HANJIN SHIPPING HOLDINGS CO., LTD.

Non-Consolidated Financial Statements

December 31, 2009 and 2008

(With Independent Auditors’ Report Thereon)

Contents

Page

Independent Auditors’ Report 1

Non-consolidated Statements of Financial Position 3

Non-consolidated Statements of Operations 5

Non-consolidated Statements of Appropriation of Retained Earnings 6

Non-consolidated Statements of Changes in Equity 7

Non-consolidated Statements of Cash Flows 8

Notes to Non-consolidated Financial Statements 10

10th Floor, GFC Tel. 02.2112.0100 737 Yeoksam-dong Fax.02.2112.0101 Gangnam-gu, Seoul 135-984 www.kr.kpmg.com Republic of Korea

Independent Auditors’ Report

Based on a report originally issued in Korean

The Board of Directors and Stockholders Hanjin Shipping Holdings Co., Ltd.:

We have audited the accompanying non-consolidated statements of financial position of Hanjin Shipping Holdings Co., Ltd. (the “Company”) as of December 31, 2009 and 2008 and the related non- consolidated statements of operations, appropriation of retained earnings, changes in equity and cash flows for the years then ended. These non-consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these non-consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008 and the results of its operations, the appropriation of its retained earnings, the changes in its equity and its cash flows for the years then ended in conformity with accounting principles generally accepted in the Republic of Korea.

Without qualifying our opinion, we draw attention to the following:

As discussed in note 2(a) to the non-consolidated financial statements, accounting principles and auditing standards and their application in practice vary among countries. The accompanying non- consolidated financial statements are not intended to present the financial position, results of operations, changes in equity and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such non-consolidated financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying non-consolidated financial statements are for use by those knowledgeable about Korean accounting principles and auditing standards and their application in practice.

As discussed in note 1 and 22 to the non-consolidated financial statements, as of December 1, 2009, the Company divided the shipping business segments of the existing company by spin-off into a new business entity called Hanjin Shipping Co., Ltd. and has changed the name of the Company to Hanjin Shipping Holdings Co., Ltd..

Seoul, Korea February 24, 2010

This report is effective as of February 24, 2010, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying non-consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any. HANJIN SHIPPING HOLDINGS CO., LTD. Non-Consolidated Statements of Financial Position

As of December 31, 2009 and 2008

(In thousands of Won, except share data) Note 2009 2008

Assets Cash and cash equivalents ₩ 37,047,250 592,257,464 Short-term financial instruments 3 2,021,803 198,715,205 Current held-to-maturity securities - 419,895 Accounts and notes receivable - trade, less allowance for doubtful accounts of nil in 2009 and ₩ 50,105,323 in 2008 20 883,628 537,971,760 Accounts receivable - other, less allowance for doubtful accounts of nil in 2009 and ₩ 32,104 in 2008 11,345 23,187,285 Accrued income 20 97,599 15,474,974 Advance payments - 35,566,349 Prepaid expenses 19,045 62,074,201 Current derivative instrument assets - 48,032,376 Inventories - 196,996,733 Other current assets 4 7,437,966 11,247,587 Total current assets 47,518,636 1,721,943,829

Non-current investments 5 248,745,408 548,418,509 Property, ships and equipment, net 6,8 81,175,545 5,921,122,155 Goodwill - 7,046,807 Non-current deferred tax assets 16 - 37,783,055 Other non-current assets 7 144,900 23,670,330 Total non-current assets 330,065,853 6,538,040,856

Total assets ₩ 377,584,489 8,259,984,685

See accompanying notes to non-consolidated financial statements.

3 HANJIN SHIPPING HOLDINGS CO., LTD. Non-Consolidated Statements of Financial Position, Continued

For the years ended December 31, 2009 and 2008

(In thousands of Won, except share data) Note 2009 2008

Liabilities Accounts payable - trade 20 ₩ 572,333 764,328,612 Current portion of long-term debt, net - 534,957,979 Current derivative instrument liabilities - 9,254,070 Other current liabilities 9 10,253,812 122,860,239 Total current liabilities 10,826,145 1,431,400,900

Bonds, net 10 49,858,457 1,195,398,729 Long-term borrowings, net - 295,772,615 Long-term obligations under installment purchases, net - 1,455,124,318 Long-term capital lease obligations - 142,387,257 Provision for retirement and severance benefits 11 1,095,579 30,061,136 Non-current derivative instrument liabilities - 482,256,188 Non-current deferred tax liabilities 16 25,418,873 - Total non-current liabilities 76,372,909 3,601,000,243 Total liabilities 87,199,054 5,032,401,143

Stockholders’ equity Common stock of ₩ 5,000 par value Authorized – 250,000,000 shares Issued and outstanding – 14,283,516 shares in 2009 and 88,368,297 shares in 2008 12 71,417,580 441,841,485 Capital surplus 75,966,109 682,939,941 Capital adjustments 13 (554,306,020) (496,274,750) Accumulated other comprehensive income 17,568,230 525,419,616 Retained earnings 14 679,739,536 2,073,657,250 Total stockholders’ equity 290,385,435 3,227,583,542

Total liabilities and stockholders’ equity ₩ 377,584,489 8,259,984,685

See accompanying notes to non-consolidated financial statements.

4 HANJIN SHIPPING HOLDINGS CO., LTD. Non-Consolidated Statements of Operations

For the years ended December 31, 2009 and 2008

(In thousands of Won, except earnings per share ) Note 2009 2008

Continuing operations Operating revenue 27 Operating income 20 ₩ 8,122,155 6,656,424 Equity in income of equity method accounted investees 5 4,718,123 3,722,397 12,840,278 10,378,821 Operating expense Operating expense 15,20 2,360,746 2,024,529 Equity in loss of equity method accounted investees 5 10,569,947 - 12,930,693 2,024,529

Operating income (loss) (90,415) 8,354,292

Interest income 20 159,095 191,271 Interest expense (290,763) - Miscellaneous income 70 - Other income (expense) (131,598) 191,271

Income (Loss) before income taxes (222,013) 8,545,563

Income taxes (benefit) 16 (7,850,997) 2,016,756 Income from continuing operations 7,628,984 6,528,807

Discontinued operations Income (loss) from discontinued operation (net of income tax benefit of ₩ 2,669,945 in 2009 and ₩ 34,528,584 in 2008) 20,23 (1,320,790,412) 313,848,018

Net income (loss) ₩ (1,313,161,428) 320,376,825

Earnings (loss) per share 17 Basic earnings per share from continuing operations in Won ₩ 111 88 Basic earnings (loss) per share from discontinued operations in Won ₩ (19,279) 4,229 Diluted earnings per share from continuing operations in Won ₩ 111 83 Diluted earnings (loss) per share from discontinued operations in Won ₩ (19,279) 4,010

See accompanying notes to non-consolidated financial statements.

5 HANJIN SHIPPING HOLDINGS CO., LTD. Non-Consolidated Statements of Appropriation of Retained Earnings

For the years ended December 31, 2009 and 2008

Date of Appropriation for 2009: March 19, 2010 Date of Appropriation for 2008: March 20, 2009

(In thousands of Won) Note 2009 2008

Unappropriated retained earnings Balance at beginning of year ₩ 1,856,443,261 1,576,406,209 Net income (loss) (1,313,161,428) 320,376,825 Balance at end of year before appropriation 543,281,833 1,896,783,034

Appropriation of retained earnings Legal reserve 14 - 3,667,252 Cash dividends 18 - 36,672,521 Loss on capital reduction 13 445,497,393 - 445,497,393 40,339,773

Unappropriated retained earnings to be carried over to subsequent year ₩ 97,784,440 1,856,443,261

See accompanying notes to non-consolidated financial statements.

6 HANJIN SHIPPING HOLDINGS CO., LTD. Non-Consolidated Statements of Changes in Equity

For the years ended December 31, 2009 and 2008

Accumulated Capital other To t a l Common Capital Capital comprehensive Retained stockholders’ (In thousands of Won) stock surplus adjustments income earnings equity

Balance at January 1, 2008 ₩ 398,064,730 462,099,584 (75,045,850) 28,331,761 1,810,372,897 2,623,823,122 Dividends - - - - (57,092,472) (57,092,472) Merger 38,680,755 265,175,557 (323,596,650) (2,348,264) - (22,088,602) Stock warrants exercise and cancellation 5,096,000 (44,335,200) - - - (39,239,200) Net income - - - - 320,376,825 320,376,825 Acquisition of treasury stock - - (97,632,250) - - (97,632,250) Change in fair value of available-for-sale securities, net of tax - - - (97,701,411) - (97,701,411) Gain on valuation of equity method investments, net of tax - - - 1,495,437 - 1,495,437 Loss on valuation of equity method investment, net of tax - - - (15,603,227) - (15,603,227) Loss on valuation of derivative instruments, net - - - (317,715,374) - (317,715,374) Gain on presentation currency translations, net - - - 928,960,694 - 928,960,694 Balance at December 31, 2008 ₩ 441,841,485 682,939,941 (496,274,750) 525,419,616 2,073,657,250 3,227,583,542

Balance at January 1, 2009 ₩ 441,841,485 682,939,941 (496,274,750) 525,419,616 2,073,657,250 3,227,583,542 Dividends - - - - (36,672,521) (36,672,521) Spin-off (370,423,905) (541,763,440) (207,051,226) (554,241,665) (44,083,765) (1,717,564,001) Net loss - - - - (1,313,161,428) (1,313,161,428) Acquisition or disposal of treasury stock - (65,210,392) 149,019,956 - - 83,809,564 Change in fair value of available-for-sale securities, net of tax - - - (14,831,081) - (14,831,081) Gain on valuation of equity method investments, net of tax - - - 6,726,661 - 6,726,661 Loss on valuation of equity method investments, net of tax - - - 7,860,763 - 7,860,763 Loss on valuation of derivative instruments, net - - - 193,353,118 - 193,353,118 Gain on presentation currency translations, net - - - (146,719,182) - (146,719,182) Balance at December 31, 2009 ₩ 71,417,580 75,966,109 (554,306,020) 17,568,230 679,739,536 290,385,435

See accompanying notes to non-consolidated financial statements.

