2016 Exceeded the 20,000 mark in annual 1990s Industries, Seoul Economic Daily) Safety Agency) production output at the Icheon Factory 3 96 UNGC & SDGs INDEX Opened a round-the-clock customer center Opened Hyundai Customer Care Center - Became the first-ever elevator maker Mar. 2006 Mar. 2013 Mar. 2017 Our Business & Competences Momentum capable of handling customer complaints Jan. 2014 Established a Vietnamese joint venture (Hyundai in the world to be awarded with the and serving customers Thanh Cong Elevator Vietnam Co., Limited) Gold Prize at the iF Design Award for 38 Our Business Apr. 2009 Completed the world’s tallest ultra-high- Jan. 2014 Increased the equity ownership of the Shanghai ‘ANYVATOR’ 1990~1999 speed elevator test tower ‘Hyundai Asan joint venture to 100% - Awarded at the iF Design Award for 42 Services Tower’ (205m) and the Chung Mong-hun Completed a factory in Brazil ‘in/out lights’ used for parking facility 46 R&D Aug. 1993 Established the Chinese joint venture Apr. 2014 R&D Center Installed Korea’s fastest elevators (600m/min, Ranked 1st in the elevator sector for 50 Production Shanghai Hyundai Elevator Co., Ltd. Jun. 2014 Mar. 2017 - Installed Korea’s fastest elevators Busan International Finance Center) six consecutive years by the Korea Sep. 1993 Established a joint venture in the 52 Quality (600m/min, Hyundai Asan Tower) Installed and operated Korea’s longest Brand Power Index (K-BPI) 2017 (Korea Philippines (Hyundai Elevator Services Dec. 2014 escalators (57m, Shinnam station, Line No. 3, Management Association Consulting) Phils., Inc.) - Installed the world’s fastest observation elevators (420m/min, Hyundai Asan Daegu Metro) Surpassed 2,000 units in the number of 3 4 Nov. 1995 Completed the Cheonan Distribution Jun. 2017 Center Tower) Feb. 2015 Installed and operated Korea’s first double deck elevators installed per month Surpassed the 100,000 mark in elevator elevators (LG U+ office building in Yongsan) Rated ‘Excellent’ for three consecutive Jul. 1996 Listed on the Korea Exchange Apr. 2009 Jun. 2017 shipment Surpassed the 100,000 mark in the number of years by the Win-Win Index (Korea Mar. 1998 Obtained the ISO 9001 and ISO Mar. 2015 Exported ultra-high-speed elevators 14001 certifications for elevators, Jul. 2009 paid maintenance elevators Commission for Corporate Partnership) (480m/min) to the Venezuelan Completed Korea’s first elevator training center Spun-off the non-elevator operations Auto-Parking Systems and Materials Aug. 2015 Jul. 2017 governmental complex Hyundai Elevator Institute of Technical (logistics, PSD) / Launched Hyundai Movex THE Handling Systems from DNV 4 Nov. 2009 - Developed and installed the world’s Education Sep. 2017 Launched a new low/mid-rise elevator fastest elevators (1,080m/min, Hyundai Sep. 2015 Awarded with the Golden Industrial Medal at model ‘NEO’ Our Sustainability Asan Tower) the 39th National Productivity Competition Oct. 2017 Surpassed the 130,000 mark in the - Developed and installed the world’s (granted by the President) number of paid maintenance elevators 58 Ethics Management fastest double deck elevators (600m/ Nov. 2015 Entered the Hall of Fame that recognizes Nov. 2017 Awarded with the Prime Minister Citation 60 Risk Management min, Hyundai Asan Tower) businesses with outstanding quality for outstanding performance in sharing 62 Human Resource Development competitiveness (Ministry of Trade, Industry, business benefits during the 2017 Win-Win 66 Environment, Health and Safety Management and Energy, Korean Agency for Technology and Growth Week (Ministry of Trade, Industry 69 Social Contributions Standards / Korean Standards Association) and Energy, Korea Commission for 72 Win-Win Management Apr. 2016 Announced Hyundai Elevator globalization Corporate Partnership) FUTURE strategy and Vision 2030 Dec. 2017 Exceeded the 20,000 mark in the number Exceeded the 2,000 mark in monthly production Jul. 2016 of elevators installed per year 5 6 output at the Icheon Factory Mar. 2018 Started the construction of a new factory Aug. 2016 Surpassed the 200,000 mark in cumulative in Shanghai, China elevator production (since 1984) Sep. 2016 Established a joint venture in Turkey (Hyundai Elevator Asansör ve Servis Sanayi ve Ticaret Anonim Şirketi) WHO WILL REACH 6

4 THE SKY FIRST?

3 2 THE CITY IS ALWAYS 1 MOVING HIGHER.

Cities are advancing beyond our imagination day by day, and buildings are rising higher and higher to meet the evolving needs of cities. We at Hyundai Elevator are adding value to buildings with our agility, performance and technology that satisfy even the toughest and most demanding architectural requirements.

2 3 BUT WE THINK 6

4 ABOVE ALL… THERE

3 2 ARE PEOPLE INSIDE 1 THAT MOVEMENT.

People are at the center of each and every mobility experience we create. We help people travel faster and higher. We take a step further to add safety and convenience to the aesthetically pleasing and comfortable mobility we create and this sets our products and services apart from the competition.

4 5 Hyundai Elevator 2017-2018 CEO Message CEO Bob Jang, CEO of Hyundai Elevator Hyundai Elevator Bob Jang, CEO of 2018 May - China, whose con in Shanghai, new Factory year, and our a milestone this year will mark in March struction began Once it is completed our global capabilities. in expanding in with 25,000 units factory 2019, this new the end of by triple our will enable us to more than annual capacity will surely This (currently 7,500). capacity total production as well as into the global market drive our expansion into market. elevator China, the world’s largest growth. new engines of Third, we will secure the that given aware we are clearly Elevator, Hyundai At technology de- and industrial convergence dynamics of our suc- era, Revolution Industrial 4th the in velopment our by determined be will industry elevator the in cess As to technology development. relentless commitment competitive our building on focused fully be will we such, across R&D, technology development through advantage talent and design and installation. We will bring in global the technology talent while laying competent develop in preparation Service and Before Smartbasis for Factory Revolution. the 4th Industrial for and Shareholders, Dear Customers domestic and We expect numerous challenges in the in 2018. Still yet, we will keep market elevator overseas stay and conditions market on changing a close watch arise may that circumstance any to responding in agile business outcomes. exceptional so that we can generate of sectors 10 principles in the four the endorsed We have human rights, labor, the environment and anti-corruption cor- since 2015 to fulfill our under the UN Global Compact and a balanced and to pursue social responsibility porate citizen. as a reliable corporate sustainable development Ele- Hyundai that ensure to committed fully be will We global is a trusted partner all our shareholders, for vator fail to who never and suppliers and domestic customers and support. us with unsparing encouragement provide and encouragement everlasting your to forward look We interest. Thank you. 7

et. As of Q1 of 2018, we reached 45.7% in domestic elevator 2018, we reached 45.7% in domestic elevator Q1 of As of building share and 145,889 units in maintenance, market Notably, our growth. sustained of records on our past track 12% from the previous rose by orders mid-to-large scale order project complex multi-purpose the including year, ensure To in January. awarded that was City in Gwanggyo we plan to strengthen momentum, growth our consistent our capabilities in landing small and short-term delivery - our prof services so as to improve and providing orders Furthermore, we will deliver highly-competitive itability. quality enabled by savings cost for recognized products technology and differentiated for as well as innovation leader. design so that we maintain our status as a market we will broaden our global capabilities. Second, stabilized their operation corporations As our overseas in such land more orders we will than projected, earlier as well as in as China and Turkey Next Home Markets in 2018. We ex- and tap into new markets Markets Focus their business to improve corporations pect our overseas last of thanks to the business rationalization outcomes Dear Customers and Shareholders, Shareholders, and Dear Customers 2017-2018 Annual Report presents its to Hyundai Elevator operations business its illustrate to order in stakeholders By way. and transparent the past year in a detailed over and our outcomes outlining our financial/non-financial years, upcoming the and plans for business projections with all communication interactive we intend to promote the future. and share our roadmap for our stakeholders and conditions market the rapidly-shifting In the face of 1.9937 posted KRW 2017, we of intensifying competition - histo in our corporate a new record trillion in sales to set in domestic and maintain our unbeatable No. 1 position ry years. 11 consecutive share for market elevator year across We expect 2018 to be yet another challenging the do- landscape: business the domestic and overseas down slow to projected is business construction mestic tighten real estate regulations. may and the government are eager to increase Meanwhile, our global competitors and further so- market elevator their share in the Korean established in the dominance they’ve market lidify their - maintain our compet To the years. over market overseas markets, both domestic and overseas in itive advantage three strategic to the following we will be committed priorities. in the First, we aim to increase our profitability domestic mark >>

Annual ReportAnnual 6 or three consecutive years. years. or three consecutive vator broke record with sales of KRW 1.9937 1.9937 KRW with sales of record broke vator et share for 11 consecutive years and topping years 11 consecutive et share for

installation mark f the maintenance segment In 2017, Hyundai Ele 1st in domestic elevator its ranking trillion, not to mention

GLOBAL TOP 7 TOP GLOBAL KOREA NO. 1, NO. KOREA

>> Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 s’ Meetings 12.5 873 2017 70 26.1 1,827* ch 2016 2016 70 1,069 13.7 2015 78 valuating and selecting outside director valuating ding the compensation of executives, executives, of ding the compensation yment conditions and incentive programs for executives executives for and incentive programs yment conditions Governance Average employee remuneration (KRW million) (KRW remuneration employee Average million) (KRW CEO remuneration Ratio (%) Recommending, e Recommending, Shareholder candidates to be appointed at the General regar Matters and bonuses including pay Employee Remuneration Remuneration Employee Including the retirement income (KRW 564 million) paid to the former 564 million) Including the retirement income (KRW CEO upon his retirement in Mar Activity Activity Meetings Shareholders’ the General regarding • Matters and the BOD directors regarding • Matters audits regarding • Matters • • Appointing, dismissing and promoting executives • • Emplo stock options and their quantities • Granting and establishing other HR-related systems • Modifying * 9

Dong-Beom Seo, Member Jong-Sang Yu, Yu-Jong Kim Jong-Sang Yu, Dong-Beom Seo, Yu-Jong Kim, Bob Jang, Ki-Seon Kwon Jong-Sang Yu, Yu-Jong Kim, Bob Jang, Ki-Seon Kwon

sonnel Management Committee Outside Directors and Their Committee Activities Activities Outside Directors and Their Committee Committee Audit Committee Outside Director Recommendation Committee Per Executive Performance Evaluation and Compensation and Compensation Evaluation Performance Executive - in accor and compensated are evaluated Our executives criteria. While all payment dance with the set executive based are paid basic bonuses (determined our employees profit targets and attaining operating of on sales, the rate bonuses (determined based and over-profit rates) growth target and the set profits beyond operating on the excess are profit), executives operating absolute increases in - to their ap according also entitled to such compensation outcomes. evaluation pointed position and performance subject to assessments that are based are also Executives and environ- as HR, safety, on such non-financial factors ment depending on their position and responsibility. Remuneration Employee and Act with Article the Commercial 388 of In accordance are placed on director limits the ArticleIncorporation, of through the resolutions made at General remuneration - the CEO’s total compen Meetings. In 2017, Shareholders’ 873 and bonuses amounted to KRW sation including pay reg- (excluding per employee pay million, and the average disclosed based on the earned income istered executives, 70 KRW statement) was payment on the earned income 2017. the end of million as of Date of Appointment Date of Mar. 30th, 2004 Mar. 18th, 2016 Mar. 27th, 2015 Mar. 18th, 2016 Mar. 18th, 2016 Mar. 24th, 2017 Mar. 28th, 2014

ce and Industry ce and Industry Annual ReportAnnual Transparency and Expertise Director Appointment in Transparency nominated are and outside directors Internal directors the BOD and the Outside Director Recommendation by the at appointed are then and respectively, Committee nom- Meetings. The whole director Shareholders’ General and impartial.is fair process ination our out- Currently, financial and accounting, from policy, come side directors in specific concentrations and do not have backgrounds - we ensure expertise In so doing, and diversi professions. decisions. in making key ty and Compensation Evaluation on the BOD to ensure evaluations periodic We perform In that it properly fulfills its roles and responsibilities. and Act with Article the Commercial 388 of accordance direc- on are placed limits Articlethe Incorporation, of the at made resolutions the through remuneration tor We ensure fairness and Meetings. Shareholders’ General to rel- according directors in compensating transparency performance of regulations and in the outcomes evant directors. on assessments conducted Stakeholders with Communication trust, our BOD ensures there is reaffirm stakeholder To of form the in stakeholders with communication constant from corporate internal/external channels, which range Meetings and IR Shareholders’ to General disclosures - regard information disclose We also expediently events. management issues. ing key 8 vernment Policy Coordination, Former Visiting Professor, Coordination, vernment Policy Career BOD, of the Hyundai Elevator of Hyundai Group, Chairperson Chairperson of the Seoul Chamber of Commer Vice Chairperson Former CEO of Otis Elevator CEO of Hyundai Elevator, Managing Director, Former Deputy of Hyundai Elevator, CFO Planning Division, Hyundai Group Strategic Chair of the Audit Committee, Former Assistant Planning Director at the Office for Go University Myongji Department of Public Administration, Former Managing Director, Equity, Managing Director at Yieum Private PE Division, Kamur Investment Partners Former Business Sales Director for Gangnam at Woori Bank, Former auditor at Woori FIS Planning Division, Executive Managing Director at Hyundai Group Strategic Former Executive Managing Director at Daewoo Securities IB Division Jeong-Eun Hyun (F) Bob Jang (M) Ki-Seon Kwon (M) Jong-Sang Yu (M) Dong-Beom Seo (M) Yu-Jong Kim (M) Ho-Jin Kim (M)

Non-executive Non-executive Director Outside Director Hyundai Elevator Board of Directors Board of Hyundai Elevator Position Internal Director Composition of the BOD of Composition Directors of our Board body, As the top decision-making management on general and decides deliberates (BOD) corporate to improve order in major issues and policies man- interest through transparent and stakeholder value in- three - directors seven of consists BOD The agement. and one non-ex- three outside directors ternal directors, the Audit Committee, operates ecutive director, and Committee, Candidate Recommendation Outside Director to ensure effi- Management Committee and Personnel in decision making. While the current BOD Chair- ciency Regulations BOD director, our is an internal man position an outside di- do not pose any limitations on appointing rector as the BOD Chairman. the BOD Independence of the total BOD members We decreed that 25% or more of Presently, there are three should be outside directors. holding the for who are responsible outside directors senior management in check and supporting objective participate in all BOD decision-making. Outside directors - to ensure the independence and transparen committees Audit the Specifically, process. decision-making the of cy reports request operations on business may Committee when neces- assets corporate status of the investigate or employees to request entitled also is The committee sary. meetings or seek expert to attend ad- or outside auditors company. the vice at the expense of GOVERNANCE Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 PROFILE COMPANY broaden ourglobalpresence. beyond thedomesticelevator market tofurther technology, we at Hyundai Elevator are moving three consecutive years. Leveraging ouradvanced the unrivaled victorinservicemaintenancefor installation for 11consecutive years andremained We maintainedourNo.1leadership innewelevator operational systems, safety andgreentechnology. gy anddesignthatsetstheglobaltrendtosmart added value, ranging from cutting-edge technolo- tor products todelivereven morespecializedand by itscommitment togobeyond itsflagshipeleva- At HyundaiElevator, relentlessinnovation isdriven Shareholder Data Shareholder shareholders Minor 41.9 % Service National Pension 9.9 % Schindler HoldingAG 17.1 persons and affiliated Major shareholders 26.1 % Association Ownership Employee Stock 5.0 % % 10 Hyundai AsanTower Operating Income Sales Paid Maintenance Market Share Major BusinessAreas No. of Employees Headquarters Date of Establishment Name of Company Annual Report Maintenance Installation New Elevator based onconsolidatedfinancialstatements) KRW 135.3billion KR 145,889 units consecutive years) 23.8% (No.1forthree years) 44.1% (No.1for11consecutive parking systems andetc. escalators, moving walks, and maintenanceofelevators, Production, sales,installation 2,112 Gyeonggi Province, SouthK Bubal-eup, IcheonCity, 2091, Gyeongchung-daero, May 23rd, 1984 Hyundai Elevator Co.,Ltd. (as oftheendDecember2017, W 1.9937trillion

orea Performance Highlight 2017 Highlight Performance KRW 2016 2015 KRW 2016 2015 2017 2017 Market Share 44.1 past threeyears. three consecutive years, demonstrating 15%orabove inannualaverage salesgrowth over the 41.3% to44.1%.Turningservicebusiness,weranked 1stinmaintenancemarket sharefor last yearto48,167unitsaccordingly. Ourmarket sharealsoincreasedby 2.8%fromlastyear’s time sinceourestablishment,andtotalelevator installationroseby 6.9%from45,044of economic downturn. We surpassed the 2,000 mark in monthly elevator installation for the first due tointensifyingcompetition tolandorders, increasingpricesof raw materialsandglobal reach KRW 1.9937 trillion.Meanwhile,ouroperating income incheddown toKRW 135.3billion set anewcorporate record in2017by increasingoursalesby 13.4%fromtheprevious yearto Driven by oursuccessinranking 1stindomesticmarket sharefor 11consecutive years, we FINANCIAL PERFORMANCE Operating Income Sales 135.3 1,993.7 (as of2017,basedonconsolidatedfinancialstatements) (new elevator installationinKorea) (as of2017,basedonconsolidatedfinancialstatements) % billion Financial Per billion 135.3 formance 1,448.7 156.5 1,758.8 181.6 1,993.7 Annual Report Financial Performance

Consolidated Financial Statements in Summary COMPANY No. 1 in new elevator installation in Korea for (Unit: KRW 100 million) 2017 2016 2015 11 consecutive years Assets 22,877 21,076 17,727 NO.1 PROFILE Current assets 9,452 10,451 10,148 Non-current assets 13,424 10,625 7,579 Liabilities 14,524 13,165 11,309 At Hyundai Elevator, relentless innovation is driven Current liabilities 7,658 7,194 6,477 by its commitment to go beyond its flagship elevator products to deliver even more specialized and Non-current liabilities 6,866 5,971 4,831 added value, ranging from cutting-edge technolo- Capital 8,353 7,911 6,418 No. 1 in elevator gy and design that sets the global trend to smart Controlling company’s interests 8,363 7,785 6,415 maintenance in Korea for operational systems, safety and green technology. Non-controlling interests (11) 126 3 NO.1 three consecutive years We maintained our No. 1 leadership in new elevator installation for 11 consecutive years and remained the unrivaled victor in service maintenance for Consolidated Statements of Comprehensive Income three consecutive years. Leveraging our advanced

technology, we at Hyundai Elevator are moving Hyundai Elevator 2017-2018 (Unit: KRW 100 million) 2016 2015 beyond the domestic elevator market to further 2017 Sales 19,937 17,588 14,487 broaden our global presence. Performance Highlight 2017 Cost of sales 16,150 13,636 11,380 Elevator maintenance Gross income 3,787 3,951 3,106 145,889 (No. of units) Selling and administrative expenses 2,434 2,136 1,541 Operating income 1,353 1,816 1,565 Net income before income taxes 1,292 189 340 Net income 790 1,169 (50)

Hyundai Asan Tower Hyundai Elevator 2017-2018 Hyundai Elevator Elevator shipments Assets (as of 2017, based on consolidated financial statements) at the Icheon Factory 23,161 (No. of units) Shareholder Data (as of the end of December 2017)

Name of Company Hyundai Elevator Co., Ltd. % KRW billion 26.1 Date of Establishment May 23rd, 1984 41.9% Major shareholders 2,287.7 Headquarters 2091, Gyeongchung-daero, Minor and affiliated Bubal-eup, Icheon City, shareholders persons 2015 1,772.7 Gyeonggi Province, South Korea Maintenance staff (No. of persons) 2016 2,107.6 No. of Employees 2,112 (including partners, excluding sales Major Business Areas Production, sales, installation 2017 2,287.7 and management staff) and maintenance of elevators, 2,166 escalators, moving walks, 5.0% parking systems and etc. Employee Stock Market Share New Elevator 44.1% (No. 1 for 11 consecutive Capital (as of 2017, based on consolidated financial statements) Ownership Installation years) Association Maintenance 23.8% (No. 1 for three consecutive years) 17.1% Paid Maintenance 145,889 units % Schindler Holding AG R&D expenses 9.9 Sales KRW 1.9937 trillion KRW billion National Pension (KRW million) Operating Income KRW 135.3 billion Service 835.3 24,939 2015 641.8

