CPO Monthly Monitoring Report CONFIDENTIAL CPO Monthly Monitoring Report HYUNDAI MERCHANT MARINE Co. Ltd. September 2013 CPO (Purchasing Team / Strategic Purchasing Part) Based Data : up to August 2013

Table of Contents Ⅰ. The Purpose of the Procurement Policy Ⅱ. The Summary of Key Indicator Ⅲ. The Summary of Monitoring A. Spend Analysis B. Supplier Evaluation C. Contract Management Ⅳ. Procurement Policy Monitoring ※ Appendix - Manual for Supplier Evaluation - Manual for Vendor information Management - Manual for Contract Management 1

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

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

Ⅱ. The Summary of Key Indicator Supplier Evaluation (August) Contract Management Spend Ratio (August) [No. of Suppliers] [No. of Contract] [Million U$] 5 2,176 6 1,649 12 527 13 Total Amount Non-Target Amount Target Amount Target Suppliers Incomplete Complete The number of the contract from system as of today In August, There are no target suppliers’ evaluation. 7 target suppliers’ evaluation on CUT & KHT(Own Terminal) has been doing in Sep. In total, 78 contracts have been shown in ERP, which no new contract was uploaded in September. In spite of increasing numbers monthly on contract uploads, many of contracts haven’t been uploaded in the system yet. So we urge you again to do the uploading 2013 contract in ELMS as soon as possible. CPO Target suppliers - Spend Ratio: 76% - USD 1,649million (Total USD 2,176million) HMM Minimum standard 80% is failed due to regression of Barge, Container Master Lease, KHT and Truck services.

General Administration Ⅲ. The Summary of Monitoring Spend Analysis (August 2013) [Unit: USD] Service No. Service Total Purchase Amount CPO Target Spend Ratio 1 L/T CNTR Lease 39,244,837 33,183,005 85% 2 Docking Repair 9,813,478 7,925,184 81% 3 Feeder 70,429,001 46,463,878 66% 4 Truck 95,924,412 40,771,233 43% 5 Bulk Agent 5,048,796 1,765,081 35% 6 Terminal 515,524,586 311,718,761 60% 7 Depot 27,492,736 6,051,578 22% 8 M&R 23,080,634 13,291,157 58% 9 Fuel & Lubricant 887,615,392 851,433,592 96% 10 Barge 19,480,040 9,174,171 47% Service No. Service Total Purchase Amount CPO Target Spend Ratio 11 Bulk Stevedore 50,071,898 31,732,509 63% 12 Container Agent 21,947,861 1,882,956 9% 13-1 CUT 50,042,728 44,963,715 90% 13-2 WUT 292,624,220 196,258,404 67% 13-3 KHT 3,619,735 1,200,633 33% 14 New van & Reefer - 15 Short term container 18,734,822 14,125,647 75% 17 Spare parts 26,988,300 18,901,418 70% 18 Legal Insurance 15,982,129 15,688,983 98% 19 General Administration 2,077,437 2,020,731 97% No New Van & Reefer purchase up to now Total Amount Total Target Spend Ratio 2,175,743,041 1,648,552,635 76%

Ⅲ. The Summary of Monitoring Spend Analysis Procurement Policy 18 Services Total Purchasing Amount (Monthly) [U$1Million] TTL AMT of Procurement Cost for Target Supplier [Unit: U$1Mil.] Item　 2012. 09 2012. 10 2012. 11 2012. 12 2013. 01 2013. 02 2013. 03 2013. 04 2013. 05 2013. 06 2013. 07 2013. 08 TTL AMT of P/O 257 296 310 262 233.981 221.098 248 273 255 345 304 Cost for TGT Supplier 201 227 233 285 174.481 191.3016 193 223 190 263 211 203 Spend Ratio 78% 77% 75% 109% 87% 82% 76% 71% 67% The average of total purchasing amount per month is USD 275 million, the average of CPO target amount per month is USD 216 million. The average of spend ratio for 12 months is 79% (Based on the data from Sep 2012 to Aug 2013)

