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HMM INSIDE 2011WE CARRY THE FUTURE
We Carry the Future!Table of ContentsFinancial Highlights
01. Corporate Overview
02. Unit Information
03. General Information
04. Sustainability Management
05. Financial Information
Hyundai Merchant Marine-which consists
of experts unrivaled in the shipping and
logistic industry - seeks to develop the
best solutions for all its customers and
contributes to enhancing the happiness of
the global community.
FINANCIAL HIGHLIGHTS
Statements of Income
(Unit: KRW Billion)
22000099 22001100 22001111
Revenue 6,115 7,978 7,188
Cost of Sales 6,561 7,242 7,344
Selling and Administrative Expenses 120 159 162
Operating Income -565 598 -367
Profit(Loss) before income tax -798 525 -453
Profit(Loss) for the year -802 540 -473
Statements of Financial Position
(Unit: KRW Billion)
22000099 22001100 22001111
Total Assets 8,341 8,478 8,432
Total Liabilities 6,127 6,064 6,732
Shareholders' Equity 2,214 2,415 1,700
Statements of Cash Flows
(Unit: KRW Billion)
22000099 22001100 22001111
Cash Flows from Operating Activities -154 308 75
Cash Flows from Investing Activities -77 342 -367
Cash Flows from Financing Activities 782 -239 -285
Net Changes in Cash & Cash Equivalents 552 412 -578
Cash & Cash Equivalents, Beginning of Year 220 771 1,172
Cash & Cash Equivalents, End of Year 771 1,172 590
*Accounting Method : Year 2009 (K-GAAP), Year 2010 & 2011 (K-IFRS)
*Above data is based on separate financial statements.
HMM INSIDE 2011
CAPEX
(Unit: KRW Billion)
22000099 22001100 22001111
CAPEX 256 534 771
Dividened
(Unit: KRW)
22000099 22001100 22001111
Dividend per share (Common stock) 500 500 -
Dividend per share (Preferred stock) 600 600 N/A
Liquidity
22000099 22001100 22001111
Debt Equity Ratio 276.7% 251.1% 396.0%
Net Debt Equity Ratio 202.4% 178.5% 310.0%
Credit Ratings
22000099 22001100 22001111
Korea Ratings Co., Ltd.Bond A A A
CP A2 A2 A2
Bond A A A
CP A2 A2 A2
*Accounting Method : Year 2009 (K-GAAP), Year 2010 & 2011 (K-IFRS)
*Above data is based on separate financial statements.
*All preferred stock has been disposed of
05
CEO INTERVIEW
HMM INSIDE 2011
President & CEO
Suk-Hui Lee
HMM believes the shipping industry has
entered a turning point of the paradigm
shift.
The global shipping business has already
entered an era of limitless competition of
Economy of Scale triggered by European
leading carriers which competitively order mega
ships during the bullish cycle. HMM, however,
doesn t believe that the number of mega-sized
vessels is the only aspect of a shipping
company s competiveness. Mega-sized vessels
can provide great efficiency on simple ocean
transport, but they don t assure customer
satisfaction. Customers will seek the company
that truly cares about optimizing their supply
chain.
In the end, HMM believes Scale Competition
gives way to Value Competition. In other
words, the shipping industry will have to be
redefined from a cargo delivery service to an
SCM provider. The new leader in the shipping
industry will need to be one which provides
customer oriented value. HMM has reconfirmed
company goals and direction by declaring a new
vision and new core values in order to take
advantage of this paradigm shift in the shipping
industry.
HMM s new vision statement is to upgrade the
company viewpoint from Cargo Delivery
Myopia to Customer Value Developer by
providing consolidated solutions which will
optimize customer supply chains worldwide.
To achieve the company s vision, HMM will have
to be the best company in order to challenge the
paradigm shift of winner-takes-all and limitless
competition. Thus, HMM endeavors to become
the best company in four areas: human
resources, quality of services, costs
competitiveness, and eco-friendly management.
The shipping industry is well known to be a cyclical business with a relatively predictable up-cycle and
down-cycle. However, recently the cyclical risk has increased and the range of fluctuation has become
unpredictable. In contrast to the historic bull market of 2010, 2011 was a year of economic collapse with
every global carrier experiencing the worst market ever caused by slow demand growth, capacity
surplus and rising oil prices. In 2012, the macro economy will likely worsen due to the European debt
crisis and skyrocketing oil prices caused by the political state of affairs in Iran. Moreover, the supply-
demand balance will deteriorate due to over-capacity versus established orders waiting for delivery. Not
surprisingly, fiercer competition among shipping companies is anticipated, and only shipping companies
with strong competiveness are eligible to become survivors.
07
Hyundai Merchant Marine - a company of unrivaled
experts offering the best solutions, going beyond
customer satisfaction and making happiness of the
global community.
Vision Statements
First, HMM will be the highly capable
expert group.
Talent is one of Hyundai Group s corporate
culture 4Ts: Trust, Tenacity, Togetherness and
Talent. HMM s goal is to be the market leader with
workers of creativity, passion, and expertise. HMM
s HR system is designed to educate workers in
areas of knowledge expertise and professional
attitude development. In addition, to prevent
personal mannerism caused by repetition of tasks,
HMM complements an HR system with Job
Rotation, which offers various benefits to both
company and workers. Moreover, Job Rotation
stimulates a habitual work process by promoting
different ways thinking and offers new opportunities
and various work experiences to employees.
Second, HMM will provide the highest
quality services.
Instead of simply reducing cost of per unit service,
HMM aims to enhance the value of per unit service.
In 2011 HMM achieved innovative working methods
by establishing a Smart Working environment of
Unified Communication Platform. This is a platform
for the working process evolution so that HMM can
provide better solutions to any requests and can
serve customers needs rapidly and accurately. At
the same time, HMM completed its major project
Process Innovation Phase 2 (PI2) which supports
efficiency on Customer Related Management
(CRM), Supply Chain Management (SCM) and
Strategic Enterprise Management (SEM). As a
result, HMM has completed a platform to develop
and optimize SCM solutions to individual
customers businesses.
HMM INSIDE 2011
Third, HMM maintains excellent yield
management via cost competency.
If carrier service quality and freight rate levels
are similar, cost competitiveness shall be a
crucial factor for yield management. In 2011,
HMM placed a concentrated effort toward vessel
cost reduction. For the Container Division, HMM
successfully ordered five 13,000 TEU container
vessels at an attractive price. These new vessels
will be delivered in 2014 and will contribute to
improvement for cost per box. Dry Bulk Division
was able to minimize losses in 2011 through
bulk ship cost restructuring in spite of
comparatively worse market conditions of 2010.
In 2012, HMM will continue TCR (Total Cost
Reduction) with corporate-level cost reductions
to enhance profitability by various activities
related to port fees, cargo cost, fuel cost and
charterage.
Fourth, HMM will become the best in
eco-friendly management.
HMM has been pursuing environmentally sound
and sustainable growth as the importance of
environmental issues continues to grow day by
day. HMM kept up green movement in various
fields such as energy saving, recycling and
developing eco-friendly ships. After continued
efforts on Green Management, HMM was
certified Green Management System by the
Korean government in 2011, the first ever in the
Korean shipping industry. At the same time,
Seaintel (Maritime Analysis) placed HMM as one
of the world s top 3 eco-friendly shipping
companies as a result of global shipping
companies eco-friendly achievements
evaluation. Aside from successful results in
green movement, HMM desires to keep up its
reputation as a leading eco-friendly shipping
company. In line with HMM s new vision, we
believe eco-friendly managements will bring
happiness to the global community.
