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HYUNDAI SECURITIESANNUAL REPORT 2008

03 International Locations

05 Company Profile

06 Innovate in limitless change

08 Message from the CEO

10 Board of Directors

12 Vision & Strategy

14 Major Achievements in FY 2008

18 Engage in the highest challenge

20 Review of Operations

28 Drive on Your best Choice

30 Financial Highlights

31 Management’s Discussion & Analysis

46 Financial Statements

86 Organization Structure

88 Shareholders’ Information

CONTENTS

Hong KHYUNDAI SECUR

Suite 2301-04, Cit

Central, Hong Kon

Phone: 852-2869-

Fax: 852-2521-52

LondonHYUNDAI SECURITIES

(EUROPE) Inc.

Neptune House, Triton Court

14 Finsbury Square, London, EC2A 1BR, U.K.

Phone: 44-20-7786-8601(General),

44-20-7786-8600(Dealer)

Fax: 44-20-7786-8620

Telex: 887418

Hochiminh HYUNDAI SECURITIES

Hochiminh Representative Office

701B, PetroVietnam Tower, 1-5 Le Duan,

District 1, Hochiminh City, Vietnam

Phone: 84-8-3910-7560

Fax: 84-8-3910-7561

AlmatyHYUNDAI SECURITIES

Almaty Representative Office

Nurly Tau Complex , Buildding 2A, 4th Fl.

5 Al-Farabi. Av., Almaty, Kazakhstan 050059

Phone: 7-727-277-7711

Fax: 7-727-277-7712

International Locations

Kong ITIES (ASIA) Inc.

tic Tower 1 Tim Mei Avenue,

ng, China

-0559

215

ShanghaiHYUNDAI SECURITIES

Shanghai Representative Office

Rm. 1405 North Stock Exchange

Mansion 528 South Pudong Rd.,

South Shanghai, China, 200120

Phone: 86-21-6881-7007~8

Fax: 86-21-6881-7778

TokyoHYUNDAI SECURITIES

Tokyo Branch

7th Floor, L Ningyoucho Building, 2-7-10,

Nohonbashi, Ningyoucho

Chuo-ku, Tokyo, 103-0013, Japan

Phone: 81-3-3661-3711

Fax: 81-3-3661-9622

New YorkHYUNDAI SECURITIES (AMERICA) Inc.

1370 Avenue of the Americas, Suite 2200,

NY, NY10019, U.S.A

Phone: 1-212-265-2333

Fax:1-212-265-2676

Hyundai Securities has led the Korean stock market for the past 46 years of ceaseless changes

and renewed challenges. Faced with an industry paradigm shift in the wake of the Capital

Market and Financial Investment Services Act, Hyundai Securities set strategic goals to lead the

new change and is making visible progress in various business areas.

We provide wealth management, brokerage, and other customer-focused financial services

through 147 domestic and overseas branch offices. We are working hard to globalize, maximize,

and professionalize our operations, including investment banking (IB), principal investment (PI),

derivatives product development, and new business exploration.

Hyundai Securities will continue to improve the quality of our services to provide premium

solutions to our customers in creating sustainable wealth growth. By establishing an innovative

business system to maximize profits, we will enhance shareholder value and employee

satisfaction to become the preeminent investment bank.

The best investment bank in Korea

with the best financial solutions

CHANGEINNOVATE IN LIMITLESS

Limitless innovation in ceaseless changes Following the enforcement of

the Capital Market and Financial Investment Services Act, Hyundai Securities has transformed itself into one

of the best financial investment companies. Based on the competitiveness of our brokerage service, we have

expanded our financial channels to deliver diverse services, including retail payment in alliance with CMA

card and credit card services. We also have advanced into proprietary trading and futures businesses to

provide the best financial services. Hyundai Securities is committed to leading the changes in the financial

market with our innovative corporate culture based on the industry’s best manpower and upgraded financial

infrastructure.

▲

Dear shareholders and investors:

Fiscal year 2008 was a very eventful year for the financial market. The financial crisis that originated in the US

spread worldwide and sent Korea’s and other financial markets around the world into a recession. The real

economy contracted and securities firms’earnings were squeezed. Some securities firms that invested in real

estate or derivatives suffered extensive losses. The KOSPI opened 2008 at 1,891.45 points, but plunged almost

half points points as of end-Oct when investment banks started falling prey to a major crisis in the US. It

rebounded fortunately to 1,206.26 points at year-end thanks to aggressive countermeasures adopted by the

financial authorities, emergency measures employed by companies, and current account surplus resulting from a

positive foreign exchange effect.

Determined to grow into the best

financial investment company and

armed with the Hyundai Group’s

signature “We Can Do” spirit, the

management and employees of

Hyundai Securities will make the

utmost efforts to maximize profits

of our shareholders and clients.

Message from the CEO

08 | HYUNDAI SECURITIES

In 2008, our net operating profit declined 17.5% year-

over-year to KRW584.7bn and earnings before tax fell

21.1% year-over-year to KRW202.7bn. We fared relatively

well compared to other large securities firms, whose net

operating profit dropped 26% year-over-year and

earnings before tax 44% year-over-year on average. In

terms of earnings before tax, in particular, we moved up

two steps to the No. 4 position in fiscal year 2008. Our

relatively sound results owe to the following. First, even

amid the stock market slump, we reached the industry’s

No.2 position in terms of commission income in the

brokerage business. Second, in proprietary trading, we

performed better than peers in the bond segment by

actively coping with interest rate cuts. We appreciate the

continuous support from our shareholders and clients

during this difficult time of economic turbulence.

Now, fiscal year 2009 has begun with high hopes. The

global economy is starting to recover. The US housing

market, the epicenter of the financial crisis, is showing

signs of recovery. Aggressive fiscal and monetary policies

by EU, Japan, China, and other nations around the world

are also contributing to the global turnaround. Although

the recent steep won appreciation is burdensome, a

green light is on for the Korean economy. It is enjoying

continued current account surplus and an uptrend in

leading indicators. We believe the Korean economy

stands to benefit greatly once the global economy begins

to rebound in earnest. A rise in customer's deposit amid

low interest rates and an inflow of foreign funds are

driving the Korean bourse’s liquidity currently, and this

trend is likely to continue through year 2009.

Against this backdrop, we have set out our priority tasks

for 2009 as follows. First, we are committed to becoming

one of the top three in fiscal year 2009. In retail

brokerage and proprietary trading, where we have strong

competitiveness, we will make utmost efforts to generate

the largest profits among peers. In wealth management,

investment banking, and retirement pension, where we

lack competitiveness more or less, we will aim to make it

to the top five.

Second, all efforts shall be put into elevating the brand

value of Hyundai Securities. By continuing to deliver solid

results and through proactive engagement in investor

and public relations, we will do our utmost to get Hyundai

Securities re-rated fundamentally in the market. We

intend to meet our investors’expectations by lifting our

shares out of undervaluation.

Third, we aim to lead the market in product development

and new business exploration. We will venture into the

uncharted territory in the market, whose doors have now

been opened with the implementation of the Capital

Market and Financial Investment Services Act, by rolling

out new financial products and seeking new business

opportunities ahead of rivals. New and competitive

financial products, such as payment and settlement,

credit card cash management account, futures business,

foreign exchange margin trading, collective investment,

and hedge fund, will be developed swiftly and provided to

customers. We intend to undertake a new form of

business that can set us apart from others.

Fourth, customer satisfaction will be maximized through

improved customer services. We will improve our

customer service system in order to enhance existing

customers’loyalty and induce new customers. To that

end, we will make efforts to overhaul the entire customer

service process from a customer’s viewpoint and

continue to systemize our customer services operation.

The financial and stock markets are expected to regain

stability in 2009 in tandem with a gradual recovery in

Korean and global economies. 2009 also started out with

the Capital Market and Financial Investment Services Act

fully implemented. By actively tapping into the economic

turnaround and policy changes, we will advance into the

industry’s top position. Determined to grow into the best

financial investment company and armed with the

Hyundai Group’s signature “We Can Do”spirit, the

management and employees of Hyundai Securities will

make the utmost efforts to maximize profits of our

shareholders and clients.

I wish for happiness and good health to all the

shareholders, clients, and your families in 2009.

Thank you.

Sincerely,

Kyung-soo Choi

Chief Executive Officer

May 29, 2009

ANNUALREPORT 2008 | 09

01 02

03 04

Hyundai Securities strives for responsible, ethical, and transparent management with advanced corporate

governance by the board of directors. The board of directors consists of four inside directors and five

corporate directors who have extensive experience and expertise in finance, economy, management, and

legal affairs. They provide guidance for righteous management in the internal decision making of Hyundai

Securities and suggest strategic directions for its business operations.

The board of directors is making concerted efforts on maximizing the company's valuation and

shareholders' value through rational decision making while being mindful of the benefits and interests of

shareholders in order to achieve its vision of making Hyundai Securities "the best investment bank in Korea,

providing the best financial solutions." In addition, the board shall put its best efforts into bringing one step

closer the future of Hyundai Securities as a financial leader with advanced financial services.

Board of Directors

Providing Guidance

for Righteous Management


01 Hyun, Jeong Eun

Director

Chairman of the board

02 Choi, Kyung Soo

Director

President and Chief Executive Officer

03 Chung, Hang ki

Director

Managing Director

Head of Strategy & Planning

Division

04 Lim, Seung Cheol

Director

Auditor

05 Park, Yo Chan

Corporate Director

06 Jeon, Jae Joong

Corporate Director

07 Ahn, Jong Bum

Corporate Director

08 Cho, Jin Wan

Corporate Director

Auditor

09 Lee, Chul Song

Corporate Director

Auditor

05

07 08 09

06


Vision and Strategy

Emerge as a top-3 general investment bank bystrengthening business competitiveness

based on retail sales

Structure

in FY2009

Vision 2012

No.1 in retail brokerage and proprietary trading

(securities, bonds, derivatives)

Top 5 in Wealth Management, IB, Retirement Pension

Securing growth drivers with new and overseas businesses

(launching new businesses and strengthening overseas businesses)


Management

Strategies

Management policy

Maximize profitability and productivity

Vitalize organization

Satisfy customers

Enhance brand value

Vitalize sales and improve earning power

Maximize productivity and profitability utilizing operational resources

Solidify operating competitiveness by beefing up support operations (research and risk management)

Improve productivity by streamlining management system(MIS, budget system)

Heighten profitability of brokerage by enhancing efficiency ofwholesale and retail sales and increasing online sales channels

Increase asset and secure new customers by introducing newproducts and strengthening wealth management services

Maximize return on investment by responding to market changes nimbly

Pursue IB profitability by exploring new income source

Core strategic goals

Action plan by business


Major Achievements in FY2008


Hyundai Securities opens office in Almaty, Kazakhstan

More than 120 prominent leaders from Korea and Kazakhstan attended Hyundai

Securities’opening ceremony for its Almaty branch office at the InterContinental Hotel

in Almaty, Kazakhstan. The opening of the Almaty branch will kick start Hyundai

Securities’PF (project financing; major real estate investments, SOC infrastructure

establishment, resource development, etc.) and PI (principal investment) operations in

Kazakhstan and enable the company to develop Kazakhstan-specific financial

instruments targeting Korean investors.

Hyundai Securities already invested in PF associated with developing a commercial or

residential complex in Kazakhstan and is currently seeking an alliance partner among

local financial institutions. Hyundai Securities, pledged that Hyundai Securities would

make best efforts to contribute to the development of the capital market in Kazakhstan

by pursuing strategic alliance with local financial institutions or by establishing joint

ventures or new companies going forward. Almaty office will serve as a hub for the CIS

(Commonwealth of Independent States) region for the company under a strategy to

secure key business points in emerging markets. Hyundai Securities set a mid/long-

term goal of expanding the number of its overseas base to 10 until 2010. With the

opening of an office in Kazakhstan, Hyundai Securities has reached seven global

financial hubs now, including New York, London, Hong Kong, Tokyo, and Shanghai.

Apr 17th, 2008

Hyundai Securities customer satisfaction center selected best

call center

Hyundai Securities customer satisfaction center was selected as the best call center in

the 2008 KSQI (Korean service quality index) evaluation of Korean industries conducted

by KMAC (Korea’s Most Admired Company).

It received high scores for being able to respond swiftly to customers’ requests via its

one-stop services based on customer satisfaction education system and knowledge

sharing system. The company’s continued efforts to enhance customer satisfaction

were valued especially high. For example, it introduced the CCO (chief customer

officer) position for the first time in the industry to oversee all customer-related

matters and actively reflected customer opinions in its management strategies.

To compile KSQI, KMAC researchers disguised as customers and evaluated 154 call

centers run by institutions in 25 industries in Korea. They were evaluated for 17

categories, such as kindness, work knowledge, accuracy of answers, speed of

responses, and extent of customer understanding. Evaluation was done 60 times on

each call center.

June 10th, 2008


Trade overseas equities easily on HTS

Hyundai Securities is providing a new gateway for investors to trade overseas equities. Using

the “overseas equity power trading” menu created in “YouFirst ACE,” the company’s HTS

(Home Trading System), investors can trade all stocks listed on the Hong Kong Exchanges

and Clearing in real time.

YouFirst ACE gives investors access to the research materials of Guotai Junan Securities

(the top research center in Hong Kong), a strategic partner of Hyundai Securities, as well as

to frequently held overseas market information sessions for investors. Hyundai Securities

plans to develop services for other markets, such as China, Japan, the US, and Vietnam, for

which there are needs from retail investors. Hyundai Securities is currently providing

intermediary services for equities in the US, Japan, Hong Kong, and China B-share market,

through offline orders.

June 27th, 2008

Ho Chi Minh office plays lead manager for the first time

With Hyundai Securities’ Ho Chi Minh Office in Vietnam acting as a lead manager, Sajo and

BLF (Bac Lieu Fisheries Join Stock Company; a fishery company in Vietnam) forged a

strategic alliance successfully. Hyundai Securities is a financial advisory company for Sajo.

Sajo formed an equity-stake alliance with BLF by taking over bond with warrants worth

VND30bn (USD1.8mn). Accordingly, Sajo will be able to secure raw materials for marine

products stably going forward. The strategic alliance is a prime example that overseas

offices of Korean securities companies help Korean companies successfully advance into

overseas markets. The Ho Chi Minh Office will position itself as a strategic hub for the

Southeast Asian region. Building upon this experience, Hyundai Securities aims to support

Korean companies in dealing with overseas companies and thus contribute to growth of

Korean companies.

September 18th, 2008

MOU Signed with RFCA in Kazakhstan

Hyundai Securities signed an MOU with RFCA (Regional Financial Centre of Almaty) to

develop a financial center in Almaty. A state agency under the Kazakhstani president’s

office, RFCA is the largest shareholder of KASE (Kazakhstan Stock Exchange) and is in

charge of managing and supervising the Almaty Financial Center.

By signing the MOU, Hyundai Securities and RFCA will jointly develop the Almaty

Financial Center (including construction of RFCA complex in the Almaty financial

district) and undertake other projects in the region. Hyundai Securities will serve as a

financial advisor to joint businesses. Going forward, Hyundai Securities will be

aggressively engaged in PF and PI for real assets, such as key real estate, SOC

infrastructure, resource development in Kazakhstan, tapping into the RFCA’s broad-

based networks. The company expects the move can add impetus to developing

specialized financial products targeted at Korean investors. Hyundai Securities

announced plans to expand busienss areas by proactively developing new revenue

models that accompany the capital market development.

September 4th, 2008


Hyundai Securities’ “fund fundamental index” first in industry

Hyundai Securities developed “Fund Fundamental Index,” the first of its kind in the

industry, designed to help investors compare investment funds based on basic

techniques for individual stock analysis. The index is based on the stock portfolio of

corresponding funds and Hyundai Research Center’s projections, and uses six indexes,

including sales growth, EPS growth, dividend yield, and PER.

Investors used to resort to historical yields or depend on the reputation of investment

firms or fund managers to choose investment funds. With the launch of the “Fund

Fundamental Index,” investors can now understand the status of each investment fund

more objectively and select an investment fund more suitable for their needs.

In addition, Hyundai Securities has launched the “Hyundai FRS (Fund Rating System)”

to recommend individual funds based on the indexes every month. The recommended

funds and basic analysis reports are posted on our monthly publication, Fund Universe

for You.

October 22nd, 2008

Sharing warmth in winter

Hyundai Securities President Kyung-soo Choi visited 30 elderly people living alone in

Yeongdeungpo with his employees to deliver heating oil and financial support. “We

wanted to help those elderly people who may have trouble with heating expenses in

this cold weather and economic slowdown,” said Mr. Choi, adding that Hyundai

Securities would fulfill its social responsibilities.

Hyundai Securities has been involved in voluntary activities based on the corporate

culture of social contribution and sharing. The company is involved in various social

charities, including the recent charity concert to help poor children who skip meals.

December 17th, 2008


Hyundai Securities forms strategic alliance with Woori Bank

Hyundai Securities signed a strategic alliance with Woori Bank for co-marketing to

provide cards and services for customers of both companies. As the first product of the

partnership, they plan to launch Hyundai CMA-Woori check card.

