It is our great pleasure to welcome you to the 69th annual Hanjin Shipping shareholders’ meeting. We would like to express our sincere appreciation for your unwavering and unchanging support over the past year.

Last year can be summarized as one filled with difficult management conditions attributable to soaring oil prices, higher logistics costs, and the introduction of expanded-capacity vessels by the competition.

Despite these well-publicized obstacles, organization-wide efforts to cut cost and conduct profit-minded business management have resulted in achieving revenue and net income of 6.05 trillion in KRW and 460.4 billion in KRW, respectively.

We owe what we have achieved to the enduring support of the shareholders as the owners of our company. As a report to our owners, the following are specific performance results for Hanjin Shipping in 2006.

Along with overall growth in major business divisions, transport volume improved to 3.27 million TEUs in the container sector and 41.1 million tons for bulk.

Revenue reached 6.05 trillion in KRW while operating profit stood at 149.1 billion in KRW and ordinary income, 623.8 billion in KRW. Revenue income in USD showed a growth of 8.7% annually but only represented a 1.2% increase in KRW due to the strong appreciation of the Korean Won.

The container business division maintained stable growth with revenue income of 5.17 trillion in KRW and operating income of 55.8 billion in KRW which is a result of reducing costs, enhancing our strategic alliance, and optimally utilizing vessel capacity under difficult working conditions.

The bulk business division recorded a healthy operating profit margin of 10.6% with revenue of 878.4 billion in KRW and operating income coming in at 93.3 billion in KRW.

Our investment activities continued to expand in 2006 so that we can build on our core competitive advantages in vessel fleet deployment and operations. As one example, we became the first Korea-based company to place orders for five 10,000 TEU class containerships.

We also deployed three additional 6,500 TEU containerships in our major service routes in the interest of improving both our market competitiveness and providing premier service to our customers.

We have also established locally incorporated entities in Spain, Thailand, and India etc. which have been identified as high potential growth areas fostering greater profitability.

In line with our business diversification strategy, we have undertaken and committed ourselves to the following important steps. We concluded a Memorandum of Understanding (MOU) to secure a dedicated terminal in Rotterdam, the Netherlands, for the CKYH Alliance’s further solidification of our European logistical base. We have started and are in full operation of 3rd-party logistics (3PL) businesses in China, Hong Kong and U.S. We also established a vessel-management company, "Hanjin SM", and formed a jointly-owned corporation named "Hanjin Pacific" to manage dedicated terminal in overseas locations.

Hanjin Shipping's constant efforts to improve the company's financial stability are reflected in the reduction of the debt-to-equity ratio from 147% in 2005 to 142% today. By strengthening our risk management activities to offset fluctuations in interest and currency rates, we are further stabilizing our business model.

Hanjin Shipping is committed to improving its image and value as a global company. By focusing on offering superior customer service and aspiring to become an exemplary corporate citizen, we are always moving in the direction to be recognized as the premier logistics company in the world.

Our company has also been given top honors and awards in the past year. Owens Corning, for one, has named us as the best carrier for four consecutive years and other recognized customers, such as, Ryder System, Inc. and Rayonier have awarded us with best carrier honors in 2006.

Hanjin Shipping's commitment to its shareholders is reflected by its decision to pay cash dividends for the past eight consecutive years with the recent three years’ paid at 20% of share value. Such consistent returns on investment are reflective of Hanjin Shipping's continuous efforts to uphold shareholder-oriented management.

Our valued shareholders,

This year, the global shipping environment will again be rife with increasingly fierce competition. Factors responsible for such increased competition include full and completed operations by mega-carriers and mega-alliances of global liner companies.

Nevertheless, Hanjin Shipping will employ all available means to capitalize on the difficult circumstances by taking the challenges in stride and drawing on creative innovation to position ourselves further as “the leading global logistics company”. 

Our specific goals in 2007 are to transport 3.52 million TEUs in containerized cargo and 43 million tons of bulk cargo. Our business objective is to earn 6.95 billion in USD with 268 million USD in operating income. Furthermore, to broaden our competitive strength and to prepare for our future, we set our investment target at USD 682 million.

Our business strategies for 2007 are as follows:

First: Focusing on our core business to achieve the business target. In the container business, we will apply even more methodical sales plans and strategies to improve profitability while reducing cost through economies of scale. Our customized service will be well-suited to satisfy the diverse demands of our customers. 

In the interest of focusing on profit-based sales, we will work more closely with our fellow members of the CKYH Alliance (Cosco of China, K-Line of Japan and Yang Ming of Taiwan) in joint vessel operations, as well as, terminal and inter-modal transportation network management.

We will strengthen our overseas bulk organizations and upgrade forecast capabilities in order to boost profitability and productivity of our bulk business.

Second: Diversifying investment opportunities into terminals, 3PL, and repair shipyards. Our new business entity, “Hanjin Pacific”, a jointly-owned corporation set up for managing overseas dedicated terminals, will strengthen our business portfolio with the addition of dedicated container terminals in Asia, Europe, as well as, the Pyongtaek container terminal in Korea. We will expand specialized 3PL logistics companies in broadening our business scope worldwide. Our repair shipyard in China scheduled for completion in early 2008, will provide efficient repair services not only for our own vessels but for other carriers, thereby functioning as an additional revenue-generating source.

Third: Solidifying our sound financial structure to be on a par with other global leading carriers. We will further lower our debt-to-equity ratio and enhance risk management in the interest of offsetting the negative effects of fluctuating exchange rates and oil prices. 

Fourth: Devoting ourselves to the implementation of Process Innovation. The Process Innovation project, ongoing for three years now, will be completed in May of this year. Through our investment activities in IT, we will stabilize our business base and lay the foundations for a more advanced management system and organizational competency thereby resulting in reliable profitability even while operating under fierce global competition.

Finally, priority will be continuously given to investor-oriented management. It is our enduring commitment that we carry on our shareholder-focused management by furthering our transparency and maximizing shareholder interests. As a corporate citizen, Hanjin Shipping will continuously remain committed to its role by contributing to the development of both the local and global communities.

Dear shareholders,

We very much owe our current status as a major player in the industry to the steadfast support of our shareholders, as owners of our company. Your trust in us is our driving force to improve ever more. We always bear in mind that working continuously to produce the optimal profitability will ultimately lead to the gain in your holdings. 

Each one of us at Hanjin Shipping asks for your support again this year so that we can continue in our efforts to become the premier logistics company, most trusted by our customers.

May you and all your beloved ones stay happy and healthy.

Thank you.