G.SQUARE, 180, Simin-daero, Dongan-gu, Anyang-si, Gyeonggi-do, Koreawww.taihan.com

THE WAY TOA GLOBAL LEADING

COMPANYAnnual Report 2012

Annual Report 2012TA

IHA

N

FINANCIAL HIGHLIGHTSFor the years ended

2010 2011 2012

Sales 2,703,504 2,578,240 1,982,801

Gross Profits 147,796 127,427 108,231

Operating Income 24,885 47,689 5,072

EBITDA 36,023 60,503 25,429

Income Before Tax (686,225) (223,871) (323,736)

Net Income (569,718) (213,185) (443,261)

As of the years ended2010 2011 2012

Current Assets 1,362,904 1,167,373 828,440

Property, Plant and Equipments 454,999 555,079 561,909

Total Assets 2,884,450 2,712,172 2,248,593

interest bearing Debts 1,843,743 1,811,708 1,444,268

Net Debts 1,778,274 1,776,724 1,399,026

Total Liablities 2,386,774 2,363,941 1,935,898

Capital Stock 357,992 389,856 262,842

Capital Surplus 595,607 175,500 496,427

Retained Earning (461,643) (213,461) (447,887)

Capital Adjustment 5,720 (3,665) 1,313

Total Shareholder's Equity 497,676 348,230 312,695

Company name Taihan Electric Wire Co., Ltd.

Business area Cables & Wires

Products and services Manufacturing, supplying, and construction services related to power lines,

communications and optical cables, and ultra high voltage cables

CEOs Kwan-Ho Sohn, Hee-Jeon Kang

Address G.SQUARE, 180, Simin-daero, Dongan-gu, Anyang-si, Gyeonggi-do, Korea

Establishment February 21, 1955

Initial public offering December 27, 1968

No. of employees 1,021

Fiscal year ends in 2012

Face value 2,500 KRW

No. of stocks issued 105,136,685

External auditing agency Deloitte Anjin LLC

Auditor’s remark Clean Opinion

Credit class BB+(BOND), B+(CP)

Closing month December

Main bank Hana Bank

COMPANY PROFILE (As of December 2012)

C O N T E N T SINTRO SECTION06 2012 Performance Highlights08 CEO Message10 Corporate History12 Domestic Affiliates14 Global Affiliates16 Organizational Chart

REVIEW OF OPERATIONS18 Domestic Sales19 Global Sales20 Overseas Sales BU I21 Overseas Sales BU II22 Overseas Sales BU III23 Installation Division24 Copper Rod & Wire25 R&D27 Growth & Innovation

SUSTAINABILITY MANAGEMENT30 Transparent Management32 People34 Social Contribution36 Safe and Healthy Working Place 40 Environmental Management

FINANCIAL SECTION46 Independent Auditors’ Report48 Statements Of Financial Position50 Separate Statements Of Comprehensive Income51 Separate Statements Of Changes In Shareholders’ Equity52 Separate Statements Of Cash Flows54 TAIHAN around the World

THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

THE WAY TO A GLOBAL LEADING COMPANYEstablished in 1955 as Korea’s first electric wire manufacturer, Taihan Electric Wire is a technology leader in the industry of power and com-munications cables and materials. The company maintains a competitive position in the global market with 70% of sales supplied to companies out-side Korea. Our priorities are on R&D and organizational competency, in order to successfully implement growth strategies in the next generation market. Taihan’s promise is to always put customers first and to provide the best quality products and services. We are committed to creating the best value for our customers and helping them grow with us, based on our integrity and ethical management principles.

▲ Dangjin Plant

More Overseas Contracts and Better Quality Through Reorganization Taihan Electric Wire reorganized the company by strengthening overseas

sales parts and downsizing the domestic units. Similar functions were in-

tegrated and downsized respectively in order to improve the organizational

efficiency. Separated marketing teams in the different companies were inte-

grated to create a synergy and the local organizations were integrated to the

marketing headquarters divided by product, in order to enhance professional-

ism and expansion in overseas markets. The production line improved thanks

to the newly established Technology Team and Quality Control Center that

will contribute to strengthen competitive power.

Taihan will provide better quality products not only for the Middle East mar-

ket, which is a traditional market for Taihan’s activities, but also in the South

East and other global markets through the ‘Speed, Slim, Smart’ campaign

of the company. We are also ready to explore advanced markets while

strengthening our position in the U.S, Russia, and Australia markets as a

market leader.

tem to improve management efficiency through effective use and integrated

management of the management resources. The ‘trustful new management

system’ ERP, designed to fulfill 3 major goals such as process innovation,

integrated system establishment & organization, as well as organizational/

manpower improvement was successfully opened after one year of develop-

ment, which started in the second half of 2011.

Through the integrated system, Taihan is expected to improve the manage-

ment transparency and achieve better sales results.

Taihan understood the importance of smart grid as the new revenue source

and founded ‘Smart Grid Consultative Group’ to establish a smart grid solu-

tion. With various product lines and the core solutions such as AMI system,

telemetering system, renewable solution and smart grid-related cable, as well

as natural light system, we will participate in the smart grid business in the

near future.

We have supported and exchanged with the Jeju National University in green

energy technology and human resource development, by donating wind pow-

er generators and cooperating in the field of smart grid and newly generated

energy development. We will try harder to develop new technologies and fos-

ter human resources through aggressive industry and academy cooperation

in the future.

for mass production of eco-friendly Gel-free optical fiber cables. We will put

more effort into the development of various products to provide total solution

based on know-how for extra-high voltage cables, as well as improvement of

existing products with the aim to expand market dominance including newly

created markets.

ERP Integrated System Taihan completed and safely stationed the SAP package-based ERP(Enterprise

Resources Planning), a global standard program through one-year R&D.

The ERP system is a standard system which integrates separated systems

for finance, production, and cost management into a unified information sys-

New Products Developed Through the Enhanced R&DTaihan is the first Korean wire company that passed PQ (Pre Qualification)

test for 500 kV extra-high voltage cable by KEMA, a certified testing institu-

tion headquartered in the Netherlands. 500kV extra-high voltage is the high-

est voltage for underground cables currently used. Only a few global wire

companies with advanced technology are able to manufacture and install the

cable. Since high voltage cable of 330kV, 380kV, and 400kV became com-

monly used, we concentrated on developing the 500kV cable with high value

to improve our competitiveness in foreign markets. As a result, we passed a

type test in 2010, conducted PO test in 2001, and finally passed PQ test in

2012.

We strengthened our competitive power in extra-high voltage markets by

developing subsidiary materials for underground cable at production cost

30% less than usual, and developed the world’s first high speed street car

line with speed of 400km/h to establish a bridgehead to expand into foreign

markets. To target markets in developed countries, we established a system

New Growth Engines Through Optical Fiber and Communication-Related Products Development Taihan has accelerated optical fiber and communication product develop-

ment to cope with the rapid growth of IT business such as FTTH. We suc-

ceeded in developing a bulk long-distance optical fiber which improves the

efficiency of data transmission in LTE service environment in 2012 and the

new product is on sale now. We are also in the development process of dam-

age-minimizing optical fiber which will be applied to long distance cables as it

can reduce optical signal damages up to 15%.

We have launched new products in bend-insensitive optical fiber cable for

FTTH. AS FTTH has been spread worldwide, we developed and started to

produce a high performance ultra-bend optical fiber which can transmit data

even through a 5mm bend that is narrower than the 7.5mm strong-bend opti-

cal fiber. Such achievements are expected to be a bridgehead to secure new

growth engines in the future.

Smart Grid as the New Revenue Source

2012PERFORMANCEHIGHLIGHTS

06 07THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

TAIHAN ELECTRIC WIRE CO., LTD.2012 Performance Highlights

CEOMESSAGE

Dear customers and shareholders of Taihan Electric Wire,

I would like to begin my message by sending my deepest appreciation and

respect to our customers, shareholders, and all others for their support for

Taihan.

Despite the gloom of an unstable economy that persisted throughout 2012,

we pushed forward with two clear objectives of enhancing our financial struc-

ture and boosting sales.

We increased capital by issuing new stocks without any troubles at 340 billion

won, which was crucial for normalization of management in December 2012.

Besides, it sold off real estates including the factory site in Siheung-dong

and the land in Docksan-dong and successfully developed the factory site

in Anyang into a industrial land, which produced great results in financial

improvement. It conducted restructuring by reducing low-profit business in-

cluding material business and focusing on high value projects to promote

future growth.

We also have done our best to get rid of business wastes through the com-

prehensive reorganization and process innovation to improve business ef-

ficiency. For instance, we could cut management cost after we moved the

head offices to Anyang.

Despite of such efforts and achievements, the total sales in 2012 slightly

decreased to 1 trillion and 982.8 billion won with 5.1 billion won of gross

profit, compared with the previous year. It was caused by either cancellation

or withdrawal of some projects that we won the contracts in the last year, we

expect that it will get better from 2013.

We will not stay with the current issues but will establish a 10-year plan for

the future to improve productivity and profitability through high-profit product

design, cost reduction and overseas market expansion. Please pay attention

and support us.

I would like to remind our shareholders that the current recession in the

global economy is especially hard on Taihan as it relies to a great extent

on exports. Even though the economy is slowly recovering, there are many

threats still remaining such as fluctuating exchange rates, unstable prices for

raw materials, and growing competition in the market. In order to overcome

this crisis and become a winner in the global market, we must focus on high-

profit technology and product development and competitive pricing through

cost control.

Since the company’s establishment in 1955, Taihan has met and overcome

countless challenges and crises. The company has maintained steady prog-

ress to achieve the global top position in the business areas of power, com-

munications, and materials, helping to build the foundations for industries.

Although the present situation is a crisis, we will turn it into an opportunity

for innovation and growth. We will take this opportunity to move forward to

achieve stable and consistent growth and become a global leading company.

More than anything, support from our shareholders is the driving force for

Taihan to overcome crises and stabilize the company.

This is the 58th year for Taihan. While we have achieved a lot so far, we

will not remain satisfied with the status quo. We will continue improving by

making difficult decisions related to restructuring to become more efficient,

expand our business in the global markets, enhance high-profit product lines,

and reduce costs and develop new technologies. We will not stop in our ef-

forts to realize our promise to our shareholders, of becoming “a global leader

in the energy and information industries, providing the best values for share-

holders.”

I would like to thank our customers and shareholders again, for their unwaver-

ing and continuing support and interest in the future of Taihan.

Sincerely,

Taihan Electric Wire declared the new company vision of “a global leader in energy and information industries, providing the best value to customers” and established the four core strategies of high-profit products development, enhanced cost control, focus on the global market, and new technology development. The vision and strategic focus represent our commitment to growth and global leadership.