7 HANJIN SHIPPING HOLDINGS CO., LTD. Non-Consolidated Statements of Cash Flows

For the years ended December 31, 2009 and 2008

(In thousands of Won) 2009 2008

Cash flows from operating activities Net income (loss) ₩ (1,313,161,428) 320,376,825 Adjustments for: Depreciation 355,739,224 291,539,009 Amortization 551,056 283,382 Amortization of discount on bonds 4,187,746 3,113,784 Reversal of allowance for doubtful accounts 10,773,696 17,583,107 Accrual for retirement and severance benefits 16,702,601 17,139,990 Equity in net loss (income) of equity method accounted investees 104,779,284 (15,172,851) Gain on disposal of available-for-sale securities, net (4,563,792) (5,722,049) Loss (gain) on disposal of property, ships and equipment, net 577,092 (2,613,340) Loss on valuation of derivative instruments, net 8,225,179 109,352,163 Foreign currency translation gain, net - (269,234,689) Translation effect to functional currency 148,150,383 137,193,055 Gain on disposal of other current assets, net - (459,992) 645,122,469 283,001,569

Changes in assets and liabilities: Accounts and notes receivables - trade (113,393,752) 95,725,772 Prepaid expenses 651,301 13,907,796 Inventories (44,468,866) 9,020,885 Other current assets (25,141,969) (21,101,648) Deferred income tax assets (17,733,178) (6,539,296) Accounts and notes payable - trade (32,088,373) (156,106,979) Other current liabilities (37,037,715) 1,899,785 Deferred income tax liabilities - (28,196,283) Payment for retirement and severance benefits (13,776,491) (15,405,831) Deposits for severance and retirements benefits 5,186,398 3,527,104 Withdrawal of severance and retirement benefits from the Korean National Pension Corporation 167,798 226,719 Severance and retirement benefits transferred from affiliates 27,395 967,140 (277,607,452) (102,074,836)

Net cash provided by (used in) operating activities (945,646,411) 501,303,558

See accompanying notes to non-consolidated financial statements.

8 HANJIN SHIPPING HOLDINGS CO., LTD. Non-Consolidated Statements of Cash Flows, Continued

For the years ended December 31, 2009 and 2008

(In thousands of Won) 2009 2008

Cash flows from investing activities Disposal of short-term financial instruments ₩ 109,731,953 158,715,685 Disposal of available-for-sale securities 43,282,414 9,403,691 Disposal of held-to-maturity securities 404,620 86,210 Disposal of equity method accounted investments 11,671,244 9,859,612 Settlement of derivative instruments 16,909,557 3,308,609 Decrease in guarantee deposits - 2,497,312 Proceeds from sale of property, ships and equipment 47,223,456 20,488,619 Acquisition of long-term financial instruments (29,613,882) (1,883,618) Acquisition of available-for-sale securities (6,703,428) (5,424,920) Acquisition of held-to-maturity securities (1,150) - Acquisition of equity method accounted investments (50,588,279) (43,118,579) Increase in derivative instruments (168,141,896) (17,796,100) Increase in long-term loans (68,462,287) (55,048) Increase in guarantee deposits (1,155,252) - Acquisition of property, ships and equipment (649,066,758) (831,002,316) Net cash used in investing activities (744,509,688) (694,920,843)

Cash flows from financing activities Proceeds from short-term borrowings 100,000,000 - Proceeds from exercise of stock warrants - 5,096,000 Proceeds from issuance of bonds 797,281,200 197,074,526 Proceeds from long-term borrowings 594,250,980 70,279,086 Increase in long-term obligations under installment purchases 394,689,847 428,576,733 Increase in capital lease obligations 85,787,891 82,559,161 Increase in assets backed loan 239,000,000 - Proceeds from disposal of treasury stock 94,830,069 - Acquisition of stock warrants - (44,335,200) Stock issue expenses (1,580) (617) Repayment of current portion of long-term debt (367,128,298) (256,411,589) Decrease in long-term obligations under installment purchases (2,488,881) (56,063,864) Acquisition of treasury stock (11,020,505) (108,663,612) Dividends paid (36,672,521) (57,092,472) Net cash provided by financing activities 1,888,528,202 261,018,152

Cash provided by merger - 50,443,139 Cash used in separation (753,582,317) -

Net increase (decrease) in cash and cash equivalents (555,210,214) 117,844,006 Cash and cash equivalents at beginning of year 592,257,464 474,413,458

Cash and cash equivalents at end of year ₩ 37,047,250 592,257,464

See accompanying notes to non-consolidated financial statements

9 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

1. Organization and Description of Business

Hanjin Shipping Holdings Co., Ltd. (the “Company”) was incorporated on December 23, 1949 under the laws of the Republic of Korea to engage in container and bulk shipping business. Under the Korean Government’s shipping industry rationalization plan approved by the Industry Policy Review Board, Hanjin Container Lines Co., Ltd. was merged with Korea Shipping Corporation in 1988 and the merged company was named Hanjin Shipping Co., Ltd..

Hanjin Shipping Co., Ltd. was established by spinning off the shipping segment of Hanjin Shipping Holdings Co., Ltd. at the date of December 1, 2009 and is engaged in the container and bulk shipping business. The Company has changed the name of the Company to Hanjin Shipping Holdings Co., Ltd..

The major stockholders are Korean Air Lines Co., Ltd. and affiliated private stockholders, with total ownership equity of 18.30% as of December 31, 2009. The Company has been listed on the Korea Exchange (KRX) since March 3, 1956.

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies

(a) Basis of Presenting Financial Statements

The Company maintains its accounting records in Korean Won and prepares statutory non-consolidated financial statements in the Korean language in conformity with accounting principles generally accepted in Republic of Korea. Certain accounting principles applied by the Company that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting principles in other countries. Accordingly, these financial statements are intended solely for use by only those who are informed about Korean accounting principles and practices. The accompanying non-consolidated financial statements have been condensed, restructured and translated into English from the Korean language non-consolidated financial statements.

The Company prepares the non-consolidated financial statements in accordance with generally accepted accounting principles in the Republic of Korea. The Company applied the same accounting policies that were adopted in the previous year’s non-consolidated financial statements.

(b) Functional currency

Pursuant to the revised Korea Financial Accounting Standard (“KFAS”) Par. 69-2 Accounting on the use of functional currency other than the Korean Won, the Company has prepared the non-consolidated financial statements in US dollars, the functional currency, which is the currency of the primary economic environment in which the Company operates, and translated them into Korean Won, the presentation currency.

(c) Revenue Recognition

Freight from shipping services and related expenses are recognized based on the percentage of completed voyage days to the total expected voyage days.

10 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(d) Cash Equivalents

The Company considers short-term deposits with maturities of three months or less on acquisition date to be cash equivalents.

(e) Short-term Deposits

Short-term deposits, including money market deposit accounts (MMDAs), time deposits, installment savings deposits and restricted bank deposits, are those maturing within one year and are held for short-term cash management purposes.

(f) Allowance for Doubtful Accounts

Allowance for doubtful accounts is estimated based on an analysis of individual accounts and past experience of collection and presented as a deduction from trade receivables.

(g) Inventories

Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated selling costs. The cost of inventories is determined by the specific identification method for materials in transit and by the weighted-average method for all other inventories. Amounts of inventory written down to net realizable value due to losses occurring in the normal course of business are recognized as cost of goods sold and are deducted as an allowance from the carrying value of inventories.

(h) Investments in Securities Excluding Investments in Associates, Subsidiaries and Joint Ventures

Classification Upon acquisition, the Company classifies debt and equity securities excluding investments in subsidiaries, associates and joint ventures into the following categories: held-to-maturity, available-for- sale or trading securities.

Investments in debt securities where the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity. Securities that are acquired principally for the purpose of selling in the short term are classified as trading securities. Investments not classified as either held- to-maturity or trading securities are classified as available-for-sale securities.

Initial recognition Investments in securities excluding investments in subsidiaries, associates and joint ventures are initially recognized at cost.

