CONFIDENTIAL Procurement Policy Monthly Report HYUNDAI MERCHANT MARINE

CONFIDENTIAL Procurement Policy Monthly Report HYUNDAI MERCHANT MARINE Co. Ltd. December 2011 Purchasing Team / Strategic Purchasing Part Jan. ~ Nov. 2011 Based Data HYUNDAI MERCHANT MARINE Co. , Ltd.

Table of Contents Ⅰ. The Purpose of the Procurement Policy Ⅱ. The Summary of Key Indicator Ⅲ. The Summary of Monitoring A. Spend Ratio Summary (Sum up from Jan. to Nov. ) B. Spend Analysis C. Supplier Evaluation D. Contract Management Ⅳ. Procurement Policy Monitoring ※ Appendix - Supplier Evaluation Manual - Vendor information Manual - Contract Management Manual HYUNDAI MERCHANT MARINE Co. , Ltd. 1

Ⅰ. The Purpose of the Procurement Policy CPO [Chief Procurement Office] An organization which carries out the monitoring and guiding on the company-wide cost management and procurement processes in relation to procurement of all goods and services at HMM Contract Service Provider Carrying out entire procurement operation from establishing a procurement strategy to making decisions and concluding contracts Helper Watcher Monitoring, managing and controlling the overall procedure of procurement Establishing a procurement strategy, Monitoring, managing and controlling the overall procurement procedure Acquiring visibility on all procurement activities carried out at HMM HYUNDAI MERCHANT MARINE Co. , Ltd. 2

Ⅰ. The Purpose of the Procurement Policy CPO Policy Monitoring * Acquiring visibility on all procurement activities carried out at HMM : Total 19 Services * Through diversification of the supplier base, should promote price competition among suppliers * Differentiating each supplier according to the supplier evaluation result and strategic importance * Minimizing the potential internal and external risk ☞ Sending Procurement Policy Monitoring Report every month Definition Indicators Supplier Evaluation Evaluating Major Suppliers on a Regular Basis (Target Suppliers: Upper 80% of Total Purchasing Amount) Formula Unit Evaluated Suppliers ∑(Evaluated Suppliers) ∑(CPO Target Suppliers) Contract Management Acquiring Visibility on Procurement Operation New & Updated Contract Check the Contract Uploaded in ELMS system Spend Ratio Checking Spend Ratio of CPO Target Suppliers’ purchasing amount Total amount of CPO Target suppliers ∑(CPO Target Supplier’s Amount) HYUNDAI MERCHANT MARINE Co. , Ltd. 3 ∑(Total Purchasing Amount) Remarks * Evaluate the target suppliers at least once a year * More than 3 people should evaluate one supplier. * Check the contract effective date * Check the contract amount of new & updated contract * Keep 80% Spend Ratio

Ⅱ. The Summary of Key Indicator Supplier Evaluation (Nov. ) Contract Management (Jan. ~Nov. ) [No. of Suppliers] [No. of Contract] 3 24 Feeder GTO Terminal Feeder Fuel & Lubricant New van & Reefer 15 110 23 Target Supplier Incomplete 17 16장기임차 연료 KHT q The number of the contract from Jan to Nov. Service q Evaluated suppliers: Total 110 suppliers - Bulk stevedore (35) - Bulk Agent_ Liner (21) - Fuel & Lubricant (20) - General Repair (11) - Feeder (10) - Kaohsiung Hyundai Terminal (6) - Bulk Agent_ Tramper (6) - Bulk Agent_ Tanker (1) HYUNDAI MERCHANT MARINE Co. , Ltd. 2. 82 0. 42 2. 40 Total Amount Non-Target Amount Long term Container Bulk Agent Complete q 110 target suppliers (November) are evaluated among 133 suppliers. [Unit: Billion U$] 1 15 신조기기 133 Spend Ratio (Jan. ~ Nov. ) No. of Contract GTO Terminal Feeder Fuel&Lubricant 24 17 16 New van&Reefer 15 Long term Container KHT Bulk Agent Total 15 3 1 91 q CPO Target suppliers - Spend Ratio (Jan~Nov): 85% - USD 2. 40 billion (Total USD 2. 82 billion) 4 q HMM Minimum standard 80% is passed.