“With the strategic collaboration with Woori Bank, we are now able to find the common

area for brokerage houses and banks and develop diverse co-marketing programs to

maximize synergy,” said the Hyundai Securities President Kyung-soo Choi. “Hyundai

Securities will introduce more products that meet our customers’ needs in an era of

the Capital Market and Financial Investment Services Act.”

February 6th, 2009

Get your funds serviced now!

Hyundai Securities launched “Choice & Care” service, a total asset care service

differentiated from previous services that focused on selling products. With Choice &

Care, the company recommends funds and provides management services (fund status

and profitability).

Choice & Care service is based on the company’s FRS (fund rating system), which

analyzes a fund’s intrinsic value, and provides objective information to investors in

choosing their investment target. Individual fund reports and comprehensive fund

investment strategies, as well as video clips that enable investors to easily get fund

information, are provided. In addition, the company helps investors to choose the best

product via online consultations.

After products are sold, Choice & Care service updates investors with recent news,

such as funds hitting a certain profit rate or falling to a dangerous situation. It also

provides a more aggressive fund management service by sending text messages or e-

mails to investors to inform of fund status. Another notable feature of Choice & Care is

that comprehensive investment reports and individual fund analysis reports are

provided, even to those who are not Hyundai Securities clients.

March 3rd, 2009

CHALLENGEENGAGE IN THE HIGHEST

Being the first, pursuing the highest Our spirit of challenge has driven

Hyundai Securities to reach the top position. We have launched many, the first-of-its-kind products and

services as follows: 1) “Best customer manager system”designed to provide professional and effective

customer services; 2) “Fund fundamental indexes”(based on basic analysis techniques of individual stocks)

to compare various individual investment funds; 3) “Hyundai FRS (Fund Rating System)”designed to

recommend individual funds based on the indexes every month; 4) “Boutique Monaco,”a financial lounge

dedicated to female customers; and 5) “Live talk”to deliver online consulting services through online

chatting. We will reinforce competitiveness of each of the business operations, drawing upon our strong

retail operations, and achieve our vision based on the spirit of challenge to become Top 3 investment bank by 2012.

▲

Establishing a company vision

We established Vision 2012, a proclamation to emerge as a top 3 general investment bank, and laid out detailed

goals of becoming the industry’s No.1 player in retail brokerage and proprietary trading and a top 5 player in

wealth management, IB, and retirement pension. We also established five management targets, including

maximizing profitability and productivity, promoting responsible management, vitalization of organization,

realizing customer satisfaction, and enhancing brand value, in order to encourage the management and

employees to work hard to achieve the goals. We have started on developing special workforce, increasing

research competitiveness, building an integral risk management structure as well as a next-generation IT

system, exploring new products and income sources, and promoting company-wide TCR (total cost reduction).

We established our strategies in detail to improve capability of all our business units such as wealth

management, brokerage, IB, PI, derivatives, and retirement pensions.

BIG 3 Investment Bank

Establishment of next-generation financial

infrastructure to lead market

Diversifying

profit source

Reinforcing new

business and risk

management

Securing

profitability and

growth potential


Hyundai Securities boasts unrivaled competitiveness in

retail brokerage, which is a core profit source and will

remain a cash cow for the company. We are making our

utmost efforts to become the best brokerage firm in both

online and offline markets by actively utilizing our offline

sales capacity backed by 148 branches at home and abroad

and the most talented work force as well as our top-notch

online channels based on the next-generation financial

system.

In order to reach the No.1 position in

brokerage, it is imperative to secure

competitiveness in wholesale

brokerage. We are continuously

making investments to raise the

brand value of our research center,

which plays a pivotal role in boosting

institutional and international sales.

In addition, we are continuously augmenting our sales

force in wholesale brokerage by reinforcing prime

brokerage service to institutions and expanding the

market share of our international sales and trading

department. We, thereby, aim to achieve a well-balanced

profit structure between retail and wholesale brokerage

businesses.

We will become an industry top five in wealth management

by building competitiveness in the whole process of wealth

management, i.e., developing and selling products,

maintaining adequate level of investment return, and so

on. In order to achieve the goal, we are concentrating on

linking our businesses and developing combined products

so that we can compete with various products in the larger

financial market, including bank, securities, and insurance

products, in line with the implementation of the Capital

Market and Financial Investment Services Act in 2009. We

are also making efforts to expand our financial assets

(regular savings plan funds, CMA, WRAP, retail bonds) and

client base as well as activate sales channels (i.e., hire

more proxy solicitors to attract investments, enter into

strategic alliances with other financial institutions, and

increase online-exclusive funds).

We also established an asset management company for

proprietary trading, which creates strong synergy with

each of our other business areas, such as wealth

management, retirement pension, institutional sales, and

IB. This is part our move towards becoming a general

investment bank.

Diversifying profit source

“Establish a diversified profit structure, through which profits are evenly generated regardless of

business area, by strengthening market dominance in brokerage, a core profit source, and

nurturing proprietary trading, wealth management, and IB.”


The implementation of the Capital Market and Financial

Investment Services Act in 2009 will likely set off

unshackled competition among banks, insurance

companies, and brokerage houses in pursuit of future

growth opportunities. With a view to secure various

business opportunities and future growth engine, Hyundai

Securities has set up strategic planning department in

charge of proactively exploring new business

opportunities and providing new services such as futures

business (i.e., foreign exchange margin trading), prime

brokerage (i.e., loan transaction), and development of

products linked to cash management account (i.e., retail

payment and credit card).

In order to create synergy between brokerage and wealth

management and to expand sales competence in each

business, we divided our marketing organization into retail

sales and planning department and wealth management

planning department, and newly established customer

marketing department and wealth management

consulting center to build a sales support system

optimized for each field. To reinforce sales staff’s job

mindset and skills, we launched BEST (Branch

Enhancement and Sales Training) team and selected eight

best managers. These managers go around different

branches to disperse their know-how in financial

instruments and customer management, adding impetus

to enhancing our retail sales competence.

With a view to reinforce risk management and aptly

measure risks that inevitably accompany investment

business (i.e., investment banking, principal investment,

overseas) in a global financial crisis, Hyundai Securities

established risk assessment department and secured

independent risk assessment capability. We also upgraded

risk management system (ERMS) for a company-wide and

systematic control of risks.

We have maximized our capacity for all-around investment

banking operation. We divided our investment banking

operation into two areas -- one for customer relation

management and the other for securities underwriting --

in order to place our top operational priority on clients and

run investment banking business more efficiently. We

have also aggressively made inroads to niche markets to

help small/mid-sized companies raise capital.

In order to secure a growth driver in the highly promising

retirement pension market, we organically integrated

consulting and sales operations of our retirement pension

department. We also set up a derivatives planning

department to meet clients’demand for various fixed

income, currency and commodities derivative products

such as hedge funds, and the department is playing a

stronger role as a control tower in derivatives product

development.

Streamlining of organization to reinforce

new business and risk management

“Maximize sales competence by reorganizing investment banking businesses and reinforcing new

business and products as well as after-sales risk management in line with changing financial

environment and expanding business scope.”


We boast competitive edges in wholesale retail and aim to

continuously strengthen competitiveness of our offline

sales channels by reinforcing sales competence and

efficiency. To this aim, we have consolidated (including

relocation) branches, diversified the size of branches,

allocated human resources efficiently, and opened

“Boutique Monaco,”a branch for only female customers.

Running counter to the overall market trend of fee

reduction, we have strived to deliver high quality customer

services and maintain our average fee rates by: 1)

designating sales personnel to customers and thereby

improving customer management; 2) providing

differentiated research information; and 3) delivering yield

management services through customer management

system. Also, we will reinforce online channel marketing

activities. To keep up with expanding online trading, we

plan to enhance our brand power and expand our

customer base by preparing for the launch of bank-linked

online transaction systems, reviewing diverse online fee

schemes, and promoting our superior online trading

system. By fortifying online channel marketing, we plan to

reinforce our sales competence in both online and offline

retail channels.

In wholesale brokerage, we have invested our core

resources in major institutional investors such as National

Pension Corporation to enhance our sales operations. To

attract large investors such as hedge funds and pension

funds, we are beefing up our research and IR activities at

home and abroad. In overseas markets, we are trading not

only stocks, but also futures by introducing the DMA

(direct market access) order system to expand our sales

competence. Also, we are hiring global sales force and

carrying out inbound sales operations, aided by overseas

branches in New York, London, Hong Kong, Tokyo, and

other global cities. Furthermore, we are offering investors

in Korea an opportunity to directly invest in global

bourses, including Hong Kong, the US, and China, through

Securing profitability and growth potential

We plan to: 1) reinforce sales competence in online and offline channels for wholesale and retail

brokerage and invite large institutional investors to expand our market share; 2) enhance our

research brand power as a major securities firm in Korea; 3) improve commercial viability of

our cash management accounts to expand assets and accounts, and thus secure profitability of

wealth management business through cross-selling; 4) strengthen underwriting business and

participate in large government projects to boost our investment banking business’growth

potential; and 5) maximize profitability of principal investment to achieve the highest

return on equities in the industry.


our home-trading-system for overseas trading, although

the size of trading is not yet substantial. We are delivering

trading services of foreign government/public bonds, KP

bonds, and depository receipts (DR) to reinforce our

outbound sales operations for domestic investors.

We have made great efforts to reinforce our research

center both in quantitative and qualitative terms. We have

recruited top analysts for large-cap sectors and held

research conferences at home and abroad to raise our

research brand value. We also have discovered hidden

blue chip companies by increasing company visits to

reinforce competitiveness of our small cap sector

coverage. We introduced new assessment and incentive

systems for our research division to improve

organizational efficiency. Against this backdrop, we boast

top analysts in the automobile, LCD∙display, bond, small

cap sectors, which upholds our reputation as a major

securities firm in Korea.

The wealth management business has yielded tangible

results as the number of subscribers to Choice & Care

service launched in Mar hit 100,000 by offering services

not only to customers who sign up for Hyundai Securities’

funds but also to customers who sign up for other

companies’funds. Hyundai Securities will remain

committed to offering diverse product lineups and

upgraded services to lead qualitative differentiation in

wealth management. In addition, Hyundai Securities is

striving for an industry top position by boosting our brand

power and product attractiveness for the WRAP products,

which have the second largest balance in the industry.

Also, we plan to boost product attractiveness for cash

management accounts by offering the highest interest rate

in the industry and credit card functionality, increase asset

size and the number of accounts, and strengthen cross

selling. As such, we will make multi-faceted efforts to

secure profitability of wealth management business.

The investment banking business has laid the foundation

for securing growth potential by strengthening the

underwriting segment such as firm commitment

underwriting for large companies and participation as a

primary collateralized bond obligation underwriter,

strengthening competence to securitize distressed assets

held by state-owned companies, and participating in large

government-led projects such as the Green New Deal

project. Besides, we move proactively to become a global

investment banking by attracting overseas companies’

initial public offerings to list them on the Korean stock

market, establishing private equity fund for large pension

funds, and participating in major mergers and acquisitions

deals.

Our proprietary trading department has flexibly adjusted

the size of bonds and equities under management to cope

with changes in financial market indexes. It is exploring

investment opportunities in undervalued blue-chip assets

following the financial crisis and building a diverse

portfolio encompassing equities/convertible bonds,

commodities, and private equity fund as part of the efforts

to diversify its investment portfolio. In addition, we also

seek to reinforce risk management by expanding

investment in safe and liquid assets while hedging against

loss using derivatives. In doing so, we will maximize

principal investment and achieve the highest return on

equities in the industry.


As financial products multiplied with the Capital Market

and Financial Investment Services Act taking effect, the

focus of financial companies’IT system is shifting to

“supporting comprehensive wealth management”from

“securities trading.”In addition, as financial information is

increasing rapidly due to launches of diverse financial

products and new services, it became necessary to

reassure security in online operations (i.e., preventing

hacking on financial information). Against this backdrop,

we opened the next-generation information system at the

end of March after a year’s preparation. The introduction

of new information system allows the following: ① shifting

the product-oriented individual account s system to a

customer-oriented system; ② shortening the development

time of financial products by 25% and the time needed to

apply modifications in existing products by 20%, ③

building a new system for general asset management

services such as 24-hour online service as well as

improving the speed of trading.

Hyundai Securities’IT system has garnered ample

credibility, as it allows finding and tracing those whoever

that access information on the system, as we continuously

beefed up security to protect customer information and

prevent hacking. We also aggressively pursue sales of

financial IT know-how for additional profit creation, by

participating in building IT system in other institutions

based on our excellent IT staff and infrastructure.

Establishment of next-generation financial

infrastructure to lead market

“By opening the next-generation financial system, Hyundai Securities will be able to efficiently

cope with expansion of business areas and changes in market landscape following the

implementation of the Capital Market and Financial Investment Services Act. Also, we will

continue to improve the complex financial business system to provide differentiated services to

our customers and become the top investment bank in Korea.


Along with the next-generation information system, we

opened new operation support system that adds financial

and investment planning system in EGIS (engine of

innovation system). With this, our customers can enjoy

systematic wealth management service, as we provide not

only financial planning consulting service but also

customized investment planning service that allocates

asset and build portfolio to meet customers’investment

target and preference.

We renewed our retirement pension system, improving

convenience for the staff in charge, and strengthened

proprietary trading and educational services for

customers. In particular, online service became available,

and text messages or e-mails are sent to customers to tell

service results. Analyses of reserve management results

and 365-day risky asset monitoring service are also

provided. We realigned our website for retirement pension

(pension.yourfirst.co.kr) and provide various information

including product and investment guide, retirement plan,

education content, and customer education management

system for employees.

We established a knowledge management system to

utilize our manpower. Hyundai Securities’knowledge

management system is operated largely with business

knowledge, product knowledge, the sharing of best

practices (business skill), and suggestions, which

contributes to disseminating creative ideas as well as

fostering active communication among employees. It also

helps increase business competitiveness and business

productivity by converting the experience of business

know-how of individual employees and executives into

concrete forms of knowledge and information to share

with each other.

Hyundai Securities will continue to improve the

management system by setting MIS (management

information system) to provide key management

information and support management’s decision making.

We also support TCR (total cost reduction) activities by

building a budget system for efficient budget allocation,

execution, control, analysis, and evaluation.


CHOICEDRIVE ON YOUR BEST

Providing the best solution for you We are exploring diverse business areas

to satisfy our customers’financial aspirations. We launched “Choice & Care Service,”a customized wealth

management service based on our analyses of funds’intrinsic value. It provides objective information to

clients to choose the best financial products and follow-up information including profitability and fund

status. We always seek to develop better services for our customers and create synergy.

▲

FINANCIAL HIGHLIGHTSAs of the year 2009, 2008 and 2007 ended March


As of the year 2008, 2007 and 2006 ended March

Operating Results

Operating revenues

Operating expenses

Operating income

Non-operating income

Non-operating expenses

Pretax income

Net income

Financial Condition

Total assets

Total liabilities

Shareholders' equity

Return on average common shareholders' equity

Net Capital Ratio

Common Share Data

Number of outstanding shares

Book value per share (KRW in Won)

Earnings per share (KRW in Won)

Dividends declared and paid per common share (KRW in Won)

Fiscal year end stock price

Selected Data

Total Employees

Branches(overseas)

2,934

2,736

198

12

7

203

149

10,644

8,364

2,279

6.6%

648%

170,000,000

14,089

878

250

11,400

2,505

141(7)

2,967

2,705

187

13

18

257

187

8,900

6,641

2,259

9.9%

616%

170,000,000

13,677

1,338

450

15,450

2,545

140(7)

1,804

1,689

115

67

19

163

115

7,753

6,234

1,519

7.6%

485%

139,353,423

11,299

822

250

12,850

2,241

135(5)

FY2008KRW in billions FY2007 FY2006

MANAGEMENT’S DISCUSSION & ANALYSIS

1. Major results of operations

Hyundai Securities’net profit declined 21% year-over-year to KRW149.2bn from KRW186.7bn in fiscal year 2008, mainly due

to a decrease in brokerage commission rate resulting from shrinking turnover value and drops in commissions (related to

beneficiary certificates and commissions from combined securities) amid the stock market contraction. Net operating profit

slid 19% year-over-year to KRW584.7bn, and selling general and administration cost expenses were cut 16% year-over-year

to KRW386.3bn due to a decline in performance bonuses under personnel expenses, efficient budget use, and cost-cutting

efforts. As such, the operating profit dwindled 24% year-over-year to KRW198.4bn, and earnings before tax came in at

KRW202.7bn. Hyundai Securities is gradually moving toward an advanced, diversified profit structure by decreasing the

profit contribution from brokerage business while increasing that from proprietary trading and investment banking

business.