In all respects, HMM endeavors to become the
world market leader and will continue to be the
best company, not in terms of size, but in terms
of value.
09
Corporate OverviewBusiness Portfolio
Fleet
Guidance
ttrust
Business Portfolio
Corporate Overview Unit Information
(Unit: No. of vessels)
2009 2010 2011
Container 61 62 62
Wet Bulk 53 43 39
Dry Bulk 48 59 76
Total 162 164 177
FLEET COMPOSITION
*Owned and Chartered over one year
*Above data is year-end basis.
Container
Wet Bulk
Dry Bulk
(Unit: KRW Billion)
2009 2010 2011
Container 4,128 5,721 5,260
Wet Bulk 1,189 1,113 885
Dry Bulk 798 1,253 1,043
Total 6,115 8,087 7,188
REVENUE BREAKDOWNContainer
Wet Bulk
Dry Bulk
2009
33%
30%
37%
HMM INSIDE 2011
43%
22%
35%
2011
19%
13%
68%
14%
15%
71%
15%
12%
73%
20112010
26%
36%
38%
20102009
*Accounting Method : Year 2009 & 2010 (K-GAAP), Year 2011 (K-IFRS)
General Information Sustainability Management Financial Information
2009 2010 22001111
Container Revenue 4,128 5,721 5,260
Operating Income -446 669 -261
OI Margin -10.8% 11.7% -5.0%
Wet Bulk Revenue 1,189 1,113 885
Operating Income 58 7 -6
OI Margin 4.9% 0.6% -0.7%
Dry Bulk Revenue 798 1,253 1,043
Operating Income -177 -75 -100
OI Margin -22.2% -6.0% -9.6%
Total Revenue 6,115 8,087 77,,118888
Operating Income -565 601 --336677
OI Margin -9.2% 7.4% --55..11%%
OPERATIONAL RESULT
13
*Accounting Method : Year 2009 & 2010 (K-GAAP), Year 2011 (K-IFRS)
(Unit: KRW Billion)
Corporate Overview Unit InformationHMM INSIDE 2011
(As of December 31, 2011)
Owned Chartered TToottaall
No. 1,000 Dwt Capacity No. 1,000 Dwt Capacity NNoo..11,,000000 DDwwtt CCaappaacciittyy
Container* 8,000 TEU 4 396 34 5 499 43 9 895 77
6,000 ~ 8,000 TEU 5 402 34 8 605 52 13 1,007 86
4,000 ~ 6,000 TEU 13 843 64 9 561 44 22 1,405 108
4,000 TEU 18 453 36 18 453 36
Container total 22 1,642 133 40 2,119 175 62 3,761 307
Wet Bulk Gas carrier** 6 454 790 5 331 503 11 785 1,293
Crude tanker 8 1,815 10 2,237 18 4,053
Other tanker 2 101 8 322 10 423
Wet bulk total 16 2,370 790 23 2,890 503 39 5,260 1,293
Dry Bulk Capesize 12 2,048 8 1,437 20 3,485
Panamax 16 1,210 16 1,210
Supramax 20 1,090 20 1,090
Handy 1 38 10 276 11 314
Heavy Lift 9 234 9 234
Dry bulk total 13 2,087 63 4,246 76 6,333
Total 51 6,099 126 9,255 117777 1155,,335544
* Contaner capacity : 1,000 TEU
** Gas carrier capacity : 1,000 CBM
Owned and Chartered over one year
FLEET PROFILE
(Unit: No. of vessels)
22001122 22001133 22001144
OOwwnn CChhaarrtteerr OOwwnn CChhaarrtteerr OOwwnn CChhaarrtteerr
Container 13,100 TEU 5 5
5,000 TEU 5
Dry Bulk Capesize 2 3
Panamax 3
Supramax 2 3 5
Handy 1
Heavy Lift 1
Total No. of new vessels 4 16 10 5
FLEET EXPANSION PLAN
Owned and Chartered more than two years
Fleet
General Information Sustainability Management Financial Information15
2011 22001122((EE)) YoY Growth
Revenue (KRW Bn) 7,188 7,765 8.0%
Revenue (USD Mn) 6,519 7,257 11.3%
Operating Income (KRW Bn) -367 131 Turn Black
CAPEX (KRW Bn) 771 369 52.1%
Volume (1,000 TEU) 2,959 3,248 9.8%
2012 GUIDANCE
(Unit: No. of vessels)
EEnndd ooff 22001111 EEnndd ooff 22001122 TToottaall NNeett CChhaannggee
OOwwnneedd CChhaarrtteerreedd TToottaall OOwwnneedd CChhaarrtteerreedd TToottaall NNoo.. %%
8,000 TEU 4 5 9 4 10 14 5 56%
6,000 ~ 8,000 TEU 5 8 13 3 9 12 1 8%
Container 4,000 ~ 6,000 TEU 13 9 22 13 10 23 1 5%
4,000 TEU 18 18 15 15 3 17%
Container total 22 40 62 20 44 64 2 3%
Crude Tanker 8 10 18 7 8 15 3 17%
Wet BulkProduct Tanker 2 8 10 2 10 12 2 20%
Gas Carrier 6 5 11 6 4 10 1 9%
Wet bulk total 16 23 39 15 22 37 2 5%
Capesize 12 8 20 12 15 27 7 35%
Panamax 16 16 21 21 5 31%
Dry Bulk Supramax 20 18 2 12 14 4 22%
Handy 1 19 22 1 24 25 3 14%
Dry bulk total 13 63 76 15 72 87 11 14%
Total 49 128 117777 50 138 118888 11 6%
FLEET PLAN
Owned and Chartered over one year
Guidance
Liner Unit
Bulk Unit
Unit Information
ttalent
Liner Unit
INTRODUCTION
LINER UNIT
Global service network with more than 51routes and over 100 ports of call enablesHMM to collaborate more strategicallywith the world’s major shippingcompanies.Since its inception in 1976, Hyundai Merchant
Marine (HMM) has continuously endeavored to
become a premier global shipping and logistics
company. With 62 operating vessels and 51
available services, HMM’s Liner business covers
Transpacific trade, Asia-Europe trade, Intra Asia
trade and Emerging market trade.
Corporate Overview Unit InformationHMM INSIDE 2011
VOLUME
Service Route Routes
Trans-Pacific Trade USWC 9
USEC 5
Asia-Europe Trade N. Europe 6
Mediterranean 1
Atlantic 4
Intra Asia Trade Middle East 5
India 2
Others 7
Emerging Market Trade South America 5
Russia 2
Australia 4
East Africa 1
Total 51
(Unit: 1,000 TEU)
Volume breakdownIn 2011 HMM managed to achieve 2.96 Million TEU
lifts to the worldwide destinations. HMM carries
broad range of products including furniture,
electronic gadgets, apparel and tires. HMM
continuously developed specialized cargoes from
reefers, oversized cargoes to the dangerous
cargoes.
