daishin securities co., ltd. annual report for the year ... filedaishin securities co., ltd. annual...

Daishin Securities Co., Ltd.

Annual Report for the year ended on

31 March 2009 as filed with the UK Listing

Authority on 30 September 2009

Annual Report

(48th Fiscal year)

Fiscal year: From April 1, 2008 to March 31, 2009

To: Financial Supervisory Service of Korea

Stock Market Division of the Korea Exchange

Daishin Securities Co., Ltd. herewith submits its annual report to the Financial Services Authority of the United

Kingdom. This annual report is the summary and translation of the annual report of Daishin Securities Co., Ltd.

submitted to the Financial Supervisory Service of the Republic of Korea pursuant to Financial Investment

Service and Capital Markets Act

September 30, 2009

Company Name : Daishin Securities Co., Ltd.

CEO : Chung Nam Roh

Head Office : 34-1, Youido-dong, Youngdungpo-ku, Seoul, 150-884, Korea

(Tel) 82-2-769-2000

Prepared by : (Position) Gneral Manager Strategic Planning & Coordination Dept.

(Name) Dae-Han Hong

(Tel) 82-2-769-2091

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Table of Contents I. Business Report ........................................................................................................................................1

1. Corporate History ………….………………………………………………………………………….1 2. Chairwoman’s Message……………………………………………………………………………….2 3. CEO’s Interview……………………………………………………………………………………… 4 4. General Corporate Information ……………………………………………………………………….5

A. Business Objectives………………………………………………………………………………..5 B. Total Employee Status……………………………………………………………………………..8 C. Status of Domestic Branches and Overseas Representative Offices………………………………8 D.Organization Chart………………………………………………………………………………….9 E. Stock Information…………………………………………………………………………………..10

5. Parent Company, Subsidiary Company and Consolidated Circumstances, etc………………………11 A. Parent Company Status…………………………………………………………………………….11 B. Subsidiary…………………………………………………………………………………………..11 C. Director’s Concurrent Office Position at Parent Company & Subsidiaries………………………..11

6. Operating Results & Asset Status for past 3 years……………………………………………………12 A. Operating Results…………………………………………………………………………………..12 B. Asset Status………………………………………………………………………………………...12 C. Financial Stability………………………………………………………………………………….12

7. Risk Management……………………………………………………………………………………..13 8. Challenges…………………………………………………………………………………………….14 9. Major Shareholder Structure………………………………………………………………………….16 10. Board of Directors and Audit Committee Member………………………………………………….16 11. Investment Status in Other Companies………………………………………………………………16 12. Major Creditor, etc…………………………………………………………………………………...16 13. Important Events Occurred after Company Fiscal Year……………………………………………..16 14. Other Important Circumstances related to Business Operation……………………………………...16

II. Financial Report (Non-consolidated)……………………….…………………………………………17 1. Balance Sheet………………………………………………………………………………………….17 2. Statement of Income…………………………………………………………………………………..19 3. Statement of Appropriations of Retained Earnings…………………………………………………...21 4. Statement of Changes in Shareholder’s Equity……………………………………………………….22 5. Statement of Cash Flows……………………………………………………………………………...23

III. Audit Report……………………………….…………………………………………………………..26 1. Audit Report by the Audit Committee………………………………………………………………...26 2. Report of Independent Auditors (Non-consolidated Financial Statements)…………………………..27

IV. Appendix…………………………………………………………………………………………………28 1. Management’s Discussion and Analysis………….…………………………………………………...28 2. Report on Internal Accounting Control System……………………………………………………….35

V. Consolidated Financial Statements………..……………………………………………………………37

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I. Business Report

1. Corporate History

1962 Jul. 27 Established as Sam-Lark Securities

1968 Jul. 08 Renamed Chung-Bo Securities

1975 Apr. 22 Oct. 01

Renamed Daishin Securities Listed on Korea Stock Exchange (now Korea Exchange)

1984 Aug. 25 Sep. 22

Established Tokyo Representative Office Established Daishin Economic Research Institute

1985 Mar. 06 Apr. 12 May 28

Forged capital alliance with W.I.C.O., Hong Kong Forged capital alliance with Yamaichi Securities, Japan Relocated headquarters to Yeoido, Seoul

1988 Mar. 24 Established Daishin Investment Consulting Co

1990 Jul. 20 Established Daishin Songchon Cultural Foundation

1996 Jul. 01

Nov. 23

Changed the name of Daishin Investment Consulting Co. to Daishin Investment Trust Management Co. Introduced Korea’s first “One Card System”

1997 Apr. 12 Launched home trading system (CYBOS DOS version)

1998 Jun. 09 Introduced Internet trading, the first among large brokers

1999 Aug. 31

Nov. 03

Capital increase (new share issue via third party placement) - strategic alliance with Sumitomo Life Insurance, Japan Capital increase (rights offering)

2002 Sep. 16

Retired 200,000 common shares of treasury stock

2003 Jul. 21

Sep. 04 Dec. 01

Selected as a component of KODI (Korea Dividend Stock Price Index, an index of 50 component stocks) Registered as insurance sales agent financial institution Selected as a component of KOGI (Korea Corporate Governance Stock Price Index)

2004 Mar. 10 Jun. 03 Jun. 23

Received Good Compliance Member Award given by Korea Exchange Recognized for outstanding corporate governance by Korea Exchange Registered to engage in investment advisory business

2005 Feb. 25 Sep. 26 Dec. 09 Dec. 09 Dec. 17

Received approval to deal in OTC derivatives products Road shows (major US cities including New York) Received approval to engage in trust business Registered to engage in retirement pension business Capital increase (new share issue via third party placement) - strategic alliance with SPARX Asset Management, Japan

2006 Aug. 21 Aug. 29 Oct. 16

Launched next generation ARS system Forged strategic alliance with Nikko Cordial Group of Japan Forged capital alliance with Nikko Cordial Group

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2007 Nov. 03 Listed 20 million GDS on London Stock Exchange (capital increase by

KRW 50 billion)

2008 Feb. 13 May 26 Sep. 12

Established Daishin Securities Asia Limited, Hong Kong (overseas subsidiary) Established Shanghai Representative Office in China Added an affiliate with the establishment of private equity fund, Daishin Pegasus No.1

2009 Feb. 04

Feb. 05 Apr. 22

May 04

Shift to financial investment business with the implementation of Financial Investment Services and Capital Markets Act Daishin Securities Asia Limited, Hong Kong, launches operation Participation in Korea Financial Telecommunications and Clearings Institute project for fund transfer (Retail payment) Opened next-generation financial system

2. Chairwoman’s Message To our esteemed shareholders, Fiscal year 2008 was a year of unprecedented challenges for the financial markets and economies across the globe. The support we received from our shareholders was invaluable in helping us navigate through the troubled times. Growing financial turmoil, bankruptcy of prominent global companies and volatile commodity prices raised fears that the global economy may be headed for a prolonged recession. Korea was not spared from the woes. Prospects for the domestic economy were bleak amid a downward spiral of the Korean currency, declining exports and subsequent deterioration in corporate earnings, and depressed domestic consumption. Over the past fiscal year, all of us at Daishin Securities worked tirelessly to find new opportunities for growth amid the crisis. We extended our international network to add momentum to our global business. We opened an office in Shanghai to make headway in China, which has emerged as a global economic center, while full-fledged operations are now underway at our Hong Kong subsidiary. Our newly launched next-generation IT system allows us to meet diverse customer needs in the face of rapid market changes including adoption of the Financial Investment Services and Capital Markets Act (FSCMA). Based on the new IT system and differentiated services, we aim to spearhead new trends in the financial markets. In recognition of our ongoing drive to provide services that delight customers, Daishin Securities secured the No.1 spot in the 2008 global customer satisfaction survey by JMA Consultants of Japan. This year, we ranked first among securities firms in the wellbeing & premium brand category. For fiscal 2008, Daishin Securities recorded operating revenue of KRW2,823.7 billion and operating expenses of KRW2,723.5 billion. Operating income amounted to KRW100.1 billion. Non-operating income was KRW27.1 billion and non-operating expenses were KRW2.3 billion. We posted pre-tax income of KRW124.9 billion and net income of KRW103.3 billion. We distributed cash dividends of KRW1,000 per share for common stock and Class 2 preferred stock and KRW1,050 for Class 1 preferred stock. In doing so, we upheld our pledge to return wealth to our shareholders while becoming the only major securities company in Korea to pay out cash dividends for eleven consecutive years. Daishin Securities will maintain its profit-oriented approach to maximize

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earnings in fiscal year 2009 and meet our shareholders’ expectations. In addition to the slump in the world economy, we anticipate fiercer competition from Korean and global financial institutions. To respond to new developments in the financial markets and to spearhead change, our business objective for fiscal 2009 is to become a “financial attending doctor offering expert financial services.” Our action plans to realize this goal include strengthening core services, cultivating future growth engines, and promoting a corporate culture based on trust. Harnessing our next-generation IT system introduced last fiscal year, we will strive to boost work efficiency and deliver unique, high quality services. Every effort will be made to ensure the success of new businesses to achieve earnings diversification and a stable profit structure. We will also promote a new investment culture with added emphasis on risk management. Daishin Securities will continue to evolve into a global investment bank that pursues mutual advances with customers and shareholders. We look forward to your continued faith and encouragement as we work towards our vision of becoming the foremost investment bank in Korea.