11 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(h) Investments in Securities Excluding Investments in Associates, Subsidiaries and Joint Ventures, Continued

Subsequent measurement and income recognition Trading securities are subsequently carried at fair value. Gains and losses arising from changes in the fair value of trading securities are included in the statement of operations in the period in which they arise. Available-for-sale securities are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available-for-sale securities are recognized as accumulated other comprehensive income, net of tax, directly in equity. Investments in available-for-sale securities that do not have readily determinable fair values are recognized at cost less impairment, if any. Held-to- maturity investments are carried at amortized cost with interest income and expense recognized in the statement of operations using the effective interest method.

Fair value information The fair value of marketable securities is determined using quoted market prices as of the period end. Non-marketable debt securities are fair valued by discounting cash flows using the prevailing market rates for debt with a similar credit risk and remaining maturity. Credit risk is determined using the Company’s credit rating as announced by accredited credit rating agencies in Korea. The fair value of investments in money market funds is determined by investment management companies.

Presentation Trading securities are presented as current assets. Available-for-sale securities, which mature within one year from the end of the reporting period or where the likelihood of disposal within one year from the end of the reporting period is probable, are presented as current assets. Held-to-maturity securities, which mature within one year from the end of the reporting period, are presented as current assets. All other available-for-sale securities and held-to-maturity securities are presented as long-term investments.

Impairment The Company reviews investments in securities whenever events or changes in circumstances indicate that the carrying amount of the investments may not be recoverable. Impairment losses are recognized when the reasonably estimated recoverable amounts are less than the carrying amount and it is not obviously evidenced that impairment is unnecessary.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized and a reversal of an impairment loss shall not exceed the carrying amount that would have been determined had no impairment loss been recognized in the asset in prior years. For financial assets measured at amortized cost and available-for-sale assets that are debt securities, the reversal is recognized in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in equity.

12 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(i) Investments in Associates and Subsidiaries

Associates are entities of the Company and its subsidiaries that have the ability to significantly influence the financial and operating policies. It is presumed to have significant influence if the Company holds directly or indirectly 20 percent or more of the voting power unless it can be clearly demonstrated that this is not the case. Subsidiaries are entities controlled by the Company.

Investments in associates and subsidiaries are accounted for using the equity method of accounting and are initially recognized at cost.

The Company’s investments in associates and subsidiaries include goodwill identified on the acquisition date net of any accumulated impairment loss. Goodwill is calculated as the excess of the acquisition cost of an investment in an associate or subsidiary over the Company’s share of the fair value of the identifiable net assets acquired. Goodwill is amortized using the straight-line method over its estimated useful life. Amortization of goodwill is recorded together with equity income.

When events or circumstances indicate that the carrying value of goodwill may not be recoverable, the Company reviews goodwill for impairment and records any impairment loss immediately in the statements of operations.

The Company’s share of its post-acquisition profits or losses in investments in associates and subsidiaries is recognized in the statement of operations, and its share of post-acquisition movements in equity is recognized in equity. The cumulative post-acquisition movements are adjusted against the carrying amount of each investment. Changes in the carrying amount of an investment resulting from dividends by an associate or subsidiary are recognized when the associate or subsidiary declares the dividend. When the Company’s share of losses in an associate or subsidiary equals or exceeds its interest in the associate or subsidiary, including preferred stock or other long term loans and receivables issued by the associate or subsidiary, the Company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate or subsidiary.

If an associate or a subsidiary uses accounting policies or estimates other than those of the Company for like transactions and events in similar circumstances, the Company makes appropriate adjustments to conform the associate’s accounting policies to those of the Company when the associate’s financial statements are used by the Company in applying the equity method. However, under the revised Statements of Korean Accounting Standards (“SKAS”) No. 15 Equity Method of Accounting, in the event that accounting policies and estimates differ due to the application of Exceptions to Accounting for Small and Medium-Sized Entities or K-IFRS, no adjustments are made.

If the investee is a subsidiary, net income and net assets of the parent company’s separate financial statements should agree with the parent company’s share in the net income and net assets of the consolidated financial statements, except when the Company discontinues the application of the equity method due to its investment in a subsidiary being reduced to zero.

Unrealized gains on transactions between the Company and its associates or subsidiaries are eliminated to the extent of the Company’s interest in each associate or subsidiary.

13 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(j) Interest in Joint Ventures

Joint ventures are those entities or assets over whose activities the Company has joint control.

With respect to jointly controlled operations, the Company includes, in its non-consolidated financial statements, the assets that it controls and the liabilities and expenses it has incurred, plus its share of the income from the joint operation. For its interest in jointly controlled assets, the Company recognizes, in the non-consolidated financial statements, its share of the assets it jointly controls, the liabilities jointly incurred and net income, plus the liabilities and expenses it has solely incurred, if any. The Company accounts for its interest in a jointly controlled entity using the equity method of accounting.

(k) Property, Ships and Equipment

Property, Ships and equipment are stated at cost, except in the case of revaluations made in accordance with the Asset Revaluation Law, which allowed for asset revaluation prior to the Law being revoked on December 31, 2000. Assets acquired through investment in kind or donations are recorded at their fair value upon acquisition. For assets acquired in exchange for a non-monetary asset, the fair value of the asset given up is used to measure the cost of the asset received unless the fair value of the asset received is more clearly evident.

Significant additions or improvements extending the useful life of assets are capitalized. Normal maintenance and repairs are charged to expense as incurred.

Depreciation is computed by using the straight-line method over the estimated useful lives of the respective assets as follows:

Useful lives (years)

Buildings 40 Equipment used for selling, general and administrative purposes 4 ~ 5

The Company reviews property, ships and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the expected estimated undiscounted future net cash flows from the use of the asset and its eventual disposal are less than its carrying amount.

14 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(l) Leases

The Company classifies and accounts for leases as either operating or capital, depending on the terms. Leases where the Company assumes substantially all of the risks and rewards of ownership are classified as capital leases. All other leases are classified as operating leases.

The assumption of substantially all of the risks and rewards of ownership is evidenced when one or more of the criteria listed below are met:

- Ownership of the leased property will be transferred to the lessee at the end of the lease term.

- The lessee has a bargain purchase option, and it is reasonably certain at inception of the lease that the option will be exercised.

- The lease term is equal to 75% or more of the estimated economic useful life of the leased property.

- The present value at the beginning of the lease term of the minimum lease payments equals or exceeds 90% of the fair value of the leased property.

In addition, if the leased property is specialized to the extent that only the lessee can use it without any major modification, it would be considered a capital lease.

Where the Company is a lessee under a capital lease, the present value of future minimum lease payments is capitalized and a corresponding liability is recognized. Payments made under operating leases are charged to the statement of operations on a straight-line basis over the period of the lease.

(m) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets acquired. Goodwill is amortized on a straight-line basis over its estimated useful life not to exceed 20 years. Where it is no longer probable that goodwill will be recovered from the expected future economic benefits generated by the acquisition, it is expensed immediately.

(n) Discount (Premium) on Debentures

Discount (premium) on debentures issued, which represents the difference between the face value and issuance price of debentures, is amortized (accreted) using the effective interest rate method over the life of the debentures. The amount amortized (accreted) is included in interest expense.

15 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(o) Retirement and Severance Benefits

Employees who have been with the Company for more than one year are entitled to lump-sum payments based on salary rates and length of service at the time they leave the Company. The Company's estimated liability under the plan, which would be payable if all employees left at the end of the reporting period, is accrued in the accompanying non-consolidated statements of financial position. A portion of the liability is covered by an employees’ severance benefits trust where the employees have a vested interest in the deposit with the insurance company or the bank in trust. The deposit for severance benefits held in trust is, therefore, reflected in the accompanying non- consolidated statements of financial position as a reduction of the liability for retirement and severance benefits.

Through March 1999, under the National Pension Scheme of Korea, the Company transferred a certain portion of retirement allowances for employees to the National Pension Fund. The amount transferred reduced the retirement and severance benefit amount to be paid to the employees when they leave the Company and is accordingly reflected in the accompanying non-consolidated financial statements as a reduction of the retirement and severance benefits liability. However, due to regulation effective April 1999, such transfers to the National Pension Fund are no longer required.

(p) Valuation of Receivables and Payables at Present Value

Receivables and payables arising from long-term cash loans/borrowings and other similar transactions are stated at present value. The difference between the nominal value and present value of these receivables or payables is amortized using the effective interest rate method. The amount amortized is included in interest expense or interest income.

(q) Foreign Currency Translation

Pursuant to the revised Korean Financial Accounting Standards (“KFAS”) 69-2, the Company has prepared the non-consolidated financial statements in US dollars, the functional currency, which is the currency of the primary economic environment in which the Company operates, and translated them into Korean Won, the presentation currency.

Assets and liabilities were translated at the closing rate as of the end of the reporting period and revenue and expenses in each statement of comprehensive income or separate statement of operations presented were translated at exchange rates at the dates of the transactions or at the average rate for the period.

(r) Derivatives and Hedge Accounting

The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivatives are not closely related, and a separate instrument with the same terms as the embedded derivatives would meet the definition of a derivative.

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Attributable transaction costs are recognized in profit or loss when incurred. 16 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(r) Derivatives and Hedge Accounting, Continued

Hedge accounting Where a derivative, which meets certain criteria, is used for hedging the exposure to changes in the fair value of a recognized asset, liability or firm commitment, it is designated as a fair value hedge. Where a derivative, which meets certain criteria, is used for hedging the exposure to the variability of the future cash flows of a forecasted transaction it is designated as a cash flow hedge.

