HANKOOK TIRE 2014 ANNUAL REPORT CEO Message Mission & Vision CONTENTS Financial Highlights Business Portfolio BUSINESS HIGHLIGHTS / Top Management / 002 Financial Highlights Global Presence / Affiliates / 004 Market Analysis Market Analysis 006 2014 News Highlights COMPANY PROFILE / Organizational Structure / 010 CEO Message 2014 News Highlights 012 Top Management 017 Organizational Structure 018 Mission & Vision 022 Global Presence 024 Business Portfolio 026 Affiliates INNOVATION UNLIMITED TECHNOLOGY UNLIMITED 042 Steady Investment in R&D 045 Kontrol Technology 046 New and Innovative Products BUSINESS 048 Design Innovation 050 Motorsports 052 Global Automotive Partnerships HIGHLIGHTS EXPANSION UNLIMITED 056 Ensuring Global Competence 058 Marketing Communications 060 Analysis by Region and Future Strategy 066 Performance Analysis of OE Tire Market and Future Strategy 068 Performance Analysis in Tire Market by Product Group RELATIONSHIP UNLIMITED 072 Corporate Social Responsibility Activities 074 Proactive Culture 076 Risk Management 079 Financial Report 106 Global Network 107 Milestones 108 Corporate Information CEO Message Mission & Vision CONTENTS Unit: KRW in Billions Business Portfolio FINANCIAL HIGHLIGHTS K-IFRS, Total on Consolidated Basis BUSINESS HIGHLIGHTSHI / Top Management Sales Operating Income Stock Market Data / 002 Financial Highlightsigh Global Presence / Affiliates 004 Market Analysisallyys 2014 2013 2012 2011 2010 006 2014 News HighlightsHi Year High (Unit: KRW) 65,100 66,000 50,400 50,000 34,450 Year Low (Unit: KRW) 48,350 43,200 40,100 27,650 20,000 COMPANY PROFILEPR High / Low 1.35 1.53 1.26 1.81 1.72 / Organizational Structure 7,040.1 7,069.2 1,031.0 1,031.6 010 CEO Messageage 6,680.8 Fiscal Year-end Final Offering (Unit: KRW) 52,700 60,700 47,000 45,250 31,750 918.8 012 Top Managementem Total Number of Shares (Unit: Share) 123,875,069 123,875,069 123,875,069 152,189,929 152,189,929 Market Capitalization (Unit: KRW in Trillions) 6.53 7.52 5.82 6.89 4.83 017 Organizationalonna Structure Average Daily Trading Volume (Unit: Share) 332,962 371,923 607,600 1,002,988 721,002 018 Mission & VisionViissi Dividend per Share (Unit: KRW) 400 400 400 400 350 022 Global Presenceseen 024 Business Portfolioort 2010-2011: Hankook Tire before spin-off | Listed on the Korea Exchange (KRX) | Par Value: KRW500 | ISIN Code: KR7000240002 | Total number 026 Affiliates of voting shares: 145,189,929 2012-2014: Hankook Tire after spin-off | Listed on the Korea Exchange (KRX) | Par Value: KRW500 | ISIN Code: KR7161390000 | Total number of voting shares: 123,852,681 INNOVATIONON UNLIMITED TECHNOLOGYOGY UNLIMITED 2012 2013 2014 2012 2013 2014 042 Steady Investmentesst in R&D Data per Share Consolidated Basis 045 Kontrol Technologychhn 2014 2013 2012 2011 2010 046 New and Innovativennoo Products Net Income (Unit: KRW in Millions) 396,428 456,866 148,845 267,189 358,902 048 Design Innovationoovva Earnings per Share (Unit: KRW) 3,201 3,689 1,202 1,840 2,472 050 Motorsportstss Cash Dividend Rate (Unit: %) 12.50 10.84 33.28 21.74 14.16 052 Global Automotiveomm Partnerships Cash Dividend Yield (Unit: %) 0.76 0.66 0.85 0.88 1.10 Ordinary Income EBITDA EXPANSIONN UNLIMITEDU (Earnings Before Interest, Taxes, Depreciation and Amortization) 2010-2011: Hankook Tire before spin-off | 2012-2014: Hankook Tire after spin-off 056 Ensuring Globalloob Competence 058 Marketing CommunicationsCCoo 060 Analysis byy RegionRRe and Future Strategy Stock Price Trends (Past 5 Years) Stock Price (Unit: KRW) Trading Volume (Unit: Share) 989.7 1,444.0 1,460.6 066 Performancecee Analysis of OE Tire Market and Future Strategy935.6 889.0 1,313.7 068 Performancecee Analysis in Tire Market by Product Group 70,000 25,000,000 60,000 RELATIONSHIPSH UNLIMITED 20,000,000 50,000 072 Corporate SocialSSoo Responsibility Activities 074 Proactive CultureCuullt 40,000 15,000,000 076 Risk Managementgeem 30,000 10,000,000 079 Financial Reportep 20,000 5,000,000 106 Global Networkwwoo 10,000 107 Milestones 0 0 2012 2013 2014 2012 2013 2014 108 Corporate InformationInnffo 20102011 2012 2013 2014 Before August 29, 2012: Hankook Tire before spin-off August 30-October 2, 2012: Trading suspension due to spin-off After October 4, 2012: Hankook Tire after spin-off 002 HANKOOK TIRE ANNUAL REPORT 2014 003 INNOVATION UNLIMITED CEO Message Mission & Vision CONTENTS MARKET ANALYSIS Business Portfolio BUSINESS HIGHLIGHTSHIGHLIGHTS / Source: IMF Unit: KRW | Source: Bank of Korea Top Management Global Economic Growth Rate in 2014 Exchange Rates in 2014 / 002 Financial Highlightsighhllights Global Presence / EUR/KRW USD/KRW JPY100¥/KRW CNY/KRW Affiliates 004 Market Analysisallyyssisis 1,600 006 2014 News HighlightsHigghlights 7.4% 5.8% COMPANY PROFILEPRROROFILE / 1,500 Organizational Structure 