1QFY07 2Q 3Q 4Q FY07

16 2,613

1,072

1,071

487


7531,984

340 38

929

YoY -24%

OoO -19%

KRW in 100milOperating income


40 2,569

1,064

1,010

534


784 2,027

359 38

922

YoY -21%

OoO -15%

KRW in 100milPre-tax income


4,572

886

1,298

1,285

1,103


832 3,863

1,012

898

1,121

YoY -16%

OoO -26%

KRW in 100milSG&A


3Q

Net Operating Income


Net operating profit declined 19% year-over-year to KRW584.7bn in fiscal year 2008. Net operating profit breaks down by

segment as follows: 1) brokerage were down 34% year-over-year to KRW291.1bn due to a year-over-year plunge in turnover

value; 2) wealth management was down 44% year-over-year to KRW47bn as sales of risky financial instruments including

ELS (or ELKS, equity-linked securities) and equity funds contracted due to the flight-to-quality trend amid financial crisis; 3)

IB (underwriting and advisory services) was up 5% year-over-year to KRW18bn on an increase in corporate bond issuances

amid fourth quarter 2008 stabilization of the financial market; 4) proprietary trading was up 28% year-over-year to

KRW149.3bn thanks to active bond management following interest rate cuts in third quarter 2008 and fourth quarter 2008;

and 5) interest income was down 3% year-over-year due to declines in valuation gains of reserve for claims of customer

deposits and in interest income from margin lending and other sources.

In net operating profit composition ratio, brokerage fell

13%p over the past three years to 50% due to decreased

turnover and brokerage commission rate. Profits from

wealth management deteriorated 3%p year-over-year on a

decline in fees for equity linked securities, collective

investment securities, and wealth management. Investment

banking profits inched up 1%p year-over-year thanks to a

recovery in the primary market. Profits from proprietary

trading jumped 16%p year-over-year to 26%, fueled by

aggressive bond management.FY05 FY06 FY07 FY08 1Q 2Q 4Q

NOI breakdown

Prop. Trading Others Interest IB Wealth Mgmt. Brokerage

68%

5%2%

16%

8%1%

59%

8%2%

25%

4%1%

0% -13%

62%

7%2%

10%

18%

58%

8%5%

20%

8%

70%

8%2%

1%

30%

-1%

38%

2%2%

31%

13%

47%

3%4%

25%

13%


7,186

1,958

2,369

1,772

1,087


1,585 5,847

1,352

860

2,050

YoY -19%

OoO -23%

KRW in bnNOI by QoQ

771 4,442

2,911

470

263

172

180

1,170

1,493

948

995

786753

KRW in 100milNOI by business

Brokerage

10070

4745

WM

63174158

IB

149-98

926518

Prop.Trading

265258263

207

Interestincome

Brokerage

WM

IB

Prop.Trading

Interestincome

FY08 1Q FY08 2Q FY08 3Q FY08 4Q FY07 FY08


601


2. Operating results by division

Brokerage


4,402

1,204

1,277

1,209

752


752 2,910

771

601

786

YoY -34%

OoO -4%

KRW in 100milBrokerage income

KRW in trMarket share (turnover)

FY05

Market share (commissions)

8.39%

FY06

7.21%

FY07

7.47%

FY081Q

6.81%

2Q

6.43%

3Q

6.75%

4Q

6.96%

6.00%

4.00%

2.00%

12,00

8.00

4.00

-

5.25%5.12%

5.48%

4.33%

5.40%5.37%

5.64%

Avg. Daily Turnover(right)

M/S(left)

08-Jan Mar Jun Sept 08-Dec 09-Mar

Market share in terms of brokerage inched down 1.3%p year-over-year to 5.1% in fiscal year 2008 due to a decline in

turnover amid a sluggish stock market. On a monthly basis, the market share was 4.33% in September and increased rapidly

to 5.64% as of end-March thanks to brisk trading by individual investors. In terms of fees, the market share was 6.96% in

fiscal year 2008. Despite a 0.51%p drop, we still ranked high.

Brokerage profits dipped 34% year-over-year due to

deteriorated turnover amid rapid changes in the financial

market. In fiscal year 2008, daily average turnover fell

16% year-over-year to KRW7.9tr from KRW6.7tr, and

stock brokerage consequently decreased 30% year-over-

year to KRW168.9tr from KRW240.8tr.


The proportions of online stock brokerage amount and fees for both online and offline trading increased 6%p and 7%p,

respectively, from the first quarter of 2007. The increase was attributable to the market turnaround from the second half of

2008 and the increased proportion of individual investors preferring low fees. The proportion of individual investors

increased significantly in the second half, driving up stock brokerage amount and fees from individual investors by 6%p and

3%p, respectively, against the first half of 2007.


FY05

On∙Off-line proportions

66%

34%

44%

56%

44%

56%

FY06

62%

38%

FY07

63%

37%

41%

59%

FY08 1Q

60%

40%

43%

57%

2Q

62%

38%

48%

52%

3Q

68%

32%

50%

50%

4Q

69%

31%

48%

52%

FY05

Proportions by investors type (turnover)

FY06 FY07 FY08 1Q 2Q 3Q 4Q

4%

5%

91%

5%

10%

85%

5%

9%

87%

6%

10%

84%

5%

12%

83%

4%

8%

88%

3%

8%

89%

Retail Domestic Inst. Overseas Inst.

On Off Comm.(on) Comm.(off)

FY05

Proportions by investor type (comm.)

FY06 FY07 FY08 1Q 2Q 3Q 4Q

4%

3%

93%

6%

5%

89%

5%

4%

90%

6%

5%

89%

5%

7%

88%

4%

4%

92%

4%

5%

91%

Retail Domestic Inst. Overseas Inst.



Client Assets

KRW in trRetail

36.1

5.6

30.5

40.9

6.7

34.2

38.9

6.8

32.1

36.6

6.8

29.8

36.8

8.1

28.7

30.8

7.3

23.5

24.6

8.2

16.4

29.0

11.5

17.5

Financial products Brokerage

FY07 1Q

KRW in trInstitutions

21.5

6.4

15.1

2Q

23.1

7.2

15.9

3Q

21.9

6.9

15.0

4Q

23.0

8.9

14.1

FY08 1Q

17.8

9.8

8.0

2Q

15.4

8.7

6.7

3Q

16.7

11.5

5.2

4QFY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q 4Q

17.0

11.5

5.5

Financial products Brokerage

Hyundai Securities’ brokerage asset under management consists of equity valuation gains/losses for clients and their

deposits for equities, futures, and options. Our financial assets include collective investment securities, wrap accounts,

equity linked securities, cash management accounts, trusts, and bonds. Among retail investors’ assets, asset under

management plunged 41% year-over-year on reduced equity valuation gains amid the stock market contraction, while

financial assets soared 69% year-over-year on increased collective investment securities and cash management account

balance. On the other hand, institutional investor assets increased 29% year-over-year on the inflow of short-term liquidity

to cash management accounts, WRAP accounts, money market funds, and money market trusts.

Financial products proportions

Collectiveinvestment

33%

CMA14%

Fixedincome/RP

15%

Wrap11%

ELS20%

Trust∙SF7%

Collectiveinvestment

26%

CMA13%

Fixedincome/RP

22%Wrap16%

ELS13%

Trust∙SF10%

FY07 4Q FY08 4Q

The breakdown of financial assets shows that the proportion of collective investment securities and equity linked securities

each decreased 7%p year-over-year, while that of wrap accounts, bonds, and trusts increased 5%p year-over-year, 7%p

year-over-year, and 3%p year-over-year, respectively. With investments in high-risk financial instruments such as equity-

type collective investment securities and equity linked securities, contracting, assets in bonds and trusts perceived as

relatively safe investment targets by investors, increased.



Wealth Management

FY071Q 2Q 3Q 4Q FY07

470

122

114

142

92


45 261

100

70

47

YoY -44%

OoO -4%

KRW in 100milWM income

FY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q 4Q

KRW in trFinancial products assets

11.2

3.00.41.01.5

1.1

4.0

12.8

3.00.52.70.9

1.4

4.2

13.7

2.81.71.22.5

1.0

4.3

15.7

3.1

2.31.12.2

1.7

5.3

17.9

3.5

3.0

1.12.5

2.4

5.4

16.0

3.6

2.71.12.1

1.9

4.5

19.5

3.0

4.4

1.62.3

3.4

4.9

23.0

2.9

5.1

2.5

2.9

3.7

5.9

CMA SF∙Trust RP�Fixed income

ELS Wrap Collective Investment sec.

1Q

KRW in 100milELS issuance & M/S

13%

10%

13%

9%

9%11%

10%

7%6,215

2,824

2Q

3,563

2,547

FY07 3Q

5,651

1,915

4Q

3,971

1,377

FY08 1Q

7,306

1,665

2Q

4,447

720

3Q

320278

4Q

609418

Private

Public

M/S

The equity linked securities primary market shrank as increased stock market volatility depressed the high-risk financial

instrument market and resulted in a 44% year-over-year drop in equity linked securities fees. Amid interest rate cuts, the

balance of financial assets increased 46% year-over-year on increased assets in short-term financial instruments such as

cash management accounts for institutions, money market funds, and wrap accounts.



FY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q 4Q

KRW in trCMA balance & accounts

168,113

241,061305,109

335,055

378,840

467,752 487,945 502,798

1.50

2.672.55 2.25

2.502.07

2.262.93

CMA blance

No. of account

FY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q 4Q

KRW in trCollective investment securities balance

4.0

1.2

0.9

0.8

0.5

4.2

1.4

0.8

0.8

0.60

4.3

1.15

0.72

0.71

0.91

5.3

1.37

0.90

1.02

0.98

5.4

1.11

0.98

1.11

1.18 4.5

0.91

0.71

0.70

1.14

4.9

0.83

0.63

1.24

1.11

5.9

0.94

0.5 0.6 0.85 1.00 1.06 1.07 1.07 1.03

0.70

2.18

1.07

Others MMF Hybrid Bond Equity

FY08 1Q

KRW in 100mil

(Accumulated)

Retirement Pension

6,687

232

FY08 2Q

7,328

264

FY08 3Q

12,745

441

FY08 4Q

13,619

497

Reserve

Accounts

The balance of collective investment securities in fiscal year 2008 rose 9%Year-over-year on substantial growth in the

balance of short-term instruments, such as MMTs and MMFs, in response to lower interest rates. The balance of CMAs

increased 30%Year-over-year, driven by a large inflow of institutional funds, and the number of relevant accounts increased

50%Year-over-year on continued cross-selling efforts. Buoyed by aggressive sales efforts, retirement pension reserves

increased KRW26.5bnYear-over-year, and there are 6,932 more pension subscribers compared to last year.



Investment Banking


172

29

76

4323


58 180

63

17

41

YoY +5%

OoO +41%

KRW in 100milInvestment Banking income

FY071Q

KRW in 100milCommissions by business

30

16

14

2Q

77

51

26

3Q

42

12

30

4Q

23

12

11

FY08 1Q

63

23

40

2Q

17

7

10

3Q

41

11

30

4Q

58

16

42

Commissions on M&A Underwriting commissions

Type FY08 1Q 2Q 3Q 4Q Total FY07 YoY

Corp.bond 700 800 1,550 7,850 10,900 7,095 54%

ABS 4,035 2,400 2,805 5,770 15,010 13,137 14%

IPO 681 - 21 16 718 369 95%

Capital increase 854 178 280 - 1,312 4,910 -73%

KRW in 100milUnderwriting

In the investment banking business, underwriting service fees surged 52% year-over-year; the size of our underwriting

business, 54% year-over-year. Underwriting fees climbed 52% year-over-year, as the underwriting of corporate bonds

jumped on increased demand for high-yield bonds amid interest rate declines. Underwriting soared 54% year-over-year, as

Hyundai Securities underwrote the Korea Credit Guarantee Fund’s primary collateralized bond obligation worth KRW1.1tr. In

fiscal year 2008, annual advisory fees stood at KRW5.7bn, as management and financial advisory fees (from HICEL, KR, etc.)

have steadily climbed since 1Q09.



Proprietary trading


1,170

435

652

149 67


524 1,500

149 98

925

YoY +28%

OoO -23%

KRW in 100milProprietary trading income KRW in tr

As of March 31st, 2009

Type of fixed income position

Type Evaluated amount Proportions

State bonds 1.33 25%

Local Government bonds 0.08 1%

Special bonds 1.48 28%

Finance bonds 1.89 35%

Corporate bonds 0.59 11%

Total 5.37 100%

Type FY08 1Q 2Q 3Q 4Q Annual

Equities 510 352 122 337 330

Fixed income 3,218 3,391 1,453 1,617 2,420

Average Trading Volume

KRW in 100milEquities∙Fixed income volume

In fiscal year 2008, gains on proprietary trading increased 28% year-over-year to KRW150bn, as gains on bond transactions

outperformed the market, bolstered by aggressive measures and trading in the more volatile market. Hyundai Securities’

annual average equity and bond balances in the proprietary trading account stood at KRW33bn and KRW242bn, respectively,

in fiscal year 2008. Hyundai Securities plans to adjust the size of the balances depending on market conditions and to carry

out aggressive proprietary trading. Gains on trading in combined securities are reflected in various kinds of transactions,

including the trading/valuation of stocks and bonds, the trading/valuation/redemption of combined securities and combined

securities sold, the trading/settlement of futures, and over-the-count derivative trading/valuation. Hyundai Securities’ bond

holdings stand at KRW5.4tr, of which financial bonds and special bonds (bank bonds, capital bonds, etc.) account for 63%.



Interest

FY071Q 2Q 3Q 4Q FY07 FY081Q 2Q 3Q 4Q FY08

KRW in 100milInterest income

FY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q 4Q

KRW in tr

(Average balance)

Customers’Deposit

1.451.47

1.131.05 1.12

0.941.01

1.20

FY07 1Q 2Q 3Q 4Q FY08 1Q 2Q 3Q 4Q

KRW in 100mil

(average balance)

Call Money

5,503

6,556

6,105

3,0803,800 3,788

2,357

847

Hyundai Securities’ interest income consists of interest on margin loans, interest on loans, and gains on valuation of

reserves for claims of customer deposits. Interest on bonds, repurchase agreements (RPs), and other instruments is

classified as gains on proprietary trading. Interest income declined 3%Year-over-year in fiscal year 2008 due to decreases in

gains on the valuation of reserves for claims of customer deposits and interest on margin loans. As reserves for claims of

customer deposits (matching account of gains on valuation of reserves for claims of customer deposits) slid Year-over-year

by KRW203.2bn on average, gains on the valuation of reserves for claims of customer deposits also dropped year-over-year

by KRW9.3bn. As interest on margin loans (matching account of margin loans) fell year-over-year by KRW236.2bn, interest

gains decreased year-over-year by KRW16.6bn. With a 49% year-over-year decline in call money’s annual balance, interest

costs declined 41% year-over-year.


1,023

215

248

264

296

265

258

264

208 995

YoY -3%

OoO -21%

Risk management

Risk management policy

- We aim to systematically control and manage various risks (all possible losses that can be incurred) pertaining to our

business activities and realize a stable financial structure and management system via efficient allocation of resources. For

this purpose, we endeavor to achieve comprehensive risk management and optimal capital allocation by: 1) establishing

company-wide risk management Risk management structure 2) setting up comprehensive risk-management Risk

management process 3) building a comprehensive risk-management system[ERMS, Enterprise risk-management system]

and 4) developing a firm-wide risk-conscious culture.

Risk management structure

1. Risk management committee

- We have in place a risk management committee (hereinafter referred to as “the committee”), a final-decision-making body

for risk management. The committee is responsible for: 1) discussing and deciding important matters that can affect the

company’s financial health; and 2) establishing and supervising asset-management directions (including total investment

limits) and risk management strategies. The committee convenes more than once a quarter. It consists of three directors,

including the CEO and one external director, as its members.

2. Risk management council

- We set up a risk management council (hereinafter referred to as “the council”), which discusses working-level agendas

(investment deliberation, etc.) entrusted by the committee and establishes detailed plans related to risk management policy.

The council convenes more than once a month and consists of seven senior members, including the Chief Risk Officer

3. Subcommittees under council

- For the sake of reasonable decision-making, the council has subcommittees that provide professional advice and

deliberation on each agenda. The council is efficiently managing risks by convening a subcommittee for each operating

activity, including PI, IB products, marketable securities, over-the-counter derivatives, credit granting, and trust.

4. Risk management department

- We have a risk management department that implements the risk management principles and strategies set up by the

committee and the council. The organization is represented by: 1) the CRO (chief risk officer), the executive responsible for

risk management affairs; 2) the risk management department (to detect, measure, and control risks); and 3) the risk

reviewing department (investment deliberation and post-investment follow-up).

- The risk management department., as a middle office, is run independent of the front office, engaged in sales activities,

and of the back office, a support unit taking care of financial and settlement issues.

Risk management process

1. Recognition of risks

Risks are classified into the following categories.: market risk, credit risk, operational risk, liquidity risk, legal risk,

reputation risk, strategic risk, and systematic risk.


2. Risk measurement

- The risk management department sets methods of measurement for each risk type and reflects the result in the risk

measurement system before periodically measuring and analyzing risks. The department documents all matters related to

measurement models, such as the process and method of deciding variables used in measuring risk, the source of data,

basic assumptions, and the conditions for system design. The details of risk measurement are stipulated in the risk

management rules for each business.

