2011 Business Report 2011.1.1~2011.12.31 www.hanjin-holdings.com HANJIN SHPPING HOLDINGS CO.,LTD. 25-11, Yoido-Dong, Youngdeungpo-Gu, Seoul, Korea Tel : 82-2-3770-6868 Fax : 82-2-2287-3488 Business Report 2011.01.01~2011.12.31 Contents Message from CEO 04 Business Report Company Overview 06 Holding Company, Subsidiaries, Affiliates and Consolidation 10 Operating Results and Financial Status 11 Directors and Auditors 12 Major Shareholders 12 Investment Status of Hanjin Shipping Holdings, status of Subsidiaries investing in other companies and Other Companies investing in Hanjin Shipping Holdings 12 The Major Creditors 14 Audit Report and Financial Statements Audit Report by Audit Committee 16 Independent Auditors’ Report 17 Non-Consolidated Statements of Financial Position 18 Non-Consolidated Statements of Operations 20 Non-Consolidated Statements of Disposition of Accumulated Deficit 21 Global Service Network 22 Holding Company and Subsidiaries 24 HANJIN SHIPPING HOLDINGS 2011 BUSINESS RERORT Message from CEO equipment. optimized for making profit. As the holding company, we will lead our affiliates so that they can concentrate on Well aware of the economic crisis, we at Hanjin Shipping their core businesses and achieve their given tasks. Holdings and operating companies tried our best in securing profitability by executing emergency business We will improve our profit structure through plan. However, due to the impact of hiking oil prices and business diversification. oversupply of vessels, we were not able to make significant improvement in our profitability. Our major sources of profit consist of trademark rights, building leases and dividends. However, we will try to Dear Shareholders, diversify our business portfolio by aggressively seeking and advancing into new business areas with great The year 2012 matters even more than any other year to potentials. Hanjin Shipping Holdings. We will elevate our brand values. We are determined to overcome the current crisis and thus, we reorganized our organization and top We will elevate the brand value of “Hanjin Shipping” so management staff back on December 1st, which is much that it can help improve our corporate image and earlier than our usual practice. Also, we are trying our customer reliance on our services, which will naturally best in returning to profitability as early as possible by link up the increase in profit of our businesses. achieving our goals in 2012 through profitability Dear Shareholders, improvement and cost reduction. Dear Shareholders, Hanjin Shipping, our major operating company, expects As mentioned earlier, we will try our best in turning the Upon our 74th Annual Shareholders General Meeting, we would like to thank the current oversupply situation to continue due to the current crisis into a new opportunity. We will continue our you for the unwavering support you have shown us. delivery of new vessels this year. However, they also efforts in overcoming the current difficulties and in expect the market to recover gradually as major shipping returning to profitability as early as possible this year. Last year was marked by huge operating losses caused by from KRW 23.9 billion to KRW 36.2 billion thanks to the carriers are trying to bring balance to demand and supply several difficulties including shipping market profits we made from trademark rights and building through service rationalization and to increase freight Once again, we look forward to your unwavering support deterioration, hiking oil prices and the economic crisis in leases. rates up to sustainable level. and faith in us. May God bless you and your family with the Euro zone. health and happiness. In case of our operating company, Hanjin Shipping This year we expect to encounter many difficulties again However, reminding ourselves that “crisis is another achieved total sales of KRW 9.5 trillion, which is 1% less due to the continuous hike in oil prices caused by the Thank you. opportunity”, we will try our best in showing you of our than that of last year. However, its operating loss recorded unstable political situation in the Middle East and to the appreciation by returning to profitability in the year 2012. KRW 492.6 billion as a result of the economic slump of economic slow-down of the major economies. However, the world s major economies, fall in freigt rates due to in order to return to profitability, we are planning on 2012. 3. 