The Company documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting the changes in fair values or cash flows of hedged items.

Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statements of operations, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges if non-derivative financial instrument was designated as cash flow hedging instrument, the effective portion of changes resulting from the changes in currency exchange rate are recognized in equity. The gain or loss relating to any ineffective portion is recognized immediately in the statements of operations. Amounts accumulated in equity are recycled to the statement of operations in the periods in which the hedged item will affect income or expense. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at the time remains in equity and is recognized when the forecast transaction is ultimately recognized in the statements of operations. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statements of operations.

Derivatives that do not qualify for hedge accounting Changes in the fair value of derivative instruments that are not designated as fair value or cash flow hedges are recognized immediately in the statements of operations.

Separable embedded derivatives Changes in the fair value of separable embedded derivatives are recognized immediately in the statements of operations.

17 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(s) Long-term Obligations under Installment Purchase

Long-term obligations under installment purchase are recorded at discounted present values, determined by applying the interest rates implicit in the purchase agreements. The long-term installment payables are shown in the accompanying statements of financial position, net of related discounts. Amortization of the discount is accounted for as interest expense.

(t) Provisions, Contingent Assets and Contingent Liabilities

Provisions are recognized when all of the following are met: (1) an entity has a present obligation as a result of a past event, (2) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and (3) a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, a provision is recorded at the present value of the expenditures expected to be required to settle the obligation.

Where the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognized as a separate asset when, and only when, it is virtually certain that reimbursement will be received if the Company settles the obligation. The expense generated by the provision is presented net of the amount of expected reimbursement.

(u) Income Taxes

Income tax on the income or loss for the year comprises current and deferred tax. Income tax is recognized in the statements of operations except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted.

Deferred tax is provided using the asset and liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period.

A deferred tax asset is recognized only to the extent that it is probable that future taxable income will be available against which the unused tax losses and credits can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred tax assets and liabilities are classified as current or non-current based on the classification of the related asset or liability for financial reporting or the expected reversal date of the temporary difference for those with no related asset or liability such as loss carryforwards and tax credit carryforwards. The deferred tax amounts are presented as a net current asset or liability and a net non-current asset or liability.

Changes in deferred taxes due to a change in the tax rate except for those related to items initially recognized outside profit or loss either in other comprehensive income or directly in equity are recognized as income in the current year.

18 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

2. Basis of Presenting Financial Statements and Summary of Significant Accounting Policies, Continued

(v) Earnings Per Share

Earnings per share are calculated by dividing net income attributable to stockholders of the Company by the weighted-average number of shares outstanding during the period.

Diluted earnings per share are determined by adjusting net income attributable to stockholders and the weighted-average number of shares outstanding for the effects of all dilutive potential shares.

(w) Income from Discontinued Operations

Operating and non-operating income, net of income tax effect is reported as income from discontinued operations in the statement of operations for the period in which an initial disclosure event occurred. The prior period financial statements, presented comparatively, are reclassified to show the discontinued operations separately from continuing operations.

(x) Use of Estimates

The preparation of non-consolidated financial statements in accordance with accounting principles generally accepted in the Republic of Korea requires management to make estimates and assumptions that affect the amounts reported in the non-consolidated financial statements and related notes to non-consolidated financial statements. Actual results could differ from those estimates.

3. Restricted Deposits

Deposits which are restricted in use for as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) 2009 2008

Short-term deposits ₩ 2,021,803 97,639,674 Long-term deposits - 396,118

₩ 2,021,803 98,035,792

4. Other Current Assets

Other current assets as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) 2009 2008

Prepaid value added tax ₩ - 10,644,350 Prepaid tax - other 7,437,966 95,544 Short-term loans - 507,693

₩ 7,437,966 11,247,587

19 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

5. Non-current Investments

Non-current investments as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) 2009 2008

Available-for-sale securities (non-current) Marketable securities ₩ - 93,687,338 Non-marketable securities - 241,591,434 - 335,278,772

Held-to-maturity securities (non-current) - 63,050

Equity method accounted investments 248,745,408 213,076,687

₩ 248,745,408 548,418,509

(a) Available-for-sale Securities (Non-current)

As of December 31, 2009 and 2008, available-for-sale securities (non-current) consist of marketable securities recorded at fair value, non-marketable securities recorded at cost and debt securities recorded at amortized cost.

(i) Marketable securities recorded at fair value

Marketable securities recorded at fair value as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won, except percentage of ownership) 2009 2008 Percentage of Acquisition ownership cost Fair value Fair value

LG Telecom Ltd. - ₩ - - 2,979,000 KL-Net Corp. - - - 768,899 Korea Line Corp. - - - 46,200,000 Moorim PNP Co., Ltd. - - - 402,761 Kawasaki Kisen Kaisha, Ltd. - - - 43,336,678

₩ - - 93,687,338

20 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

5. Non-current Investments, Continued

(ii) Non-marketable securities recorded at cost

Non-marketable securities recorded at cost as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won, except percentage of ownership) 2009 2008 Percentage of Acquisition Company ownership cost Book value Book value

Dalian Hantong Logistics Co., Ltd. - ₩ - - 1,385,368 Shandong Hanjin Logistics Co., Ltd. - - - 1,360,545 Hanjin Senator Lines Do Brasil Ltd. - - - 646,657 Thai Hanjin Logistics Ltd. - - - 3,372,174 GT NEXUS Inc. - - - 891,321 Hanjin Shipping Line Malaysia Sdn. Bhd. - - - 5,919,064 Hanjin Euro Bulk Ltd. - - - 596,716 Antwerp International Terminal NV - - - 2,490,918 Hanjin Logistics (Shanghai) Co., Ltd. - - - 2,086,630 Hanjin Shipping Australia Pty Ltd. - - - 1,722,273 Hanjin Shipping India Pty., Ltd. - - - 2,406,650 eNtoB Co., Ltd. - - - 1,340,332 Built 1 Co., Ltd. - - - 670,166 Pusan New Port Co., Ltd. - - - 2,271,864 Korea International Terminal Co., Ltd. - - - 3,347,481 Korea P&I - - - 938,354 Hanjin Ship Management Co., Ltd. - - - 1,340,332 Hanjin Energy Co., Ltd. - - - 201,049,885 Hanjin Kerry Logistics Co., Ltd. - - - 2,338,829 Samall Co., Ltd. - - - 3,077,727 Others - - - 2,338,148

₩ - - 241,591,434

(b) Held-to-maturity Securities (Non-current)

Held-to-maturity securities (non-current) as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) Book value Face value Discount 2009 2008

Government bonds ₩ - - - 482,945 Less current portion of government bonds - - - (419,895)

₩ - - - 63,050

21 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

5. Non-current Investments, Continued

(c) Equity Method Accounted Investments

(i) Investments in companies accounted for using the equity method as of December 31, 2009 are summarized as follows:

(In thousands of Won, except percentage of ownership) Percentage of Acquisition Balance at Company ownership cost December 31, 2009

Listed Hanjin Shipping Co., Ltd.(*) 12.20% ₩ 238,698,175 232,001,941 Unlisted Cyber Logitech Co., Ltd. 40.00% 800,000 16,743,467

₩ 239,498,175 248,745,408

(*) The Company accounted for its investment in Hanjin Shipping Co., Ltd. using the equity method of accounting despite its (12.20%) ownership interest as it has ability to significantly influence financial and operating policy decision.

In relation to the spin-off, equity method accounted investments except Hanjin Shipping Co., Ltd. and Cyber Logitech Co., Ltd., were inclusively transferred to Hanjin Shipping Co., Ltd.

22 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

5. Non-current Investments, Continued

(c) Equity Method Accounted Investments, Continued

(ii) Investments in companies accounted for using the equity method as of December 31, 2008 are summarized as follows:

(In thousands of Won, except percentage of ownership) Percentage Balance at of Acquisition December 31, Company ownership cost 2008

Listed KT Submarine Co., Ltd. 30.21% ₩ 6,615,000 16,911,683

Unlisted Cyber Logitech Co., Ltd. 40.00% 800,000 11,785,027 Pyongtaek Container Terminal Co., Ltd. 50.50% 10,145,000 10,747,446 Jungseok Enterprise 2.21% 4,247,570 6,111,934 Hanjin Travel Service Co., Ltd. 14.00% 10,331,682 11,671,010 Hanjin Pacific Corporation 60.00% 19,236,262 - Hanjin Shipping Newport Co., Ltd. 100.00% 10,600,000 14,210,383 Senator Lines GmbH 80.00% 307,799,028 - Hanjin Shipping Singapore Pte., Ltd. 100.00% 9,823,810 20,023,802 Shanghai Hanjin Freight & Transportation Co., Ltd. 37.69% 3,225,110 9,211,352 Huahan (Tianjin) Container Co., Ltd. 30.00% 1,836,688 3,885,234 Hanjin Shipping (China) Co., Ltd. 100.00% 10,343,360 16,692,278 Atlanta Shipping Agency (Holding) Ltd. 50.00% 593 5,611,891 Total Terminals International LLC 60.00% - - Zhejiang Eastern Shipyard Co., Ltd. 50.00% 15,827,000 21,213,443 Hanjin Logistics Inc. 100.00% 10,255,788 11,555,327 Hanjin Overseas Bulk Ltd. 100.00% 1,027,000 - Hanjin Spain S.A. 51.00% 127,561 730,409 Hanjin Overseas Tanker Pte., Ltd. 100.00% 4,635,000 22,409,983 Hanjin Shipping (Thailand) Co., Ltd. 49.00% 366,183 604,964 Total Terminal International Algeciras S.A. 100.00% 8,285,714 9,784,486 Hanjin Romania SRL 100.00% 17,066,176 19,916,035