HMM has a trustful partnership withglobal leading carriers.As a member of The New World Alliance (TNWA) since
1998, HMM has allied with the American President
Line (APL) and Mitsui OSK Line (MOL) to form what is
now the premier carrier group in the world. Since
March 2012, HMM newly formed the G6 Alliance,
which includes members of the Grand Alliance (GA) -
Hapag Lloyd, NYK and OOCL- and The New World
Alliance (TNWA). As a result, G6 Alliance will create
one of the leading networks in the Far East to Europe
and Far East to Mediterranean container shipping
markets with more than 90 ships in nine services
calling at more than 40 ports in Asia, Europe and the
Mediterranean. The integrated cooperation of these six
liners will enable product and service features to be
easily adjusted to market requirements.
General Information Sustainability Management Financial Information19
2011 HMM CONTAINER VOLUME
Corporate Overview Unit InformationHMM INSIDE 2011
Exclusive rail arrangements with cutting-edge infrastructure provide greatercoverage in each of the crucial regions.HMM’s container business delivers quality door to
door services rapidly across its global network. To
retain its advantage, the company utilizes many
facilities worldwide: HII (Hyundai Intermodal, Inc.) in
the U.S., premium block train services in Europe,
and various feeder and barge services in Asia.
In response to the needs of its customers, the
company is also developing value-added inland
intermodal services within its existing logistics
network. HMM also operates a team to construct
and implement diverse transportation solutions,
tailored to the logistics needs of shippers.
HMM aims to enhance customers’ servicesatisfaction by effectively managingcontainer terminals.To link ocean transport service and Inland services
smoothly, terminals are the essential assets.
Container box handling knowhow at the terminal is
one of the thresholds to become a competitive
carrier. By efficient container box handling skills at
the terminals, it enables us to reduce
transportation cost and keep reliable shipping
schedules to the customers. Over the years,
“Prompt & Accurate box handling” has been proven
at the HMM’s operating terminals
As of 2012, HMM is operating 4 owned terminals,
CUT(California United Terminal), WUT(Washington
United Terminals), KHT(Kaohsiung Hyundai
Terminal) and HPNT(Hyundai Pusan New-port
Terminal). Furthermore, HMM was selected as one
of its key operators in Rotterdam, RWG(Rotterdam
World Gateway) with major companies such as
DPW, APL, MOL & CMA-CGM, which will open in
2014.
INTERVIEW
LOOKING BACK ON 2011
Looking back on the container industry in 2011,
vessel capacity increased remarkably with
deliveries of mega-sized vessels, and demand
experienced a slow down due to global economic
contraction. Thus, competition between carriers
grew fiercer due to supply-demand imbalance.
Rising oil prices also burdened carriers.
Furthermore, competition became more severe
after Maersk introduced a new service “Daily
Maersk” to the Asia-Europe routes with aggressive
marketing. Consequently, the Container Sector
experienced an estimated USD 5 billion loss in 2011.
HMM focused on sales reinforcement to improve
P&L structure in order to overcome the tough
business environment in 2011. First of all, HMM
defined the year of 2011 as a “Bridging Year” to
prepare for the delivery of a five 13,000 TEU
megasized vessels for 2012. HMM also enriched its
customer relationship management system by
efficiently utilizing and upgrading CRM systems
based on its “Process Innovation Phase 2(PI2).”
Most importantly, six leading container carriers,
including HMM, had agreed to create The G6
alliance in 2011. The G6 alliance is an integration of
both TNWA (The New World Alliance) and GA
(Grand Alliance) and will cover the Asia-Europe
market. This will provide a unified basis for HMM to
sustain a very competitive main container carrier in
2012 and will allow the company to step forward as
a global leading carrier.
General Information Sustainability Management Financial Information21
Head of Liner UnitSoo-Ho Kim
Corporate Overview Unit InformationHMM INSIDE 2011
MARKET FORECAST ANDSTRATEGY FOR 2012
As economic recovery is uncertain for 2012, the
tough business environment the company
experienced in 2011 continues due to an increase of
vessel supply and a slowdown in growth of the
world’s major leading countries. HMM is preparing
for the future by implementing various strategies
such as CRM enhancement, and cost
competiveness reinforcement and by expanding the
emerging market business for mid to long-term
growth.
Enhancing CRM (Customer Relationship Management)HMM will concentrate on service reinforcement
through “The G6 Alliance.” “The G6 Alliance”
provides customers with various choices and
upgraded service by maximizing efficiency of
HMM’s vessel utilization as well as making it
possible to expand global sales networks.
HMM will place more efforts on providing
distinguished services to customers and will
achieve this with strengthened client service
training and the enhanced CRM program, which
was upgraded last year.
Reinforcement of Cost CompetitivenessHMM will aggressively reinforce cost
competitiveness per unit through economy of scale
with the delivery of 5 vessels of 13,100 TEU. Delivery
of these vessels began in February of 2012. HMM
also plans to reduce costs by rationalizing route
and terminal operation and minimize fuel
consumption by enhancing navigation shipping
systems. Consequently, HMM provides the best
service with reasonable prices by securing cost
competitiveness in quantity and maximizing
operation efficiency versus lowering tariff rates per
vendor.
Creating a Base for Emerging MarketsDue to economic downturn in advanced countries
and limits on domestic consumption in China,
carriers are actively looking to find emerging
markets in Brazil, India, Africa, and so on. For
diversification of profitability, HMM plans to drive
service rationalization of routes to the North-South
and East-West trade.
In respects the Asia-South America service, which
was started in 2008, HMM created the Emerging
Trade Management Team in order to strengthen
sales in the North-South trade in 2011, focusing on
markets in South America, Russia, Australia, and
Africa. This year, HMM will strengthen its sales
force to improve profitability in the North-South
trade as well as place more efforts toward
developing additional emerging markets in the
future.
(Source : Alphaliner)
Bulk Unit
WET BULK INTRODUCTION
TANKER SERVICE
With growing contract commitments anda rising fleet, the Tanker Team goes fromstrength to strength.The Tanker Service has been at the center of
HMM’s growth over the past few years, and the
company aims to maintain its leading role. HMM’s
Tanker Service is organized in 2 teams: Crude
tanker team and Product tanker team. Its fleet
consists of 18 crude tankers including 10 VLCCs, 8
product tankers and 4 chemical tankers.
Currently around 47% of the crude tanker fleet and
37% of the product tanker fleet (LR, MR) have long-
term contract commitments, while the remainder
operates in the spot market. Each sector - even
each individual vessel - has different primary
business routes. VLCC tankers engaged in long-
term contracts with domestic and foreign oil
companies transport crude oil from the Middle East
to the Far East; whilst VLCCs committed to the spot
market operate from the Middle East or West Africa
to destinations either in the Far East or the West.
Smaller vessels, such as Aframaxes, MRs and
chemicals, usually operate for short-haul trips
between Southeast Asia and the Far East.
Fleet expansion necessitated that new staff were
posted to both London and Singapore in 2005. The
London office is currently responsible for the
Suezmax and MR business, while the chemical
tanker business is managed by the Singapore
office.
GAS CARRIER SERVICE
Dedicated to maintaining its presence inthe LNG and LPG markets, the GasCarrier Team will focus on fosteringgreater capacity.HMM’s LNG carrier service was launched in 1994
as the first Korean LNG carrier ever. Since the first
Korean flagged vessel “Hyundai Utopia”
transported LNG cargoes from Indonesia to Korea,
HMM has become the largest LNG carrier in Korea.
With Korea Gas Corporation (KOGAS), HMM has
established a 20~25-year-long term contract :
currently its nine vessels (one on charter) convey
KOGAS cargoes in diversified routes among Korea,
Indonesia, Malaysia, Qatar, Oman and Yemen. In
2011, HMM carried 7.5 million tons of LNG, which is
approximately 22% of the total 33.9 million tons of
domestic imports.