2016 791.1 10 2017 31 835.3 32 Hyundai Elevator 2017-2018

or Sharing Business omes December. Surpassing 20,000 Units in Annual Installation Last December, we surpassed the 20,000 mark (21,397 units) in annual installation history. time in our corporate for the first This is attributed to last year’s booming construction business and we have of growth posted an annual average from 13,579 the years, nearly 12% over units in 2014 to 15,290 units in 2015 and 18,202 units in 2016. November. 1. November. Receiving the Prime Minister Citation f Outc joint consistently undertaken We have with suppliers programs innovation quality to reduce costs and improve Our while sharing their outcomes. in so doing were recognized endeavors with the Prime as we were awarded Minister Citation, in conjunction with our supplier Woojin Electric for our in sharing achievement exceptional at the 2017 business outcomes Week ceremony Win-Win Growth hosted in November. News Highlight 2017 Highlight News 15 Surpassing 130,000 Units in Paid Surpassing 130,000 Units in Paid Maintenance Elevator We reached 130,000 units in paid maintenance last October, elevator in the domestic which placed us first maintenance market for three elevator respond We swiftly consecutive years. to any customer needs, leveraging our IoT-enabled remote management remote and round-the-clock system maintenance network. October. 1. LED of Initiating the Operation Larg- Glass Escalators at Korea’s City est Hotel-Plex Seoul Dragon largest hotel-plex, Seoul Korea’s that opened in October City, Dragon and 10 is equipped with 33 elevators Hyundai manufactured by escalators Notably, eight out of the 10 Elevator. are the world’s installed escalators to adopt LED glass. first October. In 2017, we set a new record in our In 2017, we set a new record surpassing by history corporate the 2,000 mark in monthly elevator installation. As of the end of June 2017, nearly 18% our installation rose by year (1,783 units) to from the previous reach 2,108 units, further solidifying leading status as Korea’s our unrivaled manufacturer. elevator Launching the New Elevator Model Launching the New Elevator NEO On Sep. 4th, we unveiled our new with improved NEO, model, elevator design features and architectural modern Developed with the efficiency. and minimalist concepts that meet the demand of design-focused market trends, NEO is recognized for its differentiated design and the adoption of our core technology in enhancing spatial and energy efficiency. June. Surpassing 2,000 Units in Monthly Installation Elevator September. 4. Italian Super Luxury Cruise Ship Maiden Voyage Perla’s AIDA AIDA cruise line, The world-renowned Perla on its Cruises, set its AIDA following 3rd, on May maiden voyage its construction and installation of our in 2012, Back on board. ship elevators elevator Asian we became the first for a total of 66 maker to land orders from Mitsubishi Heavy ship elevators Industries who built the ship for AIDA. June. 28. Three Consec- for Rated ‘Excellent’ the Win-Win Index utive Years by We are fully dedicated to building and partnerships healthy collaborative disseminating a culture of mutually- Our endeavors beneficial cooperation. in doing so were recognized as we were three consecutive for ‘Excellent’ rated the Win-Win Index published by years the Presidential Commission for by on June 28th. Partnership Corporate May. 3. May. Annual ReportAnnual 14 Ranked First in the Elevator Sector First in the Elevator Ranked Years at the Six Consecutive for 19th K-BPI in 2017 in first was ranked Hyundai Elevator sector for six consecutive the elevator Power the Korea-Brand by years the Korea Index 2017 published by Management Association Consulting 15th. Since the domestic on March competition market is mired in fierce this among robust global players, was particularly achievement meaningful. March. 15. March. Becoming the First Elevator Maker Maker the First Elevator Becoming at the iF to Receive the Gold Award 2017 Design Award 12th, we became the first On March maker to be honored with elevator in the for ANYVATOR the Gold Award at the Professional Concept discipline one of the top three iF Design Award, across the prestigious design awards lights globe. Our in/out parking system in the Product were also awarded time we This is the second Discipline. 2012. received this honor since have March. 12. March.

Winning the SFMC Project Contract Winning the SFMC Project Contract at US$ 30 (Valued in Saudi Arabia Million) 9th, we landed a US$ On January to 34 billion) order 30 million (KRW and escalators manufacture elevators Forces to be installed in the Security (SFMC), a large-scale Medical City medical complex under construction the Saudi Arabian by in Riyadh Our technology and government. was globally recognized by quality successfully competing against global concerning contract to sign this players the largest medical complex in the Gulf region. Council (GCC) Cooperation January. 9. January. NEWS HIGHLIGHT NEWS 2017 Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 Train Train expatriate candidates (Local Entry Barrier Barrier Entry Competitiveness) system system efficient Build an operational operational How to Win How Where to Play Select priority markets markets Select priority Market Select the market entry model model entry Select the market Attractiveness Attractiveness GTM Vision and Strategy and Vision Framework Framework Develop and Develop (Go-to-Market) implement the Global Top 7 by 2020 7 by Global Top 17 Global Strategy Global Strategy and maintenance business sales production, Our elevator and across the globe, from Korea reaches 52 countries & Lat- in Asia, the Middle East, Central China to countries oil low sustained the Amid Africa. and Europe America, in last year, we suc- downturn prices and global economic 115.9 billion at KRW valued landed new orders cessfully Indonesia, 168.5 billion in sales in Turkey, and posted KRW ex- In Vietnam, we proactively and Saudi Arabia. Malaysia or- panded our sales network and increased large-scale a whopping 45%. our business by to grow ders increases in demand In 2018, we expect gradual year thanks to the recovery to the previous compared effects on the and their rippling economies advanced of we aim to proac- Hyundai Elevator, At global economy. trends: we will reinforce tively respond to such economic in Southeast Asia products high value-added the sales of to broaden our business network while stabilizing our mid/ Turkish joint venture and increasing the sales of that are elevators Less) MRL (Machine Room low-speed surely will This Europe. in development under currently 192.9 posting KRW enable us to reach our 2018 goal of billion in sales. 174.7 and KRW billion in orders (target) 17,100 17,069 best Talent 15,210 Respect Respect talent and develop them as the develop Annual ReportAnnual joining the league of global top 7 elevator makers. As the makers. global top 7 elevator joining the league of through for sustainable growth the basis lay step to first - we defined our globaliza competitiveness, global market to markets selecting priority by roadmap tion strategy required plans to build developing 2020 and by enter by - prof operating we set our sales and 2018, For capabilities. 181 billion re- 1.7100 trillion and KRW it targets at KRW basis) in consideration spectively (on a non-consolidated busi- in the global construction the expected downturn of ness. 16 Global Competence cost and quality and quality cost Safety & Ethics Safety GO GLOBAL! Globally competitive Globally competitive Service response Excellence Kindest customer to-none customer service and second- Unit: KRW 100 million, On a non-consolidated basis 100 million, On a non-consolidated Unit: KRW VISION & STRATEGY

Philosophy Core Value Value Core Norm Slogan

* Materials handling system business was transferred to Hyundai Movex in July 2017. to Hyundai Movex transferred business was * Materials handling system Sales 2018 2017 2016 Vision and Strategy Vision and Strategy ‘Vision 2020’ and set detailed tar- In 2017, we declared our increased 7’ through making it to the ‘Global Top gets for sustainable the basis for laying for sales and overseas Our 2020, under our vision slogan ‘Go Global’. by growth to acting on the our commitment Vision House embodies and ‘Safety on the basis of and norms values three core out to reach as a fundamental philosophy in order Ethics’ the across the globe. The year 2017 marked to customers to reach the ambitious goal of our journey beginning of VISION AND VISION STRATEGY Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 million million 2.9 % 30 2017 contract value value 2017 contract Average annual growth annual growth Average forecast of the elevator 2020 by industry 3 US$ Contract for the large-scale for the large-scale Contract medical complex at the center – US$ 30 million of Riyadh + + US$ Brazil Turkey Saudi Arabia Vision and Strategy and Vision 19 ------verage our verage y reducing costs ator industry is set to experience is set to experience ator industry Europe v Middle East s declined from the previous year in 2017, s declined from the previous Central & Latin America Central ve our business conditions b large-scale contracts including the Mashhad the including contracts large-scale der s for 1,668 elevators for the Bismayah New City project New City for the Bismayah s for 1,668 elevators obtaining der comparative advantage in technology and quality to further in technology and quality advantage comparative broaden our presence in this region. Latin America continue to experience economic and Central cor our Brazilian This prompted us to transform downturn. profitability. to improve into a sales corporation poration While our or our ser exceeded we met the set sales target and even strengthening recaptures 105% by vice business target by and parts sales. We expect another turbulent year in 2018 but will impro focus our shifting and rationalization operational through to service business. In 2016, we established an overseas corporation in Turkey to in Turkey corporation established an overseas In 2016, we into the European market. outpost to advance build our own in Turkey brand a premium elevator We are recognized as high-speed and large- successfully performed and have projects ranging installations on numerous elevator scale and mixed-use res and offices to hospitals from subways maintenance 2020, and its of 3% by rate an annual growth potential. We set up an additional market also holds a great to broaden our sales network, 2017 office in Izmir in January of H1 of as dealers more six with business doing are and In 2018, we aim 2018 to target mid-size and local customers. and of our Turkish corporation to stabilize the operations our market share in line with the local raise to gradually including housing policy, urban regeneration government’s redevelopment. con in early 2000, we have entered into Iraq Since we first complex and other major pub as well as the governmental US$ 30 million Metro Line No. 2 project. In 2017, we landed a to install government the Saudi Arabian by granted contract in the mega-size medical complex and escalators elevators In 2018, we forecast to be located at the center of Riyadh. from last year the Middle East market to expand slightly con including of the non-oil sectors thanks to the growth idential buildings. Driven by its prosperous construction its by idential buildings. Driven business, the Turkish ele awareness in the region to land our brand stantly improved or while making noteworthy achievements organizations lic in investment in Saudi Arabia, struction and the infrastructure In response, we intend to le the UAE, and Iran. - - - - - units % al region wth areas as 2017 growth rate of order of order rate 2017 growth 27.6 Orders granted granted Orders Sales: US$ 126 million 5,825 + Asia ysia, we established proven track records records track we established proven ysia, ators manufactured in Shanghai to improve manufactured in Shanghai to improve ators In Mala ders last year. In 2018, we expect to see increasing last year. In 2018, we ders Annual ReportAnnual astructure. China cale or our price competitive edge and reinforce approach in In Indonesia, we took a preemptive sales sales capabilities. our orders the repair and parts sales business to increase the quality was to improve 27.6%. In 2018, our top priority by local service techni of localized service and aim to train business cians and continuously invest in building service infr Rising to the No. 4 position with our exceptional quality and quality with our exceptional position No. 4 Rising to the 19.7% in Viet by we increased our business delivery, swift and increasing large- expanding our sales network nam by s investments continued infrastructure demand thanks to the the booming construc and the local government made by we will strengthen our sales op tion business. In response, and to target large local construction companies erations supplement our sales network in such high-gro centr Ho Chi Minh in the south and Da Nang in the to gain higher market share. in order engaging in such large-scale competitiveness by in quality Genting and the projects as the Kuala Lumpur Gateway and oper Highlands. In 2018, we plan to stabilize the sales to launch our on and early of our local corporation ations high-speed elev Indonesia 18 - - - Vietnam ds of Chinese ce price competition stem to make China our GLOBAL STRATEGIES BY REGION BY STRATEGIES GLOBAL the Middle East, Central & Latin America, Europe and Africa. & Latin America, Europe and Africa. the Middle East, Central China % Our elevator production, sales and maintenance business is conducted in 52 countries across Asia, in 52 countries business is conducted sales and maintenance production, Our elevator y to study the preferences and standar s are expected to engage in a fier 2017 growth rate of order of order rate 2017 growth 19.7 pabilities, improve product competitiveness through R&D, competitiveness through product pabilities, improve and build a global management sy to expand their market share while the remodeling market to expand their market share while the remodeling ca further. Our plan is to strengthen our sales grow may second domestic market. customers in order to fully adapt to the market. Notably, our in order customers March in began construction whose factory Shanghai new end of 2019 and is expected the be completed by 2018 will 3.5 times to by capacity to increase our annual production will serve as that this new factory 25,000 units. We believe global the across outcomes business generate to foothold a of market elevator largest world’s the in as well as market China. will be implement In 2018, China’s urbanization policy Global elevator leadership. ed fully under its government maker China represents our strategic market as it accounts for market as represents our strategic China Last year, our orders demand. 60% of the global elevator sales in this market amounted to (including exports) and million respectively. This is attrib 5,825 units and US$ 126 utable to declining orders caused by the sluggish local real the sluggish caused by utable to declining orders - issues between China and Ko estate market and political a second R&D center in Shanghai in rea. Still yet, we opened Januar

+ Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 Major Achievements Major 21 ultimately transforming world city skylines. skylines. city world ultimately transforming Hyundai Elevator brings extraordinary value to value extraordinary brings Hyundai Elevator spatial mobility through unrivaled cutting-edge functionalities, through unrivaled spatial mobility Annual ReportAnnual 20 MAJOR ACHIEVEMENTS Annual Report Major Achievements

BUSAN INTERNATIONAL FINANCE CENTER (BIFC): KOREA SM FOUR E-COM: PHILLIPINES

BIFC Hyundai Elevator 2017-2018

max. 600m/min 32 elevators Hyundai Elevator 2017-2018 Hyundai Elevator 14 escalators Installed 32 elevators – two 600m/min units(Korea’s fastest), three 540m/min units, and eight 480m/min units as well as 14 escalators

SM FOUR E-COM

max. 105m/min 42 elevators 41 42 Installed 42 105m/min elevators Annual Report Major Achievements

SECURITY FORCES MEDICAL CITY: SAUDI ARABIA

Security Forces Medical City Hyundai Elevator 2017-2018 max. 120m/min 284 elevators 24 escalators Installed 284 elevators, including 21 120m/min units

Hyundai Elevator 2017-2018 Hyundai Elevator and 38 105m/min units, as well as 24 escalators

43 44 Annual Report Major Achievements

SONGDO G TOWER: KOREA METROPOL: TURKEY

Songdo G Tower Hyundai Elevator 2017-2018

max. 360m/min 18 elevators

Hyundai Elevator 2017-2018 Hyundai Elevator Installed 18 elevators, including two 360m/min units and six 210m/min units

Metropol

max. 360m/min 127elevators 24 escalators 45 46 Installed 127 elevators, including six 360m/min units, one 350m/min unit, and 28 240m/min units, as well as 24 escalators Annual Report Major Achievements

WATERFRONT: SRI LANKA

Water -front Hyundai Elevator 2017-2018 max. 180m/min 91elevators 27escalators Installed 91 elevators, including 35 180m/min units,

Hyundai Elevator 2017-2018 Hyundai Elevator eight 150m/min units, and 32 105m/min units, as well as 27 escalators

47 48 Annual Report Major Achievements

LG U+ YONGSAN OFFICE BUILDING: KOREA SEOUL DRAGON CITY: KOREA

Seoul Dragon City Hyundai Elevator 2017-2018

max. 240m/min 33elevators escalators

Hyundai Elevator 2017-2018 Hyundai Elevator 10 Installed 33 elevators, including 23 240m/min units and four 210m/min units, as well as 10 escalators

LG U+ Yongsan Office Building

max. 240m/min 10elevators (2 Double Decks) 2escalators Installed 10 elevators, including two double deck elevators (Korea’s first) and 49 four 240m/min units, as well as two escalators 50 Hyundai Elevator 2017-2018 Myanmar Iran Malaysia Sri Lanka Turkey Saudi Arabia Vietnam Philippines Key Overseas Performance Yangon Hotel Mashhad UrbanRailway Line2 Suez DomainBlockF&G Suez DomainPodium ES Suez DomainBlockE&Podium Genting T3&T4 Waterfront Dogus Metro Metropol Security Forces MedicalCity D’Capital SM Four E-Com Installed 20elevators, includingfive180m/minunits,two150m/minandsix120m/minunits Installed 111escalators Installed 22elevators, including16180m/minunits,two210m/minandfour 90m/minunits Installed 52escalators Installed 15elevators, includingeight210m/minunits and five210m/minunits,aswell44escalator Installed 59elevators, includingthree300m/minunits,four 240m/minunits, and 32105m/minunits,aswell27escalator and 28240m/minunits,aswell24escalator Installed 91elevators, including35180m/minunits,eight150m/min Installed 6060m/minelevators and190escalators Installed 127elevators, includingsix360m/minunits,one350m/minunit, Installed 284 elevators, including21120m/minunitsand38105m/minunits,aswell24escalators Installed 49elevators, including24210m/minunits,20180m/minandfive150m/minunits Installed atotalof 42105m/minelevators 32 Annual Report s s s

Korea Key DomesticPerformance

E-Mart TradersE-Mart Gimpo TownE-Mart Wirye Lotte OutletGunsan GImpo HanRiverCentral Square Icheon LotteCastleGoldSky StorePangyoHyundai Department Park Hyatt Busan Ansan Grand City Xi KEPCO HeadOffice(Naju) Songdo GTower LG U+Yongsan OfficeBuilding Seoul Dragon City (BIFC) Busan InternationalFinanceCenter Installed 18moving walks Installed 26moving walks Installed 22escalators Installed 24escalators Installed 21elevators, including16210m/minunits,aswell10moving walks Installed 37elevators, includingfour 120m/minunits,aswell82 escalators Installed 11elevators, includingtwo360m/minunitsandthree240m/min Installed 92 elevators, including78210m/minunitsandeight120m/min as wellfour es Installed 22elevators, includingsix300m/minunitsandfive240m/minunits, Installed 18elevators, includingtwo360m/minunitsandsix210m/min and four 240m/min Installed 10elevators, including210m/mindoubledeckunits(Korea’s first) as well10escalator Installed 33elevators, including23240m/minunitsandfour 210m/minunits, and eight480m/minunits,aswell14escalator Installed 32elevators, includingtwo600m/minunits(Korea’s fastest),three540m/min units, 33 calators units, aswelltwoes s Major Achievements calators s

WHO CAN MAKE 6

4 A HIGHER RECORD

3 2 IN TECHNOLOGY 1 SO QUICKLY?

Hyundai Elevator set a new record in every possible sector of the Korean elevator industry by unveiling Korea’s fastest elevators, Korea’s first double deck elevators, and Korea’s longest escalators. Our top-notch technology is recognized globally across the elevator industry.

34 35 WE THINK 6 5 INTENSELY… THAT 4

3 2 BASICS SHOULD BE 1 FOLLOWED MORE THAN CHASING RECORDS.

We ceaselessly push the boundaries of our technology. We never forget, however, that this is only possible when we set the basics of our products right. From our endeavors on the shop floor to ensure the quality and safety that ranges from our tiniest parts to our product installation and the maintenance service that our customers have come to know and expect, we at Hyundai Elevator will never lose sight of the fundamentals that made it all possible.