Re-selection of CPO Target Suppliers for 2013 Ⅳ. Procurement Policy Monitoring Re-selection of CPO Target Suppliers for 2013 CPO Target Suppliers for 2013 are updated based on 2012 data → Newly updated and selected suppliers will be evaluated by the relevant parties at least once a year → Please refer to the attached, evaluation schedule for 2013 Evaluation Plan Service No. Service The number of target suppliers 1 Long term container 9 7 Depot 54 13-2 WUT 24 2-1 Docking Repair(C&B) 4 8 M&R 29 13-3 CUT 10 2-2 Docking Repair(G&T) Fuel & Lubricant 22 14 New van & Reefer 3 Feeder 19 Barge 31 15 Short term container 12 Truck 77 11 Bulk Stevedore 89 17 Spare parts 27 5 Bulk Agent 106 Container Agent 18 Legal Insurance 6 Terminal 13-1 KHT General Administration Total 603

Re-selection of CPO Target Suppliers for 2013 Ⅳ. Procurement Policy Monitoring Re-selection of CPO Target Suppliers for 2013 CPO Target Suppliers for 2013 are updated based on 2012 data Month The No. of suppliers Target Service Jan 4 KHT(4) Feb - Mar Apr 19 Master Lease(12), Bulk agent-GAS(7) May 6 CUT(6) Jun Jul Aug Sep 7 KHT(3), CUT(4) Oct 122 Feeder(9), Terminal(9), Depot(54), M&R(29), KHT(5), WUT(16) Nov 244 Feeder(3), Bulk Agent-Liner OPR, Cape/Panamax, Tank, Heavy Lift & Project(82), Terminal(10), Fuel & Lubricant(22), Bulk Stevedore(89), Container Agent(14), KHT(6), WUT(8), New Van(7) Dec 204 Long-term lease(9), Docking repair(8), Feeder(7), Truck(77), Bulk Agent-Dedicated Biz, Handymax(17), Terminal(8), Barge(31), Spare parts(27), Legal Affairs & Insurance(6), General Management(14) Total 603 ※ It is basic schedule, so it can be changed based on mutual agreement between CPO and relevant parties in charge of performing evaluation.

Ⅳ. Procurement Policy Monitoring Spend Ratio  Collect the total purchasing amount of 18 services using CPO system The people who are in charge of CPO Evaluation can use ZMMR0840 in SAP program for checking evaluation marks. Manual for ZMMR0840 Supplier Evaluation  Evaluate the CPO Target Suppliers at least once a year ☞ Flash manual : P. Pak (http://ppak.hmm21.com/gm/folder-1.11.5521) Web page (Check the ※Appendix for simple Ver. Manual) ☞ Follow the link http://hmmcpo.hmm21.com→ Evaluation → Evaluation Plan → Vendor List ☞ Give a Total Feedback after complete every evaluation of service suppliers  Total score of every suppliers will be presented in the next month report Contract Management  Figure out the contents of the contract, and it will be used as evidence if the trouble is occurred with suppliers ☞ Acquiring visibility on procurement operation: Contents of the contract (Contract Amount, General Terms and Conditions, Contract Period, etc.) ☞ Portal log on → ELMS → Contract Review → Contract Management) Related Mail (KOR)

※ Appendix Supplier Evaluation Manual 1) Visit CPO home page, The URL is http://hmmcpo.hmm21.com/ 2) Click ‘Evaluation Plan’ under the ‘Evaluation’ menu. 3) Click the period and the service on the Drop-down list for searching the supplier. (Ex. October, Feeder)

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

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

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

※ Appendix Manual for Contract Management 1) Click ‘ELMS’ in system link for managing new and updated contract. (You can also access ‘ELMS’ using this URL) http://elms.hmm21.com/index_main.jsp 2) Click ‘Contract Management’ in ‘Contract Review’ category. 3) Click ‘New Entry’ for entering contract information.

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