HMM also won the bid for KOGAS’s Joint Venture
Company Project, starting in the mid of 2009, in
which the total of transportation reaches 3.5 million
tons of LNG annually from Sakhalin and Yemen.
HMM acquired an 18% ownership stake for four
new LNG vessels, and a 20-year contract to operate
one vessel (Yemen-Korea route) out of those four.
For LPG Carrier service, it was launched at Jan
2006 with the long-term chartered VLGC, “DL
Calla” and has provided high quality service based
on spot trading and T/C out. HMM has a plan to
operate a total of 3 vessels (VLGC) in 2012 and will
expand the fleet continuously in the future, in the
balance of market demand. We are ready to give
the best service to the wide range of customers all
around the world.
General Information Sustainability Management Financial Information23
Corporate Overview Unit InformationHMM INSIDE 2011
WET BULK INTERVIEW
LOOKING BACK ON 2011
In 2011, the Crude Tanker market experienced
difficulties due to a slowdown in demand, excessive
shipping supply and a rise of bunker prices.
Moreover, Libya’s oil export cuts and Iran sanctions
induced further volatility. However, HMM continued
to strengthen competitiveness due to preemptive
action against recession in Crude Tanker Service,
which takes half of the revenue in the Wet Bulk
Sector along with LNG Carrier Service’s stable
earnings.
During the super cycle of 2007-2008 in the Crude
Tanker market, HMM had foreseen a long-term
slowdown of the Crude Tanker market and
increased COA and charter-out contracts
beforehand; therefore, in the unpredictable market
fall in 2009 and 2010, HMM could generate profits.
HMM also anticipated the weak market last year
and endeavored in increasing long-term charter-
out contracts in advance; thus, HMM managed
difficulties in the Wet Bulk Division in 2011
Additionally, in the LNG Carrier Service which
covers 40% of wet bulk revenues, HMM gained
stable earnings through a 100% long-term contract
with KOGAS (Korea Gas Corporation) last year. At
the same time, in the LPG Carrier and Product
Service, HMM endeavored to improve its profit and
loss structure by developing new shippers, return-
voyage cargoes and charter-out contracts.
Head of Bulk UnitYoung-Joon Lee
MARKET FORECAST ANDSTRATEGY FOR 2012
Even though demand for crude oil in advanced
countries may decrease due to Europe’s financial
crisis and slowdown of the economy in the United
States, world oil demand is expected to grow as
developing nations grow in 2012 90.5 mb/d [over
last year 1.3mb/d], IEA . However, with massive
vessel deliveries scheduled, an aggravated state of
oversupply is expected. Therefore, a bearish market
is likely to continue in 2012.
In 2012, HMM will uphold competitiveness by
reinforcing overseas sales on Crude Tanker and
LNG Carrier Service and seek opportunities to
expand Crude Tankers and LNG vessels utilizing
the trough of industrial cycle. Furthermore, HMM
will minimize spot exposure and reduce costs to
overcome this difficult market situation.
Seeking opportunities to reinforceOverseas Sales on Crude Tanker Serviceand LNG Carrier ServiceThanks to many years of accumulated sales
expertise, as well as smart investment on vessels,
HMM will strengthen overseas sales of Crude
Tanker Service and LNG Carrier Service to improve
the company’s competitiveness in 2012. HMM will
seek to engage in oil shipping to China and other
countries as well as proactively participate in bids
on new projects.
In addition, with the ship building market currently
being at its low point, HMM will take this
opportunity to reconstruct competitive fleets
especially in Crude Tankers. HMM will carefully
observe the market situation, and when the time
comes, HMM will aggressively, but prudently, invest
in Crude Tankers.
Reducing Spot Exposure and Cost-SavingSpot oriented vessels are susceptible to risks;
therefore, HMM will increase charter-out contracts
to bring down spot exposure and mitigate any risks
through trading and hedging activities in FFA
(Forward Freight Agreement). Additionally, HMM
will proactively reduce fuel costs through slow
steaming on ballast voyages.
General Information Sustainability Management Financial Information25
(Source : Supply - Clarkson, Demand - IEA)
Corporate Overview Unit InformationHMM INSIDE 2011
DRY BULK INTRODUCTION
TRAMPER SERVICE
Utilizing the finest dry bulk and tonnagefacilities, the Tramper Team will continueto meet customer satisfaction.HMM Tramp Team carries a broad range of both
major and minor bulk commodities in segmented
sections ; consisting of Cape/Panamax, Handy
/Handymax and Dedicated Tonnage Parts.
The Cape/Panamax Part carries iron ore, coal,
grain, coke and so forth, with owned or chartered
vessels ranging from 60,000 up to 200,000 DWT.
Handy/Handymax transports iron ore, coal,
fertilizer, cement, salt, bauxite and other materials,
with tonnages from 20,000 up to 60,000 DWT. Both
Parts are keen and willing to take spot market and
long-term business opportunities, either in cargoes
or tonnages, and ready to expand their business
scope into the Atlantic market while increasing
their Pacific business volumes.
The Dedicated Tonnage Part executes iron ore, coal
and steel product shipments with 10 ore/coal
carriers and a single steel product carrier. These
vessels have been serving KEPCO and POSCO
exclusively on 15- to 20-year contracts, and starting
in 2010 they will also include Hyundai Steel. Based
on more than 20 years of experience, HMM plans to
further expand its services towards overseas clients
in such areas as giant steel mills and power plants.
HMM has established its global network in the U.K.,
U.S., Singapore and India to assist chartering and
business development; while port captains all over
the world support the efficient operations of
vessels.
BULK LINER SERVICE
Fulfilling 4 to 5 million ton deliveriesannually across routes all over the world,the Bulk Liner Team aims to keep itsservice lines in motion.For the past 30 years, HMM’s Bulk Liner Team has
provided liner services for assorted steel and
wooden cargoes on 13 trading routes worldwide -
with capacities ranging from 10,000 to 60,000 DWT.
The team offers service routes from the Far East
/Southeast Asia to the America/Europe/Asia
/the Middle East, and has pioneered HMM’s first
service lines into the Black Sea/India/China regions
from 2004 and South America from 2009 again.
With established local offices in China, the U.S.,
Europe and India - as well as Korea and Southeast
Asia - the team annually performs over 350 voyages
and delivers 4-5 million tons of general cargoes on
a range of chartered vessels.
The demands of international customers are met
with highly qualified shipping knowledge and
experienced cargo handling. Through safe vessel
operation, the efforts of HMM Bulk Liner Team have
always been geared towards the achievement of
zero claims.
General Information Sustainability Management Financial Information27
HEAVY LIFT & PROJECT SERVICE
After generations we are now looking toincrease our presence in the projectcargo market.Building on the success of various projects up to
2006, we launched the heavy-lift service in 2007. We
have made full use of our experience to establish
substantial market share in both projects and
plants in Korea, a primary hub of Asian project
activities and a primary source of project-related
equipment.
We currently provide project cargo services
between the Far East and the Middle East/India
using modern multipurpose carriers to carry
lengthy, super-heavy, and highly voluminous
cargoes such as petro-chemical equipment, wind
energy, power plant facilities, and so forth. To meet
clients’ needs, our project service offers
individually-tailored solutions using a 3D solution
system to consider the size and specific
requirements of each cargo.