3. Risk control

- The risk management department regularly monitors to ensure 1) investment positions are maintained at appropriate

levels within investment limits, 2) those positions are effectively handled in response to changing risk levels amid market

fluctuations, and 3) that risks are controlled accordingly. If a position exceeds the investment limit, each sales department

looks into the causes, draws up measures, and either reports or refers to the committee and then takes measures according

to the outcome.

- Investment limit management is an active approach to controlling risk aimed at keeping the company’s estimated losses

within a tolerable scope while reflecting the business strategy and risk appetite. All this is done while minimizing the

interference with various departments’in decision-making discretion.

Figure 1

- Investment limit management covers all trading products and manages the limits of investment, losses, sensitivity, VaR

(value at risk), and credit risk. Hyundai Securities manages risk through the ”Enterprise risk management system” on a

daily, monthly, and quarterly basis.

4. Risk report

- The risk management department monitors risk and limits utilization rates throughout the company and reports findings

to management on a daily basis. The department also reports the overall risk-management status to the council and the

committee on a regular basis and risk management progress to the board of directors twice a year.

limit distribution plan recognition

- business strategy

- risk appetite

limit distribution plan framing

- business planning- (the previous year )

actual results

limit application

- limit application form-asset management

planning form

limit monitoring

- daily/monthly/quarterly basis

- volume,loss,VaR,sensitivity etc

RAPM

-department/period/products basis

-risk adjustment performance measure

Feedback

Risk management committee/council

Risk management department

Front office


Risk Categories

1. Market risk

- Market risk refers to risks associated with declines in the value of Hyundai Securities’investment positions due to changes

in market factors such as share prices, interest rates, and FX rates. We also use VaR as the main tool to assess market risk.

We use other indexes also, including the limit of sensitivity by risk factor and stress test analysis.

- VaR is a statistical index to estimate maximum losses in a confidence interval during a certain period of time under normal

market conditions. Our company applies a 99% confidence interval and 10-day VaR in accordance with risk assessment

standards recommended by regulations on the financial investment industry and the Financial Supervisory Service (FSS).

2. Liquidity risk

- Liquidity risk is the risk that liabilities cannot be met by trading assets. By law, the asset-to-liability ratio must exceed

100%, and ours stood at 126.94% at the end of fiscal year 2008. In addition, we established contingency plans to brace for

liquidity risk following a sudden shock in the market.

3. Credit risk

Credit risk refers to the risk of asset value declines associated with trading partners’defaults, bankruptcy, and credit rating

changes. We set a single name concentration ratio according to the corresponding trader’s credit rating and manage credit

risk in accordance with FSS standards. Furthermore, we use credit VaR, our internal model index.

4. Operational risk

- Operational risk refers to the risk of losses resulting from inadequate internal processes, personnel, or systems or from

external events. All branches and departments carry out risk management activities such as identifying operational risks,

risk and control self-assessment (RCSA), reporting losses, and monitoring key risk indicators (KRIs). The risk management

department verifies and manages related data, analyzes KRIs, and quantify operational risks to control and mitigate

enterprise-wide operational risks.

Capital adequacy

1. Net capital ratio

-Capital market laws regulate the capital of financial investment companies in order to protect investors and ensure the

sustainable operation of companies in a rapidly changing market environment. The law stipulates financial investment

companies’net capital ratio must exceed 150% to maintain capital adequacy under the PCA (prompt corrective action)

framework. Hyundai Securities aims to maintain a net capital ratio of more than 300%.

- The net capital ratio is the minimum level of capital to liquidate the company in case of bankruptcy without incurring losses

for customers and creditors. The ratio shows whether capital is kept at an adequate level against asset holding risks

(market, credit, and operational risks) and is calculated based on the following equation.

Net capital× 100% = × 100%

Total exposure

Assets on B/S - Debts on B/S - Subtracted items + Added items

Market risk + Credit risk + Operational risk


2. Hyundai Securities’net capital ratio

- Hyundai Securities aims to maintain a net capital ratio of more than 300%. Our net capital ratio surged 25.54%pYoY to

641.09% as of end-Mar 2009, far above our risk-management target of over 300%, indicating that we fulfill the requirements

for financial soundness and capital adequacy. Our recent net capital adequacy ratio figures are as follows.

Others

1. Build “Enterprise Risk Management System”

- We have developed and been operating a comprehensive risk-management system, the ERMS since April 2009 in order to

respond to changes in regulatory environment: more specifically, possible structural changes and greater fluctuation

resulting from the Capital Market and Financial Investment Services Act. We seek to seize opportunities afforded by market

changes to launch new products.

- With the goal of establishing the best risk management system in the industry, we developed the system through 14-

month-long efforts to comprise market risk, credit risk, operation risk, capital adequacy, risk database in risk management.

<Figure 2> shows the key components of the system.

2. Developing a firm-wide Risk-Conscious Culture

- We have continuously conducted risk management education for all employees to create a culture of enterprise risk

management.

- To this end, Hyundai Securities holds risk management seminars for management to seek further improvement in risk

management. We have employees in charge of risk management in all branches and departments for risk prevention

activities. We also conduct risk-management-related education for all employees both online and offline more than once in a

year to minimize risk-related losses.

Market risk

�In-house development of

process engine for OTC

derivatives

→ Verifying new products’

fair prices fast

Comprehensive risk management system: Linked to International Financial Reporting Standards'

(IFRS) projects; Establish the best risk management system in the industry

Credit risk

�Use internal credit rating

model

→ Establish credit risk

management system

Liquidity risk

�Elaborate liquidity ratio

computation

→ Strengthen liquidity

management

Operational risk

�Introduce operational risk

management

→ Efficient improvement in

internal control

Comprehensive risk

�Capital adequacy, investment limit management, emergency plan for crisis

→ Establish risk management at advanced level

FY 2008 2007 2006

Net capital (A) 1,688,707 1,544,254 933,273

Total exposure (B) 263,411 250,872 192,550

Net capital adequacy ratio (c) 641.09 615.55 484.69

(KRWmn, %) Net capital adequacy ratio trend

Figure 2



Seoul, Korea May 21, 2009

To the Shareholders and Board of Directors of

Hyundai Securities Co., Ltd.

Report of Independent Auditors

We have audited the accompanying non-consolidated balance sheets of Hyundai Securities Co., Ltd. (the

“Company”) as of March 31, 2009 and 2008, and the related non-consolidated statements of income,

appropriations of retained earnings, changes in shareholders' equity and cash flows for the years then ended,

expressed in Korean won. These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in conformity with auditing standards generally accepted in the Republic of Korea.

Those standards require that we plan and perform the audits 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 non-consolidated financial statements referred to above present fairly, in all material

respects, the financial position of Hyundai Securities Co., Ltd. as of March 31, 2009 and 2008, and the results of

its operations, the changes in its retained earnings, the changes in its shareholders’equity and its cash flows

for the years then ended in conformity with accounting principles generally accepted in the Republic of Korea.

As discussed in Note 2 to the accompanying non-consolidated financial statements, the Company has changed

its classification of the non-consolidated statement of cash flows related with securities sold under repurchase

agreement. The non-consolidated statement of cash flows for the year ended March 31, 2008, has been

restated to reflect the change, resulting in a decrease in cash flows from operating activities of ＼672,288

million, an increase in cash flows from investing activities of ＼635,875 million and an increase in cash flows

from financing activities of ＼36,413 million.

Accounting principles and auditing standards and their application in practice vary among countries. The

accompanying financial statements are not intended to present the financial position, results of operations,

changes in shareholders’equity and cash flows in conformity with accounting principles and practices

generally accepted in countries and jurisdictions other than the Republic of Korea. In addition, the procedures

and practices used 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 financial statements

are for use by those who are informed about Korean accounting principles or auditing standards and their

application in practice.

This report is effective as of May 21, 2009, the audit report date. Certain subsequent events or circumstances, which may occur between

the audit report date and the time of reading this report, could have a material impact on the accompanying non-consolidated financial

statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above

audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

www.samil.com

LS Yongsan Tower 191 Hangangno 2-ga,

Yongsan-gu Seoul 140-702, KOREA

(Yongsan P.O. Box 266, 140-600)

(in thousands of Korean won)

2009

Non-Consolidated Balance Sheets

March 31, 2009 and 2008

2008

Assets

Cash and cash equivalents (Note 3)

Deposits (Note 3)

Trading securities (Note 4)

Available-for-sale securities (Note 6)

Equity-method investments (Note 7)

Structured securities (Note 5)

Derivative assets (Note 5)

Loans receivable, net (Note 8)

Property and equipment, net (Note 9)

Accounts receivable, net

Accrued income, net

Advanced payments

Prepaid expenses

Prepaid income tax

Guarantee deposits

Collective fund for default loss (Note 3)

Intangible assets, net (Note 10)

Deferred income tax assets

Others

Total assets

Liabilities and Shareholders' Equity

Deposits from customers (Note 12)

Short-term borrowings (Note 11)

Securities sold under repurchase agreements (Note 4)

Securities sold

Structured securities sold (Note 5)

Debentures, net (Note 13)

Derivative liabilities

Accrued severance benefits, net (Note 14)

Accounts payable

Accrued expenses

Income taxes payable

Guarantee deposits received

Unearned income

Defferred income tax liabilities

Withholdings

Others

Total liabilities

＼ 153,511,496

1,594,012,743

5,880,954,384

335,652,683

185,555,070

1,023,217,774

127,512,007

738,508,783

266,828,232

79,209,405

58,378,174

27,553,201

1,984,326

13,769,171

78,538,840

6,745,876

30,880,431

-

40,897,207

＼ 10,643,709,803

1,412,859,771

288,518,254

3,829,191,416

7,613,682

2,049,621,429

200,875,290

336,533,327

34,821,661

120,247,268

24,507,474

-

13,564,570

5,003,912

8,431,231

9,034,853

23,497,509

＼ 8,364,321,647

＼ 96,214,809

1,177,285,977

3,721,068,785

241,259,574

72,640,648

1,889,148,747

28,888,350

1,178,897,216

234,013,131

22,791,704

52,338,310

22,137,253

1,708,526

-

81,858,969

7,550,584

5,489,308

25,884,392

41,111,314

＼ 8,900,287,597

1,088,784,560

405,214,175

2,333,296,617

14,954,191

2,349,335,558

200,763,431

35,490,285

29,053,981

85,111,833

30,641,100

24,910,635

14,746,057

5,729,332

-

20,750,250

2,339,696

＼ 6,641,121,701

The accompanying notes are an integral part of these non-consolidated financial statements.



Commitments and contingencies (Note 15)


Capital stock (Note 1)

Capital surplus

Capital adjustments (Note 17)

Accumulated other comprehensive income (Notes 17 and 22)

Retained earnings (Note 16)

Total shareholders' equity

Total liabilities and shareholders' equity



2009 2008

＼ 850,000,000

836,361,851

(68,161,137)

64,145,995

597,041,447

2,279,388,156

10,643,709,803

＼ 850,000,000

836,361,851

(30,279,532)

80,899,032

522,184,545

2,259,165,896

8,900,287,597


(in thousands of Korean won, except per share amounts)

2009

Non-Consolidated Statements of Income

March 31, 2009 and 2008

2008

Operating revenues

Commissions received

Gain on sales of trading securities

Gain on valuation of trading securities

Gain on sales of available-for-securities

Reveral on impairment of available-for-securities

Gain on valuation of securities sold

Gain on structured securities transactions

Gain on valuation of structured securities

Gain on structured securities sold transactions

Gain on valuation of structured securities sold

Gain on derivatives transactions

Interest income

Gain on foreign currency transactions

Gain on valuation and disposal of loans

Gain on valuation of deposits segregated under regulation

Others

Operating expenses

Commissions expenses

Loss on sales of trading securities

Loss on valuation of trading securities

Loss on sales of available-for-securities

Loss on impairment of available-for-securities

Loss on valuation of securities sold

Loss on structured securities transactions

Loss on valuation of structured securities

Loss on structured securities sold transactions

Loss on valuation of structured securities sold

Loss on derivatives transactions

Interest expense

Loss on valuation and disposal of loans

Loss on foreign currency transactions

General and administrative expenses (Note 19)

Other

Operating income

Non-operating income

Gain on disposal of property and equipment

＼ 366,667,053

144,839,037

59,354,014

757,282

22,640

1,698,758

151,189,280

122,997,524

611,826,043

670,604,694

347,382,157

377,431,035

6,159,971

1,917,969

56,722,207

14,740,103

2,934,309,767

30,036,313

192,721,058

24,181,535

1,330,870

6,610,635

1,783,002

625,714,819

344,874,542

92,944,385

204,717,083

592,161,322

218,802,055

2,580,103

10,378,923

386,300,340

751,564

2,735,888,549

198,421,218

3,069

＼ 562,381,357

108,517,722

30,380,269

11,284,265

-

2,099,735

957,627,686

139,418,497

167,913,093

457,672,665

177,034,292

278,447,869

43,086

101,900

65,987,889

7,797,520

2,966,707,845

51,662,849

84,966,643

9,096,236

34,214

1,845,520

1,408,103

154,713,900

407,149,069

1,002,603,565

147,560,088

193,060,793

189,547,228

4,243,854

118,491

457,212,293

158,826

2,705,381,672

261,326,173

739,960


(in thousands of Korean won, except per share amounts)

2009 2008

Rental income

Gain on valuation of equity-method investments (Note 7)

Gain on disposal of equity-method investments

Other

Non-operating expenses

Loss on disposal of property and equipment

Loss on valuation of equity-method investments (Note 7)

Loss on disposal of equity-method investments

Donations

Other

Income before income taxes

Income tax expense (Note 20)

Net income

Earnings per share (Note 21) (In Korean won)

＼ 6,189,284

2,530,734

255,920

2,720,540

11,699,547

100,850

3,127,928

-

3,057,443

1,129,527

7,415,748

202,705,017

53,515,794

149,189,223

913

＼ 4,862,876

4,086,351

-

3,337,915

13,027,102

4,649,617

256,259

161,485

4,088,334

8,339,672

17,495,367

256,857,908

70,110,472

186,747,436

1,272





2009

Non-Consolidated Statements of Appropriations of Retained Earnings

Years ended March 31, 2009 and 2008

(Dates of appropriations : May 29, 2009 and May 30, 2008 for the years ended March 31, 2009 and 2008, respectively)

2008

Retained earnings before appropriations

Unappropriated retained earnings carried over from prior year

Net income

Appropriations

Voluntary reserves

Legal reserves

Reserve for loss on futures transactions

Reserve for loss on electronic financial transactions

Dividends (Note 18)

Unappropriated retained earnings

carried forward to the subsequent year

＼ -

149,189,223

149,189,223

104,698,600

4,044,602

-

-

40,446,021

149,189,223

＼ -

＼ -

186,747,436

186,747,436

104,457,897

7,433,232

23,986

500,000

74,332,321

186,747,436

＼ -



Non-Consolidated Statements of Changes in Shareholders' Equity

March 31, 2009 and 2008

Retained

earnings

Shareholders' equity, April 1, 2007

Cash dividends

Retain earnings after appropriations

Issuance of capital stock

Net income

Gain on valuation of available-for-

sale securities

Loss on valuation of

available-for-sale securities

Gain on valuation of

equity-method investments


equity-method investments

Overseas operation translation credit

Shareholders' equity, March 31, 2008

Shareholders' equity, April 1, 2008

Cash dividends

Retain earnings after appropriations

Net income

Purchase of treasury stock

Gain on valuation of




Accumulated comprehensive income

of equity method investees

Accumulated comprehensive expense

of equity method investees


Shareholders' equity, March 31, 2009

Accumulated othercomprehensive

income and expense

Capital

adjustments

Capital

surplus

Capital

stock

＼ 696,767,115

-

-

153,232,885

-

-

-

-

-

-

850,000,000

850,000,000

-

-

-

-

-

-

-

-

-

＼ 850,000,000

＼ 487,896,016

-

-

348,465,835

-

-

-

-

-

-

836,361,851

836,361,851

-

-

-

-

-

-

-

-

-

＼ 836,361,851

＼ (30,279,532)

-

-

-

-

-

-

-

-

-

(30,279,532)

(30,279,532)

-

-

-

(37,881,605)

-

-

-

-

-

＼ (68,161,137)

＼ (4,702,586)

-

-

-

-

80,773,692

(887,925)

481,866

3,443,678

1,790,307

80,899,032

80,899,032

-

-

-

-

(36,149,511)

(5,298,032)

16,356,046

5,648,053

2,690,407

＼ 64,145,995

＼ 369,071,390

(33,634,281)

335,437,109

-

186,747,436

-

-

-

-

-

522,184,545

522,184,545

(74,332,321)

447,852,224

149,189,223

-

-

-

-

-

-

＼ 597,041,447

Total

＼ 1,518,752,403

(33,634,281)

1,485,118,122

501,698,720

186,747,436

80,773,692

(887,925)