Ⅲ. The Summary of Monitoring A. Spend Ratio Summary (Sum up from Jan. to Nov. ) Total Purchase Amount Spend Ratio No. Service 31, 517, 012 92% 12 Bulk Agent 16, 330, 225 9, 355, 023 57% 13 1, 478, 824, 382 1, 449, 484, 046 98% New van&Reefer 64, 827, 000 62, 782, 500 97% Short term container 21, 253, 865 20, 867, 876 98% 6 General Repair 2, 764, 171 1, 658, 111 60% 7 Spare parts 38, 192, 186 16, 540, 077 43% 8 Legal Insurance 24, 001, 775 23, 633, 050 98% 9 General Administration 9, 033, 505 5, 591, 932 62% 10 C. Feeder 120, 836, 873 96, 565, 035 80% 11 Trucking 169, 127, 932 96, 011, 589 57% No. Service 1 Long term container 34, 158, 905 2 Docking Repair 3 Fuel&Lubricant 4 5 CPO Target Amount [Unit: USD] Total Purchase Amount Spend Ratio 4, 494, 291 747, 626 17% Terminal 592, 299, 803 423, 879, 124 72% 14 Depot / CY 35, 390, 830 11, 634, 245 33% 15 M&R 38, 736, 889 29, 517, 603 76% 16 Barge 27, 124, 904 19, 599, 771 72% 17 Bulk Stevedore 23, 765, 581 8, 338, 647 35% 18 Container Agent 28, 123, 389 10, 733, 799 38% 19 CUT 64, 247, 347 58, 877, 220 92% 20 WUT 26, 361, 540 22, 413, 824 85% 21 * HMM Local brach cost will be excepted in Container agent service. KHT 4, 793, 422 3, 496, 733 73% Total Amount 2, 824, 688, 817 HYUNDAI MERCHANT MARINE Co. , Ltd. CPO Target Amount 5 Total Target Amount 2, 403, 244, 841 Spend Ratio 85%

Ⅲ. The Summary of Monitoring B. Spend Analysis Procurement Policy 19 Services Total Purchasing Amount (Monthly) [Million U$] 400 350 300 Total Purchasing Amount 250 CPO Target Amount 200 150 100 2011. 01 2011. 02 2011. 03 2011. 04 2011. 05 2011. 06 2011. 07 2011. 08 2011. 09 2011. 10 2011. 11 [Unit: million. U$] Item　 2011. 01 2011. 02 2011. 03 2011. 04 2011. 05 2011. 06 2011. 07 2011. 08 2011. 09 2011. 10 2011. 11 Total Purchasing Amount 210 207 239 262 231 285 350 268 178 321 270 CPO Target Amount 186 176 222 219 200 206 246 185 133 272 225 Spend Ratio 89% 85% 93% 84% 87% 72% 70% 75% 83% w The average of Total Purchasing Amount per month is USD 256 million, the average of CPO Target Amount per month is USD 206 million. w The average of Spend Ratio for 2011 is 81% (Jan. ~Nov. 2011 Based Data) HYUNDAI MERCHANT MARINE Co. , Ltd. 6

Ⅲ. The Summary of Monitoring C. Supplier Evaluation Service Supplier name Grade Details Al Rashed International Shipping 98 Their business period is over 15 years, and they have professionalism in the field. Their financial status is very stable. (*Debt ratio: 0~200%, *Current ratio: over 200%, *Equity capital ratio: 8%) They retain required facilities and equipment for operation. They don’t have any safety problem up to now. Exxonmobil Marine Limited 95 Their claim management is quick and accurate, and also HMM is very satisfied with their solution. The complaint of HMM against suppliers’ service is immediately corrected. They show a cooperative attitude to HMM. General Repair Shindong Digitec 93 They run cost reduction program continuously, but it is limited values to customers. They need decisive action about cost reduction. They have sufficient engineers for repairing and the engineers are regularly educated. Fuel & Lubricant S-oil Corporation 87 They offer reasonable price comparing with other suppliers. They have 97% of flexibility towards urgent delivery order. HMM requested information is rapidly provided by S-oil. Feederlink Shipping & Trading 82 They got low score in a part of confidentiality management. If there is separate program for HMM information protection (only restricted persons access to HMM information), they can upgrade their performance. In addition, information sharing activity with HMM should be considered rapidly. Bulk Agent - Tramper Parekh Marine Agencies 80 When contingency arise, the agent ready to respond within 1 week after received. Estimate Working Plan, Cargo readiness, ship's particular is reported within 2 hours after arrival. Bulk Agent - Liner Transmarine Navigation De Mexico 78 Working prospect (Terminal & Storage condition, Arrangement) is sent approximately 5 times before arrival. Daily report is provided within 3 hours at 0900 LT and missing berth. Bulk Stevedore Fuel & Lubricant Feeder • • • Dept ratio: (Total dept / Equity capital*100) Current ratio: (Total dept / Equity capital*100) Equity capital ratio: (Equity capital / Total assets*100) HYUNDAI MERCHANT MARINE Co. , Ltd. 7 Note