In addition to our current Far East Middle East
Service, we will expand project cargo service
worldwide by 2014 by extending our service line
gradually to Europe & the Mediterranean Sea, the
U.S., Africa, Australia and further.
DRY BULK INTERVIEW
LOOKING BACK ON 2011
2011 was another tough year for the dry bulk
market due to new deliveries and unexpected
variables.
To describe the 2011 dry bulk market briefly, it
started weak, but recovered in the end. The market
was weak in the first half because of various
unfortunate events such as devastating weather
conditions in Australia and an earthquake in Japan,
which caused capacity surplus. Additionally, China’s
austerity measures brought a slump in iron ore
demand. In contrast, the second half of 2011 moved
to recovery as scrapping increased and slippage
rates reached approximately 35%. Also, iron ore
demand rebounded sharply as China’s raw material
imports resumed. Despite these factors, the level of
recovery was still insufficient as annual average
BDI in 2011 was 1,548, a 44% drop year-on-year.
Though the market was low, HMM could improve
profitability in the Dry Bulk Division, mainly due to
the four proper preemptive activities.
First, HMM successfully expended long-term
contracts of affreightment (COA) and charter-out
contracts for a fixed income.
Second, to improve profitability, HMM made extra
efforts to reduce the loss from return voyages.
Third, HMM consistently restructured costs to
enhance vessel cost competitiveness of high cost
vessels, which are chartered during strong
markets, by returning matured charter vessels or
renegotiating charter fees for the non-matured
vessels.
Lastly, HMM developing a new risk management
program. HMM improved operating risk
management through tight control of demurrages
and congestions. Also, HMM developed its FFA
simulation system (Mock Trading) to reduce risk
from forward derivations.
Corporate Overview Unit InformationHMM INSIDE 2011
OUTLOOK AND STRATEGY FOR2012
Due to the 2011 capesize market ending strongly,
HMM forecasted that market would go upward in
2012. However, throughout the 1st quarter, 2012 the
market headed down.
Positive expectations are still in. There will be a
boost in China’s imports if raw material prices drop.
Additionally, supply discipline has strengthened
thanks to scrapping or slippage of mid-sized
vessels because the market has stayed historically
low over the years. However, the aforementioned
are not enough to improve supply-demand
imbalance . (2012 S&D forecasts: 3% growth in
supply, 12% growth in demand).
2012 will be another challenging year. HMM will set
a primary strategy to strengthen the sales force,
improve P&L structure through reduction of vessel
costs, and improve risk management.
Enhance Sales Capability for SecuringFuture Growth EngineHMM will strategically enhance trampers sales
capability to secure market competitiveness, which
is less vulnerable to market fluctuations. By
strategically restructuring the business model and
regional portfolio, HMM will develop overseas sales
and new customer networks so that HMM can have
more strategic options to choose from.
While the Heavy Lift & Project Cargo Service
concentrates on Middle East routes, HMM plans to
expand service composition to East Indies &
Australia for new growth momentum. In 2012, new
opportunity is predicted for dedicated service, as
cargo contract biddings from several power
producers seem to have been increased. The
Dedicated Service Team will try to win biddings by
meeting customer requirements.
Enhance Vessel Cost CompetitivenessConsistent with last year, cost restructuring efforts
will continue this year. Vessel cost competitiveness
of high cost vessels, which are chartered during a
strong market, will be enhanced by returning
matured charter vessels or renegotiation of charter
fee for the others. To maintain long-term cost
competiveness, HMM is also looking for attractive
vessel expansion opportunities during the current
low market.
Risk Management HMM will continue concentrating on risk hedging by
FFA transaction. Risk hedging will allow HMM to
overcome volatile dry bulk markets through
rationalized risk scope. To diversify the volatility
risk, HMM will focus on systematic exposure
control by considering business nature and cost
structure.
General Information Sustainability Management Financial Information29
(Source : SSY)
General InformationStock information
HMM Developments
Overseas Organizations
Governance Structure
Major Shareholders
ttenacity
Stock information
HMM Developments
Corporate Overview Unit Information
SSttoocckk lliisstteedd iinn KRX (Seoul)
TTiicckkeerr 011200.KS
CCaappiittaall KRW 816,366 Million
NNuummbbeerr ooff sshhaarreess iissssuueedd Common Stock : 143,273,229
HHeeaadd ooffffiiccee 1-7 YeonjiDong, Jongno-Gu Seoul, Korea
NNuummbbeerr ooff HHMMMM EEmmppllooyyeessss 2035
1976: Company established as Asia Merchant Marine Transportation service opened with a fleet of three VLCCs
1977 : Bulk cargo tramper service and deep-sea tug service began
1981 : Specialized ore and coal transportation service began
1985 : Full container service opened between the Far East and the Western US
1994 : Korea’s first LNG transportation began with the launching of Hyundai Utopia
1995 : Listed on the Korean stock market
1998 : The New World Alliance service began with APL and MOL
2001 : Liquidity problem arose
2002 : Disposal of fleet, Car Carrier division & domestic terminals
2003 : Liquidity crisis was fully overcome
2004 ~ 2008: Success leads to fleet expansion
2009 : Process Innovation for management efficiency
2010 : Turnaround faster than peers
2011 : Proclaimation of New Vision & Mission
FFoouunnddaattiioonn &&
SSeettttiinngg BBuussiinneessss TTeerrrriittoorryy
((11997766 ~~11998866))
JJuummpp uupp ttoo
tthhee IInndduussttrryy LLeeaaddeerr
((11998877~~22000000))
OOvveerrccoommiinngg
GGrroowwiinngg PPaaiinnss
((22000011 ~~ 22000033))
SSuucccceessss BBuuiilltt oonn SSttrroonngg
FFoouunnddaattiioonn
((22000011 ~~ 22001100))
PPllaayy aa rroollee aass aa nneeww
llooggiissttiiccss vvaalluuee ccrreeaattoorr
((22001111~~))
HMM INSIDE 2011
Overseas Organizations
General Information Sustainability Management Financial Information33
Corporate Overview Unit InformationHMM INSIDE 2011
CCllaassssiiffiiccaattiioonn TTiittllee NNaammee AAppppooiinntteedd oonn TTeerrmm ((YYRR)) LLiiaabbiilliittyy
Chairwoman of BOD Jeong-Eun Hyun 19-Mar-10 3 Insured
Representative Director Suk-Hui Lee 23-Mar-12 2 Insured
Director Paik-Hoon Lee 23-Mar-12 2 Insured
Director Nam-Yong Lee 23-Mar-12 2 Insured
Director Dong-Gun Kim 25-Mar-11 2 Insured
Director Joon-Soo Jon 23-Mar-12 2 Insured
Director Taek-Soo Han 25-Mar-11 2 Insured
Director Yong-Kuen Cho 25-Mar-11 2 Insured
Director Eric Sing Chi Ip 25-Mar-11 2 Insured
Inside
director
Outside
director
Governance Structure
General Information Sustainability Management Financial Information35
(As of December 31, 2011)
SShhaarreehhoollddeerrss SShhaarreess %%
Hyundai Elevator 34,674,191 24.2%
Hyundai Heavy Industries 23,424,037 16.3%
Hyundai Engineering & Constructions 11,048,227 7.7%
Hyundai Samho Heavy Industries 10,479,174 7.3%
Nexgen Capital 8,397,713 5.9%
Cape Fortune B. V. 7,301,838 5.1%
Others 47,948,049 33.5%
Total 143,273,229 100.0%
* Shareholders with shares above 5% based on disclosure data.