March 23, 2013

CEO and President

08 09THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

TAIHAN ELECTRIC WIRE CO., LTD.CEO Message

CORPORATEHISTORY

2010 - Awarded 82 million AUD contract for a turnkey project

from Energy Australia in Australia

- Enlisted in DJSI (Dow Jones Sustainability Index) Korea

2010 - New Leadership, establishment of CEO system

with Gwan-Ho Sohn and Hee-Jeon Kang

- Awarded 35 million USD contract for a turnkey project

from Reliance Infrastructure Ltd. in India

2011 - Dangjin Factory began production of ultra high voltage

cables(May 11, 132kV)

- Communications division transferred to Taihan Fiber

Optics

- Started exports of 500kV-grade ultra high voltage cables

(Korea’s first)

- Completed Dangjin Factory construction and facilities

transfer, began full operation

- Sold Novelis Korea shares and discontinued aluminum

business involvement

2012 - Qualified as the first Korean vendor of ECO cable

in the Japanese market

- Passed the PQ Test for 500kV extra high-voltage cable

for the first time as a Korean manufacturer

- Developed the first 400km/h high-speed electric car line

in the world

- Launched new products including bus-duct/heating cable

- Developed and commenced production of Eco Gel-free

optical cable

- Awarded the world’s best product at OPGW by the Ministry

of Knowledge and Economy

1955 - Founded TAIHAN Electric Wire Co., Ltd.

1957 - Produced plastic insulated power cable

1958 - Produced PVC jacket cable

1959 - Installed the copper smelting and rolling mill first time in Korea

1955

1984 - Completed optical fiber cable plant in Anyang

- Produced multiple and single mode optical fiber cable

- Developed and produced 154kV XLPE power cable

1985 - Developed 345kV OF power cable

- Supplied the optical fiber cable for Seoul Olympic communication networks

- Developed the 154kV single core lead sheathed OF cable

- Exported 132kV XLPE power cable first time in Korea

1986 - Acquired the KS Mark for vinyl insulated cable, high frequency coaxial cable

- Won the Prime Minister Award meritorious service in National backbone

Communication Network

1987 - Manufactured Optical Fiber Ground Wire (OPGW)

- Developed high foamed coaxial cable for CATV

- Succeeded in localization of extra high voltage OF cable accessories

1988 - Developed submarine optical fiber cable and leakage coaxial cable

- Developed Kraft insulated 345kV OF cable first time in Korea

1989 - Developed optical fiber cable for emergency and 154kV OF cable accessories

Developed PPLP insulated 345kV OF cable first time in Korea

1980

2000 - Acquired JIS certificate on stainless steel coil and sheet

- Established Malesela Taihan Electric Cable Pty., Ltd. in South Africa

- Acquired ISO 9001 certifi cate on extra high voltage underground power cable

and OPGW

2001 - Acquired ISO 14001 certificate for environmental management system

- Developed 345kV XLPE power cable Developed polymer insulator

2002 - Developed and commercialized 345kV XLPE cable accessories

- Optomagic completed optical fiber plant

- Acquired Muju Resort Co., Ltd.

2003 - Completed 345kV XLPE underground power transmission line

2004 - Developed 400kV XLPE cable and accessories (KEMA certificate)

- Developed FTTH total solution

- Participated in BcN (Broadband convergence Network) business

(Ubinet consortium construction of FTTH)

- Acquired Ssangbangwool (SBW) Co., Ltd. (now, TryBrands)

2005 - Celebrated the 50 anniversary

- Established Skynetworks in Mongolia

- Established Taihan-Wizhome for Home network business (now, TEC & CO)

- Selected as a model project for the Muju Tourism & Leisure corporate Issued

Overseas Convertible Bonds amounting to US$ 160,000,000

- Established a joint venture TSC Co., Ltd. in Vietnam

- Awarded the Presidential Prize for achieving US$ 700 Million export

- Established TMC for shipbuilding cable and wire

- Established Taihan-Techren Co.,Ltd. for solar power generation

2006 - Achieved KRW 2 trillion in sales

- Acquired D.R. Congo Korea Telecom (CKT)and set up Standard Telecom

- Established TAIHAN Global Holdings LTD. (in Hong Kong)

- Built the third VCV extra high voltage power cable

2007 - Standard Telecom Launched telecom operation service in D.R. Congo

- Received an order worth US$ 400 Million by M-TEC (Pty) Ltd.

- Acquired Hilton Hotel in Vancouver, Canada

- Completed construction of the Dangjin power devices plant

- Acquired Myungji Construction Co., Ltd. (now, TEC Construction)

- Awarded the Presidential Prize for achieving US$ 1 Billion export

2008 - Won the $100 million power turnkey project in Qatar

- Acquired Namkwang Engineering & Construction

- Won the $175 million power turnkey project in Russia

- Ground-breaking for New Cable Plant in Dangjin

2009 - Won the $175 million power turnkey project in Kuwait

- Developed the 400kV Enamelled Copper Wire Cable

- Established a joint venture for cable production in Saudi Arabia (STCC)

- Listed in DJSI (Dow Jones Sustainability Index) Korea 2009

2000 2010

1991 - Expanded SCR production facilities, the largest capacity in Korea

- Supplied 565Mb/s Optical Transmission System to KT

1992 - Established a joint venture in Qingdao, China

- Commercialized 345kV OF cable

- Succeeded localization of Class 1E power cable for the unclear power

1993 - Acquired ISO 9001 Certificate on cable and Watt Hour Meter

- Developed Electronic Watt Hour Meter

1994 - Launched stainless steel business

- Developed 345kV OPGW

1995 - Developed 345kV and 765kV AWS for overhead ground wire

- Developed 765kV ACSR/AW 480SQMM (Cardinal)

- Developed STACIR

- Acquired ISO 9002 certificate on stainless steel

1996 - Completed new VCV TOWER and extra high voltage power cable plant

- Developed optical distribution board, optical terminal box, mechanical connec-

tor Developed high intensity TACSR/AW and 765kV OPGW

- Acquired ISO 9001 Certificate on power cable accessories

1997 - Awarded the Presidential Prize for achieving US$ 500 Million export

- Developed ribbon type optical fiber cable

- Developed Aerial Bundle Cable with Waterproof (ABC-W)

1998 - Commercialized the multiple mechanical optical connector

- Recorded 2 Million tons of copper rod

- Developed Non-Zero Dispersion Shifted optical fiber

1999 - Established Skytel in Mongolia

- Separated the aluminum business (founded ‘Novelis Korea’)

- Developed epoxy bushing for high voltage transmission line terminal

1990

1961 - Produced the lead sheathed communication cable

1964 - Acquired KS mark for wire and cable

- Started export of cable to Vietnam and Taiwan

1965 - Produced 1.2/4.4mm fine conductor coaxial cable

1966 - Started production of ACSR first time in Korea

1968 - Listed the company stock on the Korean Stock Exchange

- Started production of stalpeth cable

1969 - Produced 33kV XLPE insulated power cable first time in Korea

- Started production of the watt hour meter

1960

1970 - Produced 345kV ACSR first time in Korea aluminum rod

- Produced communication cables & by Properzi method

1972 - Produced aluminum compressed conductor power cable

1974 - Acquired UL and CSA Certificate first time in Korea

1975 - Completed the construction of Anyang cable plant

1976 - Produced standard coaxial cable and 154kV OF cable

1977 - Developed optical fiber cable

- Marked the production record of 1 Million watt hour meters

1978 - Won the grand prize of First Securities Award

- Completed extra high voltage OF power cable plant

- Contracted for US$ 30 Million communication cable to Saudi Arabia

1979 - Installed the optical cable network in Seoul

- Developed and produced screen cable

1970

1980 - Completed underground power transmission line in Korea

- Completed Anyang SCR (Southwire Continuous Rod) Plant

1981 - Started production of Flame Retardant Plastic Cable for nuclear power plant

1982 - Completed 154kV POF power line replacement first time in the world

1983 - Completed the VCV extra high voltage power cable plant in Anyang

- Produced foam skin communication cable first time in Korea

- Exported OF power cable turnkey project (Malaysia)

1980

10 11THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

TAIHAN ELECTRIC WIRE CO., LTD.Corporate History

TAIHAN Fiber Optics (Previously Optomagic)Taihan Fiber Optics specializes in optical fibers. The company maintains con-

sistent growth by offering high quality products at reasonable prices based on

its core technology of full synthetic manufacturing. After its recent success

in developing a G.657.A3 5mm bending radius can be transfer. The company

is aggressively taking on the global market as well as Korea’s FTTH industry.

In particular, the company focuses on strengthening the quality and the price

competitiveness through the technological innovation, to cope with demand

increase of ZWPF optical fiber. Next-generation product Ultra Low Loss Fiber

and natural lighting fiber were completed the development and production.

In addition, in recent years, eco-Gel-free fiber to build a full-scale production

system, will capture market of developed nations. Gel-free fiber optical cable

is existing fiber was used on the inside of waterproof materials that cause

environmental pollution oil components have been removed. Water penetra-

tion and performance of the product, are improved so that no problem. Envi-

ronmental contaminants do not occur in the United States and Europe prefer

cable because it is the next big growth expectations.

The company took over Taihan Electric Wire’s optical communications division

in 2011. The decision enabled the company to establish an integrated manage-

ment system to provide comprehensive product lines of high quality optical

fibers and optical cables and enhance business performance with improved

efficiency in cost control, sales, and operation.

In addition, the company secured growth engines by withdrawing the New Phar-

maceuticals Development business which records a deficit, attracting strategic

investors using PEF, and participating in the paid-in capital increase by Taihan

Electric Wire so that we become the biggest stockholder of the company.

www.tfo.co.kr

TEC & CO. TEC & Co. produces and sells copper communication cables and also runs

electric wire installation business. The company leads the industry in the cop-

per communication cable field with its largest production facilities and is the

top vender in the UTP, RF cable and F/S cable as well as railway communica-

tion cable fields. Based on the reliable customer list naming plenty of compa-

nies including KT, SKT, LG U-PLUS and TE connectivity as well as PANDUIT, the

company won turn-key contracts in the electric wire installation field and ad-

vanced to integrated wires markets. The company secures its growth engines

and strengthens competitiveness by extending the business territory, securing

the sales network and strengthening the competitiveness.

www.tecnco.kr

In 2012, Taihan electric wire took a vigorous first step into the next decade with new management directions and aggressive performance goals. The company declared the new vision for 2020 of “a global leader in energy and information industries, providing the best value for customers” and renewed the commitment to continu-ous growth and quality improvement in the core business areas.

Taihan focuses on strengthening its competitive edge in the global market through efficient

business operations and continuous R&D efforts. The company responds to market changes

with strategic cost control measures, high productivity, and technical superiority. Maintain-

ing its technology leadership with ultra high voltage cables, communications cables and ma-

terials, the Taihan brand thrives in the global market as a comprehensive solutions provider

in the industries of optical fibers, plants, communications and construction.

Daekyung Machinery & Engineering (DKME)The company was founded in 1981 as a designer, manufacturer and supplier

of petro-chemical plant and power generation equipment including heat ex-

changers, pressure vessels, storage tanks, and heat recovery steam genera-

tors (HRSGs). The Korean company has three plants in Ulsan and Yeosu com-

bined, and another manufacturing facility in Indonesia.