481,866

3,443,678

1,790,307

2,259,165,896

2,259,165,896

(74,332,321)

2,184,833,575

149,189,223

(37,881,605)

(36,149,511)

(5,298,032)

16,356,046

5,648,053

2,690,407

＼ 2,279,388,156




2009

Non-Consolidated Statements of Cash Flows

March 31, 2009 and 2008

2008

Cash flows from operating activities

Net income

Adjustments to reconcile net income

to net cash provided by (used in) operating activities

Gain on valuation of trading securities, net

Loss(gain) on sales of available for sale securities, net

Loss on impairment of available-for-sale securities, net

Loss(gain) on valuation of securities sold, net

Loss on valuation of structured securities, net

Gain on valuation of structured securities sold, net

Loss on valuation of derivatives

Bad debts expense, net

Provision for severance benefits

Depreciation and amortization

Loss on disposal of property and equipment, net

Loss(gain) on equity method valuation, net

Gain on valuation of deposits segregated under regulation

Others, net

Changes in operating assets and liabilities

Deposits

Trading securities

Structured securities

Account receivables

Accrued income

Advanced payments

Prepaid expenses

Prepaid income tax

Deferred income tax assets

Derivative assets

Deposits from customers

Loans receivable

Collective fund for default loss

Securities sold

Structured securities sold

Income taxes payable

Accounts payable

Accrued expenses

＼ 149,189,223

(35,172,479)

573,588

6,587,995

84,245

221,877,017

(465,887,611)

189,146,593

1,413,698

24,004,312

22,128,778

97,781

597,194

(56,722,207)

2,666,757

60,584,884

(246,491,282)

(2,218,205,935)

644,053,955

(56,608,213)

(6,218,397)

(5,853,911)

(273,301)

(13,769,171)

45,084,564

12,970,906

323,053,181

439,726,693

804,708

(7,424,754)

166,173,482

(24,926,178)

33,641,609

＼ (6,133,884)

＼ 186,747,436

(21,284,033)

(11,250,051)

1,845,520

(691,632)

267,730,572

(310,112,577)

33,121,077

4,023,188

17,727,442

18,057,110

3,909,657

(3,830,092)

(65,987,888)

277,848

120,283,577

51,132,352

(797,929,146)

(33,153,704)

94,665,228

(14,092,206)

(11,981,633)

(164,969)

9,247,802

26,182,823

(2,879,177)

18,795,990

(636,348,707)

473,827

7,012,415

(127,403,177)

24,454,864

5,743,139

＼ 6,905,543




2009

Non-Consolidated Statements of Cash Flows

March 31, 2009 and 2008

2008

Withholdings

Unearned income

Derivatives liabilities

Securities sold under repurchase agreements

Payment of severance benefits

Deferred income tax liabilities

Others, net

Net cash provided by (used in) operating activities

Cash flows from investing activities

Decrease(increase) in deposits

Decrease in available-for-sale securities

Increase in available-for-sale securities

Decrease in guarantee deposits

Increase in guarantee deposits

Decrease in equity-method investments

Increase in equity-method investments

Disposal of property and equipment

Aquisition of property and equipment

Increase in intangible assets

Other, net

Net cash used in investing activities

Cash flows from financing activities

Increase in short-term borrowings

Decrease in short-term borrowings

Increase in guarantee deposits received

Decrease in guarantee deposits received

Increase in treasury stock

Issuance of capital stock

Increase in debentures

Decrease in debentures

Payments of dividends

Net cash provided by (used in) financing activities

Increase in overseas operation translation gain

Net increase(decrease) in cash and cash equivalents

Cash and cash eguivalents

Beginning of year

End of year

＼ (11,715,396)

(725,420)

301,886

1,495,894,799

(18,236,632)

8,431,231

22,781,537

576,336,077

＼ 636,920,961

(114,515,786)

48,128,553

(116,885,030)

16,385,073

(13,229,220)

609,920

(92,206,820)

79,406

(51,863,571)

(28,633,061)

221,940

(351,908,596)

137,304,079

(254,000,000)

741,527

(1,923,014)

(37,881,605)

-

-

-

(74,332,321)

(230,091,334)

2,375,656

57,296,687

96,214,809

＼ 153,511,496

＼ 10,750,409

2,090,873

(1,292,840)

843,432,697

(25,761,132)

-

2,547,098

(547,571,631)

＼ (427,288,054)

74,951,537

41,987,884

(75,072,882)

20,458,548

(24,094,924)

319,200

(5,324,399)

59,488

(37,495,962)

(3,686,671)

(10,647,538)

(18,545,719)

41,214,175

(126,100,000)

1,622,000

(231,000)

-

501,698,720

953,330

(1,000,000)

(33,634,280)

384,522,945

1,179,652

(60,131,176)

156,345,985

＼ 96,214,809



1. The Company

Hyundai Securities Co., Ltd. (the "Company") was incorporated on June 1, 1962, under the name of Kookil Securities

Co., Ltd., pursuant to the laws of the Republic of Korea. The Company changed its name to Hyundai Securities Co., Ltd.

on June 5, 1986. In 1975, the Company’s shares were listed on the Korean Stock Exchange and as of March 31, 2009,

all issued and outstanding shares are publicly traded.

In accordance with its Articles of Incorporation, the Company is authorized to issue up to 600,000,000 shares of

common stock with a par value per share of ＼5,000. As of March 31, 2009, 170,000,000 shares of common stock were

issued and outstanding.

In accordance with its Articles of Incorporation, the Company is authorized to issue up to ＼500 billion of convertible

bonds and ＼500 billion of debentures with stock purchase options. No convertible bonds and debentures with stock

purchase options have been issued as of March 31, 2009.

Also, in accordance with its Articles of Incorporation, the Company may grant stock purchase options to its employees

and directors up to 15% of the total issued and outstanding shares with the approval of the shareholders. No stock

purchase options have been issued as of March 31, 2009.

The Company is required to maintain a net capital ratio (“NCR”) of more than 100% pursuant to the Regulation on

Financial Investment Service (“RFIS”). NCR is the ratio of net operating capital to total risks exposed which include

market risk, counter party risk, fundamental risk and credit concentration risk.

2.Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation of its non-consolidated financial

statements are summarized below.

Basis of Non-Consolidated Financial Statement Presentation

The Company maintains its accounting records in Korean won and prepares statutory non-consolidated financial

statements in Korean language (Hangul) in conformity with the accounting principles generally accepted in the

Republic of Korea. Certain accounting principles applied by the Company that conform with financial accounting

standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting

principles in other countries. Accordingly, these non-consolidated financial statements are intended for use by those

who are informed about Korean accounting principles and practices. The accompanying non-consolidated financial

statements have been condensed, restructured and translated into English from the Korean language non-

consolidated financial statements.

Certain information attached to the Korean language non-consolidated financial statements, but not required for a fair

presentation of the Company’s financial position, results of operations, or cash flows, is not presented in the

accompanying non-consolidated financial statements.

The following is a summary of significant accounting policies followed by the Company in the preparation of its

Notes to Non-Consolidated Financial StatementsMarch 31, 2009 and 2008


financial statements. These policies have been consistently applied to all the years presented, unless otherwise

stated.

In the year ended March 31, 2009, the Company adopted the following new Statements of Korean Financial Accounting

Standards (SKFAS) issued by the Korea Accounting Standards Board:

∙SKFAS No. 8, Securities (As Revised)

∙SKFAS No. 20, Related Party Disclosures (As Revised)

∙Financial Supervisory Service’s Accounting Opinion(00140), Preparation of the Statement of Cash Flows in

Securities company

In accordance with Financial Supervisory Service's Accounting Opinion No. 00140, Preparation of Statement of Cash

Flows in Securities Company, the Company has changed its classification of the non-consolidated statement of cash

flows related with securities sold under repurchase agreement. The non-consolidated statement of cash flows for the

year ended March 31, 2008, has been restated to reflect the change, resulting in a decrease in cash flows from

operating activities of ＼672,288 million, an increase in cash flows from investing activities of ＼635,875 million and an

increase in cash flows from financing activities of ＼36,413 million.

Accounting Estimates

The preparation of the non-consolidated financial statements requires management to make estimates and

assumptions that affect amounts reported therein. Although these estimates are based on management’s best

knowledge of current events and actions that the Company may undertake in the future, actual results may differ from

those estimates.

Revenue Recognition

The Company recognizes commissions, and trading gains and losses on the contract date. The Company, however,

recognizes commissions, and trading gains and losses in connection with over-the-counter (OTC) transactions on the

collection date.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and in banks, and financial instruments with maturity of three months

or less at the time of purchase. These financial instruments are readily convertible into cash without significant

transaction costs and bear low risks from changes in value due to interest rate fluctuations.

Investments in securities

Costs of securities are determined using the moving-weighted average method.

Investments in equity securities or debt securities are classified into trading securities, available-for-sale securities

and held-to-maturity securities, depending on the acquisition and holding purpose. Investments in equity securities of

companies, over which the Company exercises a significant control or influence, are recorded using the equity method

of accounting.

Held-to-maturity securities are measured at amortized cost while available-for-sale and trading securities are

measured at fair value. However, non-marketable securities, classified as available-for-sale securities, are carried at


cost when the fair values are not readily determinable.

Gains and losses related to trading securities are recognized in the income statement, while unrealized gains and

losses of available-for-sale securities are recognized under other comprehensive income and expense. Realized

gains and losses of available-for-sale securities are recognized in the income statement.

Equity method investments

Investees over which the Company can exercise significant influence should reflect any changes in equity after the

initial purchase date. Under the equity method, the Company records changes in its proportionate ownership in the

book value of the investee in current operations, as other comprehensive income and expense or as adjustments to

retained earnings, depending on the nature of the underlying change in the book value of the investee.

Structured Securities and Structured Securities Sold

Equity-linked securities are recorded as assets at the purchase price, and equity linked securities sold are recorded

as a liability at the issuance price. Gains or losses upon redemption are recorded as a gain or loss on the redemption,

and the difference with the estimated value and the book value at the balance sheet date is recorded as a gain or loss

on valuation.

Derivative Instruments

Derivative financial instruments for trading or hedging purpose are valued at estimated market price with the

resulting unrealized gains or losses recognized in the current operations, except for the effective portion of derivative

transactions entered into for the purpose of cash-flow hedges, which is recorded as an adjustment to shareholders’

equity.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts based on the aggregate estimated receivable amount of the

receivables.

The RFIS provides guidelines for calculating the allowance for doubtful accounts. These guidelines require that the

minimum level of allowances that securities firms should maintain. These guidelines require that all loans and

receivables should be classified based on a number of factors including the financial position of the debtors, the

repayment history, the Company’s past relationship and dealings with the debtors and the value of any security

interest. In accordance with these guidelines, loans and receivables have been classified as normal, precautionary,

substandard, doubtful and estimated loss.

Property and equipment

Property and equipment are stated at cost, which includes acquisition cost, production cost and other costs required

to prepare the asset for its intended use. Property and equipment are stated net of accumulated depreciation

calculated based on the straight-line method and the following estimated useful lives:


Expenditures incurred after the acquisition or completion of assets are capitalized if they enhance the value of the

related assets over their recently appraised value or extend the useful life of the related assets. Routine maintenance

and repairs are charged to expense as incurred.

Intangible assets

Intangible assets are stated at cost, which includes acquisition cost, production cost and other costs required to

prepare the asset for its intended use. Intangible assets are stated net of accumulated amortization calculated based

on using the straight-line method and estimated useful lives of four years.

Development costs which are individually identifiable and directly related to a new technology or to new products

which carry probable future benefits are capitalized as intangible assets. Amortization of development cost begins at

the commencement of the commercial production of the related products or use of the related technology.

Securities Sold under Repurchase Agreements

Under the repurchase agreements, the Company recorded securities sold under repurchase agreements at the

amount of securities sold, and such securities are included in liabilities. Also the Company recorded the difference

between the repurchase price and the price of the securities sold as interest expense.

Meanwhile under the resale agreements, the securities purchased under resale agreements are stated at acquisition

cost and are included as assets. The Company recorded the difference between the securities resale price and

acquisition cost as interest income.

Discounts and Premium on Debentures

Discounts and premium on debentures are amortized over the term of the debentures using the effective interest rate

method. Amortization of discount or premium is recorded as part of interest expense.

Accrued Severance Benefits

Employees and directors with at least one year of service are entitled to receive a lump-sum payment upon

termination of their employment with the Company, based on their length of service and rate of pay at the time of

termination. Accrued severance benefits represent the amount which would be payable assuming all eligible

employees and directors were to terminate their employment as of the balance sheet date.

The Company has partially funded the accrued severance benefits through severance insurance deposits with an

insurance company. Deposits made by the Company are recorded as deductions from accrued severance benefits.

The excess portion of deposits over accrued severance benefits is recorded as other investments.

The Company deposits certain portion severance benefits to National Pension Service according to National Pension

Law. The deposit amount is recorded as deduction from accrued severance benefits.

Estimated useful lives (years)

Buildings

Equipment

Others

40

4

4


Treasury Stock

Treasury stock is stated at cost. Gain on disposal of treasury stock is charged to capital surplus. Loss on disposal of

treasury stock is first offset against gain on disposal of treasury stock, if any, and the remainder is charged to capital

adjustment, a component of shareholders’equity.

Income tax and deferred income tax

Income tax expense includes the current income tax under the relevant income tax law and the changes in deferred

tax assets or liabilities. Deferred tax assets and liabilities represent temporary differences between financial

reporting and the tax bases of assets and liabilities. Deferred tax assets are recognized for temporary differences

which will decrease future taxable income or operating loss to the extent that it is probable that future taxable income

will be available against which the temporary differences can be utilized. Deferred tax effects applicable to items in

the shareholders’equity are directly reflected in the shareholders’equity.

Trust Accounts

In accordance with the Trust Business Act, trust estate should be accounted separately from the Company’s own

estate. Trust management fee for the management, administration and disposal of the trust are recognized as

operating revenue.

Translation of assets and liabilities denominated in foreign currencies

Monetary assets and liabilities denominated in foreign currencies are translated into Korean won at the rates of

exchange in effect at the balance sheet date, and the resulting translation gains and losses are recognized in current

operations.

Currency translation for foreign operations

Assets and liabilities of a foreign branch or company subject to the equity method of accounting for investments are

translated into Korean won at the rates of exchange in effect at the balance sheet date, while their equity is translated

at the exchange rate at the time of transaction, and income statement accounts at the average rate over the period.

Resulting translation gains and losses are recorded as accumulated other comprehensive income and expense.

Corresponding gains and losses are recognized as gain or loss when the foreign branch or company is liquidated or

sold.

Earnings per Share

Earnings per share are computed based on earnings available to common shareholders, using the weighted average

number of common shares outstanding during the period.

Operating Leases

An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of

an asset. The annual minimum lease payments, less guaranteed residual value, are charged to expense on a regular

basis over the lease term.


(1) Annual interest rate could not be determined at March 31, 2009, as the depository will pay interest based on their

operating results.

(2) As of March 31, 2009, long-term financial instruments amounting to ＼38,000 thousand are subject to withdrawal

restrictions to maintain checking accounts and long-term financial instruments amounting to ＼43,690,162

thousand are pledged as collateral for derivative instruments transactions (Note 5).

According to the Regulation on Financial Investment Services, the Company is required to deposit with the Korean

Securities Finance Corporation (“KSFC”) or other banks the amount of deposits from customers for the

customers’ claims.

Pursuant to the Financial Investment Services and Capital Markets Act, the collective fund for default loss is for

compensating losses resulting from breaching of securities trading in stock exchange.

3. Cash and Deposits

Cash and deposits as of March 31, 2009 and 2008, consist of the following:


Annual Interest Rate (%)

2009 2009 2008

Cash and cash equivalents

Cash on hand

Time deposits

Passbook accounts

Checking accounts

Passbook accounts in foreign currency

Negotiable certificate of deposits

Promissory notes

Deposits

Subscription deposits

Reserve for claims of customers' deposits

Reserve for claims of customers’deposits (trust)

Guarantee deposits for futures and

Options trading

Guarantee deposits for stock borrowings

Others(2)

Collective fund for default loss

-

4.50

0.10

-

0 - 0.25

6.45

1.90

1.00

(1)

(1)

-

-

0.10 - 7.50

(1)

＼ 2,413

38,000,000

28,908,449

731,429

2,072,518

-

26,500,000

96,214,809

-

15,073,383

1,069,006,535

49,255

1,984,105

91,172,699

1,177,285,977

7,550,584

＼ 1,281,051,370

＼ 984

70,000,000

29,482,109

602,500

5,551,508

3,274,395

44,600,000

153,511,496

13,500,000

10,033,830

1,365,792,938

-

-

204,685,975

1,594,012,743

6,745,876

＼ 1,754,270,115


4. Trading Securities

Trading securities as of March 31, 2009 and 2008, consist of the following:

Securities in related companies as of March 31, 2009 and 2008, consist of the following:

As of March 31, 2009, ＼4,077,038,967 thousand (2008: ＼2,502,724,250 thousand) of the debt securities are secured

against securities sold under repurchase agreements.