Chairwoman Auh-Ryung Lee 3. CEO’s Interview Q. What is the future direction of Daishin Securities in this age of the Financial Investment Services and Capital Markets Act (FSCMA)? Our ultimate objective is to build the world’s most trustworthy company that grows together with our clients. Rather than concentrating on simply growing our capital and organization, we have a relentless focus on the fundamentals and on upgrading quality of customer service. Our plan is to complete the transition into a financial services provider with Korea’s leading brand value by the year 2013. 2009 will be the year in which we make the leap as a full-fledged investment bank. Our strategy is to bolster both existing strengths and promising growth areas to sharpen our future competitive edge. To this end, we plan to dramatically enhance our advantage in the retail segment while working to gain a solid foothold for growth in areas such as wealth management, investment banking and principal investment. In the retail segment, our goal is to make all our clients financially happy. We are empowering our sales staff with in-depth financial expertise so they can become a “financial attending doctor” offering totalwealth management solutions. Moreover, we are reinforcing all areas of the retail business by pooling our resources and mapping out new strategies. Compliance is another important area of focus as we endeavor to mitigate risks and increase customer trust. The FSCMA has opened doors for securities firms to broaden their scope of business to areas such as futures and hedge funds. We plan to achieve a stable profit structure by making full preparation before entering the new markets and developing differentiated products. Q. What are your business plans for fiscal 2009? In fiscal year 2008, Daishin Securities posted a drop in earnings from the previous year. But even in an extremely turbulent financial market, our fundamentals remained intact thanks to our proactive approach to risk

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management, and the company is now readying for another leap forward. Daishin’s 2009 management goal is to become a “financial attending doctor offering expert financial services.” To attain this goal, we will deliver total financial services and further improve retail services through companywide sales process innovation. Other 2009 objectives include successful entry into new businesses such as futures and hedge funds to propel future growth, development of new products and services to pursue earnings diversification, and an all-out campaign to increase assets. Daishin Securities remains firmly committed to evolving into a global investment bank by instilling an investment culture that values an inclusive and preemptive approach to risk management. We will also work towards building up our image as a trustworthy company that always puts customers first. Q. Tell us about your efforts to enhance shareholder value. Daishin Securities has always placed priority on maximizing shareholder value. Our principle of returning wealth to shareholders has been represented by our cash dividend payouts. We are also Korea’s only major securities company to distribute cash dividends for eleven years in a row. For fiscal year 2008, Daishin Securities distributed per share cash dividends of KRW 1,000 for common stock, KRW 1,050 for Class 1 preferred stock, and KRW 1,000 for Class 2 preferred stock. Going forward, we will invest more in areas with high growth potential and strengthen our competitiveness in retail operations to ensure that our shares are fairly valued in the market.


President & CEO Chung-Nam Roh

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4. General Corporate Information A. Business Objective

(1) The purposes of the Company shall be to engage in the following businesses:

1. Buying and selling securities;

2. Securities brokerage; 3. Acting as an intermediary or agent for sale or purchase of securities; 4. Acting as an intermediary, arranger or agent with respect to entrustment of a sale or purchase

transaction to be executed on the Stock Market Division or KOSDAQ Market Division of the Korea Exchange or an exchange located in a foreign country which is similar to the Korea Exchange;

5. Securities underwriting; 6. Public offering of outstanding securities; 7. Arranging for a public offering of newly issued or outstanding securities; 8. Extending credit in relation to sale or purchase of securities; 9. Securities savings business; 10. Margin lending; 11. Securities lending and acting as an intermediary for securities lending or borrowing; 12. Securities business in foreign countries; 13. Engaging in business activities described in Items 1 through 4 above with respect to securities

indexes; 14. Evaluating or appraising securities and equity securities; 15. Acting as an intermediary, arranger or agent for corporate mergers and acquisitions; 16. Buying and selling certificates of deposit and acting as an intermediary for sale or purchase of

certificates of deposit; 17. Trustee business for a public offering of bonds; 18. Acting as an agent in relation to securities transactions; 19. Providing advice or assistance in connection with management, restructuring and/or finance of

companies; 20. Acting as an intermediary or providing advisory services for lease, sale or purchase of real

properties owned by customers or clients during the course of conducting the business activities set out in Item 15 or 19 above;

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21. Leasing real properties to others; 22. Renting safe deposit boxes to others; 23. Lending its own securities to institutional investors; 24. Selling lottery tickets and admission tickets as an agent; 25. Providing training regarding securities; 26. Publishing publications and books; 27. Commuter service business, and leasing and selling computer systems or software related to the

securities business; 28. Securities lending and acting as an intermediary, arranger or agent for securities lending

transactions; 29. Underwriting business for securities issued in a manner other than through public offering of new

shares, and acting as an intermediary, arranger or agent for such business; 30. Selling and purchasing claims arising from loans, other transactions related thereto, and acting as

an intermediary, arranger or agent therefor; 31. Safe-keeping securities; 32. Acting as an asset manager or a servicer of a special purpose vehicle under the Act on Asset-

Backed Securitization; 33. Buying and selling foreign payment instruments for customers’ or clients’ exchange of investment

funds, and trading futures to hedge against foreign exchange risks; 34. Exchanging foreign currencies, etc.; 35. Acting as an intermediary for selling, buying, exchanging or lending foreign currencies or

conducting derivatives transactions, and other related businesses; 36. Over-the-counter derivatives transactions, and acting as an intermediary, arranger or agent for such

transactions; 37. Payment guarantee of principal and interest of corporate bonds; 38. Acting as an agent for holding in custody deposits for shares to be publicly offered; 39. Futures business; 40. Investment advisory business, discretionary investment management business, investment

management business, and selling various types of investment information; 41. Public offering or sale of shares of indirect investment companies; 42. Selling indirect investment securities;

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43. Acting as an agent or intermediary for selling insurance products; 44. Retirement pension business; 45.Selling information on appraisal of securities, etc. to the public through publications, books,

electronic documents, etc.; 46. Acting as an intermediary, arranger or agent to cause financial institutions that formed a business

alliance to lend money to customers or clients; 47. Acting as an advertisement agent through publications, books, electronic documents, etc.; 48. Businesses set out as securities firms’ areas of business in the Securities and Exchange Act

(“SEA”) and other relevant laws and regulations; 49. Any and all activities incidental to any of the foregoing.

(2)The Company shall conduct the following businesses after obtaining approvals and authorizations from the relevant agencies and authorities, including the government:

1. Conducting or providing credit investigation and services;

2. Forming an alliance with credit card companies, insurance companies and other financial institutions;

3. Foreign exchange businesses other than those set out in Items 33 through 35 of Paragraph (1) above; 4. Selling, purchasing, and acting as an intermediary or agent for selling or purchasing, derivatives

products; 5. Any and all activities related to investment in venture companies; 6. Electronic finance business; 7. Trust business pursuant to the Trust Business Act; 8. Internet broadcasting business; and 9. Any and all activities incidental to any of the foregoing.

(3) In addition to the businesses set out in Paragraphs (1) and (2) above, the Company may concurrently engage

in other businesses after obtaining approvals and authorizations from the relevant agencies and authorities, including the government.

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B. Total Employee Status (As of March 31st 2009)

Management Sales Others Total Male 403 876 28 1,307

Female 667 154 7 828 Total 1,070 1,030 35 2,135

C. Status of Domestic Branches and Overseas Representative Offices

(As of March 31st 2009) HQ Branches Rep. Offices Sales Office Total

Domestic 1 116 - - 117 Overseas - - 3* - 3

Total 1 116 3 - 120 * Overseas Offices - Tokyo Representative Office 8/F, NAX Bldg., 1-3-2 Shinkawa, Chuo-ku, Tokyo, Japan Tel : 81-3-3551-8088, Fax : 81-3-3551-5533 - Kazakhstan Representative Office Office 29, Nurly Tau 4A 7th, Almaty Business Center, Al-Farabi Avenue, Almaty, Kazakhstan Tel : 7-727-311-0239, Fax : 7-727-311-0240 - Shanghai Representative Office Office 1209-A07, 12/F Shui On Plaza Centre, 333 Huai Hai Zhong Road, Lu Wan District, Shanghai 200021, P.R. China

Tel : 86-21-5116-0740, Fax : 86-21-5116-0742

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D. Organization Chart

General Meeting

of Shareholders

Planning Group

•Public Relations Dept.•Strategic Planning &Coordination Dept.•Financial Management Dept.•Financial ServiceDevelopment Dept.•Treasury Dept.