DKME maintains its leadership in the industry, where it supplies 90% of its

petrochemical plant equipment to overseas customers. In HRSG and boiler

components, the company continues to be awarded large-scale contracts

by some of the major engineering companies in Korea and elsewhere

around the world. Deriving its competitive advantage from its outstanding

technology and the trust earned through its experience in the industry span-

ning more than 33 years, DKME distinguishes itself from other companies

in the competitive international market. The company’s sales in 2012 were

282.9 billion KRW (approx. US$257.2 million), a year-on-year increase of

over 11.9%.

www.dkme.com

TEC ConstructionSubsidized by Taihan Electric Wire in 2007, TEC Construction is a compre-

hensive construction engineering company specializing in civil engineering,

plants, residential properties, and overseas construction. Based on its 50

years of experience in large-scale construction projects, the company is ex-

panding its business to global markets.

www.tecconst.com

TAIHAN Industrial SystemTaihan Industrial System founded in 1971 sells wire materials, manufactures

special wires, and runs an infrastructure construction business. The company

has extended the business scope based on its expertise, customer-oriented

management, and advanced IT technology. As they built the Pyungtaek plant

in 2012 to produce special wires like bus-duct needed for bulk transmission,

special cables and drum for cable delivery and storage, the company is ex-

pected to strengthen its position as a specialized manufacturer based on the

outstanding production capacity and wide sales network. In infrastructure

construction, the company proved its power by winning the bid for infrastruc-

ture construction (total sales of $35,700,000) in Mali, together with Samsung

in 2012.

DOMESTICAFFILIATES

12 13THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

TAIHAN ELECTRIC WIRE CO., LTD.Domestic Affiliates

GLOBALAFFILIATES

TAIHAN USATaihan USA was established in 2000 to promote Taihan Electric Wire’s sales

and marketing activities in North America. The company began supplying

ultra high voltage and mid-low voltage products to public services and power

companies in Northeastern states in 2003, won a large-scale ultra high volt-

age power turnkey project in 2007, and is increasing sales in the IT segments

in North America. In February 2009, the company won a six-year long term

contract to supply a 69-345kV high voltage power network of the National

Grid, a major power provider in the eastern states. In addition, for three years,

the company has supplied 230kV cable and accessories to San Diego Gas &

Electric, the largest electric company in the West Coast. Taihan’s strategy is

to secure a major supplier position in the North American market by founding

branch office in the West Coast and enhancing marketing channels.

M-TECEstablished in 2000 as a joint venture with a South African corporation, M-

TEC (Malesela Taihan Electric Cable) is Taihan’s gateway to the Africa market.

The company is a manufacturer of optical communications cables and vari-

ous types of power cables, and has positioned as the industry’s largest-scale

company in Africa with annual production of 200 million dollars.

Taihan’s strategic focus for growth is in the global market. The company enhanced its com-

petitive edge by establishing manufacturing facilities for its core segment, electric wires, in

the emerging markets of South Africa and Vietnam. In addition, Taihan is expanding its busi-

ness into the global telecommunications industry. It began a mobile telecommunications

business in Mongol in 1999, and acquired a major telecommunications provider in Congo

in 2006Taihan is focusing on new global markets, using its core competency in communica-

tions and electrical power industries as leverage.

The South African government recently announced the plan to invest 17.5

billion dollars in power plant and power transmission and supply to stabilize

electric power demand, aiming to create 5 million jobs until 2022. As the

African electric market has steadily extended, we will increase market share

through product diversification of M-TEC item and a wider sales network.

www.m-tec.co.za

TAIHAN SACOM CABLE COMPANYTaihan Sacom Cable Company(TSC) was established in 2005 as a joint ven-

ture with Sacom, the top communications cables manufacturer in Vietnam.

The company is located in a suburb of Ho Chi Minh City and manufactures

and supplies power and communications cables to regional markets.

We have extended the domestic TSC sales network to a nationwide level and

have enlarged the export network to Middle East Asia and Australia from

South East Asia as many foreign companies have advanced to the market

and the fundamental infrastructure construction industry has been steadily

enlarged after Vietnamese economy has reached a phase in its restoration

from the global financial crisis in 2008.

www.tsc.vn

14 15THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

TAIHAN ELECTRIC WIRE CO., LTD.Global Affiliates

REVIEW OF OPERATIONS

In 2012, the global economy went downward due to unstable reliability on the devel-oped countries’ governments. The South Europe’s financial crisis casted a dark shadow over Greece and Spain, the whole Euro zone sunk into a swamp of stagnation. The U.S.’s growth rate in the fourth quarter dropped to nearly zero as both consumption and investment were shrunken. The world’s growth rate was 2.3% and that of the developing countries was 5.1% in 2012, which was the lowest for last decade. The world trade also was in recession. The average trade growth rate (in the U.S. dollar) dropped from 20% in 2011 to 1.5% in 2012. And the developed countries reduced exports in almost every sections including final consumption goods, intermediary products and parts as well as raw materials. The developed countries’ downsized imports largely affected on the Korea’s export which reported a minus growth.In such export recession, Taihan’s sales and profits decreased compared with the previous year, as the company turned the copper communication cable and optical communication cable business over to its subsidiaries. We fo-cused on OEM control and the cost reduction project to improve busi-ness efficiency. We have conducted financial system reconstruction and business reorganization together with cost-cutting projects.

ORGANIZATIONALCHART

Business Management Division

Planning & Human Resources Department

Procurement Department

Legal Department

Public Relations & General Affairs Department

Restructuring Headquarter

Finance Department

Accounting Department

Strategy Planning Department

Asset Management Department

Marketing & Sales Division

Strategic Marketing Department

HV Power Cable & System Sales Unit

EHV Construction Department

Industrial Cable Sales Department

Production Division

Production Department

Research & Development Department

Research & Development Institute

Production Management Department

Finance General Affairs Head Office

Internal Auditing Department

Quality Assurance Team

Board of Directors

Chairman, President

16 Organizational Chart THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

In 2012, Thihan electric wire’s sales reached 632.1 billion won in the domestic power and insulated wire

market. It was increased by 10% from 557.8 billion won in 2011. Although the domestic market was quite

sluggish due to recession of the real estate market and construction industry, we could enlarge the sales

by conducting aggressive extra high-voltage cable sales activities.

In particular, the sales of extra high-voltage cable is remarkable with 8.3% increased, compared with

the one in the previous year. The public section of our business has reached 5.3% increase in the sales,

compared with the previous year, despite of the limits of the market while the private section has reached

16.8% sales increase compared with the previous year, with order and sales increase of large size conduc-

tor cable due to increase in electric power transmission capacity.

Contrast to above, the sales of the service wire for MV/LV have slightly decreased compared with the

sales in 2011 as the domestic demands have decreased and large-scale plant extension projects were

delayed. However, the remarkable sales increase of industrial cables including the one for traction line to

14.9 billion won suggests that the relatively low MV/LV profit can be improved in the future.

Though we expect that the domestic extra high-voltage market would generally grow in 2013, the private

section still seems to be quite variable as the planned projects can be delayed due to the economic situ-

ation. Needs for MV/LV are expected to decrease owing to the sluggish real estate market, however the

overall market is expected to stay at a similar level with the previous year, on the strength of semi-conduct,

petro-chemical, and steel markets.

In 2012, our overseas sales of power and insulated wire reached 557.8 billion won which is 46% increase

from 381.2 billion won in 2011. It is understood that our overseas sales network became stronger than

before through the reorganization of the sales groups in more practical way to expand the overseas mar-

kets in 2012.

For overseas markets, the year 2012 was the time when the economic recovery was underway with

increased demand for electrical grid in the developed countries, increased infrastructure investment in

the Middle East, and increased investment in electrical grid in rising nations according to the increase

of power demand. Such trend is expected to be continued in 2013. Thus, Taihan has enhanced its sales

power in potential markets such as Russia, North America, and Europe while executing aggressive sales

plan in the traditionally strong markets including the Middle East, Asia and Oceania.

DOMESTICSALES

GLOBALSALES

18 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 19TAIHAN ELECTRIC WIRE CO., LTD.Domestic Sales Global Sales

Taihan’s Overseas Sales Division business unit I targets the Middle East Asia where is one of the major

markets and Africa, a potential market. In particular, the Middle East is the most important market which

occupies more than 50% in our export.

Our sales in Saudi Arabia remarkably increased thanks to the successful 380kV extra high-voltage project

(970% up compared with the sales in 2011) and it is expected to increase more than 400% in 2013, com-

pared with 2012. SEC(Saudi Electricity Company) has a plan to invest USD133 BIL. in building electricity

infrastructure for 10 years since 2013. It is expected that they will place an order for the turnkey project to

install 500km-long extra high-voltage cables including 380kV cables annually. As the investment program

in oil and gas is expired, the service industry is expected to lead the GDP growth since 2012-2013 in Qatar.

We also can expect to win contracts for cable installation for roads, railways, and new airports as the

government promised to invest about 60 billion dollars in infrastructure construction including sports

facilities for the 2022 World Cup. On the other hand, we try to advance to the market for 220kV cable in

Abu Dhabi, based on the solid position in Dubai, U.A.E.

As Algeria and Libya show an increased demand for 220KV~400KV cables, many Korean construction

companies and heavy machinery manufacturers have attempted to advance to the African market. It

seems as we can expect high profits from those cable products because of the relatively weak competi-

tion in the market.

In those territories, particularly in Saudi Arabia, the market for 380~400kV products have been expanded

despite of the recession. Since we proved a strong competitive power in Saudi Arabia and Kuwait, it is

expected that we can gradually occupy the market. In 2013, we will advance to new markets such as Qatar

and Africa while keeping the dominant position in the other markets.

Taihan’s Overseas Sales Business Unit II focuses on discovering new market of Asia and Oceania region,

implementing an aggressive marketing campaign to expand sales network. Our strategy is to obtain the

required qualifications to enter new markets and take advantage of the company’s strength in terms of

competitive cost, and ultimately to maintain a major supplier position.

Since 2006, Taihan is participating in 132kV underground transmission line construction for Ausgrid,

the largest power provider in Australia, supplying 70% of its 132kV purchases. In 2012, Taihan Electric

Australia works on two of high profitable projects (132kV) at the same time and has been famous from

competence of operation of projects and quality of products by their customers. Meanwhile, TEA makes

efforts to discover new customers and expects some sales from new customers in 2013.

Since 2010, Taihan has been participating in 220kV underground cable construction for Reliance In-

frastructure which is 35 million USD contract project in India. In 2011, Taihan won 220kV and 400kV

underground cable contracts in India, making a successful entry into the new market. This growth resulted

from successful peformance such as power supply networks in Indian market continues to make Taihan’s

influence reinforce in India. That is why the Taihan has an advantage for the following projects in India in

the future. In 2012, Taihan has been trying to make a profit by doing sales activity in India market. As a

result of this, we are expecting significantly higher sales in 2013 for this market.

Taihan has been doing lots of projects in Singapore since the Branch Office was established in 1988.

Most of projects are Full Turn-key of 230kV and 66kV grade project with SP PowerAssets our main client.