As of March 31, 2009, the Company holds beneficiary certificates which include ＼56,942 million of the bonds issued by

potentially ailing companies.

The above beneficiary certificates include the bonds issued by a potentially ailing company. They are valued at the

standard price of ＼65,770 million, as published by the investment trust management companies. Subsequently, the

Company devalued them by ＼8,828 million. In this regard, the Company classified those beneficiary certificates as

trading securities in accordance with the Financial Accounting Standards of the Republic of Korea. As of March 31,

2009, the actual recoverable amounts and the redemption date or resale date of the corporate bonds may be

influenced by Korean economic conditions. The accompanying non-consolidated financial statements do not reflect

that uncertainty.

For the year ended March 31, 2009, the Company recorded ＼243,630 million (2008: ＼156,364 million) of interest

income for trading securities.



2009

2009 2008

2008

Stocks

Government and public bonds

Corporate bonds

Beneficiary certificates

Commercial papers

Securities in foreign currencies

＼ 172,556,113

2,925,484,161

299,738,531

116,594,788

202,082,285

4,612,907

＼ 3,721,068,785

＼ 244,526,744

4,739,819,139

584,417,292

87,622,147

224,569,062

-

＼ 5,880,954,384

(in thousands of Korean won, except for the number of shares owned and percentage of ownership)

Hyundai Elevator Co.,Ltd

Hyundai Merchant Marine Co.,Ltd.

Number of

Shares Owned

-

47

Percentage of

Ownership

-

0.00

Acquisition

Cost

＼ -

1,304

＼ 1,304

Book

Value

＼ -

1,267

＼ 1,267

Book

Value

＼ 28,496,720

7,380

＼ 28,504,100

As of March 31, 2009, government and public bonds amounting to ＼261,487 million, corporate bonds amounting to

＼80,508 million and stocks amounting to ＼1,290 million are pledged as collateral for the contractual obligations,

including derivatives contracts and securities borrowings (Notes 5, 11 and 15).

5.Structured Securities, Structured Securities Sold and Derivative Instruments

Structured securities and structured securities sold as of March 31, 2009, are as follows:

Derivatives instruments contracts outstanding as of March 31, 2009, are as follows:



Gain on

valuation

Loss on

valuation

Equity-linked securities

Derivatives linked securities

Equity-linked securities sold

Warrant securities sold

Derivatives-linked securities sold

＼ 337,496,351

7,378,191

115,813,078

87,906,345

997,660

＼ 122,997,524

-

621,069,694

39,783,399

9,751,601

2009

＼ 1,019,816,763

3,401,011

1,973,193,323

5,302,736

71,125,370

Fair Value

Issuing Date

＼ 1,454,246,633

13,834,660

2,724,969,149

6,122,546

80,841,912


Loss on

Valuation

Purpose of

Transaction

Futures

Stock index futures

Interest futures

Listed Options

Stock index options purchased

Stock index options sold

OTC derivatives

Interest rate swap 1

Equity swap 1

Foreign exchange forward 1

OTC stock index options purchased 1

OTC derivatives purchased 2

OTC derivatives sold

Trading

"

Trading

"

Hedging

"

"

"

Trading, Hedging

Trading

＼ 314,783

-

＼ 314,783

＼ 220,512

23,280

＼ 243,792

＼ 4,725,841

296,902,255

374,856

7,250,570

843,691

-

＼ 310,097,213

Gain on

Valuation

＼ -

12,637,920

＼ 12,637,920

＼ 108,894

100,137

＼ 209,031

＼ -

105,990,270

564,577

6,975,420

6,611,423

843,691

＼ 120,985,381

Outstanding

Contract amount

＼ 47,776,262

2,009,054,970

＼ 885,835

570,460

＼ 362,000,000

1,074,291,550

15,400,041

7,781,850

15,664,047

8,984,154

1 The Company entered into derivative contracts to hedge against fluctuation in interest rate, stock price, exchange

rate and maturity amounts of equity-linked securities sold.

Since the above transactions do not meet the conditions of hedge accounting, the Company does not apply hedge

accounting. The Company provided trading and available-for-sale securities to Korea Exchange as collateral for

derivative instruments transactions (Notes 4 and 6).

2 The OTC derivatives purchased include put options that have been purchased to hedge the risk of Donghae Pulp

Co., Ltd.’s stock price change (Note 6).

6. Available-for-sale securities

Available-for-sale securities as of March 31, 2009 and 2008, consist of the following:

As of March 31, 2009, the Company provided listed available-for-sale stocks amounting to ＼89,862 million to Korea

Exchange as collateral (Notes 5 and 15).

For the year ended March 31, 2009, the Company recorded ＼2,937 million (2008: ＼666 million) of interest income

from available-for-sale securities.

Investments in stocks as of March 31, 2009 and 2008, consist of the following:



2009 2008

Stocks

Investments in partnerships

Corporate bonds

Beneficiary certificates

Others

＼ 189,358,689

25,684,450

12,382,221

10,881,442

2,952,772

＼ 241,259,574

＼ 222,455,291

40,600,414

23,050,794

26,520,190

23,025,994

＼ 335,652,683

2009 2008


Stocks in listed companies

Hyundai Eng. & Const. Co., Ltd.

Donghae Pulp Co.,Ltd. 2

Hyundai Elevator Co.,Ltd.

Hyundai Development Co. -

Engineering & Construction

Visang Inc.

Percentage

of Ownership

0.73

1.19

4.99

1.10

3.41

Number of

Shares Owned

813,149

371,560

356,209

830,000

333,924

Acquisition

Cost

＼ 36,795,027

5,502,804

30,527,111

43,990,000

8,431,581

125,246,523

Market or

Net Asset Value

＼47,975,791

1,776,057

25,183,976

27,929,500

4,341,012

107,206,336

Book

Value

＼47,975,791

1,776,057

25,183,976

27,929,500

4,341,012

107,206,336

Book

Value

＼ 69,930,814

-

-

-

-

69,930,814

1 The net asset values are recorded based on the most recent available unaudited financial statements.

2 During the year ended March 31, 2009, the Company recorded ＼1,810 million as loss on impairment of available-

for-sale securities with related to the acquisition of Donghae Pulp Co.,Ltd.’s stocks. With regard to this

transaction, the Company purchased put options to hedge the risk of Donghae Pulp Co., Ltd.’s stock price

change and recorded ＼4,504 million as gain on valuation of OTC derivatives.

3 During the year ended March 31, 2009, the Company recorded ＼383 million as loss on impairment of available-

for-sale securities, whose net asset values declined significantly and are not expected to recover.

4 The Company reclassified the investment as available-for-sale securities as Hyundai Auction Real Estate Fund 1st

stock’s establishment expiration date has lapsed.

5 Hyundai Asan Corporation is a related company.

6 These unlisted stocks are carried at values, published by Nice Pricing Services Inc., an independent valuation

organization, based on the professional judgment and rational valuation methods using reasonable financial

estimations.

2009 2008

Stocks in unlisted companies

Korea Exchange6

Korea Securities Finance Corporation6

Korea Securities Depository 6

Korea Securities Computer Corporation6

Korea Money Brokerage Corporation6

Hyundai Asan Corporation 5

Hyundai Futures Corporation

Hyundai Research Institute

C9 Asset Management Corporation1

Visang Inc(Preferred).

Reyon Pharmaceutical Co.,Ltd.

Reyon Pharmaceutical Co.,Ltd (Preferred).

Hanwon Square PFV Co.,Ltd.

Pantech & Curitel Communications, Inc.

Enbstars Co.,Ltd. 3

Hyundai Auction Real Estate Fund 1st 4

Others

Percentage

of Ownership

3.12

3.17

0.94

1.09

0.50

4.27

8.61

10.00

9.50

2.09

0.93

25.00

19.00

1.77

4.55

0.99

Number of

Shares Owned

624,190

2,152,828

56,496

58,120

10,000

587,839

396,000

200,000

140,000

209,000

9,900

297,000

190,000

9,713,264

8,292

298,791

Acquisition

Cost

＼ 2,807,105

10,757,876

496,910

290,600

50,000

21,229,535

2,009,700

480,685

700,000

7,106,000

625,000

2,025,000

950,000

2,428,316

462,000

820,564

35,887,921

89,127,212

＼ 214,373,735

Market or

Net Asset Value

＼66,082,371

16,533,719

4,729,732

1,810,438

229,980

5,552,115

3,391,354

556,487

633,946

2,229,167

398,572

1,195,716

-

582,796

52,562

1,475,222

5,780,559

111,234,736

＼ 218,441,072

Book

Value

＼66,082,371

16,533,719

4,729,732

1,810,438

229,980

5,405,175

1,882,774

480,685

700,000

7,106,000

625,000

2,025,000

760,000

582,796

78,540

491,511

5,725,234

115,248,955

＼ 222,455,291

Book

Value

＼ 73,831,066

16,228,017

4,708,603

1,630,440

192,520

4,498,240

1,882,774

480,684

700,000

7,106,000

625,000

2,025,000

950,000

582,796

462,000

-

3,524,735

119,427,875

＼189,358,689


Investments in partnerships as of March 31, 2009 and 2008, consist of the following:


for-sale securities related to the acquisition of Donghae Pulp Co.,Ltd.’s stocks. With regard to this transaction,

the Company purchased put options to hedge the risk of Donghae Pulp Co., Ltd.’s stock price change and

recorded ＼2,467 million as gain on valuation of OTC derivatives.

Corporate bonds as of March 31, 2009 and 2008, consist of the following:


2009 2008

(in thousands of Korean won, except for the percentage of ownership)

H&Q AP Korea

KTB 2007 Private Equity Fund

NPS 06-7 KDBC Corporate

Restructuring Fund

Tube Midas Venture Investment Fund

IBK KTAC Private Equity Fund No.2

Corporate restructuring fund QCP 13

Asia orchild venture Fund 1

KLAUS Private Equity Fund 1

West End Corporate Restructuring Fund

IBKC-NICE NO.1 Corporate

Restructuring Fund

Other

Percentage of

Ownership

17.00

8.80

15.00

5.00

9.10

16.70

15.38

9.56

10.34

25.00

Acquisition

Cost

＼ 1,869,150

23,880,000

5,928,000

1,000,000

800,000

750,000

1,200,000

3,000,000

3,000,000

1,200,000

400

＼42,627,550

Market or

Net Asset Value

＼ 1,531,680

23,187,955

5,805,197

913,776

784,296

614,817

1,177,010

972,864

2,984,234

1,202,255

400

＼ 39,174,484

Book

Value

＼ 1,869,150

23,880,000

5,928,000

1,000,000

800,000

750,000

1,200,000

972,864

3,000,000

1,200,000

400

＼40,600,414

Book

Value

＼ 2,040,000

14,680,000

5,814,000

1,000,000

800,000

750,000

600,000

-

-

-

450

＼25,684,450

2009 2008


Pantech & Curitel Communications, Inc.

Korea Kolmar Co.,Ltd.

GS Neo Tech Co., Ltd.

SMI XVI ABS Securitization

Specialty CO.1-9


Specialty CO.1-7

Par

Value

＼ 4,483,045

8,500,000

100,000

550,000

6,500,000

Acquisition

Cost

＼ 4,483,045

8,500,000

100,000

550,000

6,306,021

Fair

Value

＼ 2,241,523

8,500,000

100,000

550,000

5,778,384

Book

Value

＼ 2,241,523

8,500,000

100,000

550,000

5,778,384

Book

Value

＼ 2,241,523

7,000,000

200,281

-

-

-

Less : Allowance for doubtful accounts

1 During the year ended March 31, 2009, the Company reclassified this investment as available-for-sale securities,

due to continuous operating loss and worsening cash flow. Also, the Company recorded £‹58 million as loss on

impairment of available-for-sale securities, whose net asset values declined significantly and are not expected to

recover.

Beneficiary certificates as of March 31, 2009 and 2008, consist of the following:



2009 2008


Specialty CO.1-8

Shinsung Engineering &

Construction 911

Baolin Shangjian Gufengongsi 1

Hyundai Card Co.,Ltd CB

Par

Value

＼ 4,500,000

122,213

2,900,000

-

＼ 27,655,258

Acquisition

Cost

＼ 4,331,269

122,213

2,671,071

-

＼ 27,063,619

Fair

Value

＼ 3,358,555

63,934

2,671,071

-

＼ 23,263,467

Book

Value

＼ 3,358,555

63,934

2,671,071

-

23,263,467

(212,673)

＼23,050,794

Book

Value

＼ -

-

-

2,976,418

12,418,222

(36,001)

＼12,382,221

2009 2008


Shang-Hai real estate Fund

GB Vietnam Private Fund

Bond Market Stabilization Private Fund1

MBC-E&G Drama Fund

Money Market Fund

Acquisition

Cost

＼ 7,647,314

2,000,000

13,500,000

479,086

-

＼ 23,626,400

Fair

Value

＼ 11,596,005

1,301,065

13,623,120

-

-

＼ 26,520,190

Book

Value

＼ 11,596,005

1,301,065

13,623,120

-

-

＼ 26,520,190

Book

Value

＼ 8,370,445

1,311,443

-

1,050,524

149,030

＼ 10,881,442


Other available-for-sale securities as of March 31, 2009 and 2008, consist of the following:

1 During the year ended March 31, 2009, the Company recorded ＼3,200 million as loss on impairment of available-


Maturities of corporate bonds and commercial papers as of March 31, 2009 and 2008, are as follows:

Changes in unrealized gains and losses on valuation of available-for-sale securities for the years ended March 31,

2009 and 2008, are as follows:


2009 2008


Commercial papers1

Stock warrants

Acquisition

Cost

＼ 30,000,000

1,309,000

＼ 31,309,000

Fair

Value

＼ 22,800,000

225,994

＼ 23,025,994

Book

Value

＼ 22,800,000

225,994

＼ 23,025,994

Book

Value

＼ -

2,952,772

＼ 2,952,772

2009 2008


Within 1 year

1 - 5 years

Acquisition

CostMaturity

＼ 32,793,284

24,270,335

＼ 57,063,619

Fair

Value

＼ 25,535,005

20,528,462

＼ 46,063,467

Book

Value

＼ 25,535,005

20,528,462

＼ 46,063,467

Book

Value

＼ 3,176,699

9,241,523

＼ 12,418,222

2009


Unrealized gains

Unrealized losses

Increase(Decrease) due

to valuation

＼ (54,444,965)

7,930,713

Beginning

balance

＼ 84,036,409

887,925

Decrease due

to disposal

＼ (73,866)

(1,224,723)

Deferred

taxation

＼ 18,369,318

(1,407,958)

Ending

Balance

＼ 47,886,896

6,185,957

2008


Unrealized gains

Unrealized losses

Increase due

to valuation

＼ 111,598,321

1,224,724

Beginning

balance

＼ 3,262,717

Decrease due

to disposal

＼ (186,332)

Deferred

taxation

＼ (30,638,297)

(336,799)

Ending

Balance

＼ 84,036,409

887,925

On July 1, 2008, the Company reclassified ＼93,586 of trading securities into available-for-sale securities as these are

no longer held to gain profit from due to the downturn in the domestic and international financial markets, which the

Company believes may not recover in the near term.

The current book value and fair value of securities transferred from trading securities to available for sale securities

on March 31, 2009, are as follows:

For the year ended March 31, 2009, the Company recorded ＼1,067 million of interest income from the above

transferred securities.

The changes in fair value related to the above transferred securities are as follows:

Also, the changes in fair value recognized as current operating expenses if the securities have not been transferred

amount to ＼26,995 million.

The effective interest rate and estimated cash inflow from available-for-securities transferred from trading securities

on July 1, 2008, are as follows:


Book Value & Fair Value

Stock

Corporate Bond

＼ 57,454,488

9,136,939

＼ 66,591,427


The changes in fair value

until the end of previous year

Stock

Corporate Bond

＼ 40,446,927

(114,919)

＼ 40,332,008

The changes in fair value

during the current year

＼ (12,675,520)

(247,790)

＼ (12,923,310)


Corporate Bond

Within 1 year

＼ -

Effective

interest rate

9.54~9.99%

1 ~ 2 years

＼ 8,360,300

2 ~ 5 years

＼ 6,073,425

Over 5 years

＼ -


1 Offshore fund established on Labuan Island in Malaysia.

7. Equity-Method Investments

Equity-method investments as of March 31, 2009 and 2008, consist of the following:


2009


Hyundai Securities America Inc.

Hyundai Securities Asia Ltd.

Hyundai Securities Europe Ltd.

Hyundai Wise Asset Management

Co., Ltd.

Shibuya Sakuragaoka

Property TMK

Osaka Kitahama 3 undisclosed

association

Core-clean tech Venture

investment 2 association

Investment Opportunity Limited 1

Hyundai Asset Management

Co.,Ltd

Korea Pacific No.08 Ship

Investment Co., Ltd.