AdministrationSupport Group

•Personnel Dept.•Human ResourceDevelopment Dept.•General Affairs Dept.•Settlement Service Dept.•Trust Dept.

InformationTechnology Group

•I.S. Planning Dept.•I.S. Operation Dept.•I.S. Development Dept.•Next Generation SystemDept.

Six RegionalHeadquarters

•Dongbu RegionalInstitutional Business Dept.•Seobu RegionalInstitutional Business Dept.•Jungbu RegionalInstitutional Business Dept.

Compliance Officer

•Compliance Dept.

Risk ManagementGroup

•Risk ManagementDept.•Credit Analysis Dept.

Wholesale Group

•Institutional BusinessDept.•International BusinessDept.•Wholesale DerivativesBusiness Dept.•Global BusinessDevelopment Dept.•Two OverseasRepresentative Offices•One Overseas Subsidiary

Corporate Pension &Asset Group

•Corporate Pension &Asset Consulting Dept.•Corporate Pension &Asset Management Dept.•Institutional WealthManagement Business Dept.

Financial Clinic Group

•Total Service Strategy Dept.•Total Service PromotionDept.•VIP Service Dept.•Customer SatisfactionDept.

Logic & PortfolioCenter

• Consulting Lab Dept.• Consulting Clinic Dept.

Audit CommitteeMember

• Auditing Dept.• Legal Support Dept..

Board ofDirectors

Chairman

Vice–Chairman

President(C.E.O)

DeputyPresident

Audit Committee

Secretary Dept.

Innovation Support Dept

Research Center

•Investment Strategy Dept.•Corporate Research Dept

Investment BankingGroup

•Corporate Finance Dept.•Structured Finance Dept.•M&A · InternationalFinance Dept.

Capital Market Group

•Trading Dept.•Fixed Income Dept.•Derivatives Trading Dept.•Derivatives BusinessDept.

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E. Stock information

(1) Type of stocks & total issuance

Types of shares Amount of shares

Capital (Thousand won) Percentage Note

Registered common shares 50,773,400 253,867,000 58.51% 200,000 stock cancellation through

profit Registered

preferred shares 36,000,000 180,000,000 41.49%

Total 86,773,400 433,867,000 100%

(2) Change in capital

Date Types of shares Amount of shares

Amount of capital increase

(Thousand won)

Capital after increase

(Thousand won) Note

1987.7.19 Registered

common shares 8,800,000 44,000,000 Reverse stock split


common shares 4,400,000 22,000,000 66,000,000

Paid-in capital increase

1988.8.4 Registered

preferred shares 6,600,000 33,000,000 99,000,000





1989.3.31

Registered common shares

3,300,000 16,500,000 148,500,000 Stock issue

Registered preferred shares

3,300,000 16,500,000 165,000,000 Capitalization of excess reserves


common shares 3,166,493 15,832,465 180,832,465 Stock dividend

1989.12.9


1,129,240 5,646,200 186,478,665 Paid-in capital

increase Registered


1989.12.12


5,204,267 26,021,335 233,978,665 Stock issue

Registered preferred shares

5,204,267 26,021,335 260,000,000 Capitalization of excess reserves








common shares 1,128,000 5,640,000 287,640,000



common shares 17,258,400 86,292,000 373,932,000



common shares 2,187,000 10,935,000 384,867,000





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5. Parent Company, Subsidiary Company and Consolidated Circumstances. A. Parent Company Status

- none

B. Subsidiary

Subsidiary Relations

Company Address Book Value

(billion KRW)Main business Stake %

Daishin Economic Research Institute

34-8 Youido-dong Youngdungpo-ku,

Seoul, 150-884, Korea 4.95 Service 495,000 99% Research

Daishin Investment Trust Management

34-8 Youido-dong Youngdungpo-ku,

Seoul, 150-884, Korea 39.46

Securities investment trust

& advisory 6,000,000 100% -

Daishin Securities Asia Limited, Hong Kong

28/F, Queen's Road Central 8, Central,

Hong Kong 12.91

Brokerage, advisory

10,000,000 100% -

Pegasus PEF - 3.39 PEF - 26.1%

C. Director’s Concurrent Office Position in Parent Company & Subsidiaries

Position Name Concurrent office Notes

Executive Manager Director Planning Group

Yong-Hyun Cho Daishin Investment Trust Management Independent Auditor

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6. Operating Results & Asset Status for past 3 years A. Operating Results

(For the years ended March 31, 2009, 2008, and 2007) (in thousands of Korean won) 2009 2008 2007

Ⅰ. Operating revenues 2,823,670,244 2,690,484,028 1,033,910,492 Ⅱ. Operating expenses 2,723,541,110 2,466,844,238 912,441,246 Ⅲ. Operating income 100,129,134 223,639,790 121,469,245 Ⅳ. Non-operating income 27,062,390 41,840,120 24,309,899 Ⅴ. Non-operating expenses 2,277,936 9,280,188 6,228,861 Ⅵ. Net income before taxes 124,913,588 256,199,722 139,550,283 Ⅶ. Income tax expense 21,662,244 78,358,876 39,560,680 Ⅷ. Net income 103,251,344 177,840,846 99,989,604

B. Asset Status

( March 31, 2009, 2008, and 2007) (in thousands of Korean won) 2009 2008 2007

Assets

Ⅰ. Cash and deposits 1,381,131,392 1,010,070,660 800,684,214 Ⅱ. Securities 3,,491,341,898 3,075,990,415 2,890,463,819 Ⅲ. Derivatives 366,332,382 491,492,701 215,317,208 Ⅳ. Loans 519,708,930 730,602,182 620,634,923 Ⅴ. Tangible fixed assets 547,306,130 538,849,820 586,667,406 Ⅵ. Other assets 181,568,528 131,771,748 202,573,047

Total assets 6,487,389,264 5,978,777,527 5,316,340,617 Liabilities Ⅰ. Deposits from customers 1,134,342,861 811,393,326 899,291,693 Ⅱ. Borrowings 3,538,146,354 3,235,624,938 2,746,423,723 Ⅲ. Other liabilities 157,281,094 201,470,199 148,890,165

Total liabilities 4,829,770,311 4,248,488,463 3,794,605,581 Stockholder's equity

Ⅰ. Capital stock 434,867,000 434,867,000 384,867,000 Ⅱ. Capital surplus 715,771,295 717,846,169 655,919,845 Ⅲ. Capital adjustments (139,041,646) (78,044,740) (17,098,659)Ⅳ. Accumulated other comprehensive income 61,081,073 62,538,914 5,366,482 Ⅴ. Retained earnings 584,941,229 593,081,721 492,680,368

Total stockholder's equity 1,657,618,952 1,730,289,064 1,521,735,036 Total Liabilities and Stockholder’s equity 6,487,389,263 5,978,777,527 5,316,340,617

C. Financial Stability

FY2008 FY2007 FY2006

Net Capital Ratio 609.8 % 609.8 % 712.9 %

Assets to Liabilities Ratio 127.8% 134.3 % 132.7 %

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7. Risk Management

History of Risk Management at Daishin Securities All companies with a long tradition have overcome crisis at some point in time. Likewise, Daishin Securities has grown over the years by turning crisis into opportunity In 1980, the Korean economy contracted while interest rates soared beyond 30%. Akin to most companies at the time, Daishin Securities suffered a deterioration in earnings amid the harsh operating environment. However, we took advantage of soaring interest rates by investing in bonds. The bond investments generated significant returns and paved the way for our growth in the 1980s. When the KOSPI underwent a correction in 1995 after hitting an unprecedented high in November 1994, we disposed of a large portion of stocks in proprietary accounts and used the proceeds to repay short-term borrowings. When the foreign exchange crisis erupted and stock prices plummeted two years later, we were free of debt and thus, able to ride out the turbulence with relative ease of mind. Furthermore, while our peers focused on selling beneficiary certificates amid the “Buy Korea” rage, we launched our CYBOS home trading system. CYBOS gave us an edge in the online stock trading market and provided strong impetus for growth. When there was a surge in sales of beneficiary certificates (BC) with exposure to Daewoo Group bonds in 1998, Daishin Securities suspended the sales of such BCs. Instead, we concentrated on BCs invested in public bonds. One year later, Daewoo Group succumbed to bankruptcy. That triggered a massive redemption of BCs and our competitors incurred huge losses from Daewoo bonds. In striking contrast, Daishin Securities produced the industry’s best operating results for fiscal 1999 thanks to preemptive risk management. Stimulus measures to prop up the economy after the foreign exchange crisis created a consumption bubble in the early 2000s. As credit card spending ballooned, the proportion of consumption in GNP increased markedly. Fortunately, Daishin Securities refrained from investing in bonds issued by credit card companies and lending institutions. When the credit bubble eventually burst in 2003, credit card bonds plunged. A major Korean business group was even forced to sell off its securities unit. Once again, Daishin was able to sail through the turmoil due to its proactive approach to managing risk. Preemptive and strategic risk management is helping Daishin Securities take the recent global financial turmoil in stride. The subprime mortgage debacle unfolded as several hedge funds went bankrupt in July 2007 and created jitters in international financial markets. The crisis led to the collapse of prominent investment banks such as Lehman Brothers and Bear Stearns, and many financial institutions that had transactions with the insolvent firms suffered losses. However, we actually enjoyed gains from derivatives by signing credit enhancement contracts with global investment banks for OTC derivatives transactions in order to reduce counterparty risk. We increased liquidity during the one-year period from autumn of 2007 until the global financial crisis broke out in 2008. We disposed of real estate worth KRW101.6 billion and issued $129 million in global depository receipts. To respond to potential delinquencies related to the overheating real estate market, we practiced restraint with respect to real estate project financing and recovered investments already made before July 2008. In our proprietary accounts, we vastly reduced exposure to stocks and risky assets. Our bond portfolio mainly comprised safe and liquid bonds such as treasury bonds and stabilization bonds. That strategy led to sizeable profits compared to the extent of our bond holdings due to the government’s rate-cutting measures last year. As indicated above, Daishin Securities has a long tradition of preemptive risk management. Based on our accumulated knowhow in managing risk, we will further evolve as Korea’s leading financial services provider.