Also we have many experiences of supplying MV and LV cables or accessories to EPC companies (ABB,

Alstom etc). We were awarded 230kV EHV Full Turn-key project about U$ 20 million contract price. The

electricity market in Singapore continues to grow so we expect that we’re available to do many projects

more in the years to come.

OVERSEASSALESBUI

OVERSEASSALESBUII

The Middle East, Africa

Asia, Oceania

20 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 21TAIHAN ELECTRIC WIRE CO., LTD.Overseas Sales BU I Overseas Sales BU II

Targeting new markets outside the Middle East and Oceania regions, Taihan’s Overseas Sales Business

Unit III implemented an aggressive marketing campaign to expand sales network. While they present

relatively high thresholds and intense competition with major players, these markets offer significant po-

tential. Our strategy is to obtain the required qualifications to enter new markets and take advantage of

the company’s strength in terms of competitive cost, and ultimately to maintain a major supplier position.

The year 2012 was a memorable year for Taihan that secured its position as a major player in Russia.

Based on 2011’s achievement that we supplied the 500kV cable to Russian market for the first time as

a Korean company, we supplied 500kV/330kV/220kV extra high-voltage cables for many projects in

Russia. With the leading technology and customer oriented sales strategy, Taihan plans to strengthen its

dominant position and obtain more orders in the Russian market.

While the U.S.A. market remained sluggish as major power companies delayed infrastructural investments

due to the economic downturn, Taihan was able to win contracts for 230kV EHV projects with major

power suppliers including Burns&Mc and SDGE. This provided the company with leverage, when the U.S.

power industry is expected to resume major scale infrastructure projects. We are expecting significantly

higher sales in 2013 for this market.

Taihan's installation division made 16.8 billion won sales profits out of 152.6 billion won of total sales in

2012. Though the sales itself decreased 19 % compared with the previous year, it is a pretty positive result

obtained in virtue of completion of the large scale project in Middle East Asia in 2011. In addition, the divi-

sion has made stable sales profits in Australia, New Zealand, and Singapore. As there are constant needs

for power facilities in the U.S. and Russia, and wire installation in the Middle East Asia, India, and South

America, the business seems promising in the future.

Installation of ultra high voltage cables requires a high level of technical skill, resulting in the highest prof-

its. We expect the trend will continue in 2013 especially in the ultra high voltage segment in the Middle

East, where the industry is maintaining rapid growth in Kuwait, Qatar, and Saudi Arabia.

The division’s strategic focus in global markets is the higher-profit 300kV product lines, upgraded from the

100-200kV segment. Since turn-key projects of ultra high voltage installation require advanced-level tech-

niques, the segment in the developed countries, including the U.S.A. and Australia, is largely dominated by

European and Japanese providers. In this sense, Taihan’s recent performance in the markets of developed

countries presents a significant development.

2013 features new growth opportunities with cable replacement projects in Europe and North America, new

city developments in the Middle East, and infrastructure constructions in developing countries. To take full

advantage of these opportunities, the Installation Division will continue technical upgrades and proactive

marketing efforts regarding underwater cables and overhead lines, as well as ultra high voltage cables.

INSTALLATIONDIVISION

OVERSEASSALESBUIII

Europe, Russia, CIS, and North

and South Americas

22 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 23TAIHAN ELECTRIC WIRE CO., LTD.Overseas Sales BU III Installation Division

In the materials division, the total copper sales in 2012 were 59,137MT, a decrease of 34% from 2011. The

total sales amount was 478.1 billion won in 2012, with the price increase for raw copper offsetting a part

of the difference in the figures. The big fall in copper sales in 2012 was due to the rise in the copper price

coupled with the global recession that started in Europe and affected investment decisions in the industry.

Another factor was the 58% decrease in the exports of copper, due to termination of the contract with the

South China branch that previously took up a large part of the company’s exports.

The sales of the division in the domestic market slightly increased, compared with the previous year.

This increase resulted from the relative decrease in exports, caused by the contract termination with the

South China branch.

However, the sales of copper, raw material for magnet wire has somewhat decreased both in quantity and

amount. The copper sales seem to be sluggish as aluminum demand has increased and the supply to the

domestic home electronic appliances manufacturers and the major automobile companies has decreased.

The proportions of domestic and overseas sales in the materials division in 2012 were 60% and 40%

respectively. 70% of the overseas sales were supplied to China, and the remaining 30% to the Philippines,

Singapore, Malaysia and India.

We aggressively launch to obtain order in Middle East, Asia, and Oceania where it has an advantage over

others as well as strengthens sales capacity in Russia, Americas, and Europe with great market potential

expecting gradual and sustainable growth in sales. Material markets aims to expand and maintain sales by

increasing investment in basic industries on the road to recovery and targeting niche markets of Middle

East with abundant oil money, Southeast Asia with relatively reasonable price, and several countries that

concluded FTA with Korea. Also, to find a market in China is another plan to expand business.

With these trends in mind, Taihan will focus on long-term contracts with raw copper suppliers to maintain

a stable supply, and enhance spot-order sales activities.

We will focus to maintain stable growth of magnet wire and enhance competitiveness of low-profit materi-

als by improving technical skills for main products and creating high value products.

In addition, we will gradually increase the market share in the limited domestic market.

COPPERROD&WIRE

In 2012, Taihan’s R&D institute accomplished a remarkable development in research and management.

In December 2011, the institute was separated from the plant and moved to Ansan, Gyeonggi-do. Seven

testing devices including high-temperature complex test chamber were installed in the institute and hu-

man resource in research expanded 1.6 times compared with the beginning of 2011.

Since 2012, we started to make marketing and production staffs participate in R&D so that customers'

opinions are directly reflected in R&D and the results are promptly delivered to the customers.

Since a power solution part is organized in the institute, we have focused on the service environment

improvement by studying and developing operation solutions not only for power transmission system

design and cable production, sales, and installation but also for cable real-time monitoring and diagnosis,

and accident prevention.

Product Technology DevelopmentTaihan developed a contact wire used for the next generation high speed train (400km/h) in cooperation

with Korea Railway Research Institute. The new contact wire is known for the world-best strength and

conductivity.

The company secured the supplementary equipment technology and installation technology , by installing

and operating the overhead wires which are characterized with 200% increased capacity and much lower

sag, compared with the former ACSR wire. It is a cutting-edge technology that reduces loss in power

transmission while cutting installation expenses remarkably by reducing electric transmission tower con-

structions for overhead wires.

R&D

24 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 25TAIHAN ELECTRIC WIRE CO., LTD.Copper Rod & Wire R&D

The company developed the composite bushing made of polymer, not procelain for the first time in the

domestic industry, which prevents collateral accidents owing to bushing explosion in operating a power

system. It was improved than the former procelain bushing in shock resistance, safety, and weight (lighter)

as well as anti-pollution and hydro-phobic transfer so that it is expected to contribute to easier and safer

operation of the power transmission and supply systems.

We also developed the Busduct with world-top waterproof performance and short circuit strength and

have maximized product reliability through continuous research and development.

In addition, we have developed remarkable new products such as the superconductive cable to innovate

power transmission and supply systems and cutting-edge new materials. We also have improved product

reliability Soultion Technolgy Development through electric and structural researches on various power

service environments.

The latest trend of extra-high voltage markets is to apply observation/diagnosis system to electrical power

systems. Formerly, only cables and cable connectors were important in extra-high voltage systems in the

past, however it is replaced by other systems which optimizes the capacity or maximizes life of power

transmission lines in use by measuring residual life and possibility of accidents.

Our company has applied self-developed Transmission Management System (TMS) to several domestic

and foreign projects (TMS) since 2009 and developed related technologies through positive researches

on PD diagnosis of transmission lines consistently. In 2012, more expanded technologies including Hybrid

diagnosis system to examine partial electric discharge, which was developed based on existing diagnosis,

and DRS system to support multiplex DTS were developed to prevent electric power accidents as well as

provide solutions for best use of installed electrical grid to clients.

Also, we researched on lifespan of high voltage cables in Korean operation power plants and developed a

method to evaluate lifespan of high-tension cables for the first time in Korea.

The newly method to evaluate lifespan was developed by combining electrical accelerated aging skill to

existing heat accelerated aging skill to raise reliability of cable lifespan evaluation and it will be applied to

Periodic Safe Review(PSR) of nuclear power plants in the near future. Moreover, it is expected that having

our own method to evaluate lifespan of nuclear high-tension cable would contribute to build more nuclear

power plants in Korea and foreign countries and increase sales of nuclear cable that is an essential high

value product.

Besides, we have participated in smart grid technology development through the AMI Demand Response

and smart grid test-bed construction. And we established the foundation to remarkably improve electric

use and power control environment in houses and buildings by developing a next-generation Energy Man-

agement System(EMS).

Since the company’s establishment in 1955, Taihan has met and overcome countless challenges and

crises. We have maintained steady progress to achieve a top global position in the business areas of

power, communications, and materials, helping to build the foundations for industries. The company has

implemented various measures to improve its financial structure and organizational efficiency, in order to

move forward to achieve stable and consistent growth and become a global leading company.

To achieve this goal, we are focusing on the following four strategic areas.

Firstly, we are focusing on high-profit products to proactively improve business performance. On top of

ultra high voltage cables, the current top strength area, we will enhance the high-profit product portfolio

with high-temperature insulators, gap conductors, super conductors, and underwater cables. Our stra-

tegic focus is to promote three or more products from this portfolio as a top brand in the global market.

Secondly, we are taking every possible measure to ensure cost control. We are employing innovations

in product design and business process in order to reduce costs and enhance competitiveness in the

market. We will develop the Taihan brand to represent quality and reliability, and deliver the best value to

the market and customers.

GROWTH&INNOVATION

26 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 27TAIHAN ELECTRIC WIRE CO., LTD.R&D Growth & Innovation

SUSTAINABILITY MANAGEMENT

As the business environment rapidly changes, reassuring customers, shareholders and em-ployees and making them feel confident about the company’s growth potential are recog-nized as key factors for facilitating future sustainable growth. Taihan continues its efforts as a social enterprise to have a positive influence on the environment and society. It is strengthening its corporate competitiveness by developing technology, cultivating talent, and establishing a transparent management system and is leading the way in environmental preservation for the next generation so that they will enjoy a more valuable life in a cleaner environment. Furthermore, it is promoting vari-ous activities to enhance its social contributions and help local communities grow. The company is constantly creating new values and new opportu-nities through strengthening our corporate structures from the view point of shareholders and will do its best to become a global leading

company trusted by people.

Thirdly, we are concentrating on global markets with enhanced sales and marketing capacity. We will

expand overseas production facilities to six locations, implement aggressive marketing tactics with en-

hanced sales organization for each product line, and focus on localization in overseas markets. Through

this, we will maintain the position of a major power network provider in the current focus markets of the

Middle East and the new markets of Russia, Europe, Southeast Asia, and Oceania.