010 CEO Messageage 012 Top Managementemment 3.3% 3.4% 2.4% 1,400 017 Organizationalonnaall StructureStructure 0.8% 018 Mission & VisionViissiioon 0.1% 1,300 022 Global Presenceseenncce 024 Business Portfolioorttffolio The World USA Europe Japan China India Korea 1,200 026 Affiliates INNOVATIONON UNLIMITEDUNLIMITED 1,100 Raw Material Prices in 2014 TECHNOLOGYOGY UNLIMITEDUNLIMITED 1,000 042 Steady Investmentesstmment in R&D Natural Rubber RSS#3 (Ribbed Smoked Sheet) 045 Kontrol Technologychhnnoology TSR20 (Technically Specified Rubber) SICOM Monthly Price (Unit: USD/Ton) 900 046 New and Innovativennoovvative ProductsProducts 048 Design Innovationoovvaattion 4,000 200 050 Motorsportstss 180 052 Global Automotiveommootive Partnerships3,000 160 EXPANSIONN UNLIMITEDUUNLIMITED 2,000 0 (Month) 0102 03 04 05 06 07 08 09 10 11 12 056 Ensuring Globalloobbaal CompetenceCompetence 1,000 058 Marketing CommunicationsCCoommmunications 060 Analysis byy RegionRReeegion and Future0 Strategy (Month) 0102 03 04 05 06 07 08 09 10 11 12 Oil Prices in 2014 Unit: USD/bbl | Source: Monthly Trend 066 Performancecee AnalysisAAnalysis of OE Tire Market and Future Strategy Note: Average price based on shipments in the next month (FOB, USD/MT) BRENT WTI 068 Performancecee AnalysisAAnalysis in Tire Market by Product GroupGroup 140 RELATIONSHIPSHIPP UNLIMITEDUNLIMITED 120 072 Corporate SocialSSooccial ResponsibilitySynthetic Activities Rubber Source: BD-Platts (CFR Taiwan Weekly Spot Price), SM-Platts (FOB Korea) Basic Materials Price Trend (Unit: USD/Ton) Butadiene Styrene Monomer 074 Proactive CultureCuullttuure 100 076 Risk Managementgeement 4,000 80 079 Financial Reportepoort 3,000 60 106 Global Networkwwoork 107 Milestones 2,000 40 108 Corporate InformationInnffooormation 1,000 20 0 0 (Month) 0102 03 04 05 06 07 08 09 10 11 12 (Month) 0102 03 04 05 06 07 08 09 10 11 12 004 HANKOOK TIRE ANNUAL REPORT 2014 005 INNOVATION UNLIMITED CEO Message Mission & Vision CONTENTS 2014 NEWS HIGHLIGHTS Business Portfolio BUSINESS HIGHLIGHTSHI / Top Management Hankook Tire to Radically Improve Technological Leadership with the Construction of Hankook Tire to Provide Run-flat OE Tires for the Mercedes-Benz New C-Class / 002 Financial Highlightsigh Global Presence 01 04 / HANKOOK TECHNODOME, the Company’s New Central Research Center and the BMW New MINI Affiliates 004 Market Analysisallyys 006 2014 News HighlightsHi With the ground-breaking ceremony for its new central research center Hankook Tire has started to supply run-flat Original Equipment (OE) tires held in June 2014, Hankook Tire stated its ambition to soar as a top-tier for the Mercedes-Benz New C-Class and the BMW New MINI. Run- global tire brand through the strengthening of its technological leadership. flat tires are a new type of tires with enhanced safety features that are COMPANY PROFILEPR / A massive KRW266.6 billion project, HANKOOK TECHNODOME supplied exclusively to premium auto brands such as Mercedes-Benz and Organizational Structure 010 CEO Messageage embodies the company’s unwavering commitment to excellence in tire BMW. Hankook Tire has proved it possesses global top-tier technology 012 Top Managementem technology. Slated to be completed by 2016, HANKOOK TECHNODOME and quality leadership by its entry into the run-flat segment, which is at the will be built as a seven-story building (with two basement floors and cutting edge of modern tire technology. The tire the company supplied to 017 Organizationalonna Structure five above-ground floors), measuring 96,328m2 in total floor area and the German automotive powerhouses in its run-flat version is the Ventus 018 Mission & VisionViissi 70,387m2 in plottage. HANKOOK TECHNODOME will be equipped S1 evo2, the company’s flagship Ultra-High-Performance (UHP) tire, which 022 Global Presenceseen with state-of-the art test equipment that will ensure its technological boasts excellent driving performance, ride comfort and safety. leadership in the future as well as over 90 labs optimized to ensure a top- 024 Business Portfolioort class research environment. Other areas set aside for training, rest and 026 Affiliates entertainment are planned to help the research professionals maximize their performance in a creative environment. INNOVATIONON UNLIMITED 02 Expanded Global Footprint with the Construction of the Tennessee Plant 05 TECHNOLOGYOGY UNLIMITED the Growth of Children and Teens 042 Steady Investmentesst in R&D Hankook Tire is ready to accelerate its offensive and expand its presence Hankook Tire collaborated with university students to implement its 045 Kontrol Technologychhn in North America with the ground-breaking ceremony in October 2014 of 2014 “Dream With” project to Level Up Community Child Centers as part 046 New and Innovativennoo Products