₩ 452,594,525 213,076,687

23 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

5. Non-current Investments, Continued

(c) Equity Method Accounted Investments, Continued

(iii) Changes in the opening and closing balances of investments in companies accounted for using the equity method for the years ended December 31, 2009 were as follows:

(In thousands of Won, except percentage of ownership) Gain (loss) Accumulated on Inclusive Balance at Net other Other presentation transfer Balance at Jan. 1, income comprehensive increase currency from Dec. 31, Company 2009 (loss) income (decrease) translations spin-off 2009 Continuing operations Hanjin Shipping Co., Ltd. ₩ - (10,569,947) 3,832,819 238,698,175 40,894 - 232,001,941 Cyber Logitech Co., Ltd. 11,785,027 4,718,123 1,294,020 (200,000) (853,703) - 16,743,467 ₩ 11,785,027 (5,851,824) 5,126,839 238,498,175 (812,809) - 248,745,408 Discontinued operations KT Submarine Co., Ltd. ₩ 16,911,683 193,129 2,839,638 (330,750) (78,352) (19,535,348) - Pyongtaek Container Terminal Co., Ltd. 10,747,446 (13,693) 649,556 - (537,586) (10,845,723) - Jungseok Enterprise 6,111,934 132,929 554,813 (22,090) (276,098) (6,501,488) - Hanjin Travel Service Co., Ltd. 11,671,010 3,931,841 959,792 (35,569) (971,889) (15,555,185) - Hanjin Pacific Co., Ltd. ------Hanjin Shipping Newport Co., Ltd. 14,210,383 (14,993,016) (2,039,641) 9,400,000 (2,502,434) (4,075,292) - Senator Lines GmbH ------Hanjin Shipping Singapore Pte., Ltd. 20,023,802 (830,866) 544,571 - (1,239,929) (18,497,578) - Shanghai Hanjin Freight & Transportation Co., Ltd. 9,211,352 (21,353) (2,700) (544,861) (692,784) (7,949,654) - Huahan (Tianjin) Container Co., Ltd. 3,885,234 37,315 6,954 - (276,415) (3,653,088) - Hanjin Shipping (China) Co., Ltd. 16,692,278 (586,210) 6,407 - (1,171,905) (14,940,570) - Atlanta Shipping Agency (Holding) Ltd. 5,611,891 (946,330) 71,664 (1,264,698) (443,742) (3,028,785) - Total Terminals International LLC ------Zhejiang Eastern Shipyard Co., Ltd. 21,213,443 (7,558,179) 1,744,197 - (1,027,992) (14,371,469) - Hanjin Logistics Inc. 11,555,327 (2,437,587) - - (815,652) (8,302,088) - Hanjin Overseas Bulk Ltd. ------Hanjin Spain S.A. 730,409 633,397 73,323 (117,379) (32,688) (1,287,062) - Hanjin Overseas Tanker Pte., Ltd. 22,409,983 (4,297,729) (303,305) (9,456,510) (467,497) (7,884,942) - Hanjin Shipping (Thailand) Co., Ltd. 604,964 (142,148) 15,890 - (44,600) (434,106) -

24 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

5. Non-current Investments, Continued

(c) Equity Method Accounted Investments, Continued

(In thousands of Won, except percentage of ownership) Gain (loss) Accumulated on Inclusive Balance at Net other Other presentation transfer Balance at Jan. 1, income comprehensive increase currency from Dec. 31, Company 2009 (loss) income (decrease) translations spin-off 2009 Total Terminal International Algeciras S.A. ₩ 9,784,486 (1,451,074) 1,017,566 41,188,279 (3,040,940) (47,498,317) - Hanjin Romania SRL 19,916,035 - - - (1,426,986) (18,489,049) - ₩ 201,291,660 (28,349,574) 6,138,725 38,816,422 (15,047,489) (202,849,744) -

(iv) Changes in the opening and closing balances of investments in companies accounted for using the equity method for the year ended December 31, 2008 were as follows:

(In thousands of Won) Accumulated Loss on Balance at Net other Other presentation Balance at Jan. 1, income comprehensive increase currency Dec. 31, Company 2008 (loss) income (decrease) translation 2008

Keoyang Shipping Co., Ltd. ₩ 247,792,361 17,719,253 1,492,623 (267,004,237) - - KT Submarine Co., Ltd. 17,915,627 1,978,070 (8,635,970) (330,750) 5,984,706 16,911,683 Cyber Logitech Co., Ltd. 8,681,188 3,722,397 (3,358,596) (160,000) 2,900,038 11,785,027 Pyongtaek Container Terminal Co., Ltd. 10,469,654 425,194 (3,710,566) - 3,563,164 10,747,446 Jungseok Enterprise 5,571,408 360,667 (1,701,469) (11,045) 1,892,373 6,111,934 Hanjin Travel Service Co., Ltd. 4,677,427 213,364 (3,231,074) 6,281,585 3,729,708 11,671,010 Hanjin Pacific Co., Ltd. ------Hanjin Shipping Newport Co., Ltd. - - - 10,600,000 3,610,383 14,210,383 Senator Lines GmbH ------Hanjin Shipping Singapore Pte., Ltd. 14,214,507 990,489 (18,854) - 4,837,660 20,023,802 Shanghai Hanjin Freight & Transportation Co., Ltd. 6,345,842 558,592 546,523 (297,912) 2,058,307 9,211,352 Huahan (Tianjin) Container Co., Ltd. 2,821,226 173,792 110,946 (134,956) 914,226 3,885,234 Hanjin Shipping (China) Co., Ltd. 12,630,055 (1,280,856) 1,044,660 - 4,298,419 16,692,278 Atlanta Shipping Agency (Holding) Ltd. 9,688,356 83,770 1,168,902 (6,436,015) 1,106,878 5,611,891 Total Terminals International LLC ------Zhejiang Eastern Shipyard Co., Ltd. 15,827,000 - - - 5,386,443 21,213,443 Hanjin Logistics Inc. 1,112,502 554,990 - 7,766,688 2,121,147 11,555,327 Hanjin Overseas Bulk Ltd. ------Hanjin Spain S.A. 449,317 1,386,559 (125,071) (845,546) (134,850) 730,409 Hanjin Overseas Tanker Pte., Ltd. - 15,778,678 418,864 4,635,000 1,577,441 22,409,983 Hanjin Shipping (Thailand) Co., Ltd. - 267,205 47,550 216,520 73,689 604,964 Total Terminal International Algeciras S.A. - - - 8,285,715 1,498,771 9,784,486 Hanjin Romania SRL - - - 17,066,177 2,849,858 19,916,035 ₩ 358,196,470 42,932,164 (15,951,532) (220,368,776) 48,268,361 213,076,687

25 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

5. Non-current Investments, Continued

(c) Equity Method Accounted Investments, Continued

The Company used the unaudited financial statements of the above affiliated companies when applying the equity method of accounting. For each subsequent period, the Company adjusts the difference between the unaudited and audited results. Historically, the differences have been immaterial.

As of December 31, 2009, the Company recognized unrealized holding gain ₩2,989,598 thousand and loss ₩1,423,083 thousand of equity method investments in accumulated other comprehensive income as net gain ₩1,566,515 thousand.

6. Property, Ships and Equipment

(a) Property, ships and equipment at December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) 2009 2008

Property, ships and equipment at cost ₩ 96,226,532 8,656,326,795 Accumulated depreciation (15,050,987) (2,735,204,640)

Property, ships and equipment, net ₩ 81,175,545 5,921,122,155

(b) Changes in property, ships and equipment for the year ended December 31, 2009 and 2008 are as follows:

(In thousands of Won) 2009 Gain (loss) on presentation Book value Book value as currency as of Dec. of Jan. 1 Acquisitions Disposals Other(*) Depreciation translations 31

Land ₩ 210,965,397 - (74,337) (164,081,346) - (15,095,773) 31,713,941 Buildings 200,485,067 1,796,610 (198,417) (133,051,827) (5,644,783) (13,925,046) 49,461,604 Structures 20,212,654 - - (18,227,042) (592,567) (1,393,045) - Machinery 65,618,465 - (3,576,039) (7,463,794) (13,899,032) (40,679,600) - Ships 3,832,257,101 387,368,660 (18,349,627) (3,636,180,169) (253,021,862) (312,074,103) - Containers 793,530,011 73,841,231 (98,106,287) (668,463,401) (51,500,348) (49,301,206) - Container chassis 69,305,142 11,946,660 (12,590,408) (59,286,982) (4,890,080) (4,484,332) - Vehicles 177,635 - - (103,264) (67,975) (6,396) - Equipments 90,005,289 10,188,307 (283,948) (68,735,712) (26,122,577) (5,051,359) - Construction-in-

progress 638,565,394 249,713,180 - (865,161,156) - (23,117,418) -

₩ 5,921,122,155 734,854,648 (133,179,063) (5,620,754,693) (355,739,224) (465,128,278) 81,175,545

(*) This amount is sum of the re-classification entry and transfer through spin-off.