Lastly, we are proactively developing core technologies in next generation industries. We are enhancing

R&D in next generation technologies, as well as continuing to strengthen our current competitive edge,

in order to develop new markets and reinforce technical competency. In addition, we will establish Tech-

nology and Quality Divisions to focus on quality improvement, new market development, and product

portfolio development.

Integrated Management SystemFollowing the launch of Taihan’s new management innovation organization in June 2011, the company took

the first step for construction of a “companywide integrated system” in November 2011.

As the first page to write the 2nd chapter, we executed the enterprise process innovation ‘To-be 2020’

to enhance the management system and built the SAP system in November, 2012. Through it, we could

establish the foundation for precise data, management analysis, and efficient business process and have

more comprehensive customer engineering and systemic risk management system. We will devote our-

selves to realize the To-be 2020 vision and stand as a world-top enterprise based on the trustful enterprise

culture, abundant human resource, and innovation in business.

28 Growth & Innovation THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

ShareholdersTaihan is publicly traded on the Korean Exchange, and the total number of stocks issued so far is

105,136,685. As of December 31, 2012, 18.8% of Taihan shares are owned by entities and individuals who

are affiliated with the company, including Taihan Fiber Optics, the largest shareholder. Taihan shareholders

include major corporations and investors in Korea and other countries. The company holds periodic and

non-periodic shareholder meetings to report on the status of operation and make important decisions

based on shareholders’ opinions. In addition, as a part of the company’s policy to ensure shareholder

rights and provide best value, the IR Department acts as the liaison between the management and share-

holders and ensures that all opinions are heard and reflected in the company’s decision making regarding

business operations.

On the basis of advanced corporate governance built on a manage-ment specialist system and with a board of directors operating inde-pendently, Taihan is realizing transparent management and protect-ing the rights of shareholders and enhancing corporate values.Taihan has been actively aspiring to a management system and work processes that correspond to global standards. As a result, the com-pany has been greatly improving its management efficiency and transparency through change and innovation. This is the source of its competitiveness and momentum to becoming a global leading com-pany and is the strong foundation for future stainable management. Taihan is also strengthening the independence and expertise of the board of directors and auditors. We are also implementing a respon-sible management system that is operated by a management special-ists system. An advanced work system based on ERP and an internal control system have been established to secure work efficiency and transparency.

Independent Operation of Board of DirectorsTaihan board of directors is operated independently to ensure the transpar-

ency of the company’s management. As of December 2012, BOD consists of

seven members, including four (57%) from outside the company. Taihan direc-

tors provide expert opinions to support the company’s effective management

and ultimately increase the corporate value. In 2012, BOD meetings were

conducted as specified in the company’s articles of incorporation, where di-

rectors reported on major issues and discussed related matters in order to

make sound decisions. The company holds BOD meetings once every month

to help establish a system of transparent and responsible management.

Audit CommitteeBased on the company’s article of incorporation (section 25-1), Taihan Au-

dit Committee evaluates financial management systems to ensure fair and

transparent business operation. To maintain the independency of the Audit

Committee, all of its members (three) are from outside the company. The Au-

dit Committee met to evaluate decisions made by the company’s executives,

make decisions as specified by the law (including selection of the Committee

members), and conduct other functions delegated by BOD.

TRANSPARENTMANAGEMENT

Public Disclosure PolicyTaihan holds periodic IR (investor relations) sessions to disclose information

regarding its business performance and communicate its future strategy. The

sessions are open to industry analysts, fund managers, the media, and inves-

tors. Taihan’s IR and disclosure policy is geared towards investors in New

York, London, Singapore, and Hong Kong, as well as in Korea. All public dis-

closure information is available from the company website (www.taihan.com)

and through the FSS (Financial Supervisory Service) DART system (englishd-

art.fss.or.kr). Taihan also enforces a policy of open communication within the

company, to promote communication and value sharing among employees

as the foundation of the company’s growth. The system includes bulletin

boards, newsletters, and discussion forums on the company website, where

the management communicates company vision, CEO messages, and impor-

tant information regarding business performance and management status,

and employees benefit from discussions regarding various issues. This policy

provides a platform of open communication and promotes Taihan’s corporate

culture of trust and mutual growth.

Taihan frequently meets with investors, analysts and fund managers (over

200 sessions per year) to identify their needs and provide answers to their

questions. All issues raised during these sessions and major contact informa-

tion are followed through on in follow-up meetings or via e-mails.

In 2011, the company renewed its website with an enhanced IR section. Now

the website provides improved functions for existing and potential investors

looking for the company’s financial data and other information. It also fea-

tures a ticker for Taihan stocks.

In addition, a tour of Dangjin Factory, built in 2011, is available for inves-

tors upon request. Including ultra high voltage production lines and VCV ultra

high voltage tower, the tour provides investors with an opportunity to under-

stand Taihan’s business and acquire in-depth information that is not available

through regular IR meetings.

30 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 31TAIHAN ELECTRIC WIRE CO., LTD.Transparent Management

Corporate Culture of Win-Win PartnershipTaihan’s labor and management have established a win-win partnership culture, collectively overcoming

crises. The company has demonstrated a strong collaborative management-labor relationship in financial

difficulties, including the salary peak system it introduced, the first of its kind in Korea.

In 2011, Taihan moved the headquarters to Anyang from Hoihyun-dong, Seoul after the plant was relocated

to Dangjin from Anyang. Through that, we reaffirmed our determination to go though the difficult times

together and set up a base to jump to the next stage.

Taihan implements policies of recruitment, evaluation, compensation and development of human resources based on strategic system im-provement and effective human resource management. The policies help employees to develop themselves and benefit from self-actual-ization, and ultimately enhance the company’s business performance and promote changes and innovations in the organization.

Cultivating Talent with Global CompetitivenessTo support the company’s global market strategy and grow to be a global

leading company, Taihan focuses on developing talented individuals with

global competitiveness. Global Biz Skill program, a long-term course de-

signed to provide training on the mindset and skills required to promote Tai-

han’s technology and products in global markets, is offered in the English lan-

guage to help participants to learn about global cultures and proper business

manners, and develop skills of communication and negotiation.

Strategic Recruitment from Prestigious UniversitiesHuman resources with global business competency are essential for the real-

ization of the company’s Vision 2020. Taihan is working with ten universities

in Korea that have outstanding engineering programs to proactively recruit

talent necessary for the company’s global strategy implementation.

Extended Retirement and Average Retention of 14 Years for Technical Position EmployeesThe proficiency and skill level of production line workers have a great impact

on productivity and quality. Therefore, it is crucial for a company to maintain

skilled workers in order to compete in the market. Taihan operates a policy

of extended retirement for skilled workers, in order to respond to changes

in the labor market to cope with the aging of society in Korea. In 2010, the

PEOPLE

company’s labor and management agreed to extend the retirement age to

61, from 60 in 2009. As of December 2012, the average retention of Taihan

employees at a technical position is 14.4 years, with 50% staying with the

company for more than ten years. The extended retirement policy provides

employees with increased job stability and enables the company to maintain

skilled workers, leading to improved productivity and benefiting both labor

and management.

Retirement PensionTaihan participates in a retirement pension program (defined benefit) to

provide better opportunities for employees to prepare for retirement. The

company introduced the program in May 2006, the first in the industry to

do so. The program allows for the secure management of company funds

for employee retirement benefits, while providing stable means for utiliz-

ing investments so that the funds can provide the maximum benefits for

employees.

Knowledge Recharge Vacation SystemThe company provides a paid vacation of six months or one year to employ-

ees in their 5th and 10th year of service respectively. Employees are encour-

aged to use the vacation as an opportunity for self development, to receive

training in a foreign language or earn a specialized license.

32 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 33TAIHAN ELECTRIC WIRE CO., LTD.People

Working Togetherto Create

a Happier WorldWelfare Education

Art & Culture

Support for fostering talent Support for advancing Science & Technology Insong Culture Foundation

Developing Arts and Culture Expanding the Arts and Culture community

A company coexisting with society• Volunteer Activity of Employees• Corporate Donations

Social Contributions in 2012Employee volunteer activities: Let’s ART (3 sessions), Residential environment improvement service for

the Remarried handicapped (4 times), Picnic to zoo with handicapped children (once), Electricity class for

Junior (6 times), Clean service for Dangjin Silchi Festival (once), and Blood donation (frequently)

Volunteer Activities of Executives and Employees Let’s ART

Let’s ART is a program sponsored by the Sull Won-Ryang Culture Foundation. The program provides chil-

dren of low-income families with an opportunity to participate in cultural activities. With Taihan employees

volunteering as staff and chaperons, the participating children enjoy a “cultural outing” day. In 2012, three

sessions were offered to children from community center after-school programs, and were organized to

include various cultural activities such as visiting theaters, musicals, and exhibitions.

▶

SLOGANWorking together to create a happier World

MISSION1 Contribution for 1 Person

Taihan conducts social contri-bution activities based on the participation of all employees under the slogan: “Working together to create a happier world.” Each employee is en-couraged to participate in at least one activity of community service each year, to serve the underprivileged and experience the joy of sharing. The company also operates NGOs including Insong Culture Foundation and Sull Won-Ryang Culture Foun-dation, as a part of its efforts to contribute to the development of welfare, education, and cul-ture in society.

Taihan going together with the handicapped

Taihan has carried out ‘Residential Environment Improvement Service’ and

‘Picnic to Zoo with Handicapped Children’ as a program to support the under-

privileged people, together with the West Welfare Center for the Handicapped

since March, 2012. The executives and the staffs visited the handicapped

people’s houses and helped them live in more pleasant residential environ-

ments by cleaning off their houses and repairing old facilities. For the handi-

capped children who have a difficulty to go out by themselves, they became

one-day parents.

As seen in the activities, Taihan considers and practices the way to improve

the life quality of the people in need around us and shows the employees

what we can share with them.

Electricity class for Junior

We held six Electricity classes for Junior since September 2012. The event

in which staffs from Taihan take a part as a teacher is to teach elementary

school students in Dangjin about general science knowledge and the elec-

tricity principles.

Clean Service at Silchi Festival in Dangjin

In last April, 20 staffs from Dangjin plant participated in ‘Shore Clean Cam-

paign’ and cleaned up the shores for ‘Dangjin Janggohang Silchi Festival’. Sil-

chi Festival is an event held around Janggohang, Seokmun, Dangjin in every

April. The executives and staffs from Taihan picked up the trash on the shore

and around the festival spot. Taihan has made efforts to provide its supports

for environmental improvement and preservation.

Sponsorship for Elementary Schools in Dangjin

Taihan sponsors three elementary schools in Dangjin, where the company’s

new production facilities are located, to help provide a better learning envi-

ronment for children in the area. The sponsorship is given in a form that is

SOCIALCONTRIBUTION

most fitting for each school’s needs, such as donation of IT facilities and sup-

port for athlete training programs. Taihan will construct a u-cloud classroom

and provide IT classes for Kodae Elementary School, while providing sponsor-

ships for the table tennis team and badminton team of Tapdong and Dangjin

Elementary School respectively. The company will continue the sponsorship

to help the school to improve education programs and training environment

for young athletes.