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Tighter Risk Management Daishin Securities promotes an investment culture based on preemptive and companywide risk management. Our goal is to establish a total risk management system that enables us to respond effectively to the fast changing financial environment. To strengthen the system of checks and balances among the front-middle-back offices, the Risk Management Department was elevated to Risk Management Group as part of the organizational reshuffling in April 2009. The Credit Analysis Team was upgraded to Credit Analysis Dept. to boost expertise and work efficiency. The Credit Analysis Dept. was launched for several reasons. First, the adoption of the Financial Investment Services and Capital Markets Act (FSCMA) is expected to result in more diverse products and an increase in payment guarantees, loans and principal investment. This calls for more thorough examination before proceeding with investments. There is also a need for more stringent procedures on reviewing loan applications and securities offered as collateral to address the risk of delinquency of unsecured loans due to the financial crisis. Total risk management system To practice tighter risk management for new products and comply with guidelines set by the regulatory agencies following implementation of FSCMA, Daishin Securities launched its next generation total risk management system (TRMS) in May 2009. The main points of TRMS are tighter risk monitoring and companywide risk management. We have set up an early warning mechanism by monitoring the investment limit, VaR limit and sensitivity limit for each product and each unit, and by strengthening the contingency plan indicator reporting function. We have also drawn up a derivative evaluation model to prepare for expected expansion of the derivatives market and subsequent rise in need for more specialized risk management. In terms of credit risk, we are prepared to calculate credit VaR according to the BaselⅡ framework and manage the company’s total exposure. Another unique feature of TRMS is enhanced control over operational risk. The risk of embezzlement, fraud and other similar incidents along with unforeseen system errors exists in all financial institutions. Accordingly, Daishin Securities measures operational risk according to BaselⅡ standards, monitors key risk indicators (KRI), and carries out risk control self-assessments (RCSA) in order to promote the importance of operational risk management throughout the company. 8. Challenges Business Model to Secure Foot hold for Future Growth 2009 is the year Daishin Securities will make the leap as a full-fledged investment bank. At Daishin, our strategy is to bolster both existing strengths and promising growth areas to sharpen our competitive edge. Traditionally, our strong point has been retail. In line with the enforcement of the Financial Investment Services and Capital Markets Act (FSCMA) this year, we plan to further improve retail services through companywide sales process innovation designed to shore up our brand power and strengthen competitiveness. Daishin’s 2009 management goal is to become a “financial attending doctor offering expert financial services.” The financial attending doctor service, which integrates brokerage and asset management, will be our top priority. Going beyond the practice of recommending a specific stock or product, this premier service provides total wealth management solutions that encompass the entire investment process from preliminary investment consultation to follow-up risk management.

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With this in mind, we opened the Logic and Portfolio Center in March 2009. Its key responsibilities are coming up with various scenarios and projections, strategies and products to increase customer value. We are also creating a process manual for refined services and offering training in all areas of finance to enable our employees to conduct effective investment consultations. In the wholesale segment, we plan to complete the companywide total sales system for our corporate clients. To this end, we are in the process of building an organic cooperation system across our entire segments of institutional sales, research, investment banking and pensions. We will further expand our overseas reach in an effort to secure diverse sources of income. Our mid-to-long term goal is to transform into one of Asia’s leading investment banks. We will focus on areas where we can excel in and seek business opportunities in Southeast and Central Asia, regions with high growth potential and where we have the edge. To minimize risks and generate stable returns, we will maintain our strategy of forging alliance with local partners when entering a new market. Compliance is another area of focus as we endeavor to mitigate risks and protect customers. Last year, we proved that preemptive and strategic risk management is vital to survival and profit generation. In order to stay profitable, we need powerful risk management solutions. That holds greater meaning following the introduction of the FSCMA. Our plan is to instill an investment culture that values all-inclusive and proactive approach to risk management. We will continue to reinforce monitoring of new financial products for any vulnerability based on our newly introduced total risk management system. New Business Opportunities The FSCMA has opened the doors for securities firms to expand their scope of business activities. By developing a wide range of financial products and services, securities firms can seek new business opportunities that will provide new momentum for growth. At Daishin Securities, we are awaiting government approval to start the futures business. Once we get the green light, we will launch brokerage and trading services for KRX-listed products such as interest rate futures and currency futures in the second half of the year. Going forward, our plan is to gain a greater edge in derivatives by expanding operations into overseas futures and margin FX. The launch of retail payment services slated for the latter half of 2009 will not only increase customer convenience but help us upgrade our competitiveness. We also plan to diversify our revenue sources by entering such markets as hedge funds, payment guarantee and pension guaranteed loans. Our unparalleled overseas stock trading services will continue as well. Following the first trading service launched for Japanese stocks in February 2008, we are set to provide services in Hong Kong and Chinese stock markets in late 2009. Future plans include offering direct trading access to US stock exchanges to reflect increased merits of investing in major US firms whose stock values have plunged recently and growing interest in commodities (gold and crude oil) and ETFs (Exchange-Traded Fund). We are also looking into introducing a Hong Kong ELW (Equity-Linked Warrant) trading service. Our ultimate goal is to deliver comprehensive overseas investment services by gradually enhancing our presence in the global marketplace with overseas stock, bond and derivative offerings.

16

9. Major Shareholder Structure (as of March 31st, 2009, Common shares basis)

Stakeholder Number of shares Percentage(%)Relation with

Daishin Remark

Hong-Seok Yang and 5 relatives

3,512,964 shares 6.92% Major

Shareholder

Daishin ESOP 3,493,324 shares 6.88% ESOP Treasury stock 5,388,808 shares 10.61% Treasury stock

National Pension Service. 3,321,769 shares 6.54% -

10. Board of Directors and Audit Committee Member Sort Name Position Duty Remark

Full-time Auh-Ryung Lee Chairwoman

Full-time Chung-Nam Roh President & CEO

Full-time Ki-Hoon Kim Audit committee

member Auditing Dept, Legal Support

Dept.

Part-time Young-Ill Koh Outside Director Audit Committee chairman

Part-time Ki-Bae Lee Outside Director

Part-time Sung-Ho Kim Outside Director

Part-time In-Tae Hwang Outside Director Audit Committee member

11. Investment Status in Other Companies - No comments in particular

12. Major Creditor, etc - No comments in particular

13. Important Events Occurred after Company Fiscal Year - Subsidiary Company, Daishin Investment Trust Management estimated the loss incurred from the financial accident to 35.4 billion, and this is to be settled by end of June using reserve funds for debts.