Major Shareholders
SustainabilityManagement
Green Management
Safety Management
Ethics Management
ttog
etherness
Green Management
Corporate Overview Unit InformationHMM INSIDE 2011
GREEN & ENVIRONMENTAL POLICY
HMM maintains Eco-Friendly Policies, such as preventing marine & atmospheric pollution, minimizing waste
products and making economical use of resources & oil zero spills, to preserve the environment.
Considering the methodology, potential
abatement margin, HMM plans to reduce green
house emission more than 17% in 2015 based
on 2008 record in intensity unit
GHG Inventory to monitor GHG, SOC, NOX and
PM from Vessels, Terminals and Office building
Annual report on “Carbon Information Release
Project” for financial investors
Discussion with IMO marine Environment
Protection Committee
Discussion of eco-Friendly policy through
WS(World Shipping) Council Participation.
Promotion of eco-friendly maritime
transportation through BSR-CCWG(Clean
Cargo Working Group) participation
International CoordinationGHG Reduction Plan
Future PlanEnergy Efficiency
Ship Energy Efficiency Management
Plan(SEEMP), guidelines for efficient operation
methods to improve energy efficiency
Build & Charter environmental-friendly ship
EEOI & EEDI Calculator for measurement of
CO2 emission performance of existing ship and
from design phase
HMM has plans to minimize pollutants through
consistent verification of fuel-reduction facilities
and utilize resources/energy efficiently through
introducing a Green Management System
Green Management
System
EnvironmentalManagement
System
17%
Safety Management
General Information Sustainability Management Financial Information
SSuuppeerrbb VVeesssseell CCoonnddiittiioonn
Maintain best vessel condition
On dock Maintenance
Running Repair
EEmmeerrggeennccyy RReessppoonnssee
Cooperate with On-scene response
team, Emergency response team,
Business unit and the Ships
Direct communication with CEO
SSaaffee WWoorrkkiinngg
Hazard identification by risk
assessment
Reinforcement of work place order
Prevention of reoccurrence by
accident feedback
CCrreeww EEdduuccaattiioonn && TTrraaiinniinngg
Total 4 training module with 77
course
Up to dated training facilities
AAnnttii PPiirraaccyy AAccttiioonn PPllaann
Ship position reporting via satellite
communication
On-board guard & various anti
piracy arrangements incl. citadel
Coordinate with Korea Government
and Allied Navy
HHeeaalltthh && HHyyggiieennee
Periodical medical examination
Vaccination & sanitary inspection
SAFETY & QUALITY
Safety management is the fundamental activities for securing customers’ satisfaction as well as safety of
cargoes, vessel and crews onboard, and is the top priority in HMM
SafetyManagement
System
QualityManagement
System
OccupationalHealth & SafetyManagement
System
39
Corporate Overview Unit InformationHMM INSIDE 2011
Business Ethics is the resource that enables
sustainability of a company by forming its values
and helping to execute them consistently. HMM
adopting ethical management understands
employees, customers, business partners,
competitors, and stockholders.
In February 2007, we formed the “Ethics
Management Team” It is HMM’s strong desire to
practice systematic and consistent ethics
management and CSR in the future. We had
proclaimed the Code of Ethics and employees
share and pledge such spirit in the Code of Ethics
Pledge Ceremony every year.
HMM believes that ethical business is the core value of a company’s activities. We will continuously strive for
ethical management and fully assume its social responsibilities by providing customers with excellent services
and doing business in a transparent, fair, and sensible manner to become a respected and trusted company.
Ethics Management
Financial Information41
General Information Sustainability Management
Based on the philosophy of respect and co-prosperity for all of humanity, we have practiced corporate social
responsibility and carried out numerous social contribution projects to help nearby communities grow.
‘‘BBAAPPPPUURR’’ ((FFRREEEE FFOOOODD SSEERRVVIINNGG)) VVOOLLUUNNTTAARRYYHMM staffs took part in the ‘Bappur’ (Free food serving) voluntary for the
homeless and itinerants, and for isolated senior citizens at a soup kitchen in
Seoul. The voluntary activities went through about 10 times. Total 420 staffs
participated in the activities throughout the year. HMM delivers various community
services and builds up its social responsibility of sharing to enrich the world.
MMEERRCCHHAANNTT--SSHHIIPP CCLLAASSSS FFOORR CCHHIILLDDRREENNEvery year, HMM also provides underprivileged children with “Merchant-ship
Class” the invitation program which includes field trip and learning class on ships
and maritime life. This annual activity has sought, since 2008, to develop the
maritime dreams and ambitions of children being helped by charity organizations.
HHAABBIITTAATT FFOORR HHUUMMAANNIITTYY HMM volunteers participate in a “Habitat for Humanity” venture to build houses
for families in need. For 2 times, HMM staffs worked in a sweat on ceiling
constructions and laying insulations in one of the new houses in Yangpyeong,
Gyeonggi-do. Total of 56 staffs volunteered throughout the year.
SOCIAL RESPONSIBILITY
Financial InformationIndependent Auditor’s Report
Separate Financial Statements
Consolidated Financial Statements
English Translation of a Report Originally Issued in Korean
To the Shareholders and the Board of Directors of
Hyundai Merchant Marine Co., Ltd.
We have audited the accompanying separate financial statements of Hyundai Merchant Marine Co., Ltd. (the
“Company”). The financial statements consist of the separate statements of financial position as of December
31, 2011, December 31, 2010 and January 1, 2010, respectively, and the related separate statements of
comprehensive income(loss), separate statements of changes in shareholders’ equity and separate statements
of cash flows, all expressed in Korean won, for the years ended December 31, 2011 and 2010, respectively. The
Company’s management is responsible for the preparation and fair presentation of the separate financial
statements and our responsibility is to express an opinion on these separate 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 financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2011, December 31, 2010 and January 1, 2010, respectively, and
the results of its operations and its cash flows for the years ended December 31, 2011 and 2010, respectively, in
conformity with Korean International Financial Reporting Standards (“K-IFRS”).
Accounting principles and auditing standards and their application in practice vary among countries. The
accompanying separate financial statements are not intended to present the financial position, results of
operations 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 financial statements may differ from those generally accepted and applied in other
countries. Accordingly, this report and the accompanying separate financial statements are for use by those
knowledgeable about Korean accounting procedures and auditing standards and their application in practice.
March 15, 2012
Deloitte Anjin LLC14Fl., Hanwha Securities Bldg.,23-5 Yoido-dong,Youngdeungpo-gu, Seoul150-717, KoreaTel: +82 (2) 6676 1000Fax: +82 (2) 6674 2114www.deloitteanjin.co.kr
Notice to ReadersThis report is effective as of March 15, 2012, the auditor's report date. Certain subsequent events or circumstances may have occurred
between the auditor's report date and the time the auditor's report is read. Such events or circumstances could significantly affect the
financial statements and may result in modifications to the auditor’s report.