26 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

27 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

6. Property, Ships and Equipment, Continued

(In thousands of Won) 2008 Gain (loss) on Re- presentation Book value as classification currency Book value as of Jan. 1 Acquisitions Disposals entry Depreciation translations of Dec. 31

Land ₩ 154,496,123 3,935,340 (332,275) - - 52,866,209 210,965,397 Buildings 149,540,010 5,383,792 (42,373) - (5,056,251) 50,659,889 200,485,067 Structures 15,551,457 - - - (552,462) 5,213,659 20,212,654 Machinery 53,390,321 82,000 - - (5,294,161) 17,440,305 65,618,465 Ships 2,266,453,027 660,212,004 - 160,513,192 (206,254,125) 951,333,003 3,832,257,101 Containers 562,741,927 92,885,054 (14,310,235) - (48,967,573) 201,180,838 793,530,011 Container chassis 48,030,572 8,456,388 (200,206) - (4,316,430) 17,334,818 69,305,142 Vehicles 186,579 - (4) - (63,374) 54,434 177,635 Equipments 73,535,788 12,063,273 (231,863) 620,000 (21,034,633) 25,052,724 90,005,289 Construction- in-progress 361,045,724 313,233,971 - (161,133,192) - 125,418,891 638,565,394

₩ 3,684,971,528 1,096,251,822 (15,116,956) - (291,539,009) 1,446,554,770 5,921,122,155

(d) The officially declared value of land at December 31, 2009, as announced by the Minister of Construction and Transportation, was as follows:

(In thousands of Won) Book value Declared value

Land ₩ 31,713,941 41,391,270

The officially declared value, which is used for government purposes, is not intended to represent fair value.

28 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

7. Other Non-current Assets

Other non-current assets as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) 2009 2008

Long-term loans ₩ - 32,386 Key money deposits 43,700 21,640,625 Financial instruments - 1,896,119 Other assets 101,200 101,200

₩ 144,900 23,670,330

8. Pledged Assets and Guarantees

The following assets were pledged as collateral for the Company’s short-term borrowings and long-term debts as of December 31, 2009:

(In thousands of Won) Collateralized Asset Lender Book value amount

Land and buildings Korea Development Bank etc. ₩ 81,175,545 78,321,390

9. Other Current Liabilities

Other current liabilities as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) 2009 2008

Accrued expenses ₩ 389,946 11,001,607 Other accounts payable - 7,923,691 Income taxes payable 99,879 5,646,953 Others 9,763,987 98,287,988

₩ 10,253,812 122,860,239

29 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

10. Bonds

Bonds as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) Lender Maturity 2009 2008

49th 2009.12.14 ₩ - 125,750,000 57th 2010.05.30 - 300,000,000 58th 2013.08.24 - 190,000,000 59th 2014.02.24 - 200,000,000 60th 2011.02.28 - 132,834,507 61th 2012.06.18 - 300,000,000 62th 2011.10.08 - 200,000,000 64-3th 2012.02.19 50,000,000 - 50,000,000 1,448,584,507 Less discount of bonds (141,543) (7,662,014) 49,858,457 1,440,922,493 Less current portion of bonds - (248,883,803) Add current portion discount - 3,360,039

Ending balance of bonds ₩ 49,858,457 1,195,398,729

11. Retirement and Severance Benefits

Changes in retirement and severance benefits for the years ended December 31, 2009 and 2008 were as follows:

(In thousands of Won) 2009 2008

Estimated retirement and severance benefits at beginning of year ₩ 64,395,459 61,363,185 Accrual for retirement and severance benefits 16,702,601 17,139,990 Succession of provision for severance payment from the subsidiaries 27,395 174,480 Succession of provision for severance payment from the merger - 1,123,635 Payments (13,776,491) (15,405,831) Reduction of provision for severance payment from spin-off (66,121,914) - Estimated retirement and severance benefits at end of year 1,227,050 64,395,459

Transfer to National Pension Fund (3,095) (837,679) Deposit for severance benefit insurance (128,376) (33,496,644)

Net balance at end of year ₩ 1,095,579 30,061,136

30 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

11. Retirement and Severance Benefits, Continued

The Company maintains an employees’ severance benefit insurance arrangement with Samsung Life Insurance Co., Ltd. and four financial companies. Under this arrangement, the Company has made a deposit in the amount equal to 10.5% and 52.0% of the reserve balances of retirement and severance benefits as of December 31, 2009 and 2008, respectively. This deposit is to be used to guarantee the required payments to the retirees and is accounted for as a reduction of the reserve balance.

12. Stockholders’ Equity

Transactions in stockholders’ equity for the years ended December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won, except number of shares) 2009 2008 Number of Number of shares Amount shares Amount

Balance at December 31, 2008 88,368,297 ₩ 441,841,485 79,612,946 ₩ 398,064,730 Spin off (74,084,781) (370,423,905) - - Merger - - 7,736,151 38,680,755 Issue of stock warrants - - 1,019,200 5,096,000

Balance at December 31, 2009 14,283,516 ₩ 71,417,580 88,368,297 ₩ 441,841,485

13. Capital Adjustments

Details of capital adjustments as of December 31, 2009 and 2008 were as follows:

(In thousands of Won) 2009 2008

Treasury stock ₩ (56,380,953) (496,274,750) Loss on capital reduction (445,497,393) - Other capital adjustment (52,427,674) -

₩ (554,306,020) (496,274,750)

The Company reclassified securities of Hanjin Shipping Co., Ltd. amounting to ₩ 238,698,175 thousand to equity method accounted investments from the treasury stock due to the spin-off.

31 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

14. Retained Earnings

Retained earnings as of December 31, 2009 and 2008 are summarized as follows:

(In thousands of Won) 2009 2008

Legal reserve ₩ - 40,416,513 Reserve for business rationalization 136,457,703 136,457,703 Unappropriated retained earnings 543,281,833 1,896,783,034

₩ 679,739,536 2,073,657,250

The Korean Commercial Code requires the Company to appropriate a legal reserve in an amount equal to at least 10% of cash dividends for each accounting period until the reserve equals 50% of stated capital. The legal reserve may be used to reduce a deficit or may be transferred to common stock in connection with a free issue of shares.

As of December 31, 2009, the Company has not recognized the legal appropriated retained earnings since Hanjin Shipping Co., Ltd. the corporation established by the spin-off in the current year, has succeeded legal appropriated retained earnings amounting to ₩44,083,765 thousand.

15. Operation Expenses

Details of operation expenses for the years ended December 31, 2009 and 2008 were as follows:

(In thousands of Won) 2009 2008

Salaries ₩ 323,871 146,959 Depreciation 549,246 434,068 Insurance 7,284 7,200 Taxes and dues 82,461 21,097 Maintenance 762,857 1,001,747 Others 635,027 413,458

₩ 2,360,746 2,024,529

32 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

16. Income Taxes

(a) The Company was subject to income taxes on taxable income at the following normal tax rates.

Taxable income Tax rate 2008 and thereafter 2008 2009 2010 & 2011 Thereafter Up to ₩200 million 12.1% 12.1% 11.0% 11% Over ₩200 million 27.5% 24.2% 24.2% 22%

In December 2009, the Korean government postponed the reduction of the corporate income tax rate (including resident tax) from 24.2% to 22% until 2012.

(b) The components of income tax expense (benefit) for the years ended December 31, 2009 and 2008 are as follows:

(In thousands of Won) 2009 2008 Continued operations Additional payment of income taxes ₩ 1,362,414 1,326,371 Temporary differences (9,213,411) 690,385

Income tax expense (benefit) ₩ (7,850,997) 2,016,756

Discontinued operations Additional payment of income taxes ₩ 4,070,810 26,284,233 Temporary differences (6,740,756) (62,275,106) Succession of Deferred income taxes from the merger - 158,541 Deferred income taxes recognized directly to equity - 1,303,749

Income tax benefit ₩ (2,669,946) (34,528,583)

33 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

16. Income Taxes, Continued

(c) Significant changes in cumulative temporary difference and deferred tax assets and liabilities for the year ended December 31, 2009 are as follows:

(In thousands of Won) Beginning Net increase Ending Balance (decrease) Balance

Temporary differences: Equity method investments ₩ 487,869,813 (495,270,253) (7,400,440) Treasury stocks (141,871,916) 43,366,674 (98,505,242) Accrued income (605,790) 508,191 (97,599) Provision for severance benefits (*1) - 1,171,031 1,171,031 Group retirement deposits (*1) - (128,376) (128,376) Others (*2): Equity method investments - liquidation corporation 288,415,758 (288,415,758) - Gain on valuation of available-for-sale securities - equity adjustment (1,104,192) 1,104,192 - Gain on disposal of ships (37,838,924) 37,838,924 - Others 148,361 (148,361) - 595,013,110 (699,973,736) (104,960,626) Temporary differences unrecognized (*3) (429,880,760) 419,310,813 (10,569,947) Temporary differences recognized from non-shipping business ₩ 165,132,350 (280,662,923) (115,530,573)

Deferred income tax assets (liabilities) recognized: Deferred income tax assets (liabilities) recognized to current operations 64,197,893 (67,503,775) (3,305,882) Deferred income tax assets (liabilities) succeeded by merger 158,541 (158,541) - Deferred income tax assets (liabilities) recognized directly to equity (26,573,379) 4,460,388 (22,112,991)

₩ 37,783,055 (63,201,928) (25,418,873)

(*1) The Company has recorded deferred income tax assets (liabilities) for provision for severance benefits and group retirement deposits due to the change of applicable tax scheme from the Tonnage Tax System to general income tax.