Percentage ofOwnership

100

100

100

33

100

74

26

50

100

99.57

99.57

99.57

99.57

99.37

99.37

Number of

Shares OwnedInvestee

220

10,000,000

11,000,000

659,997

-

-

-

60,000

6,000,000

2,292,971

2,292,971

2,292,971

2,292,971

1,572,130

1,572,130

Acquisition

Cost

＼ 32,735,839

8,918,826

19,130,104

3,827,983

2,969,073

1,419,326

582,000

626,100

30,000,000

11,464,855

11,464,855

11,464,855

11,464,855

7,860,650

7,860,650

＼ 161,789,971

Net Asset

Value

＼ 30,752,055

30,906,630

20,284,306

4,033,010

5,751,243

2,037,312

567,036

806,152

28,638,983

11,505,395

11,505,394

11,505,411

11,485,277

7,888,433

7,888,433

＼ 185,555,070

Book

Value

＼ 30,752,055

30,906,630

20,284,306

4,033,010

5,751,243

2,037,312

567,036

806,152

28,638,983

11,505,395

11,505,394

11,505,411

11,485,277

7,888,433

7,888,433

＼185,555,070

Changes in goodwill for the years ended March 31, 2009 and 2008, are as follows:

Changes in equity-method investments for the years ended March 31, 2009 and 2008, are as follows:

2008


Hyundai Securities America Inc.


Hyundai Securities Europe Ltd.

Hyundai Wise Asset Management

Co., Ltd.

Shibuya Sakuragaoka

Property TMK

Osaka Kitahama 3 undisclosed

association





Percentage ofOwnership

100

100

100

33

100

74

26

26

Number of

Shares OwnedInvestee

220

10,000,000

11,000,000

659,997

-

-

-

-

Acquisition

Cost

＼ 32,735,839

8,918,826

19,130,104

3,827,983

2,969,073

1,419,326

354,000

582,000

＼69,937,151

Net Asset

Value

＼ 22,807,915

22,824,809

15,949,397

4,869,021

3,772,057

1,440,288

354,000

582,000

＼ 72,599,487

Book

Value

＼ 22,807,915

22,824,809

15,949,397

4,910,182

3,772,057

1,440,288

354,000

582,000

＼ 72,640,648

2009 2008


Hyundai Wise Asset

Management Co., Ltd.

EndingBalance

＼ -

Amortization

＼ (41,161)

Beginning

Balance

＼ 41,161

Beginning

Balance

＼ 82,322

Amortization

＼ (41,161)

Ending

Balance

＼ 41,161



2009


Hyundai Securities

America Inc.1

Hyundai Securities

Asia Ltd.1,3

Hyundai Securities

Europe Ltd.1

Hyundai Wise Asset

Management Co.,Ltd.1

Shibuya Sakuragaoka

Property TMK 2

Osaka Kitahama 3

undisclosed association 2




investment 2 association 2

Investment Opportunity

Limited2

Hyundai Asset Management

Co.,Ltd.


Investment Co., Ltd.2











Gain(loss)on

Valuation

＼ (833,855)

499,997

(904,993)

235,352

359,459

-

-

(14,964)

(17,743)

(1,356,373)

298,550

298,550

225,364

204,096

204,683

204,683

＼ (597,194)

Acquisition

＼ -

-

-

-

-

-

-

-

626,100

30,000,000

11,464,855

11,464,855

11,464,855

11,464,855

7,860,650

7,860,650

＼ 92,206,820

Beginning

BalanceInvestee

＼ 22,807,915

22,824,809

15,949,397

4,910,182

3,772,057

1,440,288

354,000

582,000

-

-

-

-

-

-

-

-

＼ 72,640,648


income

＼ 8,777,995

7,581,824

5,239,902

(782,525)

1,619,727

597,024

-

-

197,795

(4,644)

10,739

10,738

20,135

-

7,362

7,362

＼ 23,283,434

Dividend

＼ -

-

-

(329,999)

-

-

-

-

-

-

(268,749)

(268,749)

(204,943)

(183,674)

(184,262)

(184,262)

＼ (1,624,638)

Disposal

and Transfer

＼ -

-

-

-

-

-

(354,000)

-

-

-

-

-

-

-

-

-

＼(354,000)

Ending

Balance

＼ 30,752,055

30,906,630

20,284,306

4,033,010

5,751,243

2,037,312

-

567,036

806,152

28,638,983

11,505,395

11,505,394

11,505,411

11,485,277

7,888,433

7,888,433

＼ 185,555,070

1 As the audited reports were not available, the unaudited financial statements of subsidiaries as of and for the year

ended March 31, 2009, were used in applying the equity method of accounting.

2 The equity method of accounting is applied to the most recent audited financial statements as the balance sheet

date is not the same.

3 The Company adjusted Hyundai Securities Asia Ltd.’s financial statements since there are differences in

generally accepted accounting principles between Korea and Hong Kong.

2008


Hyundai Securities America

Inc.


Hyundai Securities Europe

Ltd.

Hyundai Wise Asset

Management Co.,Ltd.

Hyundai Research Institute

Shibuya Sakuragaoka

Property TMK

Osaka Kitahama 3

undisclosed association





Gain(loss)on

Valuation

＼ 1,431,808

1,626,709

308,394

719,440

(104,749)

(151,510)

-

-

-

＼ 3,830,092

Acquisition

＼ -

-

-

-

-

2,969,073

1,419,326

354,000

582,000

＼ 5,324,399

Beginning

BalanceInvestee

＼ 20,176,915

19,867,885

14,726,732

4,465,433

1,066,118

-

-

-

-

＼ 60,303,083


income

＼ 1,199,192

1,330,215

914,271

55,308

-

954,494

20,962

-

-

＼ 4,474,442

Dividend

＼ -

-

-

(329,999)

-

-

-

-

-

＼(329,999)

Disposal

and Transfer

＼ -

-

-

-

(961,369)

-

-

-

-

＼(961,369)

Ending

Balance

＼ 22,807,915

22,824,809

15,949,397

4,910,182

-

3,772,057

1,440,288

354,000

582,000

＼ 72,640,648


8. Loans and other Receivables

Loans and receivables as of March 31, 2009 and 2008, by risk classification and percentages of loss applied in order to

determine the allowance for doubtful accounts are as follows:

9. Property and Equipment

Property and equipment as of March 31, 2009 and 2008, consist of the following:

Changes in property and equipment for the years ended March 31, 2009 and 2008, are as follows:


2009 2008


Buildings

Equipment

Other

Less: Accumulated depreciation

Land

＼ 146,931,317

119,060,686

37,725,348

303,717,351

(151,043,950)

152,673,401

114,154,831

＼ 266,828,232

＼ 137,464,791

111,898,183

34,755,181

284,118,155

(140,274,995)

143,843,160

90,169,971

＼ 234,013,131

Total


Beginning balance

Acquisition

Depreciation

Disposal

Reclassification

Foreign currency translation

Ending balance

＼ 234,013,131

51,863,571

(18,886,840)

(177,014)

-

15,384

＼ 266,828,232

Others

＼ 11,113,174

5,846,038

(5,283,159)

(101,799)

-

6,073

＼ 11,580,327

Equipment

＼ 20,534,816

12,566,147

(10,147,339)

(75,215)

-

9,311

＼ 22,887,720

Buildings

＼ 112,195,1700

9,466,526

(3,456,342)

-

-

-

＼ 118,205,3540

Land

2009

＼ 90,169,971

23,984,860

-

-

-

-

＼ 114,154,831

2009Classification 2008 Percentages of Loss

(in millions of Korean won)

Normal

Precautionary

Substandard

Doubtful

Estimated loss

＼ 801,611

118

9,853

3,597

21,110

＼ 836,289

＼ 1,083,941

-

150

4,215

23,312

＼ 1,111,618

over 0.5%

over 2%

over 20%

over 75%

100%

As of March 31, 2009, depreciable assets are insured against fire and other casualty losses for up to approximately

＼149,396,502 thousand.

As of March 31, 2009, the value of the Company’s land, as determined by the local government in Korea for property

tax assessment purposes, is ＼143,544,856 thousand (2008: ＼125,659,483 thousand).

10. Intangible Assets

Changes in intangible assets for the years ended March 31, 2009 and 2008, are as follows:

The amortization expense of intangible assets is included under general and administrative expenses.

Total


Beginning balance

Acquisition

Amortization

Ending balance

＼ 5,489,308

28,633,061

(3,241,938)

＼ 30,880,431

Software

＼ 3,812,540

7,515,188

(2,064,371)

＼ 9,263,357

Development costs

＼ 1,676,768

21,117,873

(1,177,567)

＼ 21,617,074

2009

Total


Beginning balance

Acquisition

Amortization

Ending balance

＼ 3,543,961

3,686,671

(1,741,324)

＼ 5,489,308

Software

＼ 2,315,056

2,797,763

(1,300,279)

＼ 3,812,540

Development costs

＼ 1,228,905

888,908

(441,045)

＼ 1,676,768

2008

2008


Beginning balance

Acquisition

Depreciation

Disposal

Reclassification

Foreign currency

translation

Ending balance

Equipment

＼ 17,180,237

10,776,005

(9,117,693)

(22,936)

1,713,811

5,392

＼ 20,534,816

Buildings

＼ 91,116,525

3,820,205

(3,165,778)

(4,458,337)

24,882,555

-

＼ 112,195,1700

Land

＼ 86,682,583

2,208,296

-

-

1,279,092

-

＼ 90,169,971

Construction in

progress

＼ 14,953,489

13,701,749

-

-

(28,655,238)

-

＼ -

Others

＼ 7,562,603

6,989,707

(4,032,315)

(190,051)

779,780

3,450

＼ 11,113,174

Total

＼ 217,495,437

37,495,962

(16,315,786)

(4,671,324)

-

8,842

＼ 234,013,131



11. Short -Term Borrowings

Short-term borrowings as of March 31, 2009 and 2008, are as follows

As of March 31, 2009, trading securities amounting to ＼64,605 million are pledged as collaterals for the above short-

term borrowings (Note 4).

12. Deposits from customers

Deposits from customers as of March 31, 2009 and 2008, are as follows:

13. Debentures

Debentures as of March 31, 2009 and 2008, are as follows:

1 Publicly - offered debentures.

2008


Call money

Short-term borrowings

＼ 314,000,000

91,214,175

＼ 405,214,175

2009

＼ 60,000,000

228,518,254

＼ 288,518,254

2009

2.08

1.75 - 3.09

Annual Interest Rates (%)

2008


Customers’ deposits for brokerage

Customers’ deposits for futures and options trading

Customers’ deposits for subscriptions

Customers’ deposits for savings

Customers’ deposits for Repo

Customers’ deposits for beneficiary

Other

＼ 923,041,592

142,030,075

90,750

11,873,403

66,702

10,294,296

1,387,742

＼ 1,088,784,560

2009

＼ 1,258,853,010

119,323,010

13,186,985

10,545,891

66,698

9,061,053

1,823,124

＼ 1,412,859,771

2008


26th 1

27th 1

＼ 200,000,000

1,000,000

201,000,000

(236,569)

＼ 200,763,431

2009Series

March 6, 2010

Jan. 8, 2011

Due date

5.23

7.22

Less : Discount

Annual Interest Rates (%) 2009

＼ 200,000,000

1,000,000

201,000,000

(124,710)

＼ 200,875,290

14. Accrued Severance Benefits

Changes in accrued severance benefits for the years ended March 31, 2009 and 2008, are as follows:

15. Commitments and Contingencies

The Company has entered into the following agreements with several banks as of March 31, 2009:

(1) The maximum limit is the amount of the deposits segregated per regulations.

The Company has been named as a defendant and a plaintiff in various legal actions arising from the normal course of

business. As of March 31, 2009, the aggregate amounts of claims as the plaintiff and the defendant amounted to

approximately ＼19,545 million in two cases and ＼55,184 million in nine cases, respectively, including cases

mentioned below. The ultimate result cannot be presently estimated.

The Company brokered the sale of stocks issued by Prudential Investment & Securities Co., Ltd. (“PIS”, formerly

Kookmin Investment & Securities Co., Ltd.) from Hynix Semiconductor Inc. (“HYNIX”) to Canadian Imperial Bank of

Commerce(“CIBC”) on June 4, 1997. In this regard, Hyundai Heavy Industries Co., Ltd.(“HHI”) entered into an

agreement that CIBC had put options on the above stocks based on the memorandum provided by the Company and

HYNIX. Pursuant to the agreement, HHI bought 13,000,000 shares issued by PIS at the price of US$220 million on July

2008


Balance at the beginning of the year

Provision for severance benefits

Actual severance payments

Less : Cumulative deposits to the

National Pension Fund

Severance insurance deposits

Balance at the end of the year

＼ 55,433,502

17,727,442

(5,547,330)

67,613,614

(153,217)

(38,406,416)

＼ 29,053,981

2009

＼ 67,613,614

24,004,312

(11,347,642)

80,270,284

(142,236)

(45,306,387)

＼ 34,821,661

Maximum Limit


Bank overdraft agreements

Working capital borrowings

Short-term finance of borrowings

Short-term note trading at a discount

Margin finance borrowings

Bond dealer borrowings

General capital borrowings

＼ 330,000

(1)

＼ 100,000

(1)

＼ 1,000,000

＼ 696,767

＼ 100,000

Bank

Hana Bank and other banks

Korea Securities Finance Corporation

Woori Bank




Woori Bank



24, 2000, as CIBC exercised its put option. With regard to compensation for the above trade, HHI filed a suit against the

Company, HYNIX and an individual for the payment of W247,864 million on July 28, 2000. With regard to the above

litigation, the Supreme Court ruled that the Company, jointly with HYNIX, had to compensate ＼192,941 million to HHI

on March 26, 2009. With regard to the above litigation, the Company recorded the provisional payment of ＼99,172

million as expenses before the previous year.

In addition, HHI demanded that the Company and HYNIX cover income tax expense and other expenses of the sale and

filed a separate suit against the Company and HYNIX for ＼48,770 million on December 30, 2004. This case is still

pending. The ultimate resolution of this case cannot presently be estimated.

On May 13, 1999, the Company brokered the purchase of Tong Yang Investment Bank (TYIB) of Seneca Funding I’s

US$50,000,000 Class A notes being sold by Pain Webber-US. The Company paid US$ 7.5 million in cash with the

balance of US$ 42.5 million on credit. Relative to this, the TYIB gave to Paine-Webber Korea Data Systems Co.,Ltd.

(“KDS”) bonds of US$10 million as collateral. On November 30, 2000, Paine-Webber required the Company to pay the

balance. In turn, the Company tried to collect the said balance from TYIB, which then refused to pay. Instead, the

Company paid Paine-Webber US$10 million and received the collateralized KDS bonds in the process. TYIB sued the

Company on March 17, 2003, for the losses incurred regarding the temporary seizure of the KDS bonds.

With regard to the said litigation, the Seoul Southern District Court ruled on October 7, 2004, that the Company had to

compensate ＼3,920 million and the Seoul High Court ruled that the Company had to compensate ＼2,281 million

additionally on May 2, 2007, the Company and TYIB appealed against the decision of the Seoul High Court and this case

is still pending at the Supreme Court.

The Company recorded the provisional payment of ＼6,201 million as expenses before the previous year. As of March

31, 2009, the ultimate result cannot presently be estimated.

Securities borrowings as of March 31, 2009, are as follows:

As of March 31,2009, trading securities are pledged as collateral for the above securities borrowings (Note 4).

With regard to the beneficiary certificate sold to customers, the Company has an agreement to reimburse certain

portions of losses from the dissolution of Hyundai Securitization Specialty Co.,Ltd. In this regard, the Company

recorded other accounts payable amounting to ＼19,775 million as of March 31, 2009, and recorded ＼707 million as

expenses for the year ended March 31, 2009.

Amounts


KT&G Corporation

Industrial Bank of Korea

KCC Corporation

Others

＼ 47,563

26,441

23,595

129,397

＼ 226,996

Bank

Korea Securities Depository




The Company leases vehicles under operating leases. Minimum lease payments schedule are as follows:

As of March 31, 2009, Seoul Guarantee Insurance Co., Ltd. has provided guarantees on the Company’s deposit

requirements to court for rulings of provisional attachment amounting to ＼404 million.

16. Retained Earnings

Retained earnings as of March 31, 2009 and 2008, consist of the following:

1 The Commercial Code of the Republic of Korea requires the Company to appropriate, as a legal reserve, an

amount equal to a minimum of 10% of cash dividends paid until such reserve equals 50% of its issued capital

stock. The reserve is not available for the payment of cash dividends, but may be transferred to capital stock, or

used to reduce accumulated deficit, if any with the resolution of the Company’s shareholders.

2 In accordance with Electronic Financial Transactions Act and Regulation on Supervision of Electronic Financial

Activities, the Company must have insurance or a mutual aid association and accumulate reserve to compensate

losses resulting from electronic transactions.

3 The Company appropriates a certain portion of earnings, pursuant to a shareholder resolution, as a voluntary

reserve. This reserve may be reversed and transferred to unappropriated retained earnings through a resolution

of shareholders, and may be distributed after its reversal.