As the largest shareholder, Daishin Securities participated in the right offering of Daishin Investment Trust Management. (Right offering amount : 28 billion)

14. Other Important Circumstances related to Business Operation - No comments in particular

17

II. Financial Report

1. Balance Sheet Daishin Securities Co., Ltd. Non-Consolidated Balance Sheets March 31, 2009 and 2008 (in thousands of Korean won) 2009 2008 Assets Cash and bank deposits ￦ 409,060,038 ￦ 361,222,311Deposits segregated under regulation 972,071,355 648,848,349Trading securities 2,697,372,812 1,976,064,478Available-for-sale securities 248,900,815 244,113,001Equity-method investments 60,713,594 64,197,769Structured securities 433,176,449 755,122,814Derivative assets 366,332,382 491,492,701Loans receivable, net 519,708,931 730,602,182Property and equipment, net 547,306,131 538,849,820Intangible assets, net 30,314,940 12,352,905Accounts receivable, net 34,313,048 14,279,772Accrued revenue, net 40,931,852 28,636,667Advanced payments 11,966,612 7,594,625Guarantee deposits 63,555,539 65,287,449Collective fund for default loss 5,403,190 6,565,910Others 46,261,576 33,546,774

Total assets ￦ 6,487,389,264 ￦ 5,978,777,527

18

(in thousands of Korean won) 2009 2008 Liabilities and Shareholders' Equity Liabilities Deposits from customers ￦ 1,134,342,861 ￦ 811,393,326Borrowings 409,583,235 613,498,183Debentures, net 59,679,998 10,000Securities sold under repurchase

agreements 1,740,559,485 1,223,720,658Securities sold 2,579,222 13,007,866Structured securities sold 1,165,433,853 1,382,751,472Derivative liabilities 160,310,563 2,636,760Accrued severance benefits, net 1,759,474 1,334,621Income taxes payable - 46,266,903Other accounts payable 29,443,514 15,157,455Accrued expenses 15,898,095 19,933,068Guarantee deposits received 65,937,175 71,040,053Deferred income tax liabilities 40,093,889 33,011,641Withholdings 2,633,876 9,257,646Others 1,515,071 5,468,811 Total liabilities 4,829,770,311 4,248,488,463 Commitments and contingencies Shareholders' equity Capital stock Common stock 254,867,000 254,867,000 Preferred stock 180,000,000 180,000,000Capital surplus 715,771,296 717,846,169Capital adjustments (139,041,646) (78,044,740)Accumulated other comprehensive income 61,081,074 62,538,914

Retained earnings 584,941,229 593,081,721 Total shareholders' equity 1,657,618,953 1,730,289,064

Total liabilities and shareholders' equity ￦ 6,487,389,264 ￦ 5,978,777,527

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

19

2. Statement of Income Daishin Securities Co., Ltd. Non-Consolidated Statements of Income For the years ended March 31, 2009 and 2008

(in thousands of Korean won) 2009 2008 Operating revenues Commissions received ￦ 293,114,678 ￦ 431,214,666 Gain on sales of trading securities 104,083,162 108,455,788 Gain on valuation of trading securities 33,372,056 9,275,435

Gain on disposal of available-for-sale securities 2,429,515 9,310,161

Gain on valuation of securities sold - 631,233 Gain on structured securities transactions 38,755,058 76,217,703

Gain on structured securities sold transactions 1,676,233,143 943,923,599

Gain on derivative transactions 410,669,648 898,777,264 Interest income 209,107,414 161,519,068 Dividend income 4,322,427 3,549,639

Gain on valuation of deposits segregated under regulation 39,746,681 40,205,358

Reversal of allowance for doubtful accounts 4,166,517 5,856,758 Others 7,669,945 1,547,356 2,823,670,244 2,690,484,028Operating expenses Commissions expenses 19,685,357 29,394,608 Loss on sales of trading securities 138,521,575 95,616,005 Loss on valuation of trading securities 4,420,568 4,219,166

Loss on disposal of available-for-sale securities 802,286 170,263

Loss on impairment of available-for-sale securities 6,029,315 333,697

Loss on valuation of securities sold 263,882 51,326 Loss on structured securities transactions 225,828,176 105,175,500

Loss on structured securities sold transactions 200,001,803 941,149,877

Loss on derivatives transactions 1,681,569,405 882,198,109 Interest expense 130,728,212 91,001,149 General and administrative expenses 296,013,906 314,705,473 Bad debts expense 19,270,143 2,798,526 Others 406,482 30,539 2,723,541,110 2,466,844,238 Operating income 100,129,134 223,639,790

20

(in thousands of Korean won) 2009 2008

Non-operating income Office rental income ￦ 13,479,206 ￦ 13,142,941 Gain on disposal of property and equipment 7,330 24,946,210

Gain on valuation of equity-method investments 298,097 598,969

Others 13,277,757 3,152,000 27,062,390 41,840,120Non-operating expenses Loss on disposal of property and equipment 253,963 2,263,350 Donation 1,221,943 5,525,912

Loss on valuation of equity-method investments 793,021 43,240

Others 9,009 1,447,686 2,277,936 9,280,188 Net income before income taxes 124,913,588 256,199,722Income tax expense 21,662,244 78,358,876Net income ￦ 103,251,344 ￦ 177,840,846

￦ 1,317 ￦ 2,043Basic earnings per share (in Korean won)

Diluted earnings per share (in Korean won) ￦ 1,317 ￦ 2,043


21

3. Statement of Appropriations of Retained Earnings Daishin Securities Co., Ltd. Non-Consolidated Statements of Appropriations of Retained Earnings For the years ended March 31, 2009 and 2008 (Dates of appropriations: May 29, 2009 and May 30, 2008 For the years ended March 31, 2009 and 2008, respectively) (in thousands of Korean won) 2009 2008 Retained earnings before appropriations Unappropriated retained earnings carried over from prior year ￦ 23,703,252 ￦ 37,858,321Net income 103,251,345 177,840,846

126,954,597 215,699,167 Transfer from reserve for loss on futures transactions 120,628 55,363 Appropriations (Note 18) Legal reserves 8,007,449 10,616,186Reserve for loss on futures transactions - 43,256Other capital adjustments - 5,229,977Dividends 80,074,489 106,161,859Voluntary reserves 10,000,000 70,000,000

98,081,938 192,051,278

Unappropriated retained earnings carried forward to the subsequent year ￦ 28,993,287 ￦ 23,703,252


22

4. Statement of Changes in Shareholder’s Equity Daishin Securities Co., Ltd. Non-Consolidated Statements of Changes in Shareholders' Equity For the years ended March 31, 2009 and 2008


23

5. Statement of Cash Flows Daishin Securities Co., Ltd. Non-Consolidated Statements of Cash Flows For the years ended March 31, 2009 and 2008 (in thousands of Korean won) 2009 2008 Cash flows from operating activities Net income ￦ 103,251,344 ￦ 177,840,846Adjustments to reconcile net income to net cash provided by operating activities Loss (Gain) on disposal of trading securities, net 34,438,413 (12,839,783) Gain on valuation of trading securities, net (28,951,488) (5,056,269) Loss on structured securities transactions, net 187,073,118 28,957,798 Gain on structured securities sold transactions, net (1,476,231,340) (2,773,722) Loss (Gain) on derivatives transactions, net 1,270,899,757 (16,579,155) Loss (Gain) on valuation of securities sold , net 263,882 (579,907) Bad debts expense 19,270,143 2,798,526 Depreciation 23,395,755 20,546,739 Loss(Gain) on disposal of property and equipment, net 246,633 (22,682,860) Loss on impairment of available-for-sale securities 6,029,315 333,697 Gain on disposal of available-for-sale securities, net (1,627,229) (9,139,898) Provision for severance benefits 1,578,846 1,283,391

Loss (Gain) on valuation of equity-method investments, net 494,924 (555,729)

Reversal of allowance for doubtful accounts (4,166,517) (5,856,758)

Gain on valuation of deposits segregated under

regulation (39,746,681) (40,205,358) Others, net 7,733,317 12,425,879 103,952,192 127,917,437

24

(in thousands of Korean won) 2009 2008 Changes in operating assets and liabilities Deposits segregated under regulation ￦ (283,476,325) ￦ 105,421,819 Trading securities (726,795,259) (487,684,259) Structured securities 131,773,660 448,452,457 Derivative assets (1,149,138,387) (259,853,692) Loans receivable 215,059,768 (104,351,877) Accounts receivable (24,727,539) 83,805,231 Accrued revenue (10,177,190) (532,105) Advanced payments (4,371,987) 10,056,492 Collective fund for default loss 1,162,720 387,575 Derivative liabilities 162,323,277 2,609,644 Deposits from customers 322,951,998 (84,216,574) Securities sold (10,692,527) 10,186,300 Structured securities sold 1,258,913,721 (99,455,650) Income taxes payable (45,479,882) 37,899,723 Other accounts payable 14,286,058 (9,370,153) Accrued expenses (4,034,973) 7,660,884 Withholdings (6,623,770) 3,312,238 Deferred income tax 13,575,909 (1,538,727)

Decrease in severance insurance plan deposits 2,811,582 757,404

Payment of retirement trust 55,093 103,118 Payment of severance benefits (318,787) (2,285,130) Securities sold under repurchase agreements 516,838,827 327,573,722 Others, net (12,363,412) (2,487,718) 361,552,575 (13,549,278) Net cash provided by operating activities 465,504,767 114,368,159 Cash flows from investing activities Decrease in time deposits, net 1,000,000 -Decrease (Increase) in guarantee deposits, net 1,731,910 (9,396,244)Disposal of property and equipment 14,270 101,743,961Acquisition of property and equipment (32,112,969) (51,790,254)Acquisition of intangible assets (17,962,035) (12,352,905)Disposal of available-for-sale-securities 38,054,397 75,970,853Acquisition of available-for-sale-securities (72,320,670) (127,203,070)Decrease in equity-method investments 9,440,900 -Increase in equity-method investments (3,491,723) (18,891,029)Others (8,021,261) (3,963,163) Net cash used in investing activities (83,667,181) (45,881,851)