36 37 Hyundai Elevator 2017-2018 BUSINESS OUR ELEVATORS tions and44.1%inmarket share. consecutive years, posting21,397unitsinnewinstalla- 1 elevator manufacturerinthedomesticmarket for 11 thermore, wesolidifiedourstatusastheunrivaled No. to buildourcompetitive edgeinpriceandquality. Fur- (ultra-high-speed elevator) andconstantly endeavored evator remainedfocused ontechnologydevelopment intensifying competition. Stillyet,weatHyundaiEl- market duetorapidly-changing market conditions and In2017,wefacedchallengesintheelevator 1,260m/min. oping an elevator model able to move at a speed of elevator moving at420m/min.Presently,wearedevel- double deckelevator (600m/min),andtheobservation first todevelop ‘THEELDUO’,theultra-high-speed technology in2009,andwentontobecome Korea’s the basisof ourunmatched ultra-high-speed elevator world’s speediestelevator moving at1,808m/min,on quently abletoprovide. Weunveiled‘THEEL1080’,the well asthespatialefficiency suchbuildingsare conse- with theirdesigns.Thisincreasesproperty values as intended purposeandbuildingspecificationsinmind ter toawiderange of consumer needsandkeep the Our safe, comfortable andcost-efficient elevators ca- 38 ther solidifyourmarket dominance. more competitive intermsof priceandquality tofur- growing replacement demands. We will also become for highvalue-added ultra-high-speed elevators and orders andtoproactivelyrespondnewdemands der tostrengthenourcompetitive edgeinlandingnew strategy tailored for respective customer groups in or- competition. Thisurgesus toimplementthecustomer al players intothedomesticmarket andeven fiercer worsening businessconditions withtheentry of glob- ministration. This comes along with the projection of real estatepolicy implemented by thecurrentad- market due to changing tides in the directions of the and decreasing demand in the elevatorcertainties In2018,weexpecttowitnessincreasingun- Songdo GTower in Incheon D-Cube City inShindorim,Seoul Seoul Dragon City Park Hyatt Busan Governmental complexinVenezuela Banyan TreeClub&SpaSeoul Garden Five LG G+newofficebuildingin Yongsan Busan InternationalFinanceCenter(BIFC) MAJOR PORTFOLIO Annual Report 44.1 cost-efficient rides. comfortable, safe and mobility whiledelivering of efficiency inspatial We addanotherlayer Production Output(Unit:No.of units) Domestic Market Sharein2017 2015 2016 2017 % 39 Our Business 18,475 20,535 23,150 Hyundai Elevator 2017-2018 MAJOR PORTFOLIO MAJOR PORTFOLIO Galleria Department Store Suwon Center in Daehak-ro Multi-purpose Cultural Ramada Plaza Hotel Suwon Otris’ office building EL Tower Fine Digitech Hyatt Park Hyundai Department Store Cheonho Our Business Our 41 Hyundai Elevator, Elevator, Hyundai to Mobility Beyond Moving Value Spatial Added AUTO PARKING SYSTEM PARKING AUTO Auto parking systems safely accommodate a large accommodate safely Auto parking systems im- space to limited amount of in cars number of costs. construction and reduce spatial efficiency prove to auto parking systems of a wide range We provide cir- cart,multi layer elevator, from: including choose along with the models and puzzle-type culation type models These system. Parking Hyundai Integrated simple entry/exit through ensure user convenience to park and shortenfunctionalities the time it takes emis- and CO2 consumption reduce fuel to ultimately our edge, competitive strong their to Thanks sions. valued business landed orders auto parking system year, 42.2 billion, up 15.7% from the previous at KRW from 8.4% by up sales, in billion 36.2 KRW posted and to capacity our strengthen will We year. previous the our and diversify cut costs, orders, obtain large-scale further to solidify client size in order by sales strategy our position in the market. MAJOR PORTFOLIO MAJOR PORTFOLIO Lotte Mart Cheongju Line No.1 Station, Jongno 3-ga Subway Incheon International Airport Wirye E-Mart Town Gimpo E-Mart Traders Annual ReportAnnual MAJOR PORTFOLIO MAJOR PORTFOLIO Five Garden Shinnam Station in Daegu Yeosu Expo Incheon International Airport Court House in Turkey Hyundai Department Store Pangyo MOVING WALKS WALKS MOVING - noise-free design and flex feature walks Our moving between the horizontal and sloping ible connections - ease in use. Their con parts to deliver exceptional maintenance and outstanding easy venience, safety, both cater to the needs of performance energy saving cus- impressive truly bringing customers, and users and add safety walks tomer experience. Our moving structures, from large-scale to a wide array reliability facilities where people usually walk transportation to wel- stations) long distances (airports and subway sports and - and com facilities fare facilities, cultural 74 buildings. In 2017, we installed a total of mercial Gimpo and E-Mart Traders in E-Mart Wirye, escalators other major multi-purpose complexes. 40

Recognized for safety, ease and cost efficiency, our es- our efficiency, cost ease and safety, for Recognized mega multi-purpose complexes several grace calators buildings, including the Incheon and major large-scale International Airport, Korea, the National Museum of Hyundai Department es- Stores, and Yeosu Expo. Our solution touted as the optimal moving are calators along with mobili- added spatial value that delivers entire harmonize and blend escalators Hyundai ty. curved designs while buildings with their ergonomic efficient main- functionalities for of a range providing and inverters from system tenance and energy saving, monitoring CRT to systems control capacity transport through slip pre- and comfort safety panels. Upgrading cutting-edge and minimization slip foot steps, vention 21.4 billion KRW posted our escalators devices, safety maintained our rep- in 2017 sales and we successfully leader. utation as the quintessential market ESCALATORS Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 % orecast to slow down down orecast to slow 2016 132,229 2017 23.8 share in Market the maintenance market 145,889 Maintenance Units (Unit: No. of units) The 2018 real estate market is f The 2018 real estate market The HCCC (Hyundai (Hyundai The HCCC Center) Customer Care has professional available counselors to offer a day 24 hours prompt customer and trouble counseling shooting guidance. even further In and face intensifying price competition. even - strengthen our competi response, we will consistently through maintenance market tive edge in the elevator high-quality driven by tailored MOD sales operations service and reasonable pricing as well as differentiation Time Service) promotion. (Hyundai Real through HRTS and sustainable gains profitability We will also pursue increasing our sales in service business. by growth Notably, we created our own MOD business unit to MOD business Notably, we created our own and broadened our in the MOD market mover be the first significant growth to achieve related business operations last year. from that of Services 43 We are the first Korean company Korean We are the first Information to use the Geographic state-of- (GIS) to deliver System the-art customer service. In 2017, cumulative elevator installation surpassed elevator In 2017, cumulative in Korea. under operation) units 700,000 units (642,200 this trend paralleled market The domestic maintenance year’s elevator 1 trillion. Last KRW and expanded to reach us multiple challenges: presented maintenance market revision changed with the complete business conditions - regulations while the MOD (Moderniza the elevator of old or older) market 15 years tion: replacing elevators competition in line and price-based exposed to fierce was Still yet, our old elevators. with the increasing number of service business remained agile to respond to elevator main- and successfully the shifting business landscape maintenance in the elevator tained its No. 1 leadership Our sales surged by years. three consecutive for market year, and our mainte- more than 20% from the previous 13,660 units to reach 145,889 nance business expanded by units. SERVICES Annual ReportAnnual 42 69

WE DELIVER THE GREATEST THE GREATEST WE DELIVER CUSTOMER POSSIBLE SWIFT THROUGH SATISFACTION AND SERVICE CUSTOMER QUALITY. HIGH SERVICE Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 Operated Operated 24 Hours/d, 365 Days/y TS-enabled areas, nearly 66% of the total fault the 66% of nearly areas, TS-enabled In HR - Informa to use the Geographic first We are Korea’s Services reports remote repair, which re- can be handled through use the and visits time-consuming and unnecessary duces mobile app’ Furthermore, our ‘HRTS human resources. of fingertips so that they services at customers’ puts elevator in real time elevators status of can monitor the operational nearly last year, smartphonevia our end of the app. As of nationwide our paid under 130,789 elevators out of 25,000 and are benefiting adopted HRTS maintenance program from this differentiated maintenance service. tion System (GIS) to offer cutting-edge customer service. tion System walk-through inquiries or needs a When a customer makes the par- on a trouble shooting problem, the GIS identifies reaching the customer in the ticular engineer capable of shortest time and sends customer information amount of to the engineer’s smartphone data to and repair history enable expedient customer service. Furthermore, meister are permanently stationed in the center to sup- engineers port efficient repair service in the field through a mobile a leading role in will play the HCCC that app. We believe and data to deliver differentiated technology using varied customer service and enhance customer satisfaction. HRTS System Remote Management Advanced our el- we raised With Hyundai Real Time Service (HRTS), HRTS maintenance service to a whole new level. evator that remote management system represents our advanced ele- status of to monitor the operational enables the HCCC installed across the nation in real time. This system vators in real time, pin- operations us to monitor elevator allows - remote service accord and provide point any dysfunctions ingly. 45 % 25,000 17,233 66 2016 2017 Ratio of Remote Ratio of Repair units) Management (No. of Under HRTS Elevators Engineer Counselor Annual ReportAnnual Center Server Customer Care HCCC Days/year Monitoring 24 Hours/day, 364 care center to an around-the-clock customer We operate Locat- customers. with our communication good facilitate Care Customer Hyundai the Office, Head Icheon our in ed that reaches out tower serves as the control Center (HCCC) - under our maintenance. Profes to nearly 130,000 elevators to swiftly a day 24 hours are available sional counselors and trouble shooting advice deliver customer counseling mainte- control and remote real-time monitoring while systematically. nance are performed 44 Remote Server Remote DB Server points persons (LTE) (LTE) Network Network 86.8 2,166 Result Customer (including partners (including partners management staff) Maintenance Staff and excluding sales/ and excluding Satisfaction Survey Survey Satisfaction Hyundai

Real Time Service Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 - to reduce pow ays Ultra-high-speed double deck system double deck system Ultra-high-speed THE EL DUO Our R&D Center is exploring w SiC**-based technology, on the basis of er consumption technology such as the progressive and is developing built from new materials systems ultra-high-efficiency design technology. Furthermore, the Center and module smarta repair remote in developing engaged actively is AI predictive technology and an inte- enabled by system that boosts the efficien- system building transport grated mobility. elevator of cy in Technology Development Key Achievements System Elevator Ultra-High-Speed is equipped with THE EL 1080, one of Hyundai Asan Tower 1080 EL THE (1,080m/min). elevators fastest world’s the - distance and perfor the speed, travel proudly delivers - the most challenging construc even mance that satisfy of in yet another layer tion specifications and ushers First, Safety philosophy of with its product added value passengers enables 1080 EL THE Green. and Flexibility the by aligning to their destination floor faster to travel Gate. It also and the Speed destination selecting system to detection system with an earthquake complete comes safety. its further upgrade Double Deck System has two adjoining cabs that oper- A double deck elevator the other within a sin- ate simultaneously, one on top of a double system, gle shaft. Depending on its operational up by capacity can increase its passenger deck elevator the is equipped with to 1.8 times. Our Hyundai Asan Tower THE EL DUO (600m/ double deck elevator ultra-high-speed double deck min). As the global top-tier ultra-high-speed THE EL DUO is Hyundai Elevator, by developed elevator that Device equipped with the Floor Distance Adjustable can be used in buildings and thus control accurate allows with irregular floor intervals. R&D 47 y

ategy and localize verseas markets through global verseas ve competitiveness through design ance the R&D environment through the velop and commercialize a smart remote velop and commercialize velopment repair system: Remote elevator maintenance Remote elevator repair system: diagnostic/predictive that offers system and convenience reliability Adv Respond to o strategy product line-ups: Operate product on the basis of a global platform Establish design str development De of ultra-high buildings: Widen the scope rise engineering specifications to shorten and promote the construction period differentiation Impro line-up alignment and new design de De that Launch green elevators system: maximize spatial and energy efficienc De use of CAE*: Build an optimal design and development for product system validation - - - - rise forultra-high velop jumpelevators - - elevator velop anultra-high-efficiency - on carbide): High in thermal and electrical conductivity and on carbide): High in thermal and electrical conductivity st rd nd 1 3 2 tiveness and Service Build Global Secure Future 2018 R&D APPROACH 2018 R&D APPROACH SiC (Silic consumption in reducing energy losses and power advantageous Growth Drivers Drivers Growth CAE (C simulation, Through computer-aided design and development. product testing, product required for reduces the time and cost CAE dramatically process from product development the entire product and integrates planning to process management. Competitiveness Competitiveness Strengthen Sales Product Competi- Product R&D Center - develop to new product We are ceaselessly committed - to create globally-rec innovation ment and technology Our re- advantage. and competitive ognized R&D capacity convenient deliver more to tirelessly endeavor searchers back in 1986, Established mobility. means of and safer It our new technology. of cradle our R&D Center is the researchers nearly 100 technology development employs We were our future competitiveness. of and is the source competition in to host a design in the industry the first With our designer elevators. of 2008 and initiated an era diverse reflected we have design center at the forefront, and elevators of design the in trends and needs market elevator the world’s first this has enabled us to become 2017 iF Design to be honored with the ‘Gold Prize’ at the Award. * in Thistechnologyusescomputers omputer-Aided Engineering): ** R&D Annual ReportAnnual 46

WE PURSUE TECHNOLOGY TECHNOLOGY WE PURSUE TO DELIVER INNOVATION AND TOP-TIER PRODUCTS SYSTEMS. Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 2. 1. 2 1

Solution IoT-enabled SmartCustomizedMobilit Smart remoterepairs on thedisplay. Smallchildren andeven individualswith input theirdestinationfloor by simplytouchinganywhere per-large-size multi-touchdisplay toenablepassengers to the Product discipline. ANYVATOR isequipped with asu- signal lightsthatwerealsosubmittedawarded in Concept discipline, andourautoparkingsystem in/out VATOR was honoredwiththeprizeinProfessional receive theGoldPrizeat‘iFDesignAward’: ourANY- In 2017,webecametheworld’sfirst elevator maker to the iFDesignAward’ to Receivethe‘GoldPrizeat First-ever Elevator Maker Becoming theWorld’s AWARDS ystem y

48 ment insodoingwas widelyappreciatedattheawards. ed designsthatresonatewithcustomers, andourcommit- servations we made on elevator passengers that we creat- car’s entry andexit times. Itwas throughthethoroughob- texts andgraphics to help users intuitivelyrecognize their while, ourautoparking system in/outlightsusecolors, elevator’s operational statustoweatherandnews. Mean- display screen alsoshows diverse information, fromthe can enter their destinations simultaneously. The large conveniently usetheelevator, andmultiplepassengers disabilities inwheelchairs orotherassistivedevices can conserved. while transport efficiency ismaximizedandenergy vice. In so doing,thepassengerwait times willlessen, fication information generated de- through theirsmart mobilityvertical servicebasedonthepassengeridenti- deviceapp installedintheirsmart andenjoy anoptimal tor rides.Passengers canreservean elevator throughthe the system to become more intuitive in providing eleva- any givenpassengerwithinthebuilding,thusenabling (Internet of Things)technologytoanalyze thelocationof We developed anelevator servicesolutionthat uses IoT Passenger IdentificationandLocationRecognition BuildingMobility SolutionDrivenbySmart IoT-based analysis →visualization). lows for real-timephase-specificanalyses (collection → sis throughbigdataanalysis anddeeplearning,al- tems, performs optimalbreakdown predictionandanaly- system canbeeasilyconnected withotherexistingsys- tenance andrepairservicewillundoubtedlyimprove. This breakdown/lifespan predictions,thequality of ourmain- breakdowns. Throughremoteinspections,control and patch engineers andreducerepairtimesinthecaseof this system willallow ustodecreasetheneeddis- provide efficientmaintenanceservice.Webelieve that allows for intelligentremoteelevator maintenanceto We plantointroduce remoterepair system asmart that RemoteRepairSystemSmart Annual Report 1,080 tor technology. upgradetesting tofurther ourultra-high-speed eleva- ogy, allowing ustoperform real-life verification and dai AsanTower servesasthecradle of newtechnol- noise, temperature, andatmosphericpressure.Hyun - on suchultra-high-speed system factors asvibration, enables ustovalidate technologyandreliability parts scraper environment for technology development and tor (420m/min).Thetower createsanear-perfect sky- EL DUO), and the world’s fastest observation eleva- 600m/min ultra-high-speed doubledeckelevator (THE est elevators (THEEL1080, 1080m/min),Korea’s first HyundaiAsanTower operates oneof thefast- on the52ndfloor. a machineroomonthe51stfloor,andsky lounge on the50thfloorletsonetransfer tothesky lounge, a PRroomandresearch facility. Thetransfer lobby Chung Mong-hunR&DCenterwithanexhibitionroom, as highany52-story buildingandconsists of the sponsible for ourtechnologyandquality. Thetower is ground, contains 4,351㎡ gross floor space, and is re- er standsat205meters, reaches15meters below in April2009,thisglobaltop-tierelevator testtow- grand presence,risinghighintothesky. Completed Asan Tower willbesureto catch one’seye withits Upon enteringourHeadOfficeinIcheon,theHyundai installed inHyundaiAsanTower The speedoftheultra-high-speed elevators ASAN TOWER HYUNDAI m/min 76 Annual Report R&D Hyundai AsanTower 32,500 visitors toHyundai Height of Hyundai Cumulative No.of Asan Tower Asan Tower 205m

visitors Hyundai Elevator 2017-2018 Elevator Hyundai Annual Report P roduction

This new factory to be built on a 123,564m2 land EACH AND EVERY ELEVATOR will accommodate an IoT-enabled smart factory, an ultra- INSTALLED IN KOREA IS SUPPLIED high-speed elevator test tower (175m-high and 10m-deep), Annual Elevator Shipment at the Icheon Factory (No. of units) and a customer care center responsible for real-time ele- ENTIRELY ON THE BASIS OF OUR vator operation monitoring. DOMESTIC PRODUCTION SYSTEM 2017 23,161 2016 20,566 Smart Factory We plan to undertake the Smart Factory initiative at our 2015 18,471 Icheon Head Office and in Shanghai, China to proactively respond to the upcoming 4th Industrial Revolution and the rapid development of new digital technology. Smart Factory refers to a next-generation intelligence factory that combines IoT, big data, AI, and ICT with manufacturing. Our Smart Factory initiative aims to ‘change the PRODUCTION way we work on the shop floor’ and ‘bring data-enabled innovation’. Once our Smart Factory initiative is completed, our visibility will become more established across the entire Icheon Factory production process by means of phasing and developing

Our Icheon Factory has posted more than 2,000 units in Hyundai Elevator 2017-2018 a decision-making system informed by real-time monitor- monthly production output and more than 20,000 units ing and data input while conducting big data analyses in annual production output over the past two years, to allow for preemptive quality management and predic- serving as the driving force behind our achievement in tive facility maintenance. Furthermore, we will be able maintaining our unrivaled No.1 leadership over the past to swiftly reflect customer demands through real-time 11 years. Established in Icheon, Gyeonggi Province in 1984, alignment of the entire value chain and supply and in- the factory sits on a 44,040m2 parcel of land and produces stall our products at the time and location convenient to all the elevators that we install in Korea. the customer. Following installation, our products will be In 2017, our maximum daily production output powered by IoT and big data technology to enable us to amounted to 116 units, and we set a new record in an- predict and handle any possible breakdowns. Hyundai Elevator 2017-2018 Hyundai Elevator nual production and shipment by surpassing the 23,000- unit mark. In 2018, we aim to replace aged processing

equipment with hybrid equipment to improve production Annual Production efficiency and to develop a mobile-based smart vehicle Capacity (No. of units) (excluding overtime work, dispatch system to strengthen communication between based on regular working hours) installation sites, factories and the distribution center.

Shanghai Factory in China Upon entering the Chinese market in 1993, we established our Shanghai Factory to respond to the needs of the Chi- nese and other overseas markets. In March 2017, we initiated the construction of a new factory with 25,000 units 21,000 7,500 in annual capacity in Jinshan industrial zone, Shanghai, and plan to increase our market share and global capacity in China and across the world. Icheon Factory Shanghai Factory in China

Company-wide Smart Factory Plan

Research/Development Sales Production Installation Service /Design/Procurement

- Understand the status of production process in Lay the basis for - Real-time on-site - Breakdown prediction/ real time to respond to SMART FACTORY simulation validation monitoring analysis customer needs - AI, big data, IoT, and optimal production - Remote installation - Strengthen customer- - Flexibly respond to the collaboration robots 50 prior to mass production 78 support and inspection focused service non-standard specifications of customers Annual Report Q uality

Our commitment to quality management earned WE PLACE CUSTOMER SAFETY us the ISO 9001 (quality management system), ISO 14001 AS OUR TOP PRIORITY IN (environmental management system) and OHSAS 18001 (health and safety management system) certifications, DEVELOPING, MANUFACTURING and we endeavor to take a more systemic approach to our quality management system. In 2018, our aim is to AND MAINTAINING OUR bolster our global quality competitiveness by checking PRODUCTS. our overseas corporations for their quality systems in general. Furthermore, we will fully launch improvement programs to assist business partners in improving their We improve product reliability through quality and make continual investments in strengthening stable quality and reduced failure rates. the reliability of our products.

Production Quality Management We perform FMEA (Failure Mode Effects Analysis) to prevent quality defects all the way from the development phase as part of our quality improvement initiatives. FMEA allows us to clearly identify and eliminate the causes and effects of failures or errors that may occur in QUALITY the development phase and to prevent the recurrence of Hyundai Elevator 2017-2018 failures and elevate the quality of products.

Quality Management System as the Bedrock of Global Competitiveness Quality Management System We operate a company-wide quality management system to improve our product safety. This system aims to elevate product safety across the entire business process, ranging from sales, development/design, and procure- Manual Level 1

Hyundai Elevator 2017-2018 Hyundai Elevator ment to production, installation and service. Each and every Hyundai Elevator employee fully abides by the relevant regulations. Our quality departments play a leading role in Process Level 2 performing thorough quality validations on prototype products and products with modified designs through the Review Board. We also ensure that only defect-free Rule products are shipped to customers and conduct periodic Level 3 reliability testing on newly-developed finishing materials and mass-production outputs to improve the reliability of Guideline our products. In so doing, we take a stringent preventive approach in verifying prototypes and deliver exceptional quality and safety on the basis of top-notch reliability testing.