2009


Within 1 year

1 - 5 years

＼ 134,880

190,066

＼ 324,946

2008


Appropriated

Legal reserve 1

Reserve for loss on electronic financial transactions 2

Reserve for loss on futures transactions

Voluntary reserve 3

Unappropriated

＼ 8,744,930

-

48,636

326,643,543

335,437,109

186,747,436

＼ 522,184,545

2009

＼ 16,178,162

500,000

-

431,174,062

447,852,224

149,189,223

＼ 597,041,447



17. Capital Adjustments and Accumulated Other Comprehensive Income and Expense

Capital adjustments, and accumulated other comprehensive income and expense as of March 31, 2009 and 2008, are

as follows:

The Company holds 8,215,870 shares of its common stock as of March 31, 2009, and intends to sell the shares in the

near future.

18. Dividends

Details of dividends declared for the years ended March 31, 2009 and 2008, are as follows:

2008


Capital adjustments

Treasury stock

Accumulated Other Comprehensive Income and expense

Translation of foreign currency financial statements

Unrealized gain on available-for-sale securities

Unrealized loss on available-for-sale securities

Accumulated comprehensive income of equity method investees

Accumulated comprehensive expense of equity method investees

＼ (30,279,532)

3,297,925

84,036,409

(887,925)

588,991

(6,136,368)

＼ 80,899,032

2009

＼ (68,161,137)

5,988,333

47,886,896

(6,185,957)

16,945,038

(488,315)

＼ 64,145,995

2008

(in Korean won)

Number of shares eligible for dividend

Dividend amount

Net income

Dividend payout ratio

Dividend ratio

Dividend yield ratio

165,182,936 shares

＼ 74,332,321,200

＼ 186,747,435,648

39.80%

9.00%

2.91%

2009

161,784,130 shares

＼ 40,446,021,000

＼ 149,189,223,295

27.11%

5.00%

2.19%

19. General and Administrative Expenses

General and administrative expenses for the years ended March 31, 2009 and 2008, are as follows:

20. Income Taxes

Income tax expense for the years ended March 31, 2009 and 2008, consists of the following:

2008


Wages and salaries

Employee fringe benefits

Severance benefits

Advertising expense

Commision expense

Depreciation

EDPS expenses

Rents

Taxes and dues

Entertainment expense

Research expense

Amortization

Training

Business consignment commission

Others

＼ 243,820,754

47,727,361

17,727,442

29,232,271

17,853,046

16,315,786

15,604,003

11,731,336

11,767,036

6,587,806

1,085,305

1,741,324

4,995,274

834,576

30,188,973

＼ 457,212,293

2009

＼ 162,824,032

52,486,783

24,004,312

22,795,931

19,382,227

18,886,840

15,453,698

14,720,434

11,879,799

5,317,374

3,308,196

3,241,938

3,089,055

829,265

28,080,456

＼ 386,300,340

2008


Current income taxes

Deferred income taxes due to temporary differences

Deferred income taxes due to tax loss carry forwards

Deferred income taxes due to tax credits

Deferred income taxes allocated directly to shareholders’ equity

Income tax expense

＼ 45,522,082

54,934,557

-

-

(30,346,167)

＼ 70,110,472

2009

＼ -

52,614,143

(13,397,932)

(4,900,589)

19,200,172

＼ 53,515,794



Deferred income taxes allocated directly to the shareholders’ equity are as follows:

Reconciliation of net income before tax and income tax expense:

Changes in temporary differences and deferred tax assets (liabilities) for the year ended March 31, 2009, are as

follows:

2008


Gain on valuation of available-for-sale securities

Loss on valuation of available-for-sale securities

Accumulated comprehensive income of equity method investees

Accumulated comprehensive expense of equity method investees


＼ (30,638,297)

336,799

-

(44,669)

-

＼ (30,346,167)

2009

＼ 18,369,318

1,407,958

(417,911)

181,090

(340,283)

＼ 19,200,172

2008


Net income before tax

Income tax based on statutory rate

Adjustments

Tax credit

Effect of tax rate changes

Temporary difference not recognized as deferred tax assets(liabilities)

Others

Income tax expense

Effective tax rate (Income tax expense over net income before tax)

＼ 256,857,908

＼ 70,622,725

-

-

(1,159,195)

646,942

＼ 70,110,472

27.30%

2009

＼ 202,705,018

＼ 55,713,080

(4,900,589)

2,540,534

415,551

(252,782)

＼ 53,515,794

26.40%

Temporary differences Deferred tax assets(liabilities)


Tax expense

Accrued severance benefits

Allowance for bad debts

Available-for-sale securities

Trading securities

Dividends

(specific overseas company)

Structured securities sold

EndingBalance

＼ 10,741

2,150

56,671

(31,196)

11,987

(762,311)

Increase

(decrease)

＼ 3,043

927

9,711

(36,135)

-

(465,742)

Beginning

Balance

＼ 7,698

1,223

46,960

4,939

11,987

(296,569)

Beginning

Balance

＼ 2,117

336

12,914

1,358

3,296

(81,557)

Increase

(decrease)

＼ 246

184

(446)

(9,018)

(659)

(102,922)

Ending

Balance

＼ 2,363

520

12,468

(7,660)

2,637

(184,479)

Temporary differences Deferred tax assets(liabilities)


Accrued expenses

Majority shareholder allotment

Other extraordinary losses

Other non-operating expenses

Employee welfare fund

OTC derivatives

Structured securities

Accrued income

Commision (local subsidiary)

Equity-method investments 1

Advanced depreciation provisions 1

Others

Capital Adjustment

Accumulated comprehensive

income of equity method

investees 1

Accumulated comprehensive

expense of equity method

investees 1

Unrealized gain on available-

for-sale securities

Unrealized loss on


Overseas operation translation

credit

Tax loss carryforwards

Total

Tax credit

Deferred tax assets(liabilities)

EndingBalance

＼ 5,109

-

5,352

11,078

2,950

216,739

445,042

(19,433)

1,402

(5,353)

(16,983)

(5,543)

(71,598)

(17,408)

669

(61,393)

7,931

(1,547)

(71,748)

55,363

＼ (87,983)

Increase

(decrease)

＼ (3,351)

(37,362)

(99,172)

(1,800)

(850)

189,112

174,517

18,293

-

2,222

-

(10,072)

(256,659)

(16,774)

(5,467)

54,519

6,706

(1,547)

37,437

55,363

＼ (163,859)

Beginning

Balance

＼ 8,460

37,362

104,524

12,878

3,800

27,627

270,525

(37,726)

1,402

(7,575)

(16,983)

4,529

185,061

(634)

6,136

(115,912)

1,225

-

(109,185)

-

＼ 75,876

Beginning

Balance

＼ 2,327

10,274

28,744

3,542

1,045

7,598

74,395

(10,375)

385

(177)

-

1,246

57,468

(45)

-

(31,876)

337

-

(31,584)

-

25,884

-

＼ 25,884

Increase

(decrease)

＼ (1,203)

(10,274)

(27,567)

(1,105)

(331)

44,853

33,305

5,672

(77)

109

-

(2,581)

(71,814)

(418)

181

18,369

1,408

(340)

19,200

13,398

(39,216)

4,901

＼ (34,315)

Ending

Balance

＼ 1,124

-

1,177

2,437

714

52,451

107,700

(4,703)

308

(68)

-

(1,335)

(14,346)

(463)

181

(13,507)

1,745

(340)

(12,384)

13,398

(13,332)

4,901

＼ (8,431)



1 The Company did not recognize the deferred tax assets and liabilities since it is not certain that these can be

realized.

The Company recognized deferred tax assets for all deductible temporary differences, except for the items (1)

above as of March 31, 2009, as it is probable that taxable profit and taxable temporary difference will be available

against which deductible temporary differences can be utilized.

Deferred tax assets and liabilities as of March 31, 2009 and 2008, are as follows:

The tax effect of cumulative temporary difference was calculated based on future tax rate of the fiscal year when

temporary differences are expected to reverse. The 24.2% and 22% tax rates were used for temporary difference

expected to reverse in year 2009 and thereafter, respectively. As a result, deferred tax liabilities were lower by ＼555

million as compared to the amount using the current tax rate of 27.5%.

21. Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to common stock by the weighted average

number of common shares outstanding during the year.

Basic earnings per share for the years ended March 31, 2009 and 2008, is calculated as follows

Diluted earnings per share is the same as basic earnings per share since there are no diluted securities outstanding

as of March 31, 2009 and 2008.

2008


Deferred tax assets

Deferred tax liabilities

＼ 175,795,864

149,911,471

＼ 25,884,393

2009

＼ 225,471,321

233,902,552

＼ (8,431,231)

(in Korean won)

2009 2008

Net income attributable to common stock

Weighted average number of common stock outstanding

Basic earnings per share

＼ 186,747,435,648

146,846,424

＼ 1,272

＼ 149,189,223,295

163,445,808

＼ 913

22. Comprehensive Income

Comprehensive income for the years ended March 31, 2009 and 2008, are as follows:

23. Related Party Transactions

The Company’s subsidiaries are Hyundai Securities Asia Ltd., Hyundai Securities America Inc. and Hyundai Securities

Europe Ltd., Hyundai Asset Management Co.,Ltd., as of March 31, 2009 and 2008.

Significant transactions which occurred in the normal course of business with related companies for the years ended

March 31, 2009 and 2008, and the related account balances outstanding as March 31, 2009 and 2008, are summarized

as follows:


2009 2008

Net income

Other comprehensive income

Gain on valuation of available-for-sale securities,

net of tax of ＼18,369 million (2008: ＼30,638 million)

Loss on valuation of available-for-sale securities,

net of tax of ＼1,408 million (2008: ＼337 million)

Accumulated comprehensive income of equity method investees,

net of tax of ＼(418) million (2008: ＼45 million)

Accumulated comprehensive expense of equity method investees,

net of tax of ＼181 million

Translation of foreign currency financial statements,

net of tax of ＼(340) million

Comprehensive income

＼ 186,747,436

80,773,692

(887,925)

481,866

3,443,678

1,790,307

＼ 272,349,054

＼ 149,189,223

(36,149,512)

(5,298,032)

16,356,046

5,648,053

2,690,407

＼ 132,436,185


Subsidiaries

Equity-method companies

Other companies

＼ 986,531

-

7,409,146

＼ 8,395,677

＼ -

-

11,480,314

＼ 11,480,314

＼ 7,551,620

-

18,875,809

＼ 26,427,429

2009

Income Expenses Receivables Payables

＼ -

596,172

1,385,247

＼ 1,981,419


Subsidiaries

Equity-method companies

Other companies

＼ 670,000

-

-

＼ 670,000

＼ -

-

-

＼ -

＼ 11,455,356

-

17,196,849

＼ 28,652,205

2008

Income Expenses Receivables Payables

＼ -

-

-

＼ -



The Company purchased property and equipment, and intangible assets amounting to ＼5,617,687 thousand (2008:

＼14,830,216 thousand) from other related companies during the year ended March 31, 2009.

For the year ended March 31, 2009, the Company recognized expenses for short-term benefits of ＼7,833 million and

severance benefits of ＼1,009 million as key management compensation. Key management consists of executive

officers who have the authority and responsibility in the planning, directing and controlling of the Company’s

operations.

24. Supplemental Cash Flow Information

Significant transactions not affecting cash flows for the years ended March 31, 2009 and 2008, are as follows:

25. Supplementary Information for Computation of Value Added

The accounts and amounts, included under general and administrative expenses, needed for computation of value

added for the years ended March 31, 2009 and 2008, are as follows:


2009 2008

Increase in unrealized loss on available-for-sale securities

Increase(decrease) in unrealized gain on available-for-sale securities

Decrease in accumulated comprehensive expense of equity method investees

Increase in accumulated comprehensive income of equity method investees

Reclassification of trading securities to available-for-sale securities

Reclassification of construction in-progress to property and equipment

Retirement of troubled loans and others

＼ 887,925

80,773,692

3,443,678

481,866

-

28,655,238

270,793

＼ 5,298,032

(36,149,512)

5,648,053

16,356,046

94,199,707

-

2,298,071


2009 2008

Wages and salaries

Severance benefits

Employee fringe benefits

Rents

Depreciation

Amortization

Taxes and dues

＼ 243,820,754

17,727,442

47,727,361

11,731,336

16,315,786

1,741,324

11,767,036

＼ 162,824,032

24,004,312

52,486,783

14,720,434

18,886,840

3,241,938

11,879,799

26. Securities in Custody

As of March 31, 2009 and 2008, the securities in custody which are owned by customers are as follows:

27. Approval of financial statements

The March 31, 2009 financial statements of the Company were approved by the Board of Directors on May 8, 2009.


2009 2008

Trustor securities in custody

Saver securities in custody

Beneficiary securities in custody

＼ 50,533,849

130,783

5,109,769

＼ 55,774,401

＼ 36,082,191

80,041

5,345,871

＼ 41,508,103


Organization Structure

Auditing Dept.

AUDIT

ComplianceDept.

COMPLIANCE

Legal AffairsDept.

Risk ReviewDept.Risk ReviewDept.

RISK MANAGEMENT

RiskManagementDept.

Public RelationsDept.

PUBLICRELATIONS

&TRUST

Trust Dept.

Strategy &Planning Dept.

STRATEGY &PLANNING

FinancialManagementDept.

Settlement Dept.

HumanResources Dept.

HR DevelopmentDept.

General AffairsDept.

OperationsDevelopmentDept.

StrategicPlanning

I T PlanningDept.

Cyber SystemsDept.

SystemsManagementDept.

OperationsSystems Dept.

Equity DealingDept.

Fixed IncomeDealing Dept.

Fixed IncomeDept.

PrincipalInvestmentDept.

DerivativesTrading Dept.

StructuredProducts Dept.

Futures &Options Dept.

SP PlanningTeam

InformationSystems Dept.

Next GenerationSystems Dept.

HUMANRESOURCES &

GENERAL AFFAIRS

MANAGEMENT TRADING & DERIVATIVES

PRESIDENT & CEO

CHAIRMAN

BOARD OF DIRECTORS

GENERAL MEETING OF SHAREHOLDERS

INFORMATIONTECHNOLOGY

AUDIT COMMITTEE

NOMINATING COMMITTEE FOR NON-EMPLOYEE COMMITTEE

PERSONNEL COMMITTEE

RISK MANAGEMENT COMMITTEE

COMMITMENTS COMMITTEE

TRADING &PRINCIPAL

INVESTMENTDERIVATIVES


IPO Dept.

Real EstateFinance Dept.

CoporateFinance Dept. 1

CoporateFinance Dept. 2

GlobalSecurities Dept.

Global Business Dept.

M&A Dept.

HyundaiSecurities(Europe) Inc.

HyundaiSecurities(America) Inc.

HyundaiSecurities(Asia) Inc.

HyundaiSecurities Tokyo Branch

Equity AnalysisDept.

EconomicsAnalysis Dept.

QuantitativeAnalysis Dept.

ResearchSupport Team

InstitutionalSeucirites Dept. 1

InstitutionalSecurities Dept. 2

FinancialProducts Dept.

RP ConsultingDept.

RP ConsultingDept.

RP OperationsDept.

Inst. SecuritiesPlanning Team

CustomerMarketing Dept.

WM PlanningDept.

e-BusinessDept.

Retail PlanningDept.

HDS ShanghaiRep. Office

CustomerSatisfactionCenter

FinancialProductsPlanning Dept.

Customer AssetMangementDept.

WM ConsultingCenter

InvestmentAnalysis Dept.

HDS HochiminhRep. Office

HDS Almaty Rep.Office

RISK MANAGEMENT COUNCIL

DISCIPLINARY COMMITTEE

INVESTMENT BANKING INSTITUTIONAL SECURITIES RETAIL

IPO/M&A/REAL ESTATE

COPORATEFINANCE

GLOBAL INSTITUTIONAL SECURITIES

RESEARCHCENTER

DOMESTICINSTITUTIONAL

SECURITIES

RETIREMENTPENSION

RETAILPLANNING

8 DIVISIONS &141 BRANCHES

RETAILMANAGEMENT


Corporate headquarters

#34-4, Youido-dong, Youngdeungpo-ku

Seoul, Korea, 150-735

Tel : 822-768-0114 | Fax : 822-783-9746

http://www.youfirst.co.kr

Established

June 1, 1962

Stock listing

Korea Stock Exchange, 003450

Network

141 domestics and 7 overseas

Number of Employees

2,505 (as of March 31, 2009)

Stock Issued

170,000,000 (Common stock)


2,279 billion won

Major shareholders

Hyundai Merchant Marine 23.17%

Shareholders’ Information

Hyundai Merchant Marine 23.17%

Foreign investors 10.13%

(as of March, 2009)

Employees Stock 3.66%

Treasury Stock 4.83%

Others 58.21%

Total 100.00%

Investor Relations

#34-4, Youido-dong, Youngdeungpo-ku, Seoul, Korea, 150-735

Tel : 82-2-768-0152 | Fax : 82-2-783-9746

e-mail: [email protected]

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