Ⅲ. The Summary of Monitoring C. Supplier Evaluation status of CPO Target in November * Fuel & Lubricant Target supplier’s grade 100 95 90 85 Average: 80 80 75 70 65 60 55 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ※ Refer to the supplier’s name with No. 1~20 HYUNDAI MERCHANT MARINE Co. , Ltd. Supplier's name EXXONMOBIL MARINE LIMITED EXXONMOBIL MARINE LUBRICANTS WORLD FUEL SERVICES S-OIL CORPORATION O. W. BUNKER MIDDLE EAST DMCC SK ENERGY INCHEON COMPLEX TOTAL LUBRICANT KTB OIL CORPORATION CHEMOIL INTERNATIONAL PTE LTD NORTH SEA GROUP SHELL MARINE PRODUCTS LIMITED SINGAMAS MARKETING PTE, . LTD BP KOREA LIMITED CHEVRON MARINE PRODUCTS LLC UNIVERSAL ENERGY PTE, . LTD BP MARINE LIMITED BRIGHTOIL PETROLEUM PTE LTD SK ENERGY INTERNATIONAL PTE LTD CONOCOPHILLIPS COMPANY FAL ENERGY CO. , LTD. * Average grade is 80, and there are 13 suppliers whose grades are above average. Several suppliers which got low score have some things in common. Firstly, they have passive attitude when HMM request market information. They need some effort to share market information in a regular basis. Secondly, their employees have limited professionalism and responsibility. If they upgrade it, they can make trustful relationship with HMM. 50 1 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 8

Ⅲ. The Summary of Monitoring C. Supplier Evaluation status of CPO Target in November * Bulk stevedore Target supplier’s grade 100 95 Average: 89 90 85 80 75 70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 ※ Refer to the supplier’s name with No. 1~35 * Average grade is 89, and there are 20 suppliers whose grades are above average. Several suppliers which got high score have some things in common. Firstly, their financial status is very stable, and their credit ratings are highly ranked among local & global accounts. Secondly, they do not have any breach of safety standard case, so they gain customers confidence in business. Thirdly, their facilities and equipment maintenance is very satisfied. HYUNDAI MERCHANT MARINE Co. , Ltd. 9 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Supplier's name AL RASHED INTERNATIONAL SHIPPING CO DIAMOND SHIPPING SERVICE WLL. DIAMOND SHIPPING SERVICES INTERNATIONAL SHIPPING AGENCY CO LT GULF AGENCY CO (DUBAI) LLC SEA MELODY MARINE & PORT SERVICES C INDON SHIPPING PTE LTD SEBANG CO. , LTD. MASAN BRANCH SHINYANG SHIPPING SERVICE AGENCIES. HANJIN TRANSPORTATION CO. , LTD. POON PHOL STEVEDORES CO. , LTD. SEBANG CO. , LTD. GUNSAN BRANCH SINO FAR EAST SHIPPING(TIANJIN) CO. PASHA STEVEDORING & TERMINALS L. P. PENGHAI SHIPPING AGENCY LIMITED SHA SEBANG CO. , LTD. KWANGYANG BRANCH PORTS AMERICA, LOUSIANAS, INC. COOPER/T. SMITH STEVEDORING COMPANY HANJIN CO LTD GAC SHIPPING (SA) PTY LTD DAEJOO HEAVY INDUSTRIES CO. , LTD DONGBANG TRANSPORT & LOGISTICS CO. , JONES STEVEDORING COMPANY COASTAL CARGO CO. DONGHWA CORPORATION POHANG AGENCY, KOREA EXPRESS CO. , L DELAWARE RIVER STEVEDORES, INC. SSA COOPER, LLC SOMO HOLDING CO. , LTD GWANGYANG LBH BRAZIL SINOSTAR SHIPPING AGENCY CO. , LTD. SEBANG CO. , LTD. INCHON BRANCH KING AND SONS DONGBANG CO. , LTD. ULSAN BRANCH OFFI DESTINY SHIPPING SDN. BHD.