Product Reliability Test

Stage 0 1 2 3 4 5

Post-mass Proto-type test Reliability Code review Test planning Tower test Pilot test production (single unit reliability) Test quality analysis

Gate 0 Gate 1 Gate 2 Gate 3 Gate 4 Gate 5

79 53 52 WHO WILL WIN IN 6

5 4 TODAY’S INTENSIVELY

3 2 COMPETITIVE 1 MARKET?

Hyundai Elevator is writing the history of Korea’s elevator industry: we have maintained our No. 1 market share in domestic elevator installation for 11 consecutive years and ranked first in maintenance market share for three consecutive years. With globally-recognized technology and the wealth of experience built in Korea and abroad, we take a renewed leap forward to go beyond Korea to join the league of global top 7 elevator makers.

54 55 HOWEVER, WINING 6

4 TOGETHER IS MORE

3 2 IMPORTANT THAN 1 BEING A WINNER.

Hyundai Elevator does not cling to short-term growth, but rather looks to the future for sustainable and meaningful growth. We rise to new challenges to lay the framework for stable profitability and pave the way to pursue shared growth, and we do this hand-in-hand with society and the environment so that we emerge as the true victor of a better tomorrow.

56 57 Hyundai Elevator 2017-2018 ------14 39 100 2015 vailable vailable 9 38 verseas corporations if corporations verseas 100 2016 11 114 100 ations were added to the casebook to help to the ations were added 2017 tal to raise employee ethics awareness. In addi ethics awareness. employee tal to raise Ethics Management Ethics corporate culture. Such audits are performed yearly on yearly performed are audits Such culture. corporate formed and the reports on a formed submitted and handled guages (Korean, English, Chinses, and Portuguese) and is and Portuguese) English, Chinses, and guages (Korean, so that it is readily a uploaded onto our website our of mindset ethics the raise can it and stakeholders for and abroad. in Korea employees the audits of the details updating Casebook by agement per regulations. ethics of violation the on heads ment/branch In 2016, illustr being distributed to respective departments and busi fore is also Management Newsletter The Ethics ness partners. topics which published to share case studies on specific onto our are chosen on a monthly basis and are uploaded group por ethics management tion, case studies on the violation of are summarized and shared with o Management Audits Self-Initiated Ethics ‘self-initiated ethics man conducted Since 2015, we have aware of level agement audits’ to identify the employee advance ness on ethics management and to continuously our The Ethical Regulation Handbook is published in four lan in four Handbook is published Regulation The Ethical Card Management Self-Check Ethical Management Self-Check the ‘Ethical In 2014, we distributed them to self-check to encourage employees to all Card’ five of consists The card ethics management. and practice judgments own their make employees help to questions business and in conducting when facing ethical dilemmas or ID Card can be inserted their employee in the back of attached to their desk or computer. Management Casebook Ethical Man Management Team publishes the Ethical The Ethics newly-appointed depart monthly basis while training be its contents better access and understand employees a point. deemed useful in illustrating Ethical Regulation Handbook Regulation Ethical all employees in a survey format and include questions format in a survey all employees bribe-taking, unreasonable entertainment and regarding whistle-blowing. 59

- f reports) Reports Submitted (No. o Handling Rates (%) views are made by business area to business area are made by views Achievements Made in Ethics Management Made in Ethics Achievements fraud risks and risk factors that may occur in respective occur in respective that may factors risks and risk fraud installation, ser sales, (domestic/overseas business areas We ensure management, etc.). quality vice, procurement, that self-initiated re across the board. awareness compliance raise Report Center the Cyber of Expanded Operation and Report Korea in both Center Cyber the operate We in stakeholders assist to corporations overseas our at us to do This allows reporting any unethical practices. reportsThe limitations. distance or time any without so the through Team Management Ethics the to submitted Reportcomplaints Center are classified into simple Cyber and reports on their characteristics depending and valid in the field raised Complaints are handled accordingly. to re- and simple after-sales service issues are referred that satisfies sponsible teams and addressed in a way reports valid Meanwhile, stakeholders. and customers or unfair transactions practices corruptive that concern to ethics management, are reportedrunning counter to out- their before audits special to subject and CEO the Valid are notified. are handled and the informants comes - Reporting over Center of reports submitted to the Cyber are addressed through collaboration seas corporations Management Team and responsible between the Ethics Cyber Reporting After the corporations. staff at these in July established at our Chinese corporation Center was - in Bra also introduced was 2015, the reporting system and Vietnam in August 2016. Our Indonesia zil, Malaysia, in also initiated the reporting system corporation Turkey June 2017. Management Ethics Culture of our within deep management ethics to instill order In publish mindset, we culture and employee corporate Regulation Handbook’, ‘Ethical and disseminate ‘Ethical Management and ‘Ethical Management Self-Check Card’, ethics manage- and perform our employees Casebook’ for depart Notably, newly-appointed heads of - ment surveys. on ethics management are trained ment and branches case- the on appear that studies case the on focus a with book. Audits Performed (No. of audits) (No. of Audits Performed Reports Submitted and Handled through Report Center (Korea) the Cyber - - - -

persons ate citizen trusted by our inves ate citizen trusted by 34 Ethics Management Training Ethics ystem Annual ReportAnnual ams to embed ethics management into our corpo ams to embed ethics Attendance of Newly-Appointed Department/Branch Heads in Newly-Appointed Department/Branch of Attendance tors, our customers and the community at large. the community and our customers tors, Our Responses serves as a ethics management At Hyundai Elevator, philosophy that forms the critical pillar of our business signif truly a on takes thus and organization the of basis of action we undertake a range icant meaning. As such, progr and business transparency to establish DNA in order rate In so doing, we strive to a culture of fair competition. become a healthy corpor Prevention System System Prevention potential risks needs to control In line with the growing we developed response system, and build a corresponding fraud to identify diverse system an internal prevention such of monitoring and ensure the constant risk scenarios uses detailed checklists on system risks. This preventive In 2017, a total of 11 audits were performed – two regular, 11 audits were performed In 2017, a total of were audit. Six audits eight special and one confirmatory and we plan to extend corporations related to overseas line in corporations audits to our overseas of the scope with our vision to ‘Go Global’. and Prevention Monitoring Continuous Management S a continuous Management Team operates Our Ethics effi- for management system monitoring and preventive cient internal control. Monitoring Continuous have on sites that monitoring is performed Continuous time, in service an extended amount of not had service for in bill collection process of business, and in the approval in our sales business. This enables us to ensure integrity col of bill the efficiency management and improve order lection. 58 - - audits 11 Ethics Management in 2017 Ethics conduct and a determining factor in global factor conduct and a determining Internal Audits Performed in Relation to Internal Audits Performed y first step in fulfilling corporate social responsibility social responsibility step in fulfilling corporate y first

phasize the importance of ethics management as the as management ethics of importance the phasize ver business competitiveness. This is why we can’t overem can’t we why is This competitiveness. business and earning trust from customers. and earning trust from customers. Trends & Challenges in law in Korea of the anti-graft Since the enforcement 2016, social interest ethics awareness has increased in and there are increasing expectations more than ever ethics man ethics management. Today, on corporate agement is no longer an option but an essential value an option but an essential value agement is no longer of business Ethics Management System System Management Ethics - govern and the regulations of laws As anti-corruption and authorities tighten in Korea ments and supervisory ethics are also abroad, social expectations on corporate Man- Ethics increasing. This prompted us to establish the our business agement Team in 2007 and to strengthen in 2012. through organizational reform audit operations and evaluates reviews, Management Team Our Ethics with ethics management on our compliance improves instruc- relevant regulations and the implementation of while providing tions across our entire business conduct channel. On the and serving as an information training constitutes the basic philoso- which of ‘Ethics’, firm basis our vision ‘Go Global’, we strive to secure business phy of establish a and accountability, propriety, transparency, ethics awareness. raise and fair trade, culture of Internal Audit Internal audits are categorized into regular, special and peri- audits. Regular audits are performed confirmatory with audit plans and special audits in accordance odically by when ordered approval upon the CEO’s are performed audits are Confirmatory the CEO or deemed necessary. work- are made by that when improvements conducted departments to address the issues identified ing-level through regular and special audits need to be confirmed.

Ethics Management Ethics Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 Risk Management Risk ResponseProcess sponse process. BOD andaremanagedinaccordance withthesetriskre- viewed and evaluated by theAudit Committee under the to them.Majorfinancial andnon-financial risksarere- type andidentifytheircausestopreemptivelyrespond non-financial riskswhiledeveloping definitions byrisk identify risksandthengroupthemintofinancial the occurrenceof risksandtheirpossibledamage.We We areestablishingariskprevention system tominimize Risk ManagementSystem address suchrisks. op detailedmanagementplanstoconstantly monitorand conduct intofinancialandnon-financialrisks, devel- gorize risksthatmay posethreatstoouroverall business perspective isemphasized.At HyundaiElevator, wecate- identifying andpreventing risksfromthecompany-wide ofrelation among these risks increases, the importance idly-shifting businessenvironmentandthemutualcor- As we facediverse internal/external risks due to the rap- Risk ManagementPolicy the par ness conditions.Inlinewithtechnologydevelopment, innovative technology advancement and changing busi opportunities andchallengesasnever beforewithsuch and cultur cal convergenceinevery sector: socially,economically era wherenewvalues arecreatedthroughtechnologi We arerapidly embracing the4thIndustrialRevolution Trends &Challenges agement. vironment furtherhighlighttheimportanceofriskman ingly andincreasinguncertaintiesover thebusinessen Identify risks adigm ofriskmanagementisexpandingaccord ally. Notably,businessesarefacedwithboth Identify quantification indicators - - - - - 60 mize anypotentialdamage. Risks andEnvironmental and areaddressedtomini risks are categorized into Legal Risks, Health & Safety torespond to suchrisks.Non-financial and opportunities qualit cur inbusinessconduct concerning safety, environment, We classifyandreview key non-financialrisksthatmay oc Non-FinancialRisk in asustainablemanner. agement indicators toultimatelyattainourbusinessgoals nancial structureandimprove the predictability of man hedging. Insodoing, we ensurethesoundness of ourfi through research andanalysis, monitoring,andproper Risks, Liquidity RisksandCapitalRisks, are addressed Financial risksareclassifiedintoMarket Risks,Credit pose agrave impactonourbusinessplansandoperations. management plansonanyissuesthatmay potentially risks andconvenes BODmeetingstodetermineproper The AuditCommittee reviews andevaluates key financial FinancialRisk implement systemic riskmanagementmeasures. the causesoftheserisksby type inorder todevelop and as welleconomy.Weconductin-depthanalyses of in thefieldsofenvironment,safety, andhumanrights We ticated inlinewiththeshiftingbusinessenvironment. address risksthatareincreasinglydiverse andsophis policies andariskmanagementsystem toefficiently At Hyundai Elevator, we are developing systemic risk Our Responses Review process categorize risks into financial and non-financial risks Annual Report adequacy y andreputationidentifyrelevant challenges Minimize losses - - - - - Risk Type andManagement

Non-Financial Risk Financial Risk Market Risk Environment Risk Liquidity Risk Capital Risk Safety Risk Health and Credit Risk Legal Risk Type Price Risk Rate Risk Currency Interest Risk regulations of relevant laws and accidents andtheviolation resulting fromenvironmental impact onthecompany legal sanctionsandnegative Fines, unintendedcosts, laws andregulations the violationof relevant from safety accidentsand tarnished imageresulting financial lossesand business discontinuation, Fines, legalsanctions, ethics andregulations of internalstandards, code of resulting fromtheviolation es orcompromised reputation Legal sanctions,financialloss- the lackof assetliquidity payment issuescausedby Possibility of external future market interestrates borrowings duetochanging resulting fromdepositsand income andexpenses Fluctuations ininterest affect assetsandliabilities to currency fluctuationsthat and cost of salesinrelation Increases/decreases insales stakeholders to shareholders and providing sustainedprofits Possibility of problemsin terms comply withcontractual failingto counterparties Possibility of customers or assets available-for-sale financial through profitorlossand financial assetsatfair value Changes inthepriceof Definition 61 and regulations comply withrelevant laws information disclosure orto in environmental level of scope andboundary Failure tomeettherequired lack of recognition individual negligence,or awareness training, regulations, lackof changing laws and Insufficient responseto or regulations comply withlegalstandards or losseswhenfailingto Legal disputes,sanctions, period payments withintheagreed Failure tomake external with variable interest rates Deposits andborrowings materials projects orpurchasing raw overseasoccur inundertaking Currency fluctuationsthat business outcomes to negativeimpacton non-financial lossesleading including financial/ General businessconduct, investments Usual transactions and and equity securities derivative financialassets Changes inthepriceof Cause Risk Management - - BuildandmanageGHGemissionsinventory - Monitorrelevant regulations andpolicies ze impactontheenvironmentin - - - - Operate aphase-specificaccidentresponseprocess - cuss company-wide measurestostrengthenhealth - - Operate fairtrade compliance programs - view, evaluate andimprove compliance with - - Take properactionstoimprove thefinancial - - Analyze maturitiesof maturedfinancialliabilities - onstantly predictcashflow andmonitortheliquidity - - valuate the impact of derivative financial assets on the - - Analyze theimpactof changinginterestrates - - - Improve debtstructure theshort/long-term - ze sensitivity tosixcurrenciesincludingUSD, - - - - - Setcreditlimitsoncustomers andcounterparties process Oper global EHSstrategy system Set five-yearmid/long-termEHSplansand de c Analy the healthandsafety managementsystem health andsafety guidelinesandpoliciesthrough Reinf domestic/overseas worksitesandidentifyriskfactors Perio and HealthCommittee and safety managementthroughtheIndustrialSafety Dis systems Oper gener regulations andinstructionsacrossthe Re ratio onamonthlybasis Monitor suchfinancialr credit limits sales activitiesandtheuseof financialinstitution Maintain sufficientliquidit status of thefinancialmarket C on value increases/decreases E increases/decreases of assetvalue E basis andsetcountermeasures Monitor interestr v Maintain aproperr exchange rate insurance andotherhedgingoptions Use currenc with currency fluctuations Regularly measureex EUR, andJPY Analy bond analysis experience andotherelements factoringintheirfinancialstatus,past counterparties E E onducting business ariable rate deposits valuate theimpactof available-for-sale financialassets valuate theexposuretocreditrisksthroughindividual valuate thefinancialcredit ratings of customers and ate aharmfulchemicalsandwaste management ate monitoringandpreventive management dically auditthehealthandsafety environmentof orce riskmanagementby developing company-wide al businessconduct y substitutepayment, currency swap, ate trendsonaweekly/monthly atio of fixed rate and change rate risksinaccordance Action atios asdebratio andnetdebt y capacity throughactive

structure structure velop a

Hyundai Elevator 2017-2018 - - verseas bench- verseas anced business English/Chinese anced business English/Chinese marking courses Regional expert/o Adv courses - Advanced global insight courses global insight - Advanced - Domestic MBA courses - - - Global CoP courses - Region-specific research - Online global business courses courses - In-house/external language MBA courses - Overseas AMP courses - Domestic/overseas - Intensive language courses Train top-tier experts in Train respective fields etc.) Program, (Career Development Nurture next-generation key leaders leaders key Nurture next-generation (HLDP, HIDP, HGLDP, etc.) LEVEL 1 LEVEL 2 LEVEL 3 Human Resource Development Resource Human vided every two years to share our strategic directions to share our strategic two years vided every ees. Company-wide ‘Hanmaum (One Heart)’ training is ‘Hanmaum (One Heart)’ees. Company-wide training pro goals through communication common gether to achieve and harmony. Corporate Culture Program Culture Program Corporate aims to instill a sense of Culture Program Our Corporate all our employ belonging and pride within the mindset of to in coming and assist our employees across the board, Global Career Development Program Program Development Global Career 63 ------Core Talent Talent Core Global Talent Global Talent Expertise vel to an advanced one. vel to an advanced courses, etc.) etc.) courses, ystemic training. Job competency, job skill Job competency, training. ystemic am), and HGLDP (Hyundai Global Leader Development am), and HGLDP (Hyundai Global Leader Development Build global business capabilities A courses are operated by capability level to nurture level capability by are operated A courses (Global CDP, region-specific research (Global CDP, region-specific research Talent Development Training System System Training Development Talent Talent Development Roadmap Roadmap Development Talent develop and discover to is priority top our that believe We market. global the in growth continued our for talent key and promote the strategy implement our globalization To our employees, of and development growth continuous based programs talent development systemic we operate Expertise, and Global Talent, Core of on the three pillars Talent. Program Talent Core are tailored to respective job Programs Talent Our Core capabili of leadership definition on our own based levels (Hyundai Leader Devel include HLDP ties. These programs Development Innovator HIDP (Hyundai opment Program), Progr tal our core develop and aim to systematically Program) ent. Expertise Program with oppor our employees provide Our Expertise Programs top-tier experts into in their respective tunities to develop fields through s individ assist to offered are expertiseother and programs career and upping their their in developing ual employees capabilities from a basic le Program Global Talent we offer market, elevator overseas In line with the growing levels Global capability Programs. Global Talent of a range and crite system to our global CDP are defined according and global insight courses, advanced ria, and global CoP, MB global talent accordingly. - - persons Total employees employees Total 2,112 674,000 KRW person investment per Annual training Annual ReportAnnual the global market. Furthermore, we operate systemic systemic operate we Furthermore, global market. the ceptional outcomes, we pave the way for our future the way we pave ceptional outcomes, Our Responses a building in role essential an plays development Talent and serves as a core advantage sustained competitive our business goals. In systematically in reaching value so that our top-tier tal our human resources developing competitive edge and generate a global ent can develop ex is to dis our top priority At Hyundai Elevator, growth. talent for our continued growth key and develop cover in promote to consistently programs development talent as a way of our employees and development the growth to implement our ‘Go Global’ strategy. 62 - - - y talent to foster creative minds. hours hours that we simply cannot overemphasize the impor the overemphasize cannot simply we that Annual training hours hours Annual training per person 68

2017 Performances tance of talent management as a means to both recruit tance of talent management as a means to and nurture ke The greatest and ultimate driver behind a company’s The greatest and ultimate business rapidly-shifting within today’s future growth indi of sum the Ultimately, people. its in lies landscape Trends & Challenges enables us to make creative and rea vidual competency new business opportunities, sonable decisions, discover is with this in and rise to meet upcoming challenges. It mind

Human Resource Resource Human Development Hyundai Elevator 2017-2018 Elevator Hyundai