TAIHAN Group’s Culture Foundations Insong Culture Foundation

Insong Culture Foundation was established in 1970 by Insong Sull Geong-

Dong, the founder of Taihan Electric Wire. Started with the founder’s personal

fund, the foundation has contributed to the development of Korean society,

by providing scholarships for middle and high schools, colleges, and research

institutes. The foundation recently added new scholarship programs for chil-

dren of multi-cultural families and medical sponsorship programs for those

who suffer from obstinate diseases. In 2011 and 2012, the foundation pro-

vided support for the Smart Economy Forum, open to 140 college students

majoring in engineering or science.

www.insong.or.kr

Sull Won-Ryang Culture Foundation

The Sull Won-Ryang Culture Foundation was established in December 2005,

in memory of the entrepreneurship of former Taihan chairman Sull Won-Ry-

ang who passed away in 2004. The foundation provides support for cultural

and education programs to promote the development of culture and arts in

Korea. Let’s ART is one of the foundation’s major regular events, and provides

“cultural outing” opportunities for children from underprivileged families.

www.sullwonryang.or.kr

34 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 35TAIHAN ELECTRIC WIRE CO., LTD.Social Contribution

Risk Controland Prevention

Planning Practice

Improvement Evaluation

Risk Evaluationand Control

CapabilityManagement

Informationand

Communication

ProcessManagement

Evaluationand

Improvement

AchievementManagement

Follow-upManagement

PartnersManagement

RegulationControl

Safety & Health Based on the human-oriented safety & health regulations, we do our best to protect our staffs from acci-

dents and diseases and provide them with various preventive services to realize an accident-free working

place and healthy home. We educate our staffs about safety and health, and improve working conditions

in cooperation with our partners. We try our best to create the best working environment for the staffs

and we pay much attention to prevent accidents and diseases by providing health care services to our

employees.

Safety and Health-Oriented ManagementSince we have put safety and health-oriented management at the top of our agenda, we have led the

industry in realizing a safe and healthy working place through continuous improvement and prevention

activities.

For the purpose, we established the safety/health/environment guidelines which are more strict than

required by law and have released the results so that other similar domestic/international business run-

ners can refer.

All the working places of Taihan runs EHS(Environment & Safety and Health) integrated management

system to control environmental safety and health at work comprehensively, based on the human-oriented

management and the safety/health guidelines.

Every working place of Taihan need to get a qualification from an authorized organization every year, to

meet the global standards such as ISO and OHSAS.

1. To carry out improvement activities for developing and producing the high quality product without defects to meet our safety standard.

2. To establish and manage the quantified objectives

3. To comply with relevant legislation and other requirements

4. To carry out activities for continual improvement and prevention of pollution

5. To recycle and save resources, including reducing wastes

Environment·Safety & Health Policy

SAFEANDHEALTHYWORKINGPLACE

Safety and Health CareTaihan has developed various safety and health-oriented management activities to create a safe working

environment. Every working places of Taihan comply with the guidelines to control and improve various

risks at work effectively.

Labor and management’s risk prevention activities

We have improved our working conditions to realize a safer and healthier working place by conducting no

accident campaigns and cooperative safety checks.

In addition, we run the Industrial Safety and Health Committee to improve the working places safer and

healthier and try to get rid of risks at work through suggestion, discussion, and resolution.

Dangjin plant

Dangjin EHV Accessories Plant

▲ No accident campaign

▲ No accident campaign

▲ Safety at work’ check

▲ Safety at work’ check

Safety and Health-Oriented Management ▶

PSM

Taihan has a throughout and systemic management to control and prevent risks. We have strengthened

PSM system to protect our workers from explosion and fire due to leak of hazardous and noxious sub-

stance and conducted regular inspections and tests in accordance with the safety guidelines.

36 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 37TAIHAN ELECTRIC WIRE CO., LTD.Safe and Healthy Working Place

On the other hand, we have provided our workers with emergency training and emergency guidelines

which were made to cope with various accidents at work, in order to minimize damages and injure.

Safety & Medi-Care Education

Through the Safety Training Center to educate our staffs about safety, risk, and health, we have provided

our employees with regular safety and health trainings. Also, we have conducted integrated programs which

combine the in-company safety guidelines and cable-related knowledge at an overseas engineer level.

In order to enhance the leadership of the safety managers who take a key role at the site, we hold risk

discussions and safety skill trainings.

Especially, for those who treat hazardous substances and dangerous machines and tools, we have pro-

vided qualifying expense support and special safety and health training regularly. The re-fresh trainings

contributed to prevent industrial accidents and reduce potential risks.

Autonomous Safety Management

Our labor and management have cooperated in conducting autonomous safety management activities

and participating in safety and health promotions for the workers.

In 2012, we participated in the autonomous risk management which was a pilot project by the Ministry of

Employment and Labor and improved the personal and physical risk factors at our working places.

Through the improvement, both of our plant #1 and plant #2 were awarded an excellent risk-managing

workplace which demonstrates that our employees work at a safe and protected workplace.

We will take the lead to provide the best workplace to our employees in accordance with the relevant

safety and health regulations.

Safety and health cooperation with partners

We manage and control risks and monitor all the activities at work in cooperation with partners in accor-

dance with the safety management guidelines.

We also provide our partners with safety & health trainings, the relevant information, and continuous

safety management and improvement activities.

To control risks and damages that our sub-contractors may take or have while working at the sites, we

regularly train the supervisors and operate 3-OUT system to keep the sites safe.

▲ Specialized safety & health training

▲ Partner safety and health committee

▲ CPR Medical Training

▲ In-Company Safety education for overseas engineers

▲ Gas leak detecting system

▲ Specialized safety education at Education Center

▲ Sub-contractor training

▲ Health Care Campaign

▲ Safety & health training for field supervisors

▲ Emergency operation training

Health promotion and care

We have run an in-company health promotion program for our employees with regular health check-up and

follow-up services so that our employees can work in a safe and healthy working environment. We also

have a prompt support process when a professional treatment is needed for our employees.

Medical Care Health Care Health PromotionIndustrial sanitary

managemen

Regular checkup (general/specific)

Follow-up checkup service

Management and support of in-company clubs

GHS-MSDS system

Working place inspection (1st/2nd quarter)

personal medical consultation and health training

operation of health care room

management of works in closed spaces

Muscular skeletal diseases prevention program

health management campaign

operation of in-company fitness center

intensity of illumination and magnetic field measurement

38 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 39TAIHAN ELECTRIC WIRE CO., LTD.Safe and Healthy Working Place

Environmental PerformanceThe environment is very important to the life of human beings and to the sustainable management of a

company. TAIHAN is leading the way in preserving the environment through the energetic practice of the

development of eco-friendly products, energy saving through process improvement, contamination pre-

vention, resource recycling and reduction, etc. This systematic and strict environmental system will be

established so that the next generation can enjoy a happier and more valuable life

Air

We minimize the environmental effects on near residential areas by planting air-clarifying trees within

14 meters from the construction sites and observing more strict air pollutant treatment standards than

regulated by law.

We also conduct air pollutant reduction activities including LNG/electricity use for heating fuel and pro-

duction facilities and anti-pollutant facilities installation to prevent air pollutants (high efficiency filter dust

collector, filtering & collecting facilities) and bad smell (absorber) such as VOC.

Water

Five excellent treatment facilities and two retention facilities were installed.

Most of waste water is reused after physical and chemical treatments and partly, it is committed to be

controlled not to be discharged out of the business area.

In order to minimize the envionmental damages on the water quality of Lake Seokmun, we discharged the

waste water from the sewage treatment facilities into the eco-retention after cleaning the water pollutants.

ENVIRONMENTALMANAGEMENT

Aimed concentration :

SO2 10ppm, NO2 10ppm, HCl 0.6ppm,

dust 10㎎/S㎥, Cu 1㎎/S㎥, Pb 1㎎/S

Category Dusts NOX SOX HCL Pb Remark

Allowed discharge 40mg/㎥ 400ppm 150ppm 6ppm 10mg/㎥ -

Aimed concentration 10mg/㎥ 10ppm 10ppm 0.6ppm 1mg/㎥ -

Discharged level 5mg/㎥ 7ppm 6ppm 0.4ppm 0.5mg/㎥ -

(%) 12.5 1.8 4.0 6.7 5.0 Discharge

to reference level

Classification 2008 2009 2010 2011 2012 Remark

Capacity (ton) 442,745 468,378 461,360 361,220 111,371 -

Waste

We recycled 84% of total 3,809 tons of the by-products generated at Dangjin plant in 2012 and treated it

by either incineration or reclamation safely. Since 2005, we have recycled more than 80% of waste, which

is much higher than other companies in the industry.

Classification 2008 2009 2010 2011 2012 Remark

Recycling 115.4 122.5 117.1 164.2 99.5 -

Reclamation 0.03 0.03 0.03 0.61 0.21 -

Incineration 22.1 28.1 21.5 28.8 18.1 -

Total 137.5 150.6 138.6 193.6 117.9 -

Recycling Ratio 84% 81% 84% 85% 84% -

Unit : Kwon

2007 2008 2009 2010 2011 2012

4.5

42.7

37.9

4.4

29.431.8

3.9

32.3

19.1

4.0

30.7

12.8

3.2

22.1

6.6

0.7 1.3 1.5

Dust

Nitrogen oxide

Sulfur oxides

▲ Discharged Air Pollutants

(Unit : Ton/Year)

Green Zone

Green Space

Clean detention(a)Clean detention(b)

40 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 41TAIHAN ELECTRIC WIRE CO., LTD.Environmental Management

▲ General waste Treatment ▲ Designated waste treatment

2008 2009 2010 2011 2012

137.5

83.8 81.384.4 84.8 84.4

115.4

150.6122.5

138.6117.1

193.6164.2

117.999.5

250.0

200.0

150.0

100.0

50.0

-

80%

70%

60%

50%

40%

2%

Waste water process sludge

17%

81%

0%

Synthetic resin waste Chemical waste Timber waste

Lead ashOil

Paint Dust

Soild waste oilDisposal sludge Empty reel

6%7%

15%3%0%

23%

46%

2%

Waste water process sludge

17%

81%

0%

Synthetic resin waste Chemical waste Timber waste

Lead ashOil

Paint Dust

Soild waste oilDisposal sludge Empty reel

6%7%

15%3%0%

23%

46%

Green house gas and energy control

• Goals for mid/Long-term green house gas and energy control

To reduce 25% of green house gas by 2015, compared with that of 2007~2008 (based on BAU)

• Discharging green house gas

Control year 2010 2011 2012

36,693

51,95153,070

44,306

73,906TCO2

Control :

Average discharged green house gases between

2007~2009

Category Control year 2010 2011 2012 Remark

Scope 1 24,097 22,976 17,706 11,486 -

Scope 2 27,854 30,094 26,600 25,207 -

Total 51,951 53,070 44,306 36,693 -

• Vision and Strategy

GOAL STRATEGY

ECO-FACTORY • Carbon energy control system construction• IFS construction

ECO-PRODUCT• Eco-friendly cable development• Carbon labeling

ECO-IR• Carbon information release• Investment in SRI field• Green culture realization

To reduce 25% of green house gas by 2015, compared

with the control year

25%

Allocated green house gas

Discharged green house gas

• Green house gas inventory construction

We do our best to control and reduce discharged green house gases. We built a green house gas inven-

tory in 2005 and managed it through inspections by a 3rd party since 2007. In particular, we developed

a methane discharge-coefficient for indirect discharge generated in the process of insulation of extra

high-voltage cables and committed a 3rd party to make an inspection on it. Not only the Dangjin plant,

but also other business places of Taihan Electric Wire operate the green house gas inventories. Through

various reduction activities, the company accomplishes its goals to reduce discharged green house gases.