(*2) The Company has deducted deferred income tax assets successes by Hanjin Shipping Co., Ltd. established by spinning off as a result of spin-off as of December 1, 2009.

(*3) Deductible temporary differences associated with securities accounted for by the equity method and have not been recognized as of December 31, 2009 amounted to ₩10,569,947 thousand, because it is not probable that future profits will be available against which the Company can utilize the related benefit.

34 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

16. Income Taxes, Continued

(d) In accordance with SKAS No. 16 Income Taxes, deferred tax amounts should be presented as a net current asset or liability and a net non-current asset or liability. In addition, the Company is required to disclose gross deferred tax assets (liabilities). As of December 31, 2009, details of gross deferred tax assets (liabilities) are as follows:

Te m p o r a r y Deferred tax assets (liabilities) differences at (In thousands of Won) Dec. 31, 2009 Current Non-current

Assets Provision for retirement and severance benefits ₩ 1,171,031 - 257,627 1,171,031 - 257,627 Liabilities Equity method investments (15,962,034) - (3,511,647) Accrued interest income (225,975) - (51,862) (16,188,009) - (3,563,509) Deferred income tax assets (liabilities) recognized directly to equity: Treasury stock (98,505,242) - (21,671,153) Accumulated other comprehensive income (2,008,353) - (441,838) (100,513,595) - (22,112,991)

Net deferred tax asset (liability) ₩ (115,530,573) - (25,418,873)

35 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

17. Earnings (loss) Per Share

(a) Basic earnings (loss) per share for the years ended December 31, 2009 and 2008 were as follows:

(In thousands Won, except share information) 2009 2008

Net income (loss) ₩ (1,313,161,428) 320,376,825 Net income from continuing operations 7,628,984 6,528,807 Net income (loss) from discontinuing operations (1,320,790,412) 313,848,018

Weighted-average number of common shares outstanding (*) 68,509,181 74,209,254

Basic earnings (loss) per share in Won ₩ (19,168) 4,317 Basic earnings per share from continuing operations in Won ₩ 111 88 Basic earnings (loss) per share from discontinuing operations in Won ₩ (19,279) 4,229

(*) Weighted average number of common shares outstanding:

2009 2008 Weighted average number of shares outstanding at December 31 82,318,270 88,368,297 Weighted average number of treasury stock shares outstanding at December 31 (13,809,089) (14,159,043) Weighted average number of common shares outstanding at December 31 68,509,181 74,209,254

(b) Diluted earnings (loss) per share for the years ended December 31, 2009 and 2008 were as follows:

(In thousands Won, except share information) 2009 2008

Net income (loss) ₩ (1,313,161,428) 320,376,825 Net income from continuing operations 7,628,984 6,528,807 Net income (loss) from discontinuing operations (1,320,790,412) 313,848,018

Weighted-average number of common and common equivalent shares outstanding 68,509,181 78,264,599

Diluted earnings (loss) per share in Won ₩ (19,168) 4,094 Diluted earnings per share from continuing operations in Won ₩ 111 83 Diluted earnings (loss) per share from discontinuing operations in Won ₩ (19,279) 4,010

36 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

18. Dividends

(a) Details of dividends for the year ended December 31, 2008 were as follows:

(In thousands of Won, except number of shares) 2008 Common stock

Cash dividends ₩ 36,672,521 Number of shares 73,345,042 Dividend per share in Won ₩ 500

(b) Dividends as a percentage of net income and par value for the year ended December 31, 2008 were as follows:

(In thousands of Won, except par value) 2008

Dividend amount ₩ 36,672,521 Net income 320,376,826 Dividends as a percentage of net income 11.44%

Par value per share ₩ 5,000 Dividends as a percentage of par value 10.00%

(c) Dividend yield ratio for the year ended December 31, 2008 was as follows:

(In Won) 2008 Common stock

Dividend per share ₩ 500 Market price as of year end 18,100 Dividend yield ratio 2.76%

37 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

19. Comprehensive Income

Comprehensive income for the years ended December 31, 2009 and 2008 was as follows:

(In thousands of Won) 2009 2008

Net income (loss) ₩ (1,313,161,428) 320,376,825 Merger - (2,348,264) Separation (554,241,665) - Change in fair value of available-for-sale securities (14,831,081) (97,701,411) Unrealized holding gain on equity method accounted investments 6,726,661 1,495,437 Unrealized holding loss on equity method accounted investments 7,860,763 (15,603,227) Loss on valuation of derivative instruments 193,353,118 (317,715,374) Gain (loss) on presentation currency translations (146,719,182) 928,960,694

Comprehensive income ₩ (1,821,012,814) 817,464,680

20. Transactions and Balances with Related Companies

(a) Significant transactions which occurred in the normal course of business with related companies for the years ended December 31, 2009 and 2008 were as follows:

(In thousands of Won) Relationship Name Transaction 2009 2008

Investee Hanjin Shipping Co., Ltd. Revenue ₩ 1,219,414 - company Expense 22,175 - Subsidiary Cyber Logitech Co., Ltd. Revenue 203,033 415,878 Expense 61,306,178 55,374,491 Affiliate Hanjin Transportation Co., Ltd. Revenue 3,798,403 4,661,441 Expense 14,273,647 40,088,366 Affiliate Korean Air Lines Co., Ltd. Revenue 88,398 41,965 Expense 7,692 14,891 Affiliate Kwangyang International Revenue 5,500 6,000 Container Terminal Co., Ltd. Expense 7,394,412 8,772,112 Affiliate Busan International Revenue 5,500 167,306 Container Terminal Co., Ltd. Expense 21,113,632 28,176,312 Affiliate Jungseok Enterprise Rental expense 1,305,580 1,479,201 Affiliate Keoyang Shipping Co., Ltd. Revenue - 178,866 Expense - 13,122,430 Affiliate Hanjin Ship Management Co., Ltd. Revenue 1,154,317 1,225,314 Expense 26,858,955 16,827,483 Affiliate Hanjin Newport Co., Ltd. Revenue 32,191,245 1,007 Expense 34,530,338 - Affiliate Senator Lines GmbH Revenue 30,469,259 224,082,345 Expense 1,059,819 5,176,760 Affiliate Hanjin Pacific Co., Ltd. Interest income 813,472 1,297,410 Expense 16,924,882 26,876,871

38 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

20. Transactions and Balances with Related Companies, Continued

(In thousands of Won) Relationship Name Transaction 2009 2008 Affiliate Hanjin Shipping (China) Co., Ltd. Expense ₩ 11,952,509 13,364,188 Affiliate Shanghai Hanjin Freight & Transportation Expense 1,917,543 1,975,805 Co., Ltd. Affiliate Huahan (Tianjin) Container Co., Ltd. Expense 1,292,600 1,332,249 Affiliate Hanjin Shipping Singapore Pte., Ltd. Expense 6,508,980 7,421,774 Affiliate Atlanta Shipping Agency (Holding) Ltd. Expense 4,655,556 12,990,309 Affiliate Total Terminals International LLC Interest income 1,393,382 - Expense 194,897,621 267,050,026 Affiliate Hanjin Overseas Bulk Ltd. Revenue 16,576,039 21,732,081 Expense 5,186,629 222,552 Affiliate Hanjin Spain S.A. Expense 2,508,079 2,644,327 Affiliate Hanjin Logistics Inc. Revenue 32,202,862 73,120,456 Expense - 888,939 Affiliate Hanjin Overseas Tanker Pte., Ltd. Revenue 26,128,020 29,367,519 Expense 38,581 - Affiliate Hanjin Shipping (Thailand) Co., Ltd. Expense 1,894,800 3,172,700 Affiliate Others Revenue 97,089 103,413 Expense 1,451,235 1,645,596

Revenue ₩ 146,345,933 356,401,001 Expense 417,101,443 508,617,382

In addition to the above mentioned, the company has disbursed donations in the amount of ₩ 2,000,000 thousand and ₩ 5,003,704 thousand to Inha Corporation educational institutions etc. for the years ended December 31, 2009 and 2008, respectively.