Hyundai Elevator 2017-2018

2,092 144

2017 2,236 1,925

2016 1,925

895 795 2015 1,690 Human Resource Development Resource Human Online Offline standards, including the prohibition of child labor/forced child labor/forced of including the prohibition standards, Labor (International and ILO domestic labor and relevant are provided employees regulations. All Organization) and sexual harassment of the prevention on with training ‘Sexual and a dedicated discrimination the prohibition of created in 2017 and Center’ was Counseling Harassment Re- Our Cyber were recruited. counselors professional in the in reporting grievances port assists anyone Center - Confiden that human rights infringements occur. event principles are strictly observed to and anonymity tiality the reportsprotect the details of and the identi- received whistleblowers. of ty Discrimination and Respect for Prohibition of Diversity the grounds on not discriminate does Elevator Hyundai status, marital origin, disability, religion, gender, race, of to equal opportuni full access - have employees All etc. their full potential and this and are free to unleash ty explain why not a single issue arose in relation to may We perform during the reporting period. discrimination and team leaders that allow evaluations multi-source in other’s performance each to evaluate team members used are outcomes evaluation and manner, interactive an conducting organizational as effective baseline data in appoint- and decisions promotion making restructuring, help and Furthermore,hire consistently we managers. ing of spite in careers their advance employees female our that lie in the machine man- the inherent characteristics in. In business that we’re involved ufacturing and facility 11% to rose by employees our female 2017, the number of in 2015, and our recruitment persons from 172 191 persons especially increasing, is constantly employees female of (counselors, in manager (team leader) and professional we assist our female Moreover, positions. etc.) lawyers, in building their career path and strengthen- employees ing their capacity. Sexual Harassment Prevention Training Training Prevention Sexual Harassment and hours) (Unit: No. of persons 65 Work & Learn Program & Learn Program Work (Na- NCS systematic a operating been we have 2016, Since to program training Standards)-based tional Competency capabilities the practical developing in seekers job assist & learn program This work Hyundai Elevator. desired by gathered the requirements matching by developed was - with our existing technical train in the field operation system adopting the work & learn ing curriculum and by of Trainees government. the Korean implemented by - receive a one-month inten our work & learn program format at our in Off-the-Job Training sive group training are then They Province. in Gyeonggi Icheon headquarters departmentsassigned to different to work and learn in guid- 11 months under the for format On-the-Job Training - the 12-month train Following onsite instructors. ance of are subject to final assessments, and top-per- ing, they based on are awarded and instructors trainees forming (100 44 trainees assessment results. In 2017, a total of on a cumulative basis) attended this program trainees by required capabilities practical the developed and Hyundai Elevator. Business for Program Building Job Competency Partners for training expertisetechnical development provide We to pro- as a way our business partners of the employees between growth shared and cooperation mutual mote Such training large businesses and their SME partners. instal- manufacturing, elevator of quality on the focuses and lation and maintenance. Notably, we are developing - expertise technical train an elevator-specific operating with the National Competency in accordance ing program as a participantHuman in the ‘National (NCS) Standards su- project Consortium’ training Development Resources and Labor. Employment of the Ministry pervised by to job seekers’ for ‘training In addition, we provide meeting the work- capable of seekers talented job train them help and to industry elevator the of needs ing-level Job seekers partners. positions with our business acquire training elevator (160 hours) our four-week who complete are supported job with our business partners in finding a In 2017, 41 job seekers program. through this train-to-work 29 SME business partners recruited by were successfully program. this training through Hyundai Elevator of Human Rights Respect for human rights manage- we advance Hyundai Elevator, At and risks from occurring relevant any ment to prevent cul- human rights into our corporate embed respect for the ten principles endorsed ture. Since 2015, we have - been in full com and have the UN Global Compact, of pliance with domestic and international human rights ------ted according to ted according System System Welfare Point Welfare Point In-house Club Support and Benefits Child Tuition Employee Welfare Employee Reward System System Reward Support Specifically, immediate family members (parents, members family immediate Specifically, Medical Expense Annual ReportAnnual or those employees whose children study overseas, there overseas, whose children study or those employees parents-in-law and children) as well as employees them employees as well as children) and parents-in-law such benefits within the set annu selves, are entitled to their and our employees health of al limit to promote the families. the number of members and years of operation. We also operation. of and years members the number of to support these clubs to participatein external events ac an facilitate and fitness their promote employees help tive leisure life. Welfare and Benefits Employee cluded in such supportcluded in such are kindergarten expenses, junior ad all school fees, and tuition entrance high/high school and tuition fees. entrance and university fees, ministration F study of their peers to those benefits of is an equal level ing in Korea. Support Medical Expense We support a portion that our em the medical expenses of their treatment purposes to help improve for pay ployees health. Club Activity the We fully support club activities to improve in-house These clubs were es our employees. welfare and health of regulations with our operational tablished in accordance and are eligible to be financially suppor 64 - - - - -

f human resources in order to improve our competitive our competitive to improve in order f human resources ommemorative watches, gold medals, vacation expenses gold medals, vacation watches, ommemorative

prove their wellfare and reduce their financial burden. In their wellfare and reduce their financial burden. prove Child Tuition Support to im child tuition support to our employees We provide Welfare Point System System Welfare Point based on We offer yearly welfare points to employees welfare. These welfare employee job positions to improve leisure, dining, and culture on and points can be used for of life. a higher quality enjoy offline to help our employees and paid holidays according to their service years to fur to their service years according and paid holidays We operate an in-house proposal system to gather employ an in-house proposal system We operate reduction and the efficient management ee input on cost o to our employees encourage To edge and productivity. and prizes are awarded rewards actively use this system, a long-term ideas. We also have to the most innovative retention employee to encourage system reward employee work. Employ and hard their contributions and recognize are granted 5-30 years for at Hyundai Elevator ees who stay c on work and work efficiency. their focus ther improve Employee Communication Communication Employee are proactively and senior management Our labor union wage collective one another through with communicating - and quarterlynegotiations coopera labor-management - Improve as through the Cafeteria tion meetings as well Committee. and Health and the Safety ment Committee in 2007 to launched back Board’ Notably, the ‘1st Junior an to play continues facilitate internal communication body, an autonomous consultative active role. Created as and creative busi- novel aims to discover the Junior Board de- beyond communication ness ideas through proactive and to fully engage em- barriers partmental and job level meets The Junior Board in business operations. ployees Hyundai Elevator’s ideas regarding monthly to brainstorm opportunities, new business and improve future growth interest and em- culture and gather issues of corporate suggestions. ployee Welfare Benefits Employee and fun- retention as our top priority employee We value edge. As such, behind our competitive damental source ranging packages, welfare benefit top-notch we provide from child tuition support and medical expense support - and consis to social activities (in-house clubs, etc.), we so that programs manage these and improve tently fields. It is through such offer such benefits in diverse remained have Elevator Hyundai at we that endeavors last year. as of the past 29 years dispute-free for System Reward Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 1st 9 indicators Overseas Index Overseas 5 overseas corporations 5 overseas 1st – 2nd 9 indicators Simple Index Environment, Health and Safety Management Safety and Health Environment, of phase-specific strategic projects so as to create an so as to create an projects strategic phase-specific of self-initiated addition, In environment. work safer even and the are undertaken initiatives accident prevention to es- is further strengthened on a team level EHS system importance the stresses that culture corporate a tablish business operations. EHS across of Management System Safety/Health/Environmental ISO 14001 our management of We ensure the integrated certifications to 18001 (safety) (environment) and OHSAS annual in- management: EHS our operate systematically exam- well as regular/follow-up ternal examinations as these certifications, to maintain are performed inations en- to constantly is further improved and their operation of 2018, we half In the first hance our EHS performance. ISO of to a newer version to transfer received consulting to main- with our EHS programs 14001. We will continue certitain and manage these internationally-recognized - fications. Manual and Regulatory Register Management 31 is based on a total of Our EHS management system in accordance manuals (procedures and guides) that are OHSAS and Act Safety and Health Industrial Korea’s with we manage our regulatory In addition, 18001 standards. and laws with relevant register to ensure our compliance and Safety regulations, including the Industrial Health and Insurance Compensation and the Industrial Injury Act . Act. EHS Culture Voluntary EHS Culture a voluntary we operate Hyundai Elevator, At initia- as an accident prevention Establishment Program identify departments to voluntarily tive that encourages in problems, and implemented this program and improve that are corporations) overseas 47 teams (including five As a result standards. required to meet health and safety DepartmentInstallation MP the was evaluations, 2017 of catego- Prize in the regular index with the Grand awarded Technology Department IT Convergence awarded was ry, and our with the Best Prize in the simple index category, 23 teams without field operation 23 teams without field operation 1st – 5th 10 indicators Regular Index 19 teams under field operation vention activities: Self-inspection, self-improvement, implementation of management programs, participation in training, participation in training, implementation of management programs, vention activities: Self-inspection, self-improvement, Hyundai Elevator sets goals and targets to minimize its Hyundai Elevator impact on the environment and concerning health and across its entire business conduct and monitors safety make to targets and goals these reaching in progress its continuous improvements. complies with local regulations and Hyundai Elevator agreements as well as organizational regulations, and when standards strict management by sets and abides its compli- to continuously improve deemed necessary ance. of en- actively promotes the prevention Hyundai Elevator vironmental pollution, the use of sustainable resources, and the adaptation and mitigation of climate change of new green technology, green through the development procurement and sustained process improvements. creates a pleasant work environment Hyundai Elevator as it continues to promote em- and remains injury-free eliminating the root causes by health and safety ployee across improvements continuous making and hazards of installation the entire workplace in relation to production, and after-sales service. are deeply aware of their employees All Hyundai Elevator continue with their to stakeholders, social responsibility and sincerely fulfill their roles education and training, responsibilities, fully reflect stakeholder requirements disclose and transparently into their business operations, ful- so that Hyundai Elevator their performance outcomes its sustainabil- and advances fills its social responsibility management. ity 1 2 3 4 5 EHS Policy EHS Policy Hyundai Elevator is deeply aware of the significance of en- of significance the of aware deeply is Elevator Hyundai and takes the lead in advancing vironmental preservation create the optimal is to top priority green management. Our healthy and safe a in business conduct to environment work the following. manner; therefore, we practice Accident pre EHS Campaign, etc. Voluntary Voluntary EHS Culture Evaluation Index Culture Evaluation EHS Voluntary EHS Management Strategy Strategy EHS Management are we is our top priority, and safety health As employee management system health and safety our reinforcing in undertaking perspective and taking a field-oriented initiatives. Furthermore,we set three- health and safety (EHS) environment/health/safety year mid/long-term that consists EHS system a strategic plans and developed Target Index Evaluation Award * - - persons persons tons Emission of air pollutants 1.9 26,673 in annual Participants training health & safety Annual ReportAnnual y worksite inspections so as to prevent any health and y worksite inspections so as to prevent safety accidents before they ever occur. Furthermore, we ever accidents before they safety cul to establish an advanced constant training provide and create a safe workplace. ture of health and safety Our Responses health and we consider employee At Hyundai Elevator, our and thus are strengthening our top priority, safety and taking a system management health and safety health and in undertaking field-oriented perspective of and safety We promote the health programs. safety training our workplace through inspection, evaluation, improve making necessary while actively and prevention questionable ments to address any issues determined b 66 - - - ys. In addition, the pursuit of envi In addition, the pursuit ys. % 2017 injury rate rate 2017 injury 0 y directly impact our corporate brand value and em value brand y directly impact our corporate

2017 Performances ployee health and even result in financial loss through in financial loss through result and even health ployee fines and process dela part as development ronmentally-sound and sustainable considered of the manufacturing process is increasingly a critical issue. Trends & Challenges of the shop floor and at corporate Inherent in the nature Safety of certain risk factors. establishments, is a range ac business any for factors risk potential are accidents tivity and they warrant our extra care and attention as our extra warrant and they tivity the

Environment, Environment, and Safety Health Management Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 - - - hours hours million 28,554 Total social contribution hours social contribution hours Total 751.98 KRW Cumulative donations made (2013 – to date) sue sustainable growth by sharing what we were by sue sustainable growth vors amounted to six hours of volunteer work per work of volunteer to six hours amounted vors Social Contributions Social Our Responses that Hyundai consensus Building on the company-wide Korea’s as should fulfill its social responsibility Elevator launched our manufacturer, we officially sole elevator been previ in 2010 that had social contribution programs While these in-house clubs and volunteers. ously led by endea dra hours per year in their initial phase, the employee on a cumu matically increased to surpass 100,000 hours Elevator lative basis as of the end of 2016. We at Hyundai will pur of our society. all members with given from society 69 - - persons ate more meaningful outcomes. ate more meaningful outcomes. governments, non-profit organizations, their busi their organizations, non-profit governments, 4,961 volunteers Employee per year 2017 Performances ness peers and other diverse stakeholders in order to in order stakeholders and other diverse ness peers gener Trends & Challenges companies attempt to apply market economy Today, their along with developing principles to social economy with their that is aligned model social contribution own in undertaking social-giving core business capabilities social enterprises address social initiatives. For instance, conduct while the financial issues through their business in making social investments. market approach is taken contribu Rather than acting alone in undertaking social working businesses are shifting towards tion programs, with Social Contributions Social - 1 0.05 2015 1,873 ESG Level ESG Level Environment Society Governance 1 0.04 2016 2,106

s are less likely to suffer 0 0

2017 2,112 - 26,673 - 85,393 Trainees Trainees (No. of hours) hours) (No. of Training Hours Hours Training (No. of persons) persons) (No. of Annual ReportAnnual The K in the four listed companies on Korea’s its assessments conducted of and companies and ESG level, governance environment, society, of sectors these sectors. S, A+, A, B+, B, C, or D in each of are further rated ernance Service (KCGS) in the fields of corporate governance, society society governance, in the fields of corporate ernance Service (KCGS) and environment, and thus its shareholder employees Total persons) (No. of Injuries measured against cases) of (No. rates injury (%)* rate Injury X 100 / total employees * No. of injured employees Hyundai Elevator’s ESG Evaluation Outcomes Outcomes ESG Evaluation Hyundai Elevator’s A in 2017 ESG Assessments Rated Level has properly established an ESG This means that Hyundai Elevator Gov Corporate the Korea the criteria set by as suggested by system * publishestheoutcomes Service(KCGS) Governance orea Corporate Rates Injury External Evaluation of HDEL’s EHS Management HDEL’s EHS of External Evaluation - A in the ESG assess level rated was Hyundai Elevator - Gover Corporate the Korea 2017 by in ments performed from a level by improved rating Our Service (KCGS). nance likely are less that our shareholders 2016, and this implies ESG to due value shareholder their in loss any suffer to our furtherto strive elevate consistently will We risks. years. in the upcoming rating Outcomes Training 2017 Health and Safety due to ESG risks. any loss in their value 68

Indonesian Corporation was awarded with the Best Prize Best the with awarded was Corporation Indonesian and results Evaluation index category. in the overseas our through the board issues are shared across relevant - em encourage to emails and newsletters EHS monthly workplace in promoting the ownership to take ployees safety. Response Process Accident deal to effectively process a step-by-step We established accidents. occupational health and safety with inevitable starts accident response process with re- This four-step porting to the responsible department and staff and then accident details, investigation of proceeds to the sharing - the devel This process also includes and cause analysis. of recurrence the prevent to countermeasures of opment such accidents. Activity Health and Safety Field-focused are able to learn about We ensure that our employees in an initiatives that we undertake the health and safety manner so that these initiatives easier and convenient As partwork. daily such their in rooted deeply of become casebook accident safety a published we endeavors, accidents with illus- 67 safety which presents a total of and countermeasures. their causes to describe trations app) Talk We also send text messages (through Kakao business our of employees as well as employees, our to - safe can easily access health and they so that partners, to promote accident in the field in order information ty prevention. Training Health and Safety curriculum presents the training Our health and safety of a range and we provide highest standards, industry’s - train of needs different the meet to programs training business of to employees managers ees, from our own is offered both on and offline to Such training partners. are learning methods and diverse increase accessibility, and scenario used, including experience-based training reenactments – to maximize learning effects. Promotion Activity Health and Safety work- activities to improve We are engaged in diverse risk the prevent and We analyze safety. health and place diseases while that result in musculoskeletal factors of- installing AEDs (Automatic External Defibrillator) and our em- in response to the aging of CPR training fering arrest. cardiac of and the increasing possibility ployees noise-induced hear- to prevent training We also provide noise pollution to workplace occur due loss that may ing and mock drills to im- evacuations fire while conducting - annual exercis our response to fires and perform prove of occur in the event es to minimize damage that may disasters. Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 - - - - ching Grand Scholarship awarding ceremony awarding Scholarship ching Grand ve house repairing project E Lo Mat

1 2 3 3. 1. 2. drills accidentlife-saving levator Reward Social Contributions Social ard teams, branch offices and individuals for their out offices and individuals teams, branch ard ategic social contribution programs in order to measure in order programs ategic social contribution in vol the ownership to take our employees encourage To and festivals unteer activities, we host year-end volunteer rew the year. over performance standing volunteer Performance Our Social Contribution Advancing Management System the voluntary value programs Our social contribution We ensure that these participation our employees. of consistently implemented are programs social-giving system a feedback and plan to develop and continuously the needs and collecting surveys, satisfaction (conducting and perform and local communities, stakeholders ideas of ing expert our of diagnoses) to manage the performance str and run them in a more pro these programs the impact of and efficient manner. fessional 71 - - - - - 197 2015 4,358 22,421 225 2016 4,978 4,978 28,215 y for their heating ex y for

318 2017 4,961 28,554 y. t of our urban-rural exchange program, we undertake we undertake program, exchange our urban-rural t of y for heating expenses and donate school uniforms and uniforms heating expenses and donate school y for bags to students. A portion these funds were also used of the spirit to practice our employees medical bills for to pay sharing. of Outcomes Social Contribution activities Volunteer activities) (No. of hours Volunteer hours) (No. of persons) (No. of Volunteers Support for the Local Community the Local Community Support for are the support programs our local community Included in undertaken that has been house repairing project love project and the photo-taking the years over continuously our by made the talent donation implemented through seniors of photographs club (taking in-house photography multicultural taking photos for their longevity, to wish for facilities). local welfare photos for families, and taking ID children with to provide We support child welfare centers experience programs experiences and outdoor cultural children devel sharing and help the spirit of to practice As local community. their of good the for op their talents par to regularly visit One Village program for the One Company ties to help ad sisterhood villages with whom we formed pro also We villages. shortagerural the in labor dress of with such seniors living alone and vulnerable vide seniors essential daily items as rice and pa to faithfully fulfill penses while supporting village events our social responsibilit Donation & Sponsorship programs with our donation and sponsorship We continue Through the to extend our helping hand to those in need. the amount we match program, Scholarship Grant Matching wage round off their monthly (they employees donated by 1,000 unit and donate the amount that to the nearest KRW funds. scholarship 1,000 unit) to raise falls under the KRW started in 2009 and with six beneficiaries This program to a total of 121 million donated KRW through it we have funds donated 125 beneficiaries between 2009-2017. Such and Jong used to help Icheon City were also employees by where we are based, no-gu in Seoul, the local communities pa - - % 55.2 Individuals % Social volunteer groups groups Social volunteer 3.4 By Volunteer Unit Volunteer By % % 19.3 activity Paid 22.1 Departments Annual ReportAnnual vided training on the basic structure of elevators, the elevators, on the basic structure of vided training ften address such accidents in the field. developing an evaluation tool to measure the impact of tool to measure the impact of an evaluation developing our social-giv- to upgrade programs social contribution internally ing initiatives. We also promote such programs donations newsletters, in-house through externally and education and we with cultural along and sharing events, as well. plan to implement educational programs Social Contribution Strategic use of door lock deactivation devices, emergency keys, the keys, emergency devices, lock deactivation door use of and the proper response to elevators, of manual operation designed program partaccidents. This was our training of and this train in elevators, trapped passengers to rescue staff who rescue emergency appreciated by highly ing was o Our ‘elevator accident life-saving drills’ and ‘elevator ‘elevator and drills’ life-saving accident ‘elevator Our workers rescue emergency drills’ for rescue emergency that leverage programs represent our social contribution raises campaign safety Our characteristics. business our and elevators on the proper use of passenger awareness accidents and is safety of and the prevention escalators conjunc offices across the nation. In our branch led by tion with firemen from the Icheon/Yeoju fire stations, we pro 70 % 34.5 Local communities % 22.5 Local mountains and streams % By Beneficiary Beneficiary By 10.7 Others % % % % Children/teens 10.0 % Foreigners Foreigners 0.2 2.7 Cultural heritage 9.8 Seniors