INDEPENDENT AUDITORS’ REPORT
General Information Sustainability Management Financial Information43
Corporate Overview Unit InformationHMM INSIDE 2011
(Korean won in millions)
2010 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,171,616 589,638
Trade and other receivables 680,923 870,237
Current tax assets 5,031 6,282
Inventories 267,510 406,038
Financial assets at fair value through profit or loss 10,638 9,996
Finance lease receivables 104,919 120,979
Other current financial assets 10,723 61,059
Other current assets 378,822 139,096
Assets classified as held for sale - 1,338
Total current assets 2,630,182 2,204,663
NON-CURRENT ASSETS:
Long-term trade and other receivables 24,519 44,338
Financial assets available-for-sale 373,978 266,188
Finance lease receivables 766,141 905,633
Investment in subsidiaries 188,771 199,425
Investment in Joint ventures 35,240 22,327
Investments in associates 626,759 793,931
Property, vessels and equipment 3,681,516 3,853,045
Investment property 70,696 71,099
Intangible assets 39,464 40,667
Other non-current financial assets 370 110
Other non-current assets 40,753 30,873
Total non-current assets 5,848,207 6,227,636
TOTAL ASSETS 8,478,389 8,432,299
SEPARATE STATEMENTS OF FINANCIAL POSITIONAS OF DECEMBER 31, 2011, DECEMBER 31, 2010
45General Information Sustainability Management Financial Information
(Korean won in millions)
2010 2011
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade and other payables 521,758 730,920
Short-term borrowings 70 80,102
Provisions - 18,108
Current portion of long-term debt, net 1,128,732 1,018,769
Financial liabilities at fair value through profit or loss 3,245 1,308
Other current liabilities 4,258 2,188
Total current liabilities 1,658,063 1,851,395
NON-CURRENT LIABILITIES:
Long-term borrowings 207,223 627,500
Debentures 1,768,342 1,666,123
Provisions - 851
Finance lease obligations 2,389,217 2,528,539
Retirement benefit obligation 25,351 38,749
Financial liabilities at fair value through profit or loss 9,592 13,042
Other non-current financial liabilities 4,510 4,682
Other non-current liabilities 1,458 1,492
Total non-current liabilities 4,405,693 4,880,978
TOTAL LIABILITIES 6,063,756 6,732,373
SHAREHOLDERS’ EQUITY:
Capital stock 816,366 816,366
Other paid in capital 868,962 822,423
Retained earnings 655,574 107,244
Elements of other shareholders’ equity 73,731 -46,107
TOTAL SHAREHOLDERS’ EQUITY 2,414,633 1,699,926
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 8,478,389 8,432,299
SEPARATE STATEMENTS OF FINANCIAL POSITION
Corporate Overview Unit InformationHMM INSIDE 2011
(Korean won in millions except per share amounts)
2010 2011
Revenue 7,977,688 7,187,858
Cost of sales -7,241,939 -7,344,235
Gross profit (loss) 735,749 -156,377
Other operating income 225,150 203,188
Other operating expenses -203,909 -251,823
Selling and administrative expenses -158,838 -161,984
Operating income (loss) 598,152 -366,996
Finance income 185,896 267,556
Finance expenses -446,143 -346,461
Gain (loss) on disposal of investment in subsidiaries, joint ventures and associates 187,097 -7,009
Impairment loss of investment in joint ventures - -547
Profit(Loss) before income tax 525,002 -453,457
Income tax benefits (expense) 14,983 -19,787
Profit(Loss) for the year 539,985 -473,244
OTHER COMPREHENSIVE INCOME(LOSS), NET OF TAX:
Gains (losses) on remeasuring available-for-sale financial assets 28,797 -111,854
Gains (losses) on exchange differences on translation -51,907 -7,984
Actuarial gain (loss) on defined benefit plans -8,941 -4,385
Total comprehensive income (loss) for the year 507,934 -597,467
EARNINGS(LOSS) PER COMMON SHARE:
Basic earnings (loss) and Diluted earnings (loss) per common share 4,158 -3,316
SEPARATE STATEMENTS OF COMPREHENSIVE INCOME(LOSS)FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
47General Information Sustainability Management Financial Information
(Korean won in millions)
2010 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit (Loss) for the year 539,985 -473,244
Adjustments to reconcile profit(loss) for the year to net cash provided by operating activities -148,956 660,147
Interest received 28,302 5,446
Dividends received 31,874 36,887
Income tax refund 2,892 -
Interest paid -145,661 -151,068
Income tax paid - -2,850
Net cash provided by operating activities 308,436 75,318
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, vessels and equipment -170,745 -173,774
Acquisition of intangible asset -2,290 -4,245
Disposal of property, vessels and equipment 21,815 36,134
Disposal of intangible asset - 865
Acquisition of financial assets -76 -50,337
Disposal of financial assets 260,221 260
Acquisition of financial assets held-for-trading -10,001 -10,000
Disposal of financial assets held-for-trading - 10,008
Acquisition of financial assets available-for-sale -6,266 -10,997
Acquisition of investment in subsidiaries -27,687 -8,248
Disposal of investment in subsidiaries 247,314 -
Acquisition of investment in joint ventures -4,240 -1,539
Acquisition of investment in associates -6,672 -166,364
Disposal of investment in associates 9,001 26,012
Cash inflow from transaction of derivatives 2,599 3,463
Cash outflow from transaction of derivatives -3,631 -8,556
Decrease in loans 3,270 753
Increase in loans -21,833 -10,995
Decrease in guarantee deposits 6,155 214
Increase in guarantee deposits -2,039 -69
Disposal of assets classified as held for sale 47,561 -
Net cash provided by (used in) investment activities 342,456 -367,415
SEPARATE STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
Corporate Overview Unit InformationHMM INSIDE 2011
(Korean won in millions)
2010 2011
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 563,285 572,610
Repayment of borrowings -950,109 -106,416
Proceeds from issue of debentures 1,107,224 577,348
Repayment of debentures -686,983 -615,907
Repayment of redemption preferred stock liabilities -183,980 -193,579
Increase in finance lease liabilities 168,348 -143
Payment of finance lease liabilities -579,555 -402,325
Repayment of liabilities related in assets classified as held for sale -9,395 -
Increase in deposit received 4,241 315
Decrease in deposit received -771 -142
Dividends paid -77,152 -70,701
Disposal of treasury stock 128,458 -
Purchase of treasury stock -48,159 -46,539
Paid in capital increase 326,007 -
Net cash used in financing activities -238,541 -285,479
Net changes in cash and cash equivalents 412,351 -577,576
Cash and cash equivalents at beginning of year 771,485 1,171,616
Effects of foreign exchange rate changes on the balance of cash held in foreign currencies -12,220 -4,402
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,171,616 589,638
SEPARATE STATEMENTS OF CASH FLOWS
49General Information Sustainability Management Financial Information
(Korean won in millions)
2010 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,289,989 679,372
Trade and other receivables 685,247 868,920
Due from customers for contract work 15,934 14,820
Inventories 272,452 412,715
Financial assets at fair value through profit or loss 10,638 9,997
Finance lease receivables 104,919 120,979
Current tax assets 8,654 10,670
Other current financial assets 16,509 67,727
Other current assets 387,844 154,419
Assets classified as held for sale - 806
Total current assets 2,792,186 2,340,425
NON-CURRENT ASSETS:
Long-term trade and other receivables 28,871 50,338
Property, vessels and equipment 3,902,552 4,124,445
Investment property 74,393 74,702
Intangible assets 154,542 147,933
Financial assets available-for-sale 376,932 270,067
Investments in associates 700,316 838,941
Investment in Joint ventures 31,825 12,635
Finance lease receivables 766,141 905,633
Deferred tax assets 771 1,912
Other non-current financial assets 584 320