25

(in thousands of Korean won) 2009 2008 Cash flows from financing activities Increase (Decrease) in borrowings, net ￦ (203,914,947) ￦ 251,898,183Issuance of shares - 112,850,436Disposal of treasury shares - 5,887,500Acquisition of treasury shares (77,503,777) (79,876,528)Decrease in guarantee deposits received, net (5,102,877) (7,521,135)Issuance of debentures 59,678,900 -Retirement of debentures (10,000) -Payments of dividends (106,147,158) (77,439,494)Others - 9,198

Net cash provided by (used in) financing activities (332,999,859) 205,808,160

Net increase in cash and cash equivalents 48,837,727 274,294,468 Cash and cash equivalents Beginning of year 360,183,811 85,889,343End of year ￦ 409,021,538 ￦ 360,183,811


26

III. Audit Report 1. Audit Report by the Audit Committee

The Audit Committee has reviewed and audited the accounting principles and operations for 48th fiscal year (1st April 2008 ~ 31st March 2009), and it has made the audit report as follows. (1) Audit method summary The Audit Committee has reviewed the accounting books and related documents, as well as the financial statements and other detailed documents for the accounting audit, and the committee has made comparison check, on-the-spot inspection, witness, reference check and other appropriate auditing measures if it was found necessary. In regards to the operations audit, the Audit Committee has received management report from the

Directors and it has reviewed the related documents and details in an appropriate manner when the committee found it necessary for attending the Board of Directors meeting or other important meetings,

(2) Details on the balance sheet & income statement The balance sheet and income statement fairly represents the Company’s assets and profit/loss conditions appropriately in accordance to the Korean regulations and the Company’s statute. (3) Details on the statement of appropriations of retained earnings The Company’s statement of appropriations of retained earnings has been prepared appropriately in accordance to the Korean regulations and the Company’s statute. (4) Details on the business report The Company’s business report accurately represents the Company’s condition.

11th May 2009

Daishin Securities Co.,Ltd.

Chairman of Audit Committee Young-Ill Koh

27

2. Report of Independent Auditors (Non-consolidated Financial Statements)

To the Board of Directors and Shareholders of Daishin Securities Co., Ltd. We have audited the accompanying non-consolidated balance sheets of Daishin Securities Co., Ltd. (the “Company”) as of March 31, 2009 and 2008, and the related non-consolidated statements of income, appropriations of retained earnings, changes in shareholders’ equity and cash flows for the years then ended, expressed in Korean won. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of Daishin Securities Co., Ltd. as of March 31, 2009 and 2008, and the results of its operations, the changes in its retained earnings, the changes in its shareholders’ equity and its cash flows for the years then ended in conformity with accounting principles generally accepted in the Republic of Korea. Accounting principles and auditing standards and their application in practice vary among countries. The accompanying non-consolidated financial statements are not intended to present the financial position, results of operations, changes in shareholders’ equity and cash flows in conformity with accounting principles and practices generally accepted in countries and jurisdictions other than the Republic of Korea. In addition, the procedures and practices used in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying non-consolidated financial statements are for use by those who are informed about Korean accounting principles or auditing standards and their application in practice. Seoul, Korea May 11, 2009

This report is effective as of May 11, 2009, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying non-consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any

28

IV. Appendix

1. Management’s Discussion and Analysis Overview In the aftermath of the global credit crisis, stock markets and asset values including raw materials and real estate worldwide corrected significantly and led to the steep downturn of the real economy. Although US sub-prime mortgage issues surfaced in 2007, the world economy continued to grow thanks to high growth in emerging countries like China and India. However, risks in the financial markets resurfaced following the rating downgrade of monoline insurers and bankruptcy of Bear Stearns and peaked with the bankruptcy of Lehman Brothers. Spreading to the rest of the world, the credit turmoil has triggered a potentially dragged out global recession. The Korean economy was not spared from the phenomenon and saw a sharp decline in the value of the won, weakening exports, sluggish domestic demand, shrinking investments and a slowdown in corporate earnings. The dollar-based MSCI global index declined 43.5% in 2008 and retreated to levels recorded five years ago. The MSCI developed market index plummeted 42.1% and the MSCI emerging market index, which received investors’ attention for the past few years, retreated 54.5%. The Korean stock market also experienced marked losses. After peaking at 2,064.85 on October 31, 2007, KOSPI dropped below 1,000 in October 2008. It gained back some of the lost ground to reach 1,206.26 in March 31, 2009, which was still down by 29.2% from a year earlier. KOSDAQ fell 34.6% year-on-year to 421.44. Uncertainties in the capital market triggered a massive sell-off by foreign investors as they reduced their exposure to the Korean stock market, and foreign net selling amounted to KRW 21 trillion in FY2008. The average daily stock trading turnover dropped 19.9% from KRW 7,972.3 billion in FY2007 to KRW 6,385.7 billion in FY2008. On the other hand, the fluctuating stock market led to a respective 13.6% and 24.1% increase in the average daily transaction value of futures and options. Fund balance reached KRW 361 trillion at the end of 2008 as a result of steady influx of money into installment funds amid the absence of massive redemptions despite unstable financial market conditions in Korea and overseas. Furthermore, steep correction of the stock market led to opportunities for institutional and retail investors to buy into undervalued stocks, and the Korean stock market stabilized earlier than expected with the higher liquidity. Operating revenue in FY2008 increased 5.0% compared to the previous year to KRW 2,823.7 billion thanks to growing revenues from marketable securities and interest income, although lower stock trading turnover and reduced retail trading depressed commission income. However, operating income dropped 55.2% to KRW 100.1 billion due to deteriorating revenue from brokerage and financial services amid the bearish stock markets and greater provisioning related to preemptive risk management efforts. Pre-tax income and net income declined to KRW 124.9 billion (down51.2%) and KRW 103.3 billion (down 41.9%), respectively. Although FY2008 results were down compared to the previous year, Daishin Securities still managed to maintain stable earnings despite the credit crisis worldwide. As of the end of March 2009, total assets stood at KRW 6,487.4 billion, up by 8.7% from a year earlier. We reshuffled our asset portfolio to 1) increase our position in less risky assets such as cash/deposits, government bonds, and monetary stabilization bonds; and 2) reduce our exposure to assets with greater risk such as derivatives, structured securities and loans. In doing so, we lowered the risks associated with asset management and became better positioned to cope with uncertainties in the capital markets. As a result, our net capital ratio and assets to liabilities ratio stood at 844.3% and 127.8%, respectively, at the end of FY2008, which were far above the limits set by the Financial Supervisory Service. Moreover, Daishin Securities is the only major securities firm in Korea to pay out cash dividends for eleven consecutive years. We strive to achieve continued enhancement of shareholders’ value as evidenced by the 5.4% dividend yield on common stock for FY2008, which is the highest level in the industry. Analysis of Operating Pe rformance Net Operating Revenues Although market liquidity and fundamentals of the economy weakened with the global credit crunch during 2008, Daishin Securities was able to create a steady stream of revenues thanks to preemptive and strategic risk management.

29

Accordingly, we recorded net operating revenue of KRW 396.1 billion for FY2008. That represented a decline by 26.4% year-on-year but was higher than the figure posted in FY2006. This is an indication that Daishin Securities has established a business portfolio and growth platform that can produce solid performance even in difficult times. Net revenue from brokerage fell 29.5% year-on-year to KRW 290.3 billion owing to the decrease of average daily trading turnover and a weaker presence of retail investors in the stock market. Net revenue from financial services recorded a 29.7% year-on-year drop to KRW 37.2 billion as the bearish market forced a decrease in broker loans (unsecured loans and loans backed by securities) by 37.3%. On the other hand, as the result of stronger marketing activities aimed at risk-averse clients, the number of cash management accounts (CMA) accounts grew 31.3% year-on-year to 205,817, and money deposited in CMAs rose by 25.8% year-on-year to KRW 1,165.3 billion. Turning to the Capital Market Group, our proprietary trading desk reduced the weighting of high-risk assets such as equities in its portfolio and focused on safer assets with high liquidity such as government bonds and monetary stabilization bonds. Accordingly, net operating revenue from capital market operations amounted to KRW 63.4 billion (up 51.4% year-on-year) in FY2008, helped by the government’s relaxed monetary policy. . Net Operating Revenues (KRW billion) FY06 FY07 FY08 %YoY

Brokerage Financial service (loan service) Wealth management Capital markets (proprietary trading income) Investment Others

282.8 30.4 27.5 22.2 5.0

15.4

411.6 52.8 19.0 41.9 7.5 5.6

290.3 37.2 14.5 63.4 4.8

-14.0

-29.5 -29.7 -23.8 51.4 -35.7

-

Net operating revenues 383.3 538.3 396.1 -29.4

Breakdown of Net Operating Revenues (%) FY06 FY07 FY08

Brokerage Financial service (loan service) Wealth management Capital markets (proprietary trading income) Investment banking

76.9 8.3 7.5 6.0 1.4

77.3 9.9 3.6 7.9 1.4

70.8 9.1 3.5

15.5 1.2

Total 100.0 100.0 100.0

Balance of beneficiary certificates (BCs) sold recorded a 9.5% year-on-year increase to KRW 2,726.9 billion despite the weak equity market. As customers became more risk-averse, funds were concentrated on safer vehicles like MMF. While the balance of MMF and equity-type BCs sold increased by 161.0% and 7.9% year-on-year to KRW 1,076.6 billion and KRW 385.9 billion respectively, balance of bond-type and hybrid-type BCs sold decreased 53.7% and 4.2% to KRW 312.5 billion and KRW 287.1 billion, respectively. Balance of overseas and derivatives fund BCs was down by 10.6% at KRW 664.9 billion. Commission income from sales of BCs, despite the increase in balance sold, decreased 17.1% to KRW 8 billion owing to lower commission rates.