(b) Account balances with related companies as of December 31, 2009 were as follows:

(In thousands of Won) Relationship Name Receivables Payables

Investee company Hanjin Shipping Co., Ltd. ₩ 882,253 2,794,215 Affiliate Hanjin Transportation Co., Ltd. - 1,705 Affiliate Others - 252

₩ 882,253 2,796,172

39 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

20. Transactions and Balances with Related Companies, Continued

(c) Account balances with related companies as of December 31, 2008 were as follows:

(In thousands of Won) Relationship Name Receivables Payables

Subsidiary Cyber Logitech Co., Ltd. ₩ - 7,690,797 Affiliate Hanjin Transportation Co., Ltd. 351,163 5,760,965 Affiliate Korean Air Lines Co., Ltd. 3,907 2,734 Affiliate Kwangyang International Container Terminal Co., Ltd. - 418,448 Affiliate Busan International Container Terminal Co., Ltd. 101,135 1,885,491 Affiliate Jungseok Enterprise 780,702 - Affiliate Hanjin Ship Management Co., Ltd. 55,372 2,573,384 Affiliate Senator Lines GmbH 40,003,740 - Affiliate Hanjin Pacific Corporation 1,602 3,261,061 Affiliate Hanjin Shipping (China) Co., Ltd. 2,420,138 994,470 Affiliate Shanghai Hanjin Freight & Transportation Co., Ltd. - 37,156 Affiliate Huahan (Tianjin) Container Co., Ltd. - 396,677 Affiliate Hanjin Shipping Singapore Pte., Ltd. - 509,012 Affiliate Atlanta Shipping Agency (Holding) Ltd. 2,286,832 - Affiliate Total Terminals International LLC - 21,055,097 Affiliate Hanjin Overseas Bulk Ltd. 210,675 10,226 Affiliate Hanjin Spain S.A. 4,612,136 1,697,138 Affiliate Hanjin Logistics Inc. 4,263,036 9,828 Affiliate Hanjin Overseas Tanker Pte., Ltd. 890,069 - Affiliate Hanjin Shipping (Thailand) Co., Ltd. 2,708,353 49,800 Affiliate Others 9,460 398,311

₩ 58,698,320 46,750,595

(d) Key management personnel compensation in total and for each of the following categories for the year ended December 31, 2009 was as follows:

(In thousands of Won) Compensation details Amount paid Amount approved

Standing directors ₩ 4,013,022 5,000,000 Outside directors 241,600

Although the Officers Liability Insurance has succeeded to Hanjin Shipping Co., Ltd. after spin-off, the Company is still maintaining the position as a beneficiary of the insurance.

(e) Receivables and payables relating to the shipping business segment have succeeded to Hanjin Shipping Co., Ltd. According to the Commercial law par. 1 of Article 9 in clause 530, Hanjin Shipping Co., Ltd. established by spin-off and Hanjin Shipping Holdings., Co., Ltd. continued by spin- off are jointly responsible for the payables occurred prior to the spin-off.

40 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

21. Segment Information

The following table provides information for each operating segment as of and for the years ended December 31, 2009 and 2008:

(In thousands of Won) 2009 2008 Continuing operations Rental, etc. Operating Revenue ₩ 12,840,278 10,378,821 Operating income (loss) (90,414) 8,354,292 Discontinued operations Container Operating Revenue 5,087,452,679 7,164,590,512 Operating income (loss) (796,177,753) 98,676,078 Bulk Operating Revenue 1,361,641,268 2,184,542,690 Operating income (loss) (120,614,660) 231,085,876

Operating Revenue 6,461,934,225 9,359,512,023 Operating income (loss) ₩ (916,882,827) 338,116,246

22. Spin-offs

(a) As of December 1, 2009, the Company split itself into two companies by spinning off the shipping segment, according to the resolutions of its board of directors on September 16, 2009 and stockholders’ meeting on October 28, 2009 to optimize the operations and management of each business division and to improve their competitiveness. In relation to the spin-off, the Company allotted shares in the ratio of 0.1616362 share to Hanjin Shipping Holdings Co., Ltd. and 0.8383638 shares to Hanjin Shipping Co., Ltd per share to persons who were in the stockholders´ list as of the date of separation.

(b) The shipping segment sales of last three fiscal years that was transferred to Hanjin Shipping Co., Ltd. were as follows:

(In thousands of Won) 2009 (Eleven-month period) 2008 2007 2006 Sales ₩ 6,449,093,947 9,349,133,202 6,929,224,813 6,044,837,489

(c) Loss on reduction of capital incurred in connection with the spin-off was charged to capital surplus, respectively.

41 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

22. Spin-offs, Continued

(d) Summary of non-consolidated statements of financial position through the spin-off was as follows:

(In thousands of Won) Hanjin Shipping Hanjin Shipping 2009.12.01 Holdings Co., Ltd. Co., Ltd.

Quick assets ₩ 1,619,328,198 44,785,848 1,574,542,350 Inventories 223,553,281 - 223,553,281 Current assets 1,842,881,479 44,785,848 1,798,095,631

Investments(*) 534,489,303 254,224,565 518,962,913 Property, ships and equipment 5,702,003,411 81,248,718 5,620,754,693 Intangible assets 6,042,174 - 6,042,174 Others 67,828,679 144,900 92,215,936 Non-current assets 6,310,363,567 335,618,183 6,237,975,716 Total assets 8,153,245,046 380,404,031 8,036,071,347

Current liabilities 1,832,985,281 8,829,316 1,824,155,965 Non-current liabilities 4,306,834,352 75,459,716 4,255,906,793 Total liabilities 6,139,819,633 84,289,032 6,080,062,758

Total stockholder’s equity ₩ 2,013,425,413 296,114,999 1,956,008,589

(*) In relation to the spin-off, the company reclassified securities of Hanjin Shipping Co., Ltd. amounting to ₩ 238,698,175 thousand to equity method accounted investments from the treasury stock.

23. Discontinued Operations

The results of the discontinued operation were calculated as follows:

2009 (In thousands of Won) (Eleven-month period) 2008

Operating revenue ₩ 6,449,093,947 9,349,133,202 Operating expense 7,060,914,163 8,691,467,867 Gross profit (loss) (611,820,216) 657,665,335 Selling, general and administrative expenses 304,972,197 327,903,381 Operating income (loss) (916,792,413) 329,761,954 Other income 155,494,421 309,466,678 Other loss 562,162,365 359,909,198 Income before income (loss) taxes (1,323,460,357) 279,319,434

Income tax benefit (2,669,945) (34,528,584)

Discontinued operations ₩ (1,320,790,412) 313,848,018

42 HANJIN SHIPPING HOLDINGS CO., LTD. Notes to Non-Consolidated Financial Statements

December 31, 2009 and 2008

24. Subsequent events

On the board of directors’ meeting at February 4, 2010, the Company has decided to issue additional common stocks to invest in Hanjin Shipping Co., Ltd. compensating the investment in kind from Hanjin Shipping Co., Ltd. by 30,000,000 shares of their common stock.

25. Planning and Adoption of K-IFRS (International Financing Reporting Standards)

The Company subsequently plans to issue financial statements prepared in accordance with K-IFRS from 2011. The Company organized a Task Force Team to perform preliminary analysis of the effects of K-IFRS adoption and establish accounting systems to apply the new accounting treatments, and trained its relevant personnel internally and externally. The Task Force Team regularly reports the details and status of the Adoption Plan to its board of directors and management. The Company plans to perform further analysis on the effects of the spin-off of Hanjin Shipping on K-IFRS adoption.

43

10th Floor, GFC Tel. 02.2112.0100 737 Yeoksam-dong Fax.02.2112.0101 Gangnam-gu, Seoul 135-984 www.kr.kpmg.com Republic of Korea

Independent Accountants’ Review Report on Internal Accounting Control System

English translation of a Report Originally Issued in Korean

To the President of Hanjin Shipping Holdings Co., Ltd.:

We have reviewed the accompanying Report on the Operations of Internal Accounting Control System (“IACS”) of Hanjin Shipping Holdings Co., Ltd. (the “Company”) as of December 31, 2009. The Company's management is responsible for designing and maintaining effective IACS and for its assessment of the effectiveness of IACS. Our responsibility is to review management's assessment and issue a report based on our review. In the accompanying report of management’s assessment of IACS, the Company’s management stated: “Based on the assessment on the operations of the IACS, the Company’s IACS has been effectively designed and is operating as of December 31, 2009, in all material respects, in accordance with the IACS Standards issued by the IACS Operations Committee.”

We conducted our review in accordance with IACS Review Standards, issued by the Korean Institute of Certified Public Accountants. Those Standards require that we plan and perform the review to obtain assurance of a level less than that of an audit as to whether Report on the Operations of Internal Accounting Control System is free of material misstatement. Our review consists principally of obtaining an understanding of the Company’s IACS, inquiries of Company personnel about the details of the report, and tracing to related documents we considered necessary in the circumstances. We have not performed an audit and, accordingly, we do not express an audit opinion.

A Company's IACS is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, however, IACS may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our review, nothing has come to our attention that Report on the Operations of Internal Accounting Control System as of December 31, 2009 is not prepared in all material respects, in accordance with IACS Framework issued by the Internal Accounting Control System Operation Committee.

This report applies to the Company’s IACS in existence as of December 31, 2009. We did not review the Company’s IACS subsequent to December 31, 2009. This report has been prepared for Korean regulatory purposes, pursuant to the External Audit Law, and may not be appropriate for other purposes or for other users.

Seoul, Korea February 19, 2010 Notice to Readers This report is annexed in relation to the audit of the non-consolidated financial statements as of December 31, 2009 and the review of internal accounting control system pursuant to Article 2-3 of the Act on External Audit for Stock Companies of the Republic of Korea.