Ⅲ. The Summary of Monitoring D. Contract Management New & Updated Contract (Jan~Nov) * Contract Amount & Number of Contract (Jan~Oct) * Contract Status for Each Month 35 33 New van & Reefer 30 Feeder Fuel & Lubricant (94. 15%) Kaosiung Hyundai Terminal 25 Long term Container 20 Bulk Agent Contract Amount (U$) Contract Amount Ratio No. of Contract Ratio 16, 137, 000 95. 28% 16 17. 58% 666, 330, 000 3. 93% 15 16. 48% Feeder 22, 540, 636 0. 13% 17 58, 132, 500 0. 34% 3 3. 30% Long term Container 49, 913, 750 0. 29% 15 16. 48% 2, 203, 400 0. 01% 1 1. 10% 　 24 26. 37% 100% 91 100% 10 18. 68% KHT 10 15 11 11 Service Fuel&Lubricant New van&Reefer Bulk Agent GTO Terminal - Total 16, 936, 120, 286 ※ Feeder Contract amount is estimated by purchasing amount of last year. ※ GTO Terminal cost will be calculated as it occurs. HYUNDAI MERCHANT MARINE Co. , Ltd. 10 5 4 2 5 0 Jan Feb Mar Apr May Jun Jul Aug • 33 contracts was made in January among total 93 contracts. (36%) (Most of the contracts are Feeder service. ) Sep

Ⅳ. Procurement Policy Monitoring Spend Ratio Collect the total purchasing amount of 19 services using CPO system Supplier Evaluation Evaluate the CPO Target Suppliers at least once a year ☞ Flash manual : P. Pak (http: //ppak. hmm 21. com/gm/folder-1. 11. 5521) Web page (Check the ※Appendix for simple Ver. Manual) ☞ Follow the link http: //hmmcpo. hmm 21. com→ Evaluation Plan → Vendor List ☞ Give a Total Feedback after complete every evaluation of service suppliers Contract Management Figure out the contents of the contract, and it will be used as evidence if the trouble is occurred with suppliers. ☞ Acquiring visibility on procurement operation: Contents of the contract (Contract Amount, General Terms and Conditions, Contract Period, etc. ) ☞ Portal log on → ELMS → Contract Review → Contract Management) 11 Related Mail (KOR)

※ Appendix Supplier Evaluation Manual 1) Visit CPO home page, The URL is http: //hmmcpo. hmm 21. com/ 2) Click ‘Evaluation Plan’ under the ‘Evaluation’ menu. 3) Click the period and the service on the Drop-down list for searching the supplier. (Ex. October, Feeder) 12

※ Appendix Supplier Evaluation Manual 1) Click the Checklist button for Evaluation. 2) Click the position and working period on the Drop-down list. 3) Start to answer about the question. 4) Click ‘Evaluation’ tab for next step after you complete the answer and save it. 5) After you complete the evaluation sheet, please move on to next supplier. 13

※ Appendix Vendor Information Manual 1) Click ‘Vendor Information’ under the ‘Evaluation’ menu. 2) Click the service name which you want to put the information on the Drop-down list. 3) You can also put the supplier name in the search bar. 4) Click the appropriate vendor name on the list. 14

※ Appendix Vendor Information Manual 1) Click ‘Edit’ for entering the information. 2) Click ‘Save’ after you complete the form. ( The items with red star should be entered necessarily. ) * Vendor information should be completed during supplier’s evaluation period. 15

※ Appendix Contract Management Manual 1) Click ‘ELMS’ in system link for managing new and updated contract. (You can also access ‘ELMS’ using this URL) http: //elms. hmm 21. com/index_main. jsp 2) Click ‘Contract Management’ in ‘Contract Review’ category. 3) Click ‘New Entry’ for entering contract information. 16

※ Appendix Contract Management Manual Search the vendor code Fill the CPO Evaluation period out Summarize the contents of contract here. Click here and attach the contract. 17