30

Balance of Beneficiary Certificates (KRW billion) FY06 FY07 FY08 %YoY

Beneficiary certificates (year-end) MMF Bond-type Hybrid-type Equity-type Others 1)

2,136.7 290.7 786.7 576.8 166.3 316.2

2,498.4 412.5 675.5 299.8 357.5 744.0

2,726.9 1,076.6 312.5 287.1 385.9 664.9

9.5 161.0 -53.7 -4.2 7.9

-10.6

BC commission income 6.0 9.6 8.0 -17.1 1) Others = overseas fund + derivatives fund + others Interest-earning assets comprised mainly of bonds and loans which offer relatively high stability and profitability. The loans (margin to customers, loans for stock purchase, loans secured by securities) mostly have stocks as collateral. As the loan to collateral ratio is monitored real-time, our portfolio has relatively low risk and high return. Net interest income in FY2008 grew 6.7% to KRW 118.1 billion despite lower market interest rates. Net Interest Income (KRW billion) FY06 FY07 FY08 %YoY

Interest income Interest on bonds Interest on loans Interest on deposits Interest on funds managed Others

Interest expense

135.6 55.1 30.7 34.4 4.8

10.6 45.3

201.7 86.4 61.8 41.5 9.2 2.9

91.0

248.9 128.5 46.3 41.1 28.7 4.3

130.7

23.4 48.7 -25.1 -1.0

212.0 48.3 43.7

Net operating income 90.3 110.7 118.1 6.7

* Interest income includes gain on valuation of deposits segregated under regulation The Capital Market Group recorded a KRW 63.4 billion gain in FY2008, a 51.4% improvement over the FY2007 figure. The proprietary trading desk primarily invested in safe and liquid monetary stabilization bonds and government bonds, and benefited from the drop in interest rates following the Korean government’s monetary loosening policy, which resulted in bond trading profits of KRW 72.3 billion. On the other hand, equities trading produced a loss of KRW 7.2 billion due to the sharp fall in stock prices despite a conservative investment strategy and reduction in the weight of higher-risk equities. Daishin Securities continues in its endeavors to improve its propretary trading profits by diversifying away from equities and bonds and pursuing alternative investments and principal investments. General and Administrative Expenses General and administrative (G&A) expenses for FY2008 decreased 5.9% year-on-year to KRW 296.0 billion. Wages, which account for around 60% of G&A expenses, were down 9.6% to KRW 180 billion. This was despite the inaugural launch of ESOP in March 2009, resulting in compensatory stock award of KRW 8.6 billion, and a performance bonus of KRW 3 billion to management and research personnel. Daishin Securities maintains the discretionary portion of wages at about 50% in order to flexibly respond to stock market conditions. Through cost control initiatives, the IT system operating expenses and advertising expenses were cut by 4.0% and 34.3% to KRW 22.5 billion and KRW 5.6 billion, respectively. Rent and depreciation expense increased 21.2% and 13.9% to KRW 6.9 billion and KRW 23.4 billion respectively due to extension of our branch network as part of efforts to reinforce retail brokerage and wealth management services.

31

G&A Expenses (KRW billion) FY06 FY07 FY08 %YoY

Salaries & employee benefits IT system operating expenses Rent Miscellaneous commissions Advertising expenses Depreciation expenses Others

156.4 22.3 4.9

15.8 10.4 20.0 32.1

199.1 23.5 5.7

18.4 8.5

20.5 39.0

180.0 22.5 6.9

20.7 5.6

23.4 36.9

-9.6 -4.0 21.2 12.3 -34.3 13.9 -5.3

G&A expenses 261.9 314.7 296.0 -5.9

Breakdown of G&A Expenses (%) FY06 FY07 FY08

Salaries & employee benefits IT system operating expenses Rent Miscellaneous commissions Advertising expenses Depreciation expenses Others

59.7 8.5 1.9 6.0 4.0 7.6

12.3

63.3 7.5 1.8 5.8 2.7 6.5

12.4

60.8 7.6 2.3 7.0 1.9 7.9

12.5

Total 100.0 100.0 100.0

Profitability and Shareholder Value The downturn in the Korean equity markets following the global financial turmoil adversely affected our profitability. Operating income fell 55.2% year-on-year to KRW 100.1 billion in FY2008 and the operating income margin declined for the second consecutive year. The margin erosion is largely explained by the fact that stock valuation gains stemming from greater issuance of ELS were recognized as operating revenue. The reported operating revenue is overstated relative to net operating revenue since stock valuation gains from ELS issuance are largely offset by matching stock valuation losses from hedging. Accordingly, actual operating profitability is assessed to be higher than the accountingbased figure. The ability to generate KRW 100.1 billion in operating income in a bearish market is a reflection of our solid earning structure. Operating Profitability (KRW billion) FY06 FY07 FY08 %YoY

Operating revenues Operating income

1,033.9 121.5

2,690.5 223.6

2,823.7 100.1

5.0 -55.2

Operating income margin (%) 11.7 8.3 3.5 -4.8%p

Daishin Securities continues with efforts to improve overall profitability by boosting the net non-operating income. In FY2008, we slashed our non-operating expenses by 75.5% year-on-year. Despite a decrease in absolute terms, net non-operating income accounted for 20% of pre-tax income, which is a testament to the effective operations at Daishin.

32

Non-operating Balance (KRW billion) FY06 FY07 FY08 %YoY

Non-operating income Non-operating expenses

24.3 6.2

41.8 9.3

27.1 2.3

-35.3 -75.5

Net Non-operating income 18.1 32.6 24.8 -24.0

The equity market downslide triggered by the global financial crisis put a crimp on bottom-line earnings. FY2008 pre-tax income dropped 51.2% year-on-year to KRW 124.9 billion, while net income recorded a 41.9% drop to KRW 103.3 billion. On the other hand, we conducted a stock buyback as part of efforts to stabilize the share price and the compensatory stock award program, which in turn lowered the weighted average number of outstanding common stocks in FY2008 by 7.2% to 45,791,649. Thus, earnings per share for common stock after subtracting preferred stock dividends stood at KRW 1,317 in FY2008, a 35.5% decrease from the prior year. Net Income (KRW billion, %) FY06 FY07 FY08 %YoY

Net income Net income margin ROE

100.0 9.7 6.6

177.8 6.6

10.3

103.3 3.7 6.2

-41.9 -3.0%p -4.1%p

Daishin Securities carries out various activities to maximize shareholder value. As part of our commitment to returning value to shareholders, we have paid out cash dividends for eleven consecutive years, the first major securities firm to do so in Korea. For FY2008, we distributed dividend per share (DPS) of KRW 1,000 for common stock, KRW 1,050 for class 1 preferred stock, and KRW 1,000 for class 2 preferred stock. Although total dividends declined relative to last year, the payout ratio improved to 77.6%. The dividend yield was at the highest levels in the industry, reaching 5.4% for common stock, 12.9% for class 1 preferred stock, and 13.6% for class 2 preferred stock. Analysis of Financial Conditions Assets The global financial crisis and enforcement of the Financial Investment Services and Capital Markets Act has intensified competitive pressure in the Korean brokerage market. To become the best financial service provider in tough market conditions, Daishin Securities has focused on practicing comprehensive and preemptive risk management and fostering total wealth management services, rather than simply pursuing volume growth. As of the end of March 2009, total assets stood at KRW 6,487.4 billion, up by 8.5% from a year earlier. Our asset portfolio is concentrated in low-risk assets such as cash/deposits, government bonds, and monetary stabilization bonds. Cash and deposits grew 36.7% year-on-year to KRW 1,381.1 billion while the balance of securities, comprising mostly low-risk and liquid public bonds, climbed 13.5% year-on-year to KRW 3,491.3 billion. The proportion of assets with greater risk such as derivatives, structured securities and loans were reduced as part of enhanced risk management to better cope with financial market uncertainty. The balance of derivative products and loans dropped to KRW 366.3 billion (-25.5%) and KRW 519.7 billion (-28.9%), respectively.