Other non-current assets 43,264 32,088
Total non-current assets 6,080,191 6,459,014
TOTAL ASSETS 8,872,377 8,799,439
CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAS OF DECEMBER 31, 2011, DECEMBER 31, 2010
Corporate Overview Unit InformationHMM INSIDE 2011
(Korean won in millions)
2010 2011
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade and other payables 538,185 741,882
Short-term borrowings 14,575 89,957
Current portion of long-term debt, net 1,031,730 955,508
Financial liabilities at fair value through profit or loss 3,245 1,316
Current tax liabilities 4,337 3,503
Provisions - 18,108
Due to customers for contract work 6,212 12,671
Other current liabilities 25,197 24,940
Total current liabilities 1,623,481 1,847,885
NON-CURRENT LIABILITIES:
Long-term borrowings 2,263,903 2,904,082
Debentures 1,946,941 1,783,940
Redemption preferred stock liabilities - -
Provisions 2,869 3,030
Retirement benefit obligation 49,068 62,862
Finance lease obligations 257,881 281,210
Deferred tax liabilities 1,834 2,686
Financial liabilities at fair value through profit or loss 9,592 34,443
Other non-current financial liabilities 127,468 131,129
Other non-current liabilities 1,481 1,709
Total non-current liabilities 4,661,037 5,205,091
TOTAL LIABILITIES 6,284,518 7,052,976
SHAREHOLDERS’ EQUITY:
Equity attributable to owners of the company:
Capital stock 816,366 816,366
Other paid in capital 871,554 824,966
Retained earnings 794,083 189,373
Elements of other shareholders’ equity 56,055 -123,473
2,538,058 1,707,232
Non-Controlling Interests 49,801 39,231
TOTAL SHAREHOLDERS’ EQUITY 2,587,859 1,746,463
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 8,872,377 8,799,439
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
51General Information Sustainability Management Financial Information
(Korean won in millions except per share amounts)
2010 2011
Revenue 8,124,208 7,420,767
Cost of sales -7,177,953 -7,369,878
Gross profit (loss) 946,255 50,889
Other operating income 234,142 209,143
Other operating expense -214,664 -285,268
Selling and administrative expenses -376,098 -389,327
Operating income (loss) 589,635 -414,563
Finance income 157,411 213,021
Finance expenses -448,879 -358,989
Net gain on valuation of equity method investments 70,492 46,304
Gain on disposal of investment in joint ventures and associates 186,344 13,570
Impairment loss of investment in joint ventures and associates - -9,479
Profit (Loss) before income tax 555,003 -510,136
Income tax benefits (expense) 8,138 -24,700
Profit (Loss) from continuing operations 563,141 -534,836
Profit (Loss) from discontinued operation 13,254 522
Profit (Loss) for the year 576,395 -534,314
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Gains (loss) on remeasuring available-for-sale financial assets 28,807 -111,363
Changes in retained earnings of equity method investments - -4,697
Changes in equity of equity method investments 2,531 -45,393
Foreign operation translation -1,377 -2,343
Loss on exchange differences on translation -30,871 -20,567
Actuarial loss on defined benefit plans -8,352 -4,742
-9,262 -189,105
Total comprehensive income (loss) for the year 567,133 -723,419
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
Corporate Overview Unit InformationHMM INSIDE 2011
(Korean won in millions except per share amounts)
2010 2011
PROFIT (LOSS) FOR THE YEAR ATTRIBUTABLE TO:
Owners of the Company 586,277 -524,496
Non-controlling interests -9,882 -9,818
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:
Owners of the Company 577,204 -713,537
Non-controlling interests -10,071 -9,882
EARNINGS (LOSS) PER COMMON SHARE:
Continuing and discontinued operations
Basic earnings (loss) per common share 4,515 -3,675
Diluted earnings (loss) per common share 4,515 -3,675
Continuing operations
Basic earnings (loss) per common share 4,412 -3,679
Diluted earnings (loss) per common share 4,412 -3,679
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
53General Information Sustainability Management Financial Information
(Korean won in millions)
2010 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit (Loss) for the year 576,395 -534,314
Adjustments to reconcile profit(loss) for the year to net cash provided by operating activities -189,426 695,379
Interest received 28,685 5,942
Dividends received 32,181 37,185
Income tax refund 3,108 313
Interest paid -147,620 -155,929
Income tax paid -5,474 -9,657
Net cash provided by operating activities 297,849 38,919
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, vessels and equipment -161,089 -182,460
Acquisition of intangible asset -2,362 -4,483
Disposal of property, vessels and equipment 25,243 42,747
Disposal of intangible asset - 876
Acquisition of financial assets available-for-sale -6,537 -984
Disposal of financial assets available-for-sale - 98,000
Disposal of investment in subsidiaries 246,519 749
Acquisition of investment in subsidiaries -20,000 -
Disposal of investment in joint ventures and associates 9,796 24,757
Acquisition of investment in joint ventures and associates -10,912 -166,902
Acquisition of short-term financial assets -10,154 -54,975
Disposal of short-term financial assets 260,221 3,291
Disposal of long-term financial assets 3 266
Decrease in loans 3,440 869
Increase in loans -22,762 -11,075
Decrease in guarantee deposits 6,176 610
Increase in guarantee deposits -2,168 -998
Disposal of assets classified as held for sale 47,561 -
Disposal of financial assets at fair value through profit or loss 2,700 13,648
Acquisition of financial assets at fair value through profit or loss -4,642 -29,553
Cash inflow (outflow) from other investment activities 771 -756
Net cash provided by (used in) investment activities 361,804 -266,373
CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
Corporate Overview Unit InformationHMM INSIDE 2011
(Korean won in millions)
2010 2011
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 3,246 98,331
Repayment of borrowings -10,457 -10,018
Repayment of current portion of long-term borrowings -3,946 -491,905
Proceeds from long-term borrowings 562,436 489,373
Repayment of long-term borrowings -951,493 -4,468
Increase pain in capital of subsidiaries 2,215 1,665
Purchase subsidiaries’ investment interest - -14
Increase in deposit received 4,504 314
Decrease in deposit received -771 -401
Proceeds from issue of debentures 1,107,224 577,348
Repayment of debentures -686,983 -713,689
Repayment of redemption preferred stock liabilities -183,980 -193,579
Increase in finance lease liabilities 168,348 1,082
Payment of finance lease liabilities -579,555 -12,733
Purchase of treasury stock -48,159 -46,539
Disposal of treasury stock 128,458 -
Dividends paid -67,792 -72,944
Government grants received 794 292
Government grants used -509 -524
Paid in capital increase 326,007 -
Repayment of liabilities related in assets classified as held for sale -9,395 -
Net cash used in financing activities -239,808 -378,409
Net increase (decrease) in cash and cash equivalents 419,845 -605,863
Cash and cash equivalents at beginning of year 882,971 1,289,989
Effects of foreign exchange rate changes on the balance of cash held in foreign currencies -12,827 -4,754
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,289,989 679,372
CONSOLIDATED STATEMENTS OF CASH FLOWS
trust
talent
tenacity
togetherness
Representing a central part of Hyundai Group's scope and corporate
culture, the themes of Trust, Talent, Tenacity and Togetherness will unify
and guide HMM through whatever lies ahead. Both external and internal
challenges will be met in unison with the combined efforts of all. Without
compromise, the caliber of 4T will bring the eminent potential of HMM to
the fore to carry the success of the business to new heights.
4T