2017 Social Contribution Outcomes Outcomes Contribution 2017 Social Social Contribution Goals Social Contribution sharing’, by that grows be a company Under the motto ‘To with so- communicate constantly we at Hyundai Elevator citizen and reciprocate corporate as a responsible ciety the within growth sustainable pursue to sharing through Furthermore, supportproactively we society. our of whole that are aligned with the in- programs social contribution in, we’re involved the industry of herent characteristics strengths in undertaking- our core social contri leverage and do our utmost synergy bution initiatives to generate sustainable growth. towards to move Initiatives Key Social Contribution programs social contribution In addition to strategic - chosen in consider word the key aligned with ‘safety’, we also undertake our business characteristics, ation of through the proactive support and programs of a range but not limit- including participation our employees, of grant matching local communities, ed to the support for and employees, donations made by salary scholarships, Furthermore, establish we sponsorships. & donations into taking by strategies policies and social contribution to establish our social our business advantages account while and implementation framework policy contribution 9.6 People with disabilities Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 ------yees in webzine format, and can be format, yees in webzine in Management in ds of cash compensation, long-term contracts, long-term contracts, compensation, cash ds of partners to reduce costs, improve processes, en improve reduce costs, to partners d subcontract forms. We also post the details of of post the details We also forms. subcontract d W Win- hance quality and develop new products while sharing the new products and develop hance quality benefits created together through such mutually-agreed upon metho tance of compliance programs. programs. compliance tance of ent detailed behavioral guidelines. These newsletters are These newsletters guidelines. ent detailed behavioral emailed to all emplo industries. diverse Korea’s edge for ger competitive principles and using subcontracting key ing with the four standar Sharing Program Performance Multilateral the sharing program, performance Through the multilateral sign suppliers second-tier or and their first-tier contractor roles in divide their one-to-one or one-to-many contracts, the set goals, and then share the respective steps, achieve predetermined the with accordance in made achievements these vertically-aligned to companies allowing contract, Hyun At on an equal footing. outcomes share performance with programs joint innovation we undertake dai Elevator, business and joint patent applications. Since 2015, adjustments, cost our sec to this program of extended the scope we have ond-tier business partners. Compliance Newsletter Newsletter Compliance to share Newsletters Compliance We publish monthly and to fair trade issues that occur in relation of a range pres to and company the outside and inside compliance support our in-house compliance to through subscribed and through our CP website. system Agreement Trade Fair fair trade been signing we have Hyundai Elevator, At and 2013, since partners business agreements with our such into entered we that anniversary 6th the marks this supportagreements. These agreements mainly concern for and endeavors fair contracts, win-win cooperation, for agreements are not simply trade Fair legal compliance. through SME suppliers of the business improving about the support large businesses but aim to benefit large of such support of the source become businesses who often to save materials from suppliers high-quality procuring by which ultimately builds a stron quality, and improve costs Business Partners Support for Compliance Trade in Fair comply relationships by We establish fair subcontracting principles on our website (www. subcontracting the four as as well so that business partners hyundaielevator.co.kr) to and use them anytime. can refer employees our own CP workshops and a declaration ceremony on compliance on compliance ceremony and a declaration CP workshops on the impor consensus are hosted to build management 73 ------f regulatory viola f regulatory forming work inspections in relation to the Framework Framework work inspections in relation to the forming tel practices in order to improve awareness among re awareness to improve order in practices tel specific job characteristics. In addition, company-wide addition, In characteristics. job specific amework Act on the Construction Industry’ and the ‘Ele Industry’ on the Construction amework Act separate set of review processes to prevent the violation prevent to processes review of set separate ommission. The core of any fair trade compliance program program compliance trade fair any of core The ommission. ompliance with the Fair Trade Act through Management through Management Act Trade with the Fair ompliance vator Facility Safety Management Act’. Regarding sales op Regarding Management Act’. Safety Facility vator unjustified to prevent mock reviews we conduct erations, car of the Fair Indication and Advertisement Act and perform perform Indication and Advertisement and Act the Fair of monitoring accordingly. consistent CP Training Fair against the violations prevent to training We provide regulations to establish a and subcontracting Act Trade Program Such Compliance compliance. fair trade culture of in the first is offered regularly to employees (CP) training to exec is provided half, and special training and second No- representatives. sales and agents hires, new utives, to depart is provided tably, team-based tailored training violations due regulatory ments exposed to higher risks of to Compliance Program (CP) Operation (CP) Operation Program Compliance - employ our inform we practices, trade fair establish To about our strict and customers stakeholders, ees, external c Presently, we are adopting and Meetings and CEO Letters. com trade fair the of components seven the abiding by Trade Fair the Korea by recommended as pliance program C the violations. In regulatory of lies within the prevention compli our we review half respectively, and second first while Act the Subcontract and Act Trade Fair with the ance per Facility and the Elevator Industry on the Construction Act Management Act. Safety to Compliance Commitment to fair commitment Our CEO declared our company-wide CEO principles through Management Meetings and trade their share also officers compliance our while messages to highlight the importance messages self-initiated of own regulations across the board. with fair trade compliance are also dis Such messages from our senior management offi our through and customers stakeholders seminated to and the CP website. cial disclosures CP Monitoring (CP) monitoring Program Compliance periodic We perform our the use of on respective business areas. We review legal our revise and forms subcontract in-house standard to in order forms contract process and standard advisory outsourc manufacturing/construction our overall improve measures. follow-up ing process through such consistent We also strive to minimize any risks o the Act’, Transaction Subcontract the ‘Fair tions concerning ‘Fr and disseminate We plan to develop sponsible employees. a - persons persons companies companies 285 with Business partners whom we signed fair trade agreements 1,596 in annual Participants CP training Annual ReportAnnual orea Commission for Corporate Partnership in June Partnership Corporate orea Commission for Our Responses to establishing we are committed At Hyundai Elevator, win-win and culture of fair trade and disseminating a business with basis of our partnership on the growth for three con ‘Excellent’ been rated We have partners. by Index published in the Win-Win Growth secutive years the K honored with our business partner 2017, and were jointly in the Woojin Electric with the Prime Minister’s Citation sector in November. performance sharing excellent 72 - - ative in the highly-competitive ative in the highly-competitive cases Support for business in technology partners development 1,556 ade practices, sharing the combined outcomes gener sharing the combined outcomes ade practices,

4th Industrial Revolution era just to promote sustainable era 4th Industrial Revolution growth. corporate Trends & Challenges through trust- can create great value Businesses today with business partners based win-win relationships prod from ranging ecosystem along the entire business uct design to production and sales. Establishing fair and sales. Establishing fair uct design to production tr so in competitive advantage ated, and building a greater doing is a business imper 2017 Performances Win-Win Management Win-Win Hyundai Elevator 2017-2018 Elevator Hyundai Annual Report Annual Report

FINANCIAL AND NON-FINANCIAL

STATEMENTS Hyundai Elevator 2017-2018

76 Major Consolidated Financial Statements Hyundai Elevator 2017-2018 Hyundai Elevator 76 Consolidated Statements of Financial Position 78 Consolidated Statements of Comprehensive Income 79 Consolidated Statements of Cash Flows

80 Financial Management Discussion & Analysis 84 Non-Financial Management Discussion & Analysis 92 Independent Auditor’s Report 94 Global Network 96 UN Global Compact / SDGs Index Hyundai Elevator 2017-2018

2015 661,880 157,807,163 627,308,000 284,659,859 December 31, 3,096,601,195 5,890,282,937 4,704,406,053 35,571,118,768 31,192,972,200 23,494,321,794 98,314,121,966 75,601,972,592 18,275,734,852 22,842,009,771 29,251,142,050 18,923,209,433 (17,633,477,291) 144,091,424,537 177,964,929,605 162,798,349,819 194,701,862,900 123,162,565,000 469,224,378,554 150,146,204,852 641,517,557,231 641,802,217,090 647,739,460,355 483,142,891,044 1,130,882,351,399 1,772,684,568,489 2017, 2016, and 2015 0

2016 224,720 408,925,515 5,373,319,171 4,651,879,229 6,638,200,233 6,545,026,700 31,192,972,200 30,551,273,839 38,439,959,166 14,809,015,544 10,847,586,969 165,916,914,517 463,768,269,111 (5,535,084,879) 12,571,240,136 103,569,316,743 171,786,404,682 185,614,026,794 176,001,168,605 182,987,663,935 163,388,926,467 214,868,705,783 123,162,565,000 597,125,570,211 791,076,876,085 778,505,635,949 719,356,053,884 1,316,481,624,095 2,107,558,500,180 0

Major Consolidated Financial Statements Statements Financial Consolidated Major 2017 257,500 77 1,087,154,501 8,449,412,236 4,439,239,168 15,124,137,127 31,177,619,760 6,624,489,045 18,715,783,320 40,718,439,071 14,457,146,080 22,016,802,042 (9,282,941,334) 268,497,317,241 463,768,269,111 152,251,804,263 115,589,984,067 217,602,002,459 123,162,565,000 226,267,638,893 183,063,441,898 239,967,800,225 145,005,683,859 (1,053,995,534) 765,816,777,865 836,331,476,322 835,277,480,788 686,555,791,345 1,452,372,569,210 2,287,650,049,998

yee benefits liabilities s for contract work contract s for or financial derivatives yables yables omponents of equity omponents of ontrolling interest wings and debentures wings and debentures arent Company ative financial liabilities erred tax liabilities ade payables ccumulated other comprehensive income ccumulated other comprehensive dvances received dvances quity attributable to owners of of quity attributable to owners otal liabilities otal equity Net defined benefit liabilities Long-term emplo Def T E the P Share capital Capital surplus Other c A Retained earnings Non-c T Current liabilities Tr Other pa Borro Deriv A Due to customer Provisions Other financial liabilities Other current liabilities Current tax liabilities Non-current liabilities Other pa Other non-current liabilities Borro Liabilities f Provisions

(in Korean won) (in Korean Equity liabilities and equity Total Liabilities 0 0 2015 6,462,345 18,000,000 761,050,000 2,587,172,153 4,103,721,399 2,281,289,898 15,257,571,616 8,190,570,000 17,833,718,389 31,843,792,401 13,430,343,071 7,000,000,000 33,467,518,829 18,754,812,060 15,098,136,948 48,028,695,243 120,170,428,164 439,159,367,027 175,722,305,483 144,275,566,689 245,190,565,952 429,503,480,822 757,850,065,725 1,014,834,502,764 1,772,684,568,489 0 0 2016 22,500,000 246,926,398 102,380,000 1,627,704,365 9,230,837,729 2,429,704,524 13,176,814,227 3,670,088,428 14,691,262,221 2,539,805,000 21,283,227,638 15,369,769,490 10,889,890,121 8,000,000,000 60,135,300,594 28,844,424,664 139,331,794,755 148,150,114,284 683,548,019,713 180,470,352,765 489,901,998,618 273,895,584,646 1,062,469,912,816 2,107,558,500,180 1,045,088,587,364 0 Annual ReportAnnual 2017 531,272,188 674,810,000 453,860,000 76 2,787,619,729 8,615,728,331 7,276,804,421 7,440,176,346 6,195,659,914 7,081,578,410 27,612,366,147 5,784,580,000 25,929,638,451 38,353,133,638 27,555,548,501 44,667,305,079 119,210,716,270 60,369,340,829 744,332,831,392 323,871,844,492 192,503,729,033 174,842,400,661 152,895,956,527 308,663,149,639 945,231,044,555 1,342,419,005,443 2,287,650,049,998 or-sale alents s for tract work tract s for ty y financial assets y financial assets atives ables ty, plant and equipment ty, ative financial assets t-term financial instruments erred tax assets ade receivables vailable-for-sale financial assets vailable-for-sale vailable-for-sale financial assets vailable-for-sale otal assets Def T Financial deriv Investment proper Proper Intangible assets Other financial assets Other non-current assets Non-current assets Long-term financial instruments A Held-to-maturit Investments in associates Deriv Inventories Other financial assets Other current assets Current tax assets Non-current assets held-f Shor A Held-to-maturit Tr Due from customer Other receiv Current assets Cash and cash equiv

(in Korean won) (in Korean Assets Consolidated Statements of Financial Position Statements of Consolidated Major Consolidated Consolidated Major Statements Financial Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 0 0 0 0 0 0 0 0 0 0 0 0

2015 (200,000) 41,053,300 172,315,168 169,707,375 170,064,821 465,732,653 (81,732,096) 985,454,545 5,305,851,971 1,513,520,000 5,516,288,700 3,608,681,630 11,956,018,134 1,300,000,000 42,422,837,987 13,001,249,564 (7,031,406,124) (9,567,676,649) (1,175,055,000) (4,530,995,108) 162,020,947,794 150,051,941,818 333,075,085,774 (39,247,897,163) 357,015,655,520 (10,674,947,963) 275,073,259,006 (1,847,037,512) (51,366,931,440) (14,398,400,761) 126,819,019,126 304,531,499,208 (178,595,528,384) 429,503,480,822 (298,931,896,656) (139,200,000,000) 2017, 2016, and 2015 2017, 2016, and Years Ended December 31, Ended December 31, Years 0 0 0 0 0 0 0 0 0 0 0

2016 28,910 81,381,273 95,506,529 68,885,656 179,979,908 448,940,797 346,206,702 379,962,000 761,050,000 1,969,516,170 9,101,355,510 4,545,193,310 9,295,474,750 5,399,265,307 (431,640,000) (500,000,000) 2,000,000,000 3,000,000,000 1,548,079,009 49,656,258,937 (3,876,252,077) (5,479,915,982) (4,447,294,382) 171,927,344,000 158,623,462,242 (11,706,552,256) (17,295,602,353) (15,453,133,083) (29,093,325,973) 58,850,438,787 (88,761,009,683) (100,119,230,157) (32,700,000,000) 489,901,998,618 429,503,480,822 (159,070,963,844) 0 0 0 0 0 0 0 0 0 0

2017 4,000,000 40,278,762 61,620,000 95,340,000 Major Consolidated Financial Statements Statements Financial Consolidated Major 109,062,372 291,075,669 225,000,000 3,262,115,539 1,775,598,188 9,124,401,629 11,332,731,431 (435,360,000) 34,821,141,655 (2,754,721,091) 92,695,499,718 2,000,000,000 99,318,704,209 (2,295,471,682) 11,720,000,000 (1,965,499,629) (8,093,409,170) 114,802,747,503 319,871,357,040 (3,878,825,000) (10,153,602,421) (3,762,078,833) (37,366,264,500) (12,464,390,030) (31,099,998,684) (54,369,340,829) (12,586,906,000) 323,871,844,492 (192,706,703,537) (369,766,322,514) 489,901,998,618 (179,649,048,699) (106,500,960,515) (162,268,075,293) ables f held-to-maturity financial assets f held-to-maturity financial assets f available-for-sale f short-term financial instruments f investments in associates f investment properties plant and equipment f property, f intangible assets onsideration wings and debentures ative financial assets ative financial liabilities antee deposits provided t-term loans antee deposits provided antee deposits provided t-term loans w (outflow) from investing activities w (outflow) from financing activities w (outflow) w from operating activities w from operating w due to disposal of disposal group w due to disposal of subsidiaries of w due to acquisition ated from operations ated from operations f preemptive right f government grants grants f government f subsidiary’s capital f subsidiary’s ontrolling interest paid yments of borrowings and debentures borrowings yments of ance benefits received ome tax paid cquisition of short-term of financial instruments cquisition long-term financial instruments of cquisition financial assets available-for-sale of cquisition financial assets held-to-maturity of cquisition investments in associates of cquisition properties investment of cquisition plant and equipment property, of cquisition assets intangible of cquisition A A Increase in guar A A A Decrease in deriv Increase in other non-crrunet receiv Net cash inflo Proceeds from borro Isur Capital increase with c Non-c Return o Repa Dividends paid Net cash inflo Cash gener Interest received Dividends received Interest paid Inc Net cash inflo Proceeds from disposal o Proceeds from disposal o Proceeds from disposal o Disposal o Proceeds from disposal o Decrease in guar Proceeds from disposal o Decrease in deriv Proceeds from disposal o Proceeds from disposal o Receipt o Decrease in long-term loans Decrease in shor Decrease in long-term financial instruments Net cash flo Net cash flo Increase in shor Increase in long-term loans A A A

(in Korean won) (in Korean

from financing activities Cash flows Net cash increase (decrease) in cash and cash equivalents the year at the beginning of Cash and cash equivalents rate changes on cash and cash equivalents of exchange Effects the year at the end of Cash and cash equivalents Consolidated Statements of Cash Flows Cash Statements of Consolidated activities from operating Cash flows from investing activities Cash flows

(185) (185) 2015 81,417,677 (985,953,611) (894,091,153) (1,726,746,301) (3,043,310,713) (9,170,320,284) (4,050,678,414) 18,253,632,872 17,050,270,649 20,381,010,916 (17,185,482,295) 19,444,658,697 (36,081,073,941) 39,025,499,883 30,210,905,028 33,988,867,858 (35,186,982,788) 154,117,053,936 (5,036,632,025) 156,510,511,822 310,627,565,758 (31,044,441,916) (128,550,994,676) 1,138,026,321,805 2017, 2016, and 2015 2017, 2016, and 1,448,653,887,563 Years Ended December 31, Ended December 31, Years

2016 5,225 4,888 86,820,060 (693,912,728) (354,923,293) 2,074,539,762 12,446,748,279 142,444,188,161 18,922,791,259 12,676,839,346 13,559,272,080 130,493,652,956 (11,765,895,524) 128,700,276,400 33,088,867,215 33,392,463,408 48,997,964,854 (11,950,535,205) 116,934,380,876 (52,711,228,314) 140,092,218,900 395,148,438,363 181,566,033,358 (98,011,589,617) 213,582,405,005 1,758,791,900,587 1,363,643,462,224 0

Annual ReportAnnual 3,801 3,801 2017 (59,940,477) (85,193,846) 78 (487,192,868) 93,617,146,017 82,619,285,753 (2,165,242,626) 68,899,289,602 (13,719,996,151) (14,615,951,619) (7,304,334,979) 79,001,194,398 51,729,283,969 16,908,939,139 32,393,854,198 50,192,492,890 (7,383,362,736) 68,506,483,684 129,193,687,288 135,284,765,368 378,725,244,466 243,440,479,098 (10,101,904,796) 1,614,975,314,613 1,993,700,559,079

alue of available-for-sale available-for-sale alue of f net defined benefit y be subsequently reclassified f the Parent Company for the for Company f the Parent f other comprehensive income of of income f other comprehensive f remeasurements of net defined f remeasurements of s of the Parent Company the Parent s of s of the Parent Company the Parent s of ontrolling interest ontrolling interest change differences on translation of change differences on translation otal comprehensive income for the year for income otal comprehensive oreign operations

Basic earnings per share Diluted earnings per share Owner Non-c financial assets Ex f T Owner Non-c benefit liabilities from associates Items that ma to profit or loss: Changes in the fair v Share o associates Items that will not be reclassified to profit or loss: Remeasurements o liabilities Share o

year the year is attributable to: Earnings per share attributable to the equity holders o for the year attributable to: Profit (loss) (loss) for income comprehensive Total

(in Korean won) (in Korean Sales sales of Cost Gross profit expenses and administrative Selling, marketing profit Operating Other income Other expenses for accounted of associates net profit Share of using the equity method investment in associates Gain on disposal of Finance income Finance costs tax income Profit before tax expense (benefit) Income for the year Profit income Other comprehensive Consolidated Statements of Comprehensive Income Comprehensive Statements of Consolidated Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 ------orea and China as well as by intensifying intensifying orea and China as well as by Financial Management Discussion & Analysis Discussion Management Financial 81 ds on complete safety inspections performed on old elevators while price inspections performed on old elevators ds on complete safety anches in Ankara and Izmir to expand its sales network and landed orders for and Izmir to expand its sales network and landed orders anches in Ankara w oil prices; therefore, the Company’s overseas business performance deteriorated business performance deteriorated w oil prices; therefore, the Company’s overseas y’, ‘expanding global capabilities’ and ‘building future growth drivers’. drivers’. growth and ‘building future global capabilities’ y’, ‘expanding between China and Korea and other direct and indirect factors, the Company produced produced Company the factors, indirect and direct other and Korea between China and ced its advancement and promotion in target markets while widening customer contact and promotion in ced its advancement veral years and its construction industry posted its lowest-ever growth rate. The Company rate. growth posted its lowest-ever and its construction industry years veral ver market downturn due to decreases in housing supply caused by the government’s apart the government’s by due to decreases in housing supply caused ver market downturn competition intensified even further. The auto parking system market also experienced a similar a experienced also market system parking auto The further. even intensified competition Despite such business and price competition worsening. growing demand trend, with an overall more by orders elevator increased its mid-to-high speed apartment conditions, the Company elevator its overall continued to rise, which raised than 20%, and its small and short-term orders 1.1378 trillion. year to KRW nearly 19% from the previous sales by Business Overseas disappointing results in 2017. The global eco rather business posted The Company’s overseas and the in emerging economies values continued due to the falling currency nomic downturn prolonged lo expectations. business results that fell short of its initial Southeast Asia market continued to expand in line with the contin In the Southeast Asian market, the elevator The Company investments. infrastructure large-scale urbanization and the ued government-led reinfor to generate points and strengthening customer response through constant monitoring in order intended outcomes. America Middle East/Africa/Latin sus to markets due African East and Middle the in declined performance While the Company’s compensated thanks to increasing demand in the hous oil prices, this was partially tained low the Company In Turkey, markets as Israel. opportunity in such ing and shopping mall sectors created new br the Company post however, stations. In Brazil, landmark projects including airports and subway performance as the nation’s construction economy remained sluggish ed less-than-satisfactory for se Elevator will do our utmost to maximize shareholder values by fully preparing for internal and ex fully preparing for by values to maximize shareholder will do our utmost Elevator Business Domestic Elevator opera system) (auto parking in elevator business is involved elevator The Company’s domestic East, Southeast Asian countries, and across the over in the Middle when it came to oil producers drove which eventually in large project undertakings, and delays countries competition in several 168.5 billion. year to KRW 22% from the previous sales by down performance thanks to for its less-than-satisfactory Still yet, the Company was able to make up The Company broadened its sales into new Israel. new demand in Vietnam, the Philippines, and through proactive sales its orders in Vietnam, and improved orders areas, increased large-scale region. major are 2017 market situations by in Indonesia. The followings operations China business challenging for the Company and other Korean very The Chinese market was generally ternal uncertainties and by acting on the three management principles of ‘increasing domestic of ‘increasing domestic management principles acting on the three and by ternal uncertainties profitabilit market, there were continued concerns In the 2017 real estate operations. tions and remodeling o and real estate specula policy, profit restitution reconstruction excess ment price ceiling policy, demands grew to respond market, replacement In the remodeling policy. tion demand reduction to tightening standar the sluggish business was negatively impacted by seas market. On top of this, the Company’s between K real estate economy and political issues to political the sluggish real estate economy, and due amid declined orders es. New elevator conflicts ------Annual ReportAnnual 80 vide any assurance that the expected results, issues or influ that the expected vide any assurance s that may cause material differences between the estimates s that may wnturn due to low oil prices. Turning to the domestic economy, the growth of the the domestic economy, the growth oil prices. Turning to wnturn due to low s to ‘Hyundai Elevator’ if otherwise stated. s to ‘Hyundai Elevator’ this report were prepared at the time of the creation of this report, and the Company will not will Company the and report, this of the creation of time the at prepared were report this This Management Discussion & Analysis (MD&A) was prepared to compare Hyundai Elevator’s to compare Hyundai Elevator’s (MD&A) was prepared & Analysis This Management Discussion year ending on December 31, 2017 and financial position during the fiscal business performance a consolidated basis unless otherwise year. All amounts are presented on to that of the previous prepared and audited in ac on the consolidated financial statements specified and are based The Company in this Won (KRW). All amounts are denominated in Korean with K-IFRS. cordance section refer ences that are stated in this report will actually occur. Please note that the forecasts illustrated occur. Please note that the forecasts illustrated ences that are stated in this report will actually in update any of the risk factors or forward-looking statements herein in the future. statements herein in the future. or forward-looking update any of the risk factors 2017 OVERVIEW econo while the U.S., Europe and other advanced The global economy presented mixed results: to address increasing tightened its policy as the government down construction business slowed 1688.5 billion in new household debts. Still yet, the Company posted solid performance with KRW profits while maintaining 135.3 billion in operating 1993.7 billion in sales, and KRW KRW orders, and installation market share for 11 consecutive years its No. 1 lead position in domestic elevator In the service business that in domestic maintenance market share for three consecutive years. we expect to witness the past three years, has been posting more than 15% in sales CAGR over and MOD components the sales and repair of elevator due to an increase in sustained growth business elevator domestic The elevators. outdated of number growing the with business in line market in response to the expanding renovation demand is also expected to experience growth that requires replacements. despite such downward In 2018, we forecast that the global economy will continue to recover hikes additional interest rate pressures as the strengthening protectionism of global powers, business in the U.S., and increasing financial uncertainties in emerging countries. The domestic as changing tides in the directions of the govern is also expected to be turbulent landscape The events, incidents or phenomena that the Company expects or forecasts to occur in the future incidents or phenomena that The events, performance at on such incidents and financial views within this report reflect the Company’s forecasts are documents. These expectations and the time of preparing the official disclosure to the future business environment, and such assump of assumptions related based on a range In addition, these assumptions include the risks, inaccurate. to be prove eventually tions may uncertainties and other factor that can cause such and actual results. Factors statements presented in the forward-looking management related to the internal to factors material differences include but are not limited factors. of the Company as well as the external environmental state forward-looking reports to modify to disclose The Company does not bear any obligation of such statements. In that occur after the preparation ments to reflect the risks or uncertainties conclusion, the Company cannot pro emerging countries including those in the Middle East suffered economic recovery, mies showed economic do increases may and interest rate in the market result in a slowdown may ment’s real estate policy at Hyundai lead to sustained uncertainties. In spite of such challenging business conditions, we 1.