• Participation in the Green house gas & energy discharge control system

We have participated in the Discharge control system since the company was appointed as a green house

gas & energy discharge manager since 2010. Not only the division in charge, but the entire company

makes efforts to reduce discharged energy and green house gases though energy-saving plans and or-

ganic cooperation with the KPIs.

Total by-product Level

Recycled Level(Unit : per 1000tons)

Recycling Ratio(Unit : percentage)

42 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 43TAIHAN ELECTRIC WIRE CO., LTD.Environmental Management

FINANCIAL SECTION

A good tree is not just made in a day. A strong wind makes a stronger tree and a dark forest make a tree grow higher. The sun, cold weather, and rain and snow are all necessary things for a tree to grow up. The solid finance and transparent management that we have seek even in the difficult times, which protect clients’ value and stockholders’ profit are the biggest assets that we have and pursue in the future.

• Energy-saving activities

1) Central electricity control system using IFS :

- IFS, built in 2012 is an intelligent factory system that saves energy and green house gases while improv-

ing ubiquitous building’s value by providing pleasant working and business environments.

- Due to the IFS system, Taihan Electric Wire minimizes electricity consumption for heating and cooling,

using the highly efficient energy system through a remote metering.

- Automatic office lights-out : 12:00 ~13:00, 18:00 ~ 19:00

- Central cooling/heating control : Summer -26C°, Winter -20C°

2) Replacement to clean energy

- We try to minimize green gases and air pollutants by replacing the B/C boilers (efficiency: 87%) to the

connected LNG boilers (efficiency: 92%).

3) Highly efficient facilities

- The old compressors (850HP × 3) in shuttle type were replaced by new ones in turbo or screw types.

4) Activated green traffic

- We make our staffs ride on a bicycle for short distance works (Bicycle-only roads were built in the com-

pany)

- Utilization of electric bicycles

* Max Speed : 25 km/h (Speed limit applied)

* Charging time : Fast charging 1hour

* Safety function : Break, overcurrent/overvoltage blocking, lowvoltage warning

▲ Central electricity control system using IFS

▲ Highly efficient facilities

▲ Replacement to clean energy

▲ Activated green traffic

44 Environmental Management THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012

INDEPENDENTAUDITORS’REPORT

To the Shareholders and Board of Directors of Taihan Electric Wire Co., Ltd.

We have audited the accompanying separate financial statements of Taihan Electric Wire

Co., Ltd. (the “Company”). The separate financial statements consist of the separate state-

ments of financial position as of December 31, 2012 and 2011, and the related separate

statements of comprehensive income, separate statements of changes in shareholders’

equity and separate statements of cash flows for the years ended December 31, 2012 and

2011 all expressed in Korean won. The Company’s management is responsible for the prep-

aration and fair presentation of the separate financial statements, and our responsibility is

to express an opinion on these separate financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the

Republic of Korea. Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstate-

ment. 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 separate financial statements referred to above present fairly, in all ma-

terial respects, the financial position of the Company as of December 31, 2012 and 2011,

and the results of its operations and its cash flows for the years ended December 31, 2012

and 2011 in conformity with Korean International Financial Reporting Standards (“K-IFRS”).

English Translation of a Report Originally Issued in Korean

Without qualifying our opinion, we draw attention to the following :

(1) Implementation agreement for normalization of business with

creditors:

As explained in Note 33 to the accompanying separate financial statements,

on May 29, 2009, an agreement for the improvement of the Company’s fi-

nancial structure was entered into with Hana Bank, a principal creditor. Un-

der the agreement, the Company committed to sell portions of its affiliates

and real estate, perform capital injections, extinguish borrowings, and retire

payment guarantees of affiliated companies’ loan and others.

In addition, as explained in Note 33 to the accompanying separate financial

statements, on February 7, 2012, the Company signed a memorandum of un-

derstanding (MOU) with creditors, including Hana Bank, a principal creditor,

for supporting additional loan of ￦280 billion and additional credit line of ￦150

billion. Under this MOU, 2,804,828 shares of common stock of the Company

have been provided as collateral to financial institutions.

Moreover, as explained in Note 33 to the accompanying separate financial

statements, on August 7, 2012, the Company entered into an implementation

agreement for normalization of business with creditors, including Hana Bank,

a principal creditor. Under this agreement, the Company should implement

to raise funds including paid-in capital increase, perform capital reduction

without consideration, dispose of investment assets, and repay the project

financing liabilities. The Company and its principal shareholder, Seul, Yoon

Suk, should transfer its stock rights to creditors.

(2) Going-concern uncertainties:

The accompanying separate financial statements are prepared on a going

concern basis. Assets and liabilities are recorded on the basis that the entity

will be able to realize its assets, and discharge its liabilities in the normal

course of business.

However, as explained in Note 34 to the accompanying separate financial

statements, the Company incurred net loss of ￦443,261 million for the year

ended December 31, 2012, and total current liabilities exceed total current

assets by ￦684,088 million as of December 31, 2012. In addition, related

party receivables of ￦379,153 million (net of allowance for doubtful accounts

and other) as of December 31, 2012 may not be collectible if the recovery

plan does not fulfill as planned. Moreover, contingent liabilities on financial

guarantee contract provided for related parties and others of ￦427,984 million

are exposed to credit risk.

These factors mean that there are significant uncertainties about the Com-

pany’s ability to continue as a going concern. Therefore, the Company’s

ability to continue as a going concern depends on financing plan, achieve-

ment of stable operating profit as a result of financial structure improvement

agreement and implementation agreement for normalization of business, col-

lection of related party receivables, and resolution of contingent liabilities on

financial guarantee contract. The Company may not be able to continue as

a going concern if it does not operate as planned, and therefore the Com-

pany will not be able to realize its assets, and discharge its liabilities in the

normal course of business. The ultimate effect of these significant uncertain-

ties cannot presently be determined in the accompanying separate financial

statements.

(3) Capital reduction without consideration and paid-in capital in-

crease

As explained in Note 22 to the accompanying separate financial statements,

the Company reduced its capital without consideration on October 22, 2012

according to the board of directors’ meeting held on August 24, 2012 and

the extraordinary shareholders meeting held on September 14, 2012. As

a result, the capital of the Company decreased from ￦439,892 million to

￦62,842 million, and total number of common shares outstanding decreased

from 175,956,799 shares to 25,136,685 shares. In addition, the Company

increased paid-in capital by issuing 80,000,000 common shares on Decem-

ber 11, 2012 at ￦347,600 million (￦4,345 per share) to raise funds for loan

repayment and operation.

NOTICEtoREADERS ThisreportiseffectiveasofMarch15,2012,theauditors'reportdate.Certainsubsequenteventsorcircumstancesmayhaveoccurredbetweentheauditors'reportdateand

thetimetheauditors'reportisread.Sucheventsorcircumstancescouldsignificantlyaffecttheaccompanyingfinancialstatementsandmayresultinmodificationstotheauditors'report.

March 14, 2013

46 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 47TAIHAN ELECTRIC WIRE CO., LTD.Independent Auditors’ Report

Separate Statements of Financial Position

Korean won (In Thousands)

December 31, 2012 December 31, 2011

ASSETS

CURRENT ASSETS

Cash and cash equivalents ￦45,242,096 ￦34,984,506

Short-term financial instruments 20,636,617 83,471,395

Current available-for-sale(“AFS”) financial assets 39,084,968 88,450,601

Accounts receivable 296,351,690 509,247,944

Short-term loans 156,900,892 120,936,306

Other current financial assets 47,551,307 77,331,584

Inventories 171,575,833 180,506,815

Income tax receivable 963,642 3,073,931

Other current assets 48,143,322 69,280,217

Non-current assets held for sale 1,990,050 90,000

Total current assets 828,440,417 1,167,373,299

NON-CURRENT ASSETS

AFS financial assets 32,286,870 108,971,427

Long-term loans 28,625,664 19,000,000

Investments in subsidiaries, associates and joint ventures 416,390,659 531,471,238

Other financial assets 176,926,899 1,939,317

Property, plant and equipment 561,908,582 555,078,698

Intangible assets 4,592,053 11,237,836

Investments property 672,619 1,260,872

Deferred tax assets 198,749,120 315,839,232

Total non-current assets 1,420,152,466 1,544,798,620

Total assets ￦2,248,592,883 ￦2,712,171,919

Korean won (In Thousands)

December 31, 2012 December 31, 2011

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable ￦364,021,278 ￦402,100,791

Short-term borrowings 348,109,319 646,469,016

Current portion of long-term borrowings 687,469,477 762,650,667

Other current financial liabilities 54,933,341 77,039,953

Current provision 5,015,214 -

Other current liabilities 52,979,285 71,177,401

Total current liabilities 1,512,527,914 1,959,437,828

NON-CURRENT LIABILITIES

Long-term borrowings 408,689,884 121,886,259

Convertible securities - 280,702,100

Defined benefit obligations 7,816,441 1,595,224

Other financial liabilities 6,863,735 320,066

Total non-current liabilities 423,370,060 404,503,649

Total liabilities ￦1,935,897,974 ￦2,363,941,477

SHAREHOLDERS’ EQUITY

Capital 262,841,713 389,855,805

Other contributed capital 496,427,042 175,500,100

Components of other capital 1,313,355 (3,664,629)

Accumulated deficit (447,887,201) (213,460,834)

Total shareholders’ equity 312,694,909 348,230,442

Total liabilities and shareholders’ equity ￦2,248,592,883 ￦2,712,171,919

As of December 31, 2012 and 2011

48 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 49TAIHAN ELECTRIC WIRE CO., LTD.Statements of Financial Position

Separate Statements of Changes in Shareholders’ Equity

Korean won (In thousands except per share amounts)

2012 2011

Sales (Notes 23, 29 and 30) ￦1,982,801,358 ￦2,578,239,969

Cost of sales 1,874,569,887 2,450,813,226

Gross profit 108,231,471 127,426,743

Selling and administrative expenses 103,159,258 88,085,166

Operating income 5,072,213 39,341,577

Non-operating income and expense

Finance income 100,297,177 218,005,228

Finance expenses 429,269,286 489,564,355

Other non-operating income 49,799,944 65,191,045

Other non-operating expenses 49,636,439 56,844,085

(328,808,604) (263,212,167)

Loss before income tax (323,736,391) (223,870,590)

Income tax expense (benefit) 119,524,901 (10,685,816)