16 Let us share with you our 2011 performances. oversupply of vessels, hike in fuel prices caused by the executing the following action plans: political situation in the Middle East and northern Africa. CEO Eun Young Choi We achieved KRW 36.2 billion in operating revenue, We will improve management activities of our Hanjin Shipping Holdings Co., Ltd. KRW 301.8 billion in operating loss and KRW 285.9 CyberLogitec, IT specialist in shipping and logitiscs, affiliates. billion in net loss. This includes KRW 327.1 billion of achieved 3% increase in total sales over last year from valuation loss by equity method for subsidiaries. If KRW 69.7 billion to KRW 71.6 billion. However, the We will review and improve business structure in excluded, the net profit adds up to KRW 18.3 billion. company also made operating loss of KRW 1.5 billion container, bulk, terminal, 3PL, IT and more. All Our operating revenue jumped by 52% over last year due to expenses such as additional purchase of businesses should be operated based on the system 4 5 HANJIN SHIPPING HOLDINGS 2011 BUSINESS RERORT Company Overview Established Hanjin Logistics Inc. (HJL) in Chicago Objectives 2001 Opened 120-acre exclusive container terminal in Oakland CKYH Alliance Agreement Holding business that controls, provides managerial guidance, Resource development. Launched 5500TEU vessel, the Hanjin Cairo, into Pendulum service organizes and rears all sorts of business of its subsidiary by Agriculture. Achieved OHSAS 18001 certification acquiring and owning its shares or equities. Human dispatch service. Signed terminal agreement with PSA to continue long-term partnership Shipping. Clerical support to joint development of goods or services, 2002 Opened newly constructed terminal at Pier T, Long Beach Port and terminal services. sales and equipments and joint use of computer system with Added China-Northwest Europe (CNE) service in cooperation with Coscon Warehousing. subsidiaries. Reinforced the All Water and Transatlantic Services (AWE1, 2, 3, and TAS) with CKYHS Real estate leasing. Provision of materials and equipments necessary to Began to offer mobile service for PDA users at Hanjin Shipping's Homepage (FEB) Shipbuilding and repair. information research services, production, sales, distribution, Split Pendulum Express Service into PNX (US) and NEX (Europe) to enhance service quality (FEB) Ship sales and chartering service. consulting, training, export using data processing and Introduced services to Vietnam with Sinokor (MAR) Launched North China-Indonesia Express Service (NIX) jointly with COSCO (MAR) Port & terminal operation and development stevedoring. information telecommunications technology. 2003 Total logistics. Technology research and development, provision of Deployed 5750TEU vessel; Hanjin Basel (MAR), Hanjin Lisbon (MAY), Hanjin Madrid (JUN), Hanjin Chicago (JUL) Software business, Information & Telecommunications technology information and service consignment business. Sooho Cho appointed Chairman of Hanjin Shipping (JUL) business, Information & Telecommunications service Management consulting. Started the second phase on-dock operation of the Dedicated Terminal in Long Beach (AUG) business, and the development, sales, service, rent, Market research and management consulting. Accredited by Bureau Veritas Quality International for Quality, Environmental and Health & Safety Management Systems (DEC) installation, maintenance & repair and agencies related to License of intellectual property rights of brand and trademark Celebrated 10th Anniversary of the establishment of dedicated terminal in Aomi, Tokyo (APR) Value-added Information & Telecommunications business. rights, etc. All Hanjin Shipping vessels became fully compliant with the ISPS code (MAY) Honored by International Business Association in Long Beach for contribution to Long Beach regional development (MAY) Equipment (Container/chassis) production. Any and all businesses that are necessary to any of the 2004 New and renewable energy, environmental energy business. foregoing objectives. Listed on Forbes 400 A-List Companies (SEP) J. W. Park appointed President & CEO of Hanjin Shipping (OCT) Restructured PDE, PNW and PDS that connect major ports in China with US West Coast (OCT) History Named the Best Partner by Samsung Electronics in China (JAN) Ordered three 6500 TEU class vessels to Hyundai Heavy Industries (FEB) 1949 Established Korea Shipping Corp.ƒ Signed MOU with Sebang to integrate the control of berths in Gamman and Gwanyang Terminals (MAR) 1968 Privatized Korea Shipping Corp. Named one of the Top Ten Companies that will lead Korea's future economy by Dong-4 Ilbo (APR) 1977 Established Hanjin Container Lines Ltd. MGS, a new weekly Asia-Mexico/Guatemala feeder service launched (JUN) 2005 1978 Established Korea`s first Middle East Route Deployed two 8000 TEU class vessels in Transpacific trade, the Hanjin Boston and the Hanjin Miami (JUN) 1979 Introduced Transpacific Service Won Best Buy's 2005 Quality Partnership Award (JUL) 1986 Launched All-Water East Coast Service, and Korea-Japan Service Opened exclusive terminal in Seattle,