Financial Management Management Financial & Analysis Discussion Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 285 2015 31,193 35,571 33,468 94,940 48,029 17,633) 175,722 123,163 171,405 439,159 469,224 429,503 380,459 647,739 ( 641,518 483,143 757,850 641,803 1,772,685 1,130,882 1,014,835 December 31, 2017, 2016, and 2015 2016 2,430 31,193 5,535) 5,535) 63,776 60,135 12,571 165,917 123,163 ( 431,276 196,022 463,768 180,470 791,077 489,902 683,548 719,356 597,126 778,506 1,316,482 2,107,559 1,062,470 1,045,089 2017 18,716 38,353 25,930 123,163 (9,283) 397,314 174,842 114,007 744,333 323,872 (1,054) (1,054) 239,967 463,768 468,999 765,817 835,277 945,231 836,331 686,556 1,452,373 1,342,419 2,287,650 Financial Management Discussion & Analysis Discussion Management Financial 83 ompanies alents omponents y s ontrolling share ccount receivables and other receivables other receivables and receivables ccount income ccumulated other comprehensive angible assets Cash and cash equiv A Inventor Others Investment in affiliated c T Intangible assets Other Capital Capital surplus Other capital c A Earned surplus ontrolling company’s share share ontrolling company’s Current assets Non-current assets Current liabilities Non-current liabilities C Non-c otal liabilities Total capital Total Assets is This trillion. 2.2877 KRW to amounted assets total Company’s the 2017, of 31st December of As 8.5% from the end of 2016 as real estate investments increased in line with the purchase up by 245 billion) in July 2017. of Hyundai Group’s office building (KRW Liabilities 1.4524 trillion. This As of December 31, 2017, the Company’s total liabilities amounted to KRW the 150 billion) were issued to purchase 10.3% from the end of 2016 as public bonds (KRW rose by office building for the Hyundai Group. Capital 791.1 billion as of December 31, 2016 rose The Company’s total capital which amounted to KRW 79 billion that was 835.3 billion as of December 31, 2017 due to the KRW 5.6% to reach KRW by in net income. generated FINANCIAL STRUCTURE STRUCTURE FINANCIAL Summary in Position Financial of Statements Consolidated assets Total T (unit: KRW million, earnings per share: KRW) million, earnings per share: (unit: KRW 3. ------7 2015 (185) (185) (986) (4,051) (5,037) 156,511 1,448,654 2017, 2016, and 2015 Years Ended December 31, Years 13 2016 5,225 4,888 116,934 181,566 (11,766) (11,766) 128,700 1,758,792 13 2017 3,801 3,801 93,617 79,001 135,285 (14,616) (14,616) 1,993,701 Annual ReportAnnual 82 vators produced growing demand for component repair, which growing produced vators aw materials. to reach KRW 289.2 billion. Notably, as a result of focusing on the elevator modernization modernization elevator the on focusing of result a as Notably, billion. 289.2 KRW reach to Sales its to due is This trillion. 1.9937 KRW to year previous the from 13.4% by rose sales Company’s The instal posting 20,000 units in new elevator by in setting a new record outstanding achievement design to from product lations during 2017 on the basis of its expedient One-Stop Service ranging of paid installation and service. Furthermore, new installations resulted in an increasing number maintenance units while used ele installation. its sales in the service business in addition to new elevator raised Income Operating 135.3 billion. year to KRW 25.5% from the previous income fell by In 2017, the Company’s operating income fell due to intensify 234.9 billion from 2016, its operating KRW While its sales grew by the shrinking real estate economy and the increasing concerns over ing competition caused by prices of r Sales income Operating (loss) net income Consolidated company the controlling Owner of share Non-controlling Basic earnings (loss) per share Diluted earnings (loss) per share companies consolidated No. of ment Act further aggravated negative impacts in general. Amidst such difficult business condi business difficult such Amidst general. in impacts negative aggravated further Act ment more than 20% from the previous service business increased its sales by tions, the Company’s year ANALYSIS PROFITABILITY and from manufacturing, sales, installation, are generated sources main revenue The Company’s The follow and related components. auto parking systems escalators, maintenance of elevators, from the consolidated finan information was extracted of consolidated financial ing summary report, and should be analyzed the business that were audited and included in statements cial statements that appear in this report. in conjunction with the consolidated financial Income Comprehensive Statements of Consolidated in Summary plans to train local technical staff to improve the quality of installation service and to build installation service of the quality staff to improve local technical plans to train trust. stronger customer Service Business the facilities and of elevator service business concerns the maintenance Hyundai Elevators’ to a continued increase in used In 2017, the service market expanded due sales of components. Manage Safety Facility Elevator of the the complete revision while issues concerning elevators rose significantly from orders modernization 15-year-old or older elevators, business that targets to year 13,660 units from the previous and maintenance units increased by year, the previous 145,889 units. (unit: KRW million, earnings per share: KRW) million, earnings per share: KRW) (unit: KRW

2. Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 - - 13 54 28 8.9 112 172 110 153 330 248 166 358 9.18 2.44 2015 2015 203 3.57 9.64 76 10 42 39 2016 5.6 317 154 118 202 108 356 2016 191 4.98 9.04 2017 17 29 157 135 164 287 140 263 292 304 13.8 2017 Non-Financial Management Discussion & Analysis Discussion Management Non-Financial 85 Male Female Total Regular Contractual Male Female Total Regular Contractual against total employees against total employees against total managers had received higher education and that some of the employees earned degrees. By By earned degrees. employees and that some of the education had received higher sons in 2017, and female employees accounted for 17 persons. Meanwhile, the total number of accounted for 17 persons. sons in 2017, and female employees At Hyundai Elevator, the number of new hires is calculated by combining its regular workers who combining its regular workers is calculated by the number of new hires At Hyundai Elevator, Since 2017, the workers. agreements directly with the Company with contractual sign contract extending the retire by Company replaced a portion of the new hires with existing employees year to 304 previous 14.6% from the the number of new recruits by down ment age. This drove per This is due to the 8.2%p to 13.8%. rose by resignations amounted to 292 and the resignation rate the spin-off of the logistics business last August, increase in resignation caused by temporary was excluded. transfer was 8.2% when the employee and the resignation rate while that of the administrative and research workers inched down. The ratio of regular workers workers regular of ratio The down. inched workers research and administrative the of that while fell by workers 2017 while that of contractual mark, with 91.1% in the 90% above held its place gradu the number of high school is concerned, As far as diversity year. the previous 5.5% from Nurturing Talent Female employees female No. of employees female Ratio of managers female Ratio of Recruitment and Resignation (No. of employees) New recruitment Resignation/turnover Resignation rate ates dropped by 17.1%, which can be attributed to the fact that new recruits were hired to replace 17.1%, which can be attributed to the fact that ates dropped by retirees who age group, the ratio of employees aged 30 or under rose significantly by 21.7%. significantly aged 30 or under rose of employees age group, the ratio In their professional capacity. and improve to hire female employees endeavors Hyundai Elevator from the previous which inched down employees, 2017, the Company hired a total of 191 female to is consistently growing however, of female managers, year to 9.04% of the total. The ratio fairly limited due is Given that the recruitment of female employees reach 4.98% or 11 persons. and manufacturing business, facility machinery/electrical of the to the inherent characteristics improvement in ‘undertaking proactive employment the set standard the Company exceeded and Labor surveys. of Employment Ministry the by measures’ as demonstrated - - 22 18 89 172 126 126 531 631 551 547 244 852 806 2015 1,747 1,701 1,873 91 22 18 199 199 923 801 594 563 644 203 893 305 2016 1,907 1,903 2,106 21 18 87 191 723 275 937 514 188 188 664 900 600 2017 1,921 1,924 2,112 Annual ReportAnnual 84 Male Female Administrative Manufacturing/technical Research Other Regular Contractual graduates High school People with disabilities and veterans Patriots 30 or younger 31 to 40 41 to 50 51 or older wing concerns ‘Hyundai Elevator’, excluding its subsidiaries, unless otherwise stated. its subsidiaries, excluding Elevator’, wing concerns ‘Hyundai At Hyundai Elevator, the total number of employees is calculated by combining regular workers combining regular workers is calculated by the total number of employees At Hyundai Elevator, As of the workers. with the Company with contractual contracts who directly sign employment and plans to continuously expand its end of 2017, the Company hired a total of 3,700 employees the Company hired a total In Korea, business and hire talented individuals accordingly. overseas and 48.2% workers as of December 2017, and 51.8% of them are administrative of 2,112 employees are manufacturing and technical workers. spun-off its logistics business and created ‘Hyundai Movex’ In August 2017, Hyundai Elevator As a result, the of this business. competency and core genuine characteristics to highlight the head count, which had been continuously rising, remained the same Company’s total employee 4.9% rose by of manufacturing and technical workers the ratio job category, as it was in 2016. By vator’s key performance outcomes in such non-financial sectors as human, social and environ as non-financial sectors in such performance outcomes key vator’s 1st, 2017 to December 31st, 2017, and the spans from January period mental capital. The reporting follo HUMAN CAPITAL Composition Employee (No. of employees) employees Total gender By job category By type employment By Diversity age group By This non-financial management discussion & analysis was prepared to illustrate Hyundai Ele Hyundai was prepared to illustrate & analysis discussion This non-financial management 1.

Non-Financial Management Management Non-Financial & Analysis Discussion Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 - 4 41 64 178 1~2 100 2015 1,778 7,367 partner Registered as business 5 74 85 1~2 307 100 2016 1,589 5,824 Yes No 2 91 69 1~2 381 100 2017 6,747 1,556 Decision made on qualifications

PQ Non-Financial Management Discussion & Analysis Discussion Management Non-Financial performed performed Assessments 87 Yes No f cases) f cases) f business partners) Q Assessments are conducted on eligible candidates. The assessments on eligible candidates. The assessments Q Assessments are conducted Assessments No. of business partners who received business partners No. of financial support 100 million) Financial support (KRW (%) payments Cash/cash equivalent made – 1~2 times payments No. of technology development Support for (No. o technology protection Support for (No. o support persons) (No. of Training sent to business partners Engineers (No. o on whether to Decision made perform the PQ the PQ perform candidates the pool of the pool of Included in business partner received application Registration Registration P and other factors. safety and non-financial assessments on the environment, Mutual Growth Outcomes Outcomes Mutual Growth Financial support Technology support/protection Training/HR/ recruitment support SOCIAL CAPITAL SOCIAL CAPITAL Partners Business of Selection and objective procedures. transparent through partners selects new business Hyundai Elevator the cor to apply through can register the Company with do business to wishing company Any are granted final approval the companies evaluations, and non-financial consist of financial and business partner. registered as the Company’s PQ Assessments are step and the screening are disqualified in the 1st Those applicants who on their If applicants improve pool of business partner candidates. included in the Company’s can be at their request, and they items, reassessments are performed evaluation disqualified outcomes. to the evaluation partner according registered as a business * includefinancial/technicalassessments partners Q Assessment:Prequalificationassessmentsconductedonbusiness Selection Process Business Partner Mutual Growth porate website. This is followed by a decision regarding whether PQ Assessments* should be should Assessments* PQ whether regarding decision a by followed is This website. porate P performed, and finally, 2. - - - 1 1 7 9 5 8 804 68.6 2015 2015 2015 1 5 6 0 10 10 65.1 2016 2016 2016 1,127 7 2 5 0 0 5 64.4 2017 2017 2017 1,190 Annual ReportAnnual

Total Female Male leave and childcare leave and to apply for reduced working hours. We also and to apply for reduced working hours. leave childcare and leave wer interest rates on loans, and introducing the Refresh Leave program. program. the Refresh Leave on loans, and introducing wer interest rates

(%) unionized workers Ratio of its labor-management in labor relations, advances mutual growth pursues Hyundai Elevator and trust, and facilitates labor-management communication. The culture based on integrity labor regulations, and with Korea’s Company protects the freedom of association in accordance is of unionized workers wish. The ratio are free to join the labor union as they its employees as measured against the total number of of unionized workers calculated as the current ratio eligible for labor union membership. employees its labor union the Company and that the Labor Collective Agreement stipulates Article 14 of as changes in the position or to notify each other on such important matters a system operate 2018, the work site of labor union executives as well as their appointment and relocation. Since im by employees welfare and motivating Company has been committed to increasing employee in benefiting assisting employees family events, for employee the criteria used in paying proving from lo Labor Relations tirement since 2018. tirement since 2018. (No. of employees) leave who took maternity Employees employees No. of who took childcare leave leave reinstated after taking childcare Employees of who resigned within 12 months Employees reinstatement due to preg do not suffer career discontinuation ensures that its employees Hyundai Elevator to its employees childbirth or childcare. As such, the Company proactively encourages nancy, take pre/post-natal employees at the Head Office and Seoul office. In 2017, five protection rooms maternity operate took childcare who including some of the employees employees, and seven took childcare leave, year, were reinstated to continue their career path. the previous leave in 2015, six in 2016 and amounted to nine leave maternity who took The number of employees to do so. There were is free leave to take maternity who wishes two in 2017, and any employee their childcare 12 months of reinstatement following who resigned within only two employees well the Company is managing the how which demonstrates the past three years, over leave employees. of its reinstated career development Retirement Pension Retirement million) 100 (KRW Retirement pension with system in accordance pension a define benefit (DB) retirement operates Hyundai Elevator the wage peak program introduced Act. The Company Benefit Security Retirement the Employee their in designing to support employees program a training operating in 2017, and has been age in preparing for their re nearing their retirement assist employees retirement life to fully and Reinstatement Childcare Leave Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 - - - - 4.0 116 318 -7.8 0.72 0.72 2015 2015 7,527 2,587 10,431 eq and 2 4.1 116 400 0.64 0.64 -11.7 2016 2016 7,943 7,943 2,833 11,176 eq and the intensity was eq and the intensity 2 29 1.9 508 -8.8 0.58 2017 2017 2,773 8,279 11,560 y 3% from last year to reach 11,213tonCO Non-Financial Management Discussion & Analysis Discussion Management Non-Financial y. 89 y was upgraded from a grade 1 to a grade 2 establishment based 1 to a grade from a grade y was upgraded eq/KRW 100 million) eq/KRW 2 pollutants such as dust, and maintain its control equipment annually and replace pollutants such as dust, and maintain its eq) 2 Scope 1 Scope 2 Scope 3 Scope 0.58, which was down by 8.8% from the previous year. The Company regularly manages its energy energy its manages regularly Company The year. previous the from 8.8% by down was which 0.58, and dissemi improvements, necessary inefficiencies, makes operational consumption, identifies GHG emissions. In 2018, to reduce its along the entire supply chain in order nates such endeavors b the Company aims to reduce its GHG emissions Change in intensity (%) Change in intensity air pollutant emissions. Hyundai Elevator will continue to endeavor to reduce its air pollutant will continue to endeavor air pollutant emissions. Hyundai Elevator emissions. (ton) air pollutants of Generation air pollutants Emission of ENVIRONMENTAL CAPITAL CAPITAL ENVIRONMENTAL is systemat and system management environmental an integrated is building Hyundai Elevator GHG Emissions the in Icheon, Office of its Head the data from originate GHG emissions Hyundai Elevator’s from its subsidiaries exclude emissions Center and the Seoul Office, and Cheonan Distribution dividing the total GHG calculated by of the GHG emissions is intensity and supply chain. The 100 million). (KRW sales emissions by total GHG emissions amounted to 11,560tonCO In 2017, the Company’s GHG Emissions (tonCO emissions Total (tonCO Intensity Management Air Pollutant to minimize pollut air pollutants are processed through control equipment At Hyundai Elevator, 2 underwent a process of Factory wet painting facility its consumables regularly. In July 2017, the accord and control equipment ceased operations and its air polluting equipment rationalization ically managing the operation of its environmental facilities, the emission of air pollutants and of air pollutants facilities, the emission of its environmental the operation ically managing and electricit the consumption of water its emission are released into the air. The Company strives to reduce ant substances before they of major air reduce its dust emissions from 116 tons in 2016 the Company to dramatically ingly. This allowed to 29 tons in 2017, and the factor will continue to strive to cut its GHG emissions. will continue to strive to cut its GHG emissions. 3. - - - - 267 207 1.43 2015 2015

274 229 1.30 2016 2016 y technology 249 285 1.25 2017 2017 ZER RGS and strengthen sales competitiveness ZER RGS and strengthen sales competitiveness maintenance securit Outcomes and Expected Benefits Outcomes HRTS in alignment with escalator Operate models MRL brake Independently develop Respond to the specifications that adopt new Y of through the adoption Differentiate products LED glass transparent type circulation multi layer for Increase orders auto parking systems on-site monitoring panels and optimize Standardize terminal functionalities time and strengthen the LP-OPB Reduce counseling phone service for lay the basis and service efficiency Improve Annual ReportAnnual