Net loss ￦(443,261,292) ￦(213,184,774)

Other comprehensive income (expenses)

Gain(loss) on valuation of AFS financial assets, net ￦4,977,984 ￦(9,384,420)

Actuarial loss on defined benefit obligations, net (4,625,904) (276,060)

352,080 (9,660,480)

Total comprehensive loss ￦(442,909,212) ￦(222,845,254)

Basic loss per common share ￦(15,478) ￦(9,989)

Diluted loss per common share ￦(15,478) ￦(9,989)

Korean won (In Thousands)

Capital stock Other contributed

capital

Components of other capital

Retained earnings

(accumulated deficit)

Total amount

Balance at January 1, 2011 ￦357,991,783 ￦595,606,971 ￦5,719,791 ￦(461,642,816) ￦497,675,729

Net loss - - (213,184,774) (213,184,774)

Conversion of convertible and redeemable preferred stock

20,000,000 17,102,067 - - 37,102,067

Issuance of bonds with stock warrants

- 18,730,628 - - 18,730,628

Exercise of stock warrants 11,864,022 5,703,250 - - 17,567,272

Disposition of deficit - (461,642,816) - 461,642,816 -

Loss on valuation of AFS financial assets, net

- - (9,384,420) - (9,384,420)

Actuarial loss - - - (276,060) (276,060)

Balance at December 31, 2011 ￦389,855,805 ￦175,500,100 ￦(3,664,629) ￦(213,460,834) ￦348,230,442

Balance at January 1, 2012 ￦389,855,805 ￦175,500,100 ￦(3,664,629) ￦(213,460,834) ￦348,230,442

Net loss - - - (443,261,292) (443,261,292)

Conversion of convertible and redeemable preferred stock

50,000,015 18,495,321 - - 68,495,336

Exercise of stock warrants 36,178 (19,780) - - 16,398

Capital reduction without consideration

(377,050,285) 377,050,285 - - -

Paid-in capital increase 200,000,000 139,193,517 - - 339,193,517

Acquisition of treasury stock - (331,572) - - (331,572)

Disposition of deficit - (213,460,829) - 213,460,829 -

Gain on valuation of AFS financial assets, net

- - 4,977,984 - 4,977,984

Actuarial loss - - - (4,625,904) (4,625,904)

Balance at December 31, 2012 ￦262,841,713 ￦496,427,042 ￦1,313,355 ￦(447,887,201) ￦312,694,909

For the Years ended December 31, 2012 and 2011

Separate Statements of Comprehensive Income

For the years ended December 31, 2012 and 2011

50 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 51TAIHAN ELECTRIC WIRE CO., LTD.Separate Statements of Changes in Shareholders’ EquitySeparate Statements of Comprehensive Income

Korean won (In Thousands)

2012 2011

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss ￦(443,261,292) ￦(213,184,774)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

496,929,459 249,087,342

Changes in operating assets and liabilities (45,970,599) (5,473,715)

7,697,568 30,428,853

Interest received 14,881,595 58,327,536

Interest paid (86,253,068) (117,963,089)

Dividend received 651,174 34,348,417

Income tax received (paid) 158,368 (4,950,095)

Net cash provided by (used in) operating activities (62,864,363) 191,622

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from withdrawal of short-termfinancial instruments

176,329,901 365,284,122

Proceeds from disposal of current AFS financial assets

- 117,224,556

Proceeds from disposal of AFS financial assets 10,267,887 26,444,988

Collection of short-term loans 6,210,771 50,137,450

Collection of long-term loans - 16,210

Proceeds from disposal of investments in subsidiaries - 15,500,000

Proceeds from disposal of investments in associates - 91,574,450

Proceeds from disposal of property, plant and equipment 8,559,838 6,452,305

Proceeds from disposal of intangible assets 1,051,818 1,400,000

Proceeds from disposal of investment property 2,442,122 -

Decrease in other financial assets 362,026 204,377

Proceeds from disposal of non-current assets held for sale 43,797,652 159,632,787

Proceeds from transfer of business 11,537,000 15,000,000

Acquisition of short-term financial instruments (113,248,408) (354,783,817)

Acquisition of current AFS financial assets - (200,483,726)

Acquisition of AFS financial assets (2,921,529) (30,498,411)

Continued →

Korean won (In Thousands)

December 31, 2012 December 31, 2011

CASH FLOWS FROM INVESTING ACTIVITIES

Extension of short-term loans (54,334,424) (41,000,000)

Extension of long-term loans (9,684) -

Acquisition of investments in subsidiaries - (119,514,715)

Increase in other financial assets (2,103,287) (1,671,299)

Acquisition of property, plant and equipment (33,987,341) (124,557,609)

Acquisition of intangible assets - (10,007,271)

Acquisition of investment property - (342,448)

Increase of non-current assets held for sale (4,461,000) -

Net cash provided by (used in) investing activities ￦49,493,342 ￦(33,988,051)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term borrowings ￦1,423,585,170 ￦640,830,364

Proceeds from long-term borrowings 127,598,400 207,979,200

Proceeds from issuance of debentures - 248,610,750

Issuance of bonds with stock warrants - 244,417,319

Increase of financial lease liabilities - 5,000,000

Issuance of common stock 347,600,000 -

Exercise of stock warrants 3,303 949

Repayment of long-term borrowings (1,344,605,099) (732,907,662)

Repayment of current maturities of long-term borrowings (521,105,008) (610,264,441)

Acquisition of treasury stock (331,572) -

Common stock issuance costs (8,722,747) (372,691)

Net cash provided by financing activities 24,022,447 3,293,788

Net increase (decrease) in cash And cash equivalents 10,651,426 (30,502,641)

Cash and cash equivalents, beginning of year 34,984,506 65,469,040

Effect of exchange rate on cash And cash equivalents (393,836) 18,107

Cash and cash equivalents, end of year ￦45,242,096 ￦34,984,506

Separate Statements of Cash Flows

For the years ended December 31, 2012 and 2011

52 THE WAY TO A GLOBAL LEADING COMPANYAnnual Report 2012 53TAIHAN ELECTRIC WIRE CO., LTD.Separate Statements of Cash Flows

USA LA

Vietnam

KOREA

Singapore

Hongkong

USA NY

Australia

New Zealand

Kuala Lumpur

South Africa

Kuwait

Russia

DubaiQatar

Riyadh

Congo

TAIHANAROUNDTHEWORLD

OVERSEAS SUBSIDIARIES

South Africa l Malesela Taihan Electric Cable(Pty) Ltd. (M-TEC)

PO Box 1643, Vereeniging 1930, Gauteng, South Africa

TEL : +27-16-450-8200 FAX : +27-16-450-8202

E-mail : kskil@m-tec.co.za Website : www.m-tec.co.za

D.R Congo l STANDARD TELECOM

No. 833, Blvd du 30 Juin, Commune de la Gombe, Kinshasa, D.R.Congo

TEL : +243-1511-0007 FAX : +243-1511-1100

E-mail : colee@stelecom.cd Website : www.st.cd

Vietnam l Taihan Sacom Cable Company.,Ltd. (TSC)

152/11B Dien Bien Phu St., W.25, Binh Thanh District, HCM City

TEL : +84-8-3518-0786 FAX : +84-8-3514-0516

E-mail : frkwak@tscable.com, shkim@taihansacom.com Website : www.tsc.vn

USA l Taihan Electric USA.,Ltd. (Taihan USA)

LandMark Building, 99 Tulip Avenue, Suite#106, Floral Park, NY 11001, USA

TEL : +1-562-282-2206 FAX : +1-562-946-0200

E-mail : cwlee@taihan.com

Hong Kong l Taihan Global Holdings.,Ltd. (TGH)

12/F., 3 Lockhart Road, Wanchai, Hong Kong

Subsidiary Company

Branch Office

OVERSEAS BRANCH OFFICE

Dubai Branch Office

Office No.908, Al Shafar Tower 1, TECOM, P.O.Box 117561, Dubai, UAE

TEL : +971-4-368-8988 FAX : +971-4-368-6779

E-mail : Sales - hkjoo@taihan.com, sales@taihan.ae

Technical - kimhj@taihan.com

Riyadh Branch Office

Office No.613, Al Rossais Commercial Center Olaya Road, P.O.Box 300201, Riyadh

11372, Kingdom of Saudi Arabia

TEL : +966-1-419-0227 FAX : +966-1-419-0262

E-mail : jsnam@taihan.com

Kuwait Branch Office

Sabah al Salem, block No.4, Street No.26 House No.8, State of Kuwait

TEL : +965-2552-8642 FAX : +965-2552-8508

E-mail : ksan@taihan.com

Qatar Branch Office

Duhail Road Near College of North Atlantic P.O.Box : 18740 - Doha Qatar

TEL : +974-421-3851

E-mail : jsnam@taihan.com

Singapore Branch Office

150 Kampong Ampat #07-04 KA Centre Singapore 368324,Republic of Singapore

TEL : +65-6842-5069 FAX : +65-6842-5076

E-mail : hcjung@taihan.com

Kuala Lumpur Branch Office

No. 2-09, Jalan Pandan Prima 1 Dataran Pandan Prima 55100 Kuala Lumpur,

Malaysia

TEL : +60-3-9018-9113/9115 FAX : +60-3-9200-1136

E-mail : hcjung@taihan.com

Australia Branch Office

Suite 2, Level 13, 80 Mount Street, North Sydney, NSW 2060, Australia

TEL : +61-2-9460-3600 FAX : +61-2-9954-4354

E-mail : okkwon@taihan.com

New Zealand Branch Office

Suite 2, Level 11, 48 Emily Place, PO Box 105895, Auckland 1143, New Zealand

TEL : +64-9-368-7703 FAX : +64-9-368-7704

E-mail : okkwon@taihan.com

USA LA Branch Office

12016 Telegraph Rd., Suite 200 Santa Fe Springs, CA90670, USA

TEL : +1-562-282-2206 FAX : +1-562-946-0200

E-mail : cwlee@taihan.com

Russia Branch Office

119421, Moscow, Russia. Leninsky prospect d. 111, korp. 1, floor 2, office 121-122.

TEL : +7-495-989-5812

E-mail : alexlee@taihan.com, alexlee.taihan@gmail.com

Head OfficeG.SQUARE, 180, Simin-daero, Dongan-gu, Anyang-si, Gyeonggi-do, KoreaTel. +82-2-316-9114 Fax. +82-2-316-9023

Dangjin Cable Accessory Plant2-1. Seulhang-ri, Godae-myeon, Dangjin-gun, Chungcheongnam-do, KoreaTel. +82-41-359-9114 Fax. +82-41-359-9116

Dangjin Plant1110, Janghang-ri, Godae-myeon, Dangjin-gun, Chungcheongnam-do, KoreaTel. +82-41-360-9114 Fax. +82-41-360-9199

R&D Laboratory603-4, Seonggok-dong, Danwon-gu, Ansan-si, Gyeonggi-do, KoreaTel. +82-31-420-9530 Fax. +82-31-420-9350

54 TAIHAN around the World