88 Development Period Jan. 2016~Feb. 2017 2015~Mar. 2017 May Sep. 2016~Apr. 2017 Dec. 2015~Jul. 2017 Jan. 2017~Jul. 2017 Jan. 2017~Sep. 2017 Jan. 2017~ Sep. 2017 Jan. 2017~Dec. 2017

velopment and training. Such endeavors were widely recognized when the were widely recognized endeavors Such and training. velopment

y materials and components from them to improve the competitive edge across the the competitive edge across improve y materials and components from them to vement system vement system vious year to KRW 24.9 billion. While such expenditures are continuously on the rise, their 24.9 billion. While such expenditures are continuously on the vious year to KRW velop an HCCC efficiency velop an HCCC

replace HHT specifications De impro a smartphone app to Develop Hyundai Elevator has been signing fair trade agreements with its business partners since 2013 to since 2013 with its business partners agreements has been signing fair trade Hyundai Elevator condi business their improve support to receive partners business These growth. support their 100 million) R&D expenditure (KRW Ratio against sales (%) Major R&D Projects in 2017 R&D Project HRTS of the diversity Improve MRL brakes Develop RGS new YZER Develop LED glass transparent Develop type circulation multi layer Develop HRTS non-standard for standards Develop monitoring panel computer lent payments while constantly improving payment conditions and supporting business partners partners supporting business conditions and payment improving while constantly lent payments de through technology Index published Win-Win Growth in the years for three consecutive Excellent rated Company was Woojin Electric with the Prime jointly honored with its business partner in June 2017, and were in November. performance sharing sector the excellent Minister’s Citation in while the Company procures technology and training as financing, sectors tions in such diverse high-qualit agreements with a total of 285 business partners In 2017, the Company signed fair trade industry. years. and aims to increase this number in the upcoming R&D Investment ele ultra-high-efficiency technology that delivers is committed to developing Hyundai Elevator respond to the 4th Indus through its R&D Center. To and remote maintenance technology vators that merges system a preemptive maintenance the Company is also developing trial Revolution, Company’s R&D expenditures rose nearly 9% from the IoT with artificial intelligence. In 2017, the pre 0.05% to 1.25% due to increasing sales. by against sales inched down ratio Hyundai Elevator provides financial support to its business partners and makes cash-equiva and makes to its business partners financial support provides Hyundai Elevator Agreement Trade Fair with whom fair trade business partners No. of agreements were signed (No. of companies) Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 ------0 19 40 107 255 553 381 381 10.1 2015 2015 2015 32.17 s environ 17 34 80 104 235 502 -6.6 356 356 2016 2016 2016 35.13 17 10 20 38 3.5 3.5 357 332 369 2017 2017 2017 27.43 27.43 Non-Financial Management Discussion & Analysis Discussion Management Non-Financial 91 ated a total of 369 tons of waste, and this is declining year ated a total of 369 tons of waste, and this y repair expenses, and sewage treatment expenses. In 2017, y repair expenses, and sewage treatment will promote the efficiency of its environmental management by replacing of its environmental management will promote the efficiency Landfill Incineration Recycling Environmental operation expenses Environmental operation Environmental investment Total waste Total designated waste Total (%) generation Change in waste dy in the years ahead. ahead. dy in the years in order to minimize any damage to the surrounding environment. In addition, the addition, In environment. surrounding the to damage any minimize to order in mental training on waste sorting and storage inspection to employees handling and discharging handling and discharging inspection to employees storage on waste sorting and mental training waste. In 2017, the Company gener year the previous nearly 29% from 357 million, and dropped by such expenses amounted to KRW and control facilities. Environmental invest of pollution discharging through the downsizing in 2016. In system of a GHG inventory the development continued to fall following ments have 2018, the Company environmental invest and making necessary installed at cutting equipment old dust collectors ments. million) (KRW Environmental investment Chemicals Management Chemicals Com year. The substances every of chemical its discharge to reduce endeavors Hyundai Elevator mini The Company plans to programs. and prevention implements review Company constantly (ton) chemicals of consumption Total Management Waste and treatment - is law to its transport from its generation waste - ranging At Hyundai Elevator, year. by (ton) Waste Environmental Investment maintain and oper makes environmental investments to efficiently Each year, Hyundai Elevator pany uses its chemical inventory to perform impact assessments based on its discharge of discharge based on its perform impact assessments to its chemical inventory pany uses chemicals substances that are not harmful and replace harmful chemicals with mize its use of chemicals to the human bo process management. The Company also evaluates with its waste fully treated in accordance that waste is processed properly, and offer its waste processing companies to ensure expenses include waste treatment operation ate its environmental facilities. The environmental expenses, pollution control facilit - - 7.7 3.4 159 -8.3 -8.3 2.51 28.6 36.3 2015 2015 11.01 -20.6 2,510 2,510 253,921 881,699 881,699 11,640,790 52,880kwh 371,640kwh Annual Reduction in 8.7 3.4 27.7 2.07 36.4 -17.4 2016 3,065 3,065 Electricity Consumption Consumption Electricity 169 -12.7 -12.7 9.61 2016 977,743 977,743 281,094 Rate 12,144,219 -75.0% -75.0% -68.0% Reduction 3.4 9.8 -6.9 1.93 28.6 38.4 38.4 2017 2,981 2,981 64w 20% 2016 250w 173 -9.7 -9.7 8.68 8.68 2017 214,114 1,022,137 1,022,137 12,611,820 12,611,820 5% 16w 80w 2017 Annual ReportAnnual

90 /KRW 100 million) /KRW 3 Underground water (1,000 ton) Underground water (1,000 ton) Industrial water Total consumption (1,000 ton) consumption Total (1,000 ton) water recycled Total (1,000m Intensity Change in intensity (%) Change in intensity (ton) generated Wastewater ycled water. ycled ) 3 (consumption X 1,000/KRW 100 million) 100 X 1,000/KRW (consumption ve the Puge Loss ratio ve the Puge Loss ratio Electricity (kwh) Electricity Gas (Nm Fuel (ℓ)

y dividing total energy consumption by sales (KRW 100 million). In 2017, the Company’s energy energy Company’s the 2017, In million). 100 (KRW sales by consumption energy total dividing y

Water Resources Resources Water Wastewater Replace old absorption-type air dryers and air dryers Replace old absorption-type impro lights LED Replace crane Replace sensor lights in the hallway Resource Management Water from its year to decrease the wastewater generated cleans its sumps every Hyundai Elevator managing op of wastewater while periodically quality the manufacturing process and improve sumption of its subsidiaries or any others along the supply chain. Energy intensity is calculated along the supply chain. Energy intensity others or any sumption of its subsidiaries b (TJ) consumption Total (%) Change in intensity Initiatives Energy Conservation initiatives to replace old equipment to is undertaking energy conservation Hyundai Elevator the have allowed These endeavors energy efficiency. reduce its energy consumption and improve more than 400,000 kwh in energy consumption per year. Company to save wastewater. In 2017, its total of high-concentration facilities to reduce the discharge erational industrial water consumption amounted to 38,400 tons, including the use of underground water, water and rec Energy Consumption Energy Consumption Office in data of its Head based on the its energy consumption calculates Hyundai Elevator management environmental by the integrated data is collected its Seoul Office. The Icheon and con energy the include not does and providers, energy by issued bills energy through system drop This is a significant year to 173 TJ. a mere 2.4% from the previous by consumption increased the Company’s commitment to (13.4%), and demonstrates sales growth when compared to its efficiency. its energy improving Energy Consumption Intensity Intensity Hyundai Elevator 2017-2018 Elevator Hyundai Hyundai Elevator 2017-2018 -

y. differ

if necessar centage of

acts whose acy and cut-off acy zed actual and estimated cost to zed actual and estimated ver when a new contract is engaged. ver when a new contract viewed internal control of the Group in relation to viewed internal control act cost accumulation and allocation. Independent Auditor’s Report Auditor’s Independent centages of completion have significantly changed. centages of completion have completion for construction contr per We tested the occurrence, accur assertions for sampled input costs. We inquired about internal controls related to We inquired about internal controls related contr We independently recalculated the per reviewing and approval process of a contract by an by process of a contract and approval reviewing We re appropriate appro inquired about the reason of the significant difference. inquired about the reason We compared and analy projects with significant identify if there are completed projects with the significant differences. For the identified reasons of significant differences, we determined evidences ences and obtained relevant Other Matter vary and their application in practice Auditing standards in the used and practices procedures The countries. among to audit such financial statements may Republic of Korea and applied in other accepted differ from those generally countries. 16, 2018 March Seoul, Korea Samil PwC Kim, CEO Young-Sik C. Measurement of Percentage of Completion Percentage of C. Measurement of statements, As explained in the Note 23 to the financial in es- for the year ended December 31, 2017, the changes cost amounts to ₩ 14,681 million, timated total contract 31, 2017 and aggregated cost incurred as at December - amounts to ₩ 1,189,335 million. We identified measure of completion as a significant risk in ment of percentage and uncertainty cost in contract of volatility consideration costs. in estimated total contract Group’s esti- As at December 31, 2017, in respect of the incurred costs aggregated and costs contract total mated of on the measurement of percentage impacts that have audit pro- performed the following completion, we have cedures. - - - - - 93 93

vidence of the contract vidence of the contract act project with a significant view procedures on changes in act project with a significant osts) atio of similar contract projects, and atio of similar contract tainty of Total Estimated Contract Costs Costs Estimated Contract Total tainty of vant evidences. vant Uncer (total estimated c 57,930 million. The impacts of changes in estimated ₩ 57,930 million. The impacts of changes in estimated This report is effective as of March 16, 2018, the audit report date. Certain subsequent events or circumstances, which may occur between the which may events or circumstances, 16, 2018, the audit report date. Certain subsequent This report is effective as of March a material impact on the accompanying consolidated financial statements audit report date and the time of reading this report, could have audit report may that the above is a possibility that there of the audit report should understand the readers and notes thereto. Accordingly, if any. events or circumstances, to reflect the impact of such subsequent to be revised have We performed analytical re cost for each reporting period. estimated total contract We tested with the associated e We inquired about the contr for the construction loss, and tested with provision rele We identified the contr actual cost r project with a significant change in the total contract cost, and inquired about the reason of the significant change. ratio comparing to the difference on estimated cost As explained in the Note 23 to the financial statement, As explained in the Note 23 to the financial esti- future on based estimated are costs contract total period mates of material costs, labor costs, construction in these estimates would have A 5% increase and others. amounting tax income before profit on effect negative a to costs on the profit or loss for the current total contract uncertainty we identified therefore, considered; year are costs as a significant risk. of estimated total contract 31, 2017, in respect of the Group’s uncer- As at December per- costs, we have of estimated total contract tainty audit procedures. formed the following As explained in the Note 2 to the financial statements, As explained in the Note costs and contract revenue contract the Group recognizes and as revenue contract associated with the construction of comple- on the percentage expense respectively based at the end of the reporting activity tion of the contract can of a construction contract when the outcome period of completion of the The percentage be estimated reliably. to is the proportion that costs incurred activity contract that does not reflect the cost any contract date, excluding costs of the work performed, bear to the estimated total The Group presents the gross amount due from contract. in work as an asset for all contracts customer for contract profits progress for which costs incurred plus recognized pres- and billings, progress exceed losses) recognized (less work for contract ents the gross amount due to customers in progress for which prog- for all contracts as a liability costs incurred plus recognized profits ress billings exceed (less recognized losses). B. - - - - Annual ReportAnnual A. General Information A. General Common information applied to the area of focus on con- as are report audit in this described contract struction follows: Emphasis of Matter Emphasis of attention to the Without qualifying our opinion, we draw area of focus. following on Focus Auditor’s Emphasis on Area of Contracts Construction with in accordance Area of focus on construction contracts 2016-1 are Guidance of Auditing Standard the Practical judgment professional auditor’s the in that, matters those governance, with those changed with and communication were of most significance in the audit of the consolidated financial statements of the current year. These matters were addressed in the context of the audit of the consoli- our a whole, and in forming statements as dated financial opinion separate a provide not do we and thereon, opinion on these matters. the for process audit the of output the addressed have We in forming an audit opinion on the area of focus as below ELEVATOR HYUNDAI of statements financial consolidated as a whole. and its subsidiaries LTD. CO., in the circumstances, but not for the purpose of express- but not for the in the circumstances, internal effectiveness of the entity’s ing an opinion on the appropriate- the evaluating includes also An audit control. used and the reasonableness ness of accounting policies by manage- estimates made of significant accounting of the presentation the overall ment, as well as evaluating statements. consolidated financial obtained is we have the audit evidence that We believe a basis for our audit sufficient and appropriate to provide opinion. Opinion financial consolidated the accompanying In our opinion, respects, the statements present fairly, in all material CO., ELEVATOR of HYUNDAI position financial consolidated as at December 31, 2017 and 2016, and its subsidiaries LTD. consol- its and performance financial consolidated its and accordance in ended then years the for flows cash idated IFRS. with Korean 92

Auditor’s Responsibilities opinion on the con- is to express an Our responsibility our audits. We solidated financial statements based on Standards with Korean conducted our audits in accordance with comply we that require standards Those Auditing. on ethical requirements, and plan and perform the audit to the consol- about whether obtain reasonable assurance mis- from material free financial statements are idated statement. obtain audit procedures to performing involves An audit in the con- about the amounts and disclosures evidence solidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consol- or error. idated financial statements, whether due to fraud In making those risk assessments, the auditor considers and preparation to the entity’s internal control relevant fair presentation of the consolidated financial statements are appropriate to design audit procedures that in order Management is responsible for the preparation and fair preparation the for responsible is Management statements in presentation of the consolidated financial with International Financial Reporting Stan- accordance IFRS), (Korean of Korea the Republic as adopted by dards determines and for such internal control as management of financial state- to enable the preparation is necessary whether ments that are free from material misstatement, or error. due to fraud Management’s Responsibilities for the the Management’s Responsibilities for Financial Statements To the Board of Directors and Shareholders of and Shareholders Directors of the Board To LTD. CO., ELEVATOR HYUNDAI state- audited the accompanying consolidated We have and its subsidiar- LTD. CO., ELEVATOR ments of HYUNDAI to as the “Group”), which com- ies (collectively referred statements of financial position prise the consolidated and 2016, and the consolidated as at December 31, 2017 income, consolidated state- statements of comprehensive statements and consolidated ments of changes in equity the to notes and ended, then the years for flows cash of a summary consolidated financial statements, including explanatory of significant accounting policies and other information. Independent Auditor’s Report Auditor’s Independent Hyundai Elevator 2017-2018 Elevator Hyundai Annual Report Global Network

Gangwon Branch Office Seoul Office

Icheon Head Office and Incheon Factories Branch Office Gyeonggi Branch Office Cheonan Distribution Center

GLOBAL Daejeon Branch Office Daegu Branch Office Ulsan Branch Office Jeonju Branch Office Gyeongnam Busan Branch Branch Office Office NETWORK Gwangju Branch Office

MAJOR BUSINESS UNITS Jeju Branch Office Hyundai Elevator operates the Head Office in Icheon, Gyeonggi Province, along with the Seoul Office and 12 other branch offices throughout Korea. Russia We also have six overseas corporations as well as several overseas agencies spanning 46 countries. Poland Mongolia Kazakhstan Azerbaijan

Armenia Korea

Kyrgyzstan Hyundai Elevator 2017-2018 Turkey Lebanon Iran Tunisia Jordan Iraq Nepal Algeria Israel China Kuwait Pakistan Bangladesh Bahrain Egypt Myanmar Saudi UAE Cuba Qatar Oman India Thailand Philippines Mexico Arabia Cambodia Vietnam Domestic Worksite Dominican Republic Sudan Guatemala Panama Nigeria Costa Rica Ethiopia Head Office/Factory Venezuela Sri Lanka Malaysia Icheon Factory 1, 2, 3, R&D Center, Colombia Kenya Hyundai Customer Care Center (HCCC) Hyundai Elevator 2017-2018 Hyundai Elevator Domestic Office Ecuador Seoul Office, Gyeonggi Branch Office, Indonesia Busan Branch Office, Incheon Branch Office, Peru Daejeon Branch Office, Daegu Branch Office, Ulsan Branch Office, Gangwon Branch Office, Jeonju Branch Office, Gwangju Branch Office, Brazil Gyeongnam Branch Office, Jeju Branch Office Chile Distribution Center Cheonan Distribution Center Argentina Worksite Data

Head Office in Icheon Seoul Office Chinese Factory (Gyeonggi Province) (Yeonji-dong, Jongno-gu, Seoul) (Shanghai, China) Overseas Worksite - (Factory 1/2/3) Cutting-edge facilities - Sales: Elevator business - Size: 28,716m2 situated on a 44,040m2 land - Service: Service business - Manufacturing of elevators and Overseas Corporation - Manufacturing, quality and safety, - Planning & management: escalators China, Malaysia, Vietnam, Indonesia, Turkey, Brazil R&D Business Support Unit, Finance - Elevator test tower Overseas Agency & Procurement Unit, Future (72m in height) Hyundai Asan Tower Innovation Unit, China Regional - New factory under construction 9 in Asia, 12 in the Middle East, 12 in Americas, 7 in World’s top-tier elevator test tower Management Unit (to be completed by the end of Africa and 6 in Europe & CIS 2019) Hyundai Customer Care Center (CCC) Real-time remote management service (HRTS) and customer 94 counseling 95 Hyundai Elevator 2017-2018 UN GlobalCompact /SDGsIndex targets concerningtheGoalsthatarerelatedtoourbusiness. have reviewed ourprogressmadeineachofthe17Goals,andwillcontinuewithsuchendeavors by settingourown To jointheinternationalcommunity inreachingtheSustainableDevelopment Goals(SDGs),weatHyundai Elevator SUSTAINABLE DEVELOPMENTGOALS UN GlobalCompact’s 10Principles rights, labor,theenvironmentandanti-corruptionsince2015. We atHyundaiElevator have endorsed thetenprinciplesofUNGlobalCompactinfourareashuman UN GLOBAL COMPACT INDEX 13 7 1 Affordable and Climate Action Clean Energy No Poverty 14 8 2 Economic Growth Decent Work and Life below Water Zero Hunger

Anti-Corruption Environment Labor Human Rights Area 15 Industry, Innovation 9 3 and Infrastructure Good Healthand Life onLand Well-being 10. 9. 8. 7. 6. 5. theeffectiveabolition of childlabor;and 4. theeliminationof allforms of forced andcompulsory labor; 3. 2. ensurethe 1. Principle internationally proclaimedhumanrights;and Businesses shouldsuppor environmental challenges; Businesses shouldsuppor Businesses shouldupholdthefreedomo effective recognition of therightto collective bargaining; environmentally-friendly technologies. enc and occupation. the eliminationo responsibility; and under including extortion andbribery.including extortion Businesses shouldworkagainstc ourage thedevelopment anddiffusion of take initiatives topromotegreaterenvironmental 96 y arenotcomplicit intheabuseof humanrights. 16 10 4 Strong Institutions Peace, Justiceand Quality Education Inequalities Reduced f discrimination inrespecttoemployment Annual Report t andrespecttheprotectionof t aprecautionary approachto 17 11 orruption inallitsforms, Partnerships for the 5 Sustainable Cities and Communities Gender Equality f associationandthe Goals

agt e Monitored Targets set

12 6 Consumption and Clean Water and Responsible Production Sanitation 58-59 67 89-91 67 65, 85 65 65 86 65 65 Page ink andisnotvolatile andthus helpsreduceairpollution. forests developed andmanagedinaneco-friendlymanner.Soy inkalso ismoreeco-friendlycomparedtopetroleum-based This Report was PreparedbyThis Report inner pagesofthisreport.TheFSC This reportwasprintedwithsoy oilinkoneco-friendlypaper.FSC-certified paperwasusedinprintingboththe cover and Management PlanningTeam/KimIckHwan Purchasing Strategy Team/NohJongHyun Compliance &LegalAffairs Team/MoonSeokJun Finance Team/LeeEuiTae Finance &ProcurementUnit Talent Development team/KimDooHee Change InitiativeTeam/HyunJinA HR Strategy Team/KimDae Won Unit Business Support R&D ManagementTeam/KimSeungHwan R&D Unit Quality ManagementInnovation Team/ChoiHyungJin Environment Health&Safety Team/KimJinKyu Quality &Safety Unit Official Affairs EnvironmentTeam / KwonEuiJun Production PlanningTeam/Yang CheolMin Manufacturing Unit MOD Team/JungHyunWoo Service Excellence Team/KangJeongBin Strategy &Marketing Team/KimJinYong Service Division China BusinessManagementTeam/AnDongGyu China RegionalManagementUnit Design Center/LeeJinSung Korea SalesStrategy Team/KangSeungHo Team/YuSoJeong Global BusinessSupport Elevator SalesDivision TM (Forest Stewardship Council TM ) labelisonlygranted toproducts madefromtimbergrown in Hoy-Yong Uhm(DariStudio) Photograph Geumgang Printec Printing creative IM Planning/Design +82-2-3670-0681/ [email protected] Contact Lee SungBok Kwon KeeSeob,ChoChanHo, Public RelationsTeam: Directed by Bob Jang Publisher www.hyundaielevator.co.kr/eng City, Gyeonggi Province, Korea 2091, Gyeongchung-daero, Bubal-eup,Icheon Hyundai Elevator Published by Ethics ManagementTeam Business ManagementTeam Digital PlanningTeam/KimGye Soo Future Innovation Unit /Park JaeYoung /HanHeeSung