33

Assets Portfolio (KRW billion) FY06 FY07 FY08 %YoY

Cash & deposits Securities Derivative assets Loans receivable, net Property and equipment, net Others

800.7 2,890.5 215.3 620.3 586.7 202.6

1,010.1 3,076.0 491.5 730.6 538.8 131.8

1,381.1 3,491.3 366.3 519.7 547.3 181.6

36.7 13.5 -25.5 -28.9 1.6

37.8

Total Assets 5,316.3 5,978.8 6,487.4 8.5

Assets Breakdown (%) FY06 FY07 FY08 Cash & deposits Securities Derivative assets Loans receivable, net Property and equipment, net Others

15.1 54.4 4.0

11.7 11.0 3.8

16.9 51.5 8.2

12.2 8.9 2.2

21.3 53.8 5.6 8.0 8.4 2.8

Total 100.0 100.0 100.0

Liabilities and Shareholders’ Equity In line with the growth in assets, liabilities went up 13.7% to KRW 4,829.8 billion, with a particularly large increase in customer deposits. With the government’s economic stimulus measures in motion, market liquidity surged during the first quarter of 2009 and stability returned to the stock market. As a result, customer deposits at end-March 2009 jumped 39.8% from a year earlier to KRW1,134.3 billion. Borrowings rose by 9.3% year-on-year to KRW 3,538.1 billion due to the growing tendency of market participants to invest short-term and the resultant surge in RP (repurchase agreement) stemming from the growth of CMA holders, which offset the impact of the decline in call money, loans and structured securities. Liabilities (KRW billion) FY06 FY07 FY08 %YoY

Deposits from customers Borrowings and securities sold Other liabilities

899.3

2,746.4 148.9

811.4 3,235.6 201.5

1,134.3 3,538.1 157.3

39.8 9.3

-21.9

Total Liabilities 3,794.6 4,248.5 4,829.8 13.7

Liabilities Breakdown (%) FY06 FY07 FY08

Deposits from customers Borrowings and securities sold Other liabilities

23.7 72.4 3.9

19.1 76.2 4.7

23.5 73.3 3.3

Total Liabilities 100.0 100.0 100.0

In November 2007, Daishin Securities became the first Korean securities firm to successfully issue global depository shares (GDS) on the London Stock Exchange. Consequently, we raised US$ 129 million in capital and maintained a stable financial structure during the global financial crisis. Following the cash dividend

34

payment of KRW 106.2 billion in FY2007, we decided to pay out cash dividends in FY2008 worth KRW 80.1 billion and became the only securities firm in Korea to distribute cash dividends for eleven years in a row. Also, continuing with our efforts to return value to shareholders, Daishin Securities bought back 3,000,000 common and 2,500,000 preferred shares worth KRW 77.5 billion during FY2008. Despite the tough market conditions, Daishin Securities reported net income of KRW 103.3 billion. But owing to dividend payments and share buybacks, shareholders’ equity at the end of March 2009 stood at KRW 1,657.6 billion, down by 4.2% year-on-year. Shareholders’ Equity (KRW billion) FY06 FY07 FY08 %YoY

Capital stock Capital surplus Capital adjustments Accumulated other comprehensive income Retained earnings

384.9 655.9 -17.1 5.4

492.7

434.9 717.8 -78.0 62.5

593.1

434.9 715.8 -139.0 61.1 584.9

0.0 -0.3

- -2.3 -1.4

Total shareholders’ equity 1,521.7 1,730.3 1,657.6 -4.2

Financial Soundness To realize its future vision of becoming a “trustworthy company that grows with clients” and a “financial attending doctor offering expert financial services,” we are building a stable and diversified earnings structure while maintaining financial soundness and a strong balance sheet. The net capital ratio of Daishin Securities surged 234.5%p to 844.3% at the end of FY2008. This figure is far above the 300% limit set by the Financial Supervisory Service for companies that deal with OTC derivatives. Meanwhile, substandard or below loans grew 14.4% from a year earlier to KRW 139.2 billion as a result of the global financial crisis and deterioration in the Korean capital market and real economy. The coverage ratio for such loans edged down year-on-year to 94.0%. The assets to liabilities ratio stood at 127.8%, remaining above the limit set by the Financial Supervisory Service. Asset Quality (%) FY06 FY07 FY08 Change

Net Capital ratio Coverage Ratio Assets-to-liabilities ratio

712.9 97.4

132.7

609.8 95.3 134.3

844.3 94.0

127.8

234.5%p -1.3%p -6.5%p

2009 Management Plan and Risk Management With the global economic slowdown expected to persist and enforcement of the Financial Investment Services and Capital Markets Act, Daishin Securities anticipates heightened competition among Korean and foreign financial institutions in FY2009. To overcome the difficulties ahead, we will solidify our presence in retail brokerage, our traditional area of strength, and nurture other platforms such as wealth management, investment banking and principal investment for future growth. We are endeavoring to strengthen our earnings base and diversify our source of income by seeking new opportunities, such as futures brokerage and the hedge fund business, and by offering differentiated financial products. We also plan to establish a comprehensive risk management system to efficiently counter drastic changes in the financial environment. We upgraded the Risk Management Department into the Risk Management Group in April 2009 to improve the system of mutual checks and balances and to boost cooperation between the sales and support divisions. The Credit Analysis Team was upgraded to Credit Analysis Dept. to boost expertise and work efficiency.

35

Based on its long tradition and accumulated experience coupled with preemptive and strategic risk management, Daishin Securities will evolve into Korea’s leading investment bank. 2. Report on Internal Accounting Control System A. Report of independent accounts review of internal accounting control system To the President of Daishin Securities Co., Ltd. We have reviewed the accompanying management’s report on the operations of the Internal Accounting Control System (“IACS”) of Daishin Securities Co., Ltd. (the “Company”) as of March 31, 2009. The Company’s management is responsible for designing and operating IACS and for its assessment of the effectiveness of IACS. Our responsibility is to review the management’s report on the operations of the IACS and issue a report based on our review. The management’s report on the operations of the IACS of the Company states that “based on its assessment of the operations of the IACS as of March 31, 2009, the Company’s IACS has been designed and is operating effectively as of March 31, 2009 in all material respects, in accordance with the IACS standards established by the Internal Accounting Control System Operations Committee (IACSOC) of the Korea Listed Companies Association.” Our review was conducted in accordance with the IACS review standards established by the Korean Institute of Certified Public Accountants. Those standards require that we plan and perform, in all material respects, the review of management’s report on the operations of the IACS to obtain a lower level of assurance than an audit. A review is to obtain an understanding of a company’s IACS and consists principally of inquiries of management and, when deemed necessary, a limited inspection of underlying documents, which is substantially less in scope than an audit. A company’s IACS is a system to monitor and operate those policies and procedures designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the Republic of Korea. Because of its inherent limitations, IACS may not prevent or detect a material misstatement of the financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on our review, nothing has come to our attention that causes us to believe that management’s report on the operations of the IACS, referred to above, is not presented fairly, in all material respects, in accordance with the IACS standards established by IACSOC. Our review is based on the Company’s IACS as of March 31, 2009, and we did not review management’s assessment of its IACS subsequent to March 31, 2009. This report has been prepared pursuant to the Acts on External Audit for Stock Companies in Korea and may not be appropriate for other purposes or for other users. May 11, 2009

36

B. Report of independent accounts review of internal accounting control system To the Board of Directors and Audit Committee of Daishin Securities Co., Ltd. I, as the Internal Accounting Control Officer (“IACO”) of Daishin Securities Co. Ltd. (“the Company”), assessed the status of the design and operations of the Company’s internal accounting control system (“IACS”) for the year ended March 31, 2009. The Company’s management including the IACO is responsible for designing and operating the IACS. I, as the IACO, assessed whether the IACS has been effectively designed and is operating to prevent and detect any error or fraud which may cause misstatements to the financial statements, for the purpose of establishing the reliability of financial reporting and the preparation of financial statements for external purposes. I, as the IACO, applied the IACS standard to assess the design and operations of the IACS. Based on the assessment on the operations of the IACS, in all material respects, the design and operations of the Company’s IACS were effective as of March 31, 2009, in accordance with the IACS standards. April 22, 2009

Yong-Hyun Cho Internal Accounting Control System Officer

Chung-Nam Roh President and Chief Executive Officer

7

V. Consolidated Financial Statements

Daishin Securities Co., Ltd. and Subsidiaries Consolidated Financial Statements March 31, 2009 and 2008

Daishin Securities Co., Ltd. and Subsidiaries Index March 31, 2009 and 2008

7

Pages Report of Independent Auditors .................................................................... 1 - 2 Consolidated Financial Statements Balance Sheets ................................................................................................ 3 - 4 Statements of Income ....................................................................................... 5 - 6 Statements of Changes in Shareholders’ Equity .............................................. 7 - 8 Statements of Cash Flows ................................................................................ 9 - 11 Notes to the Consolidated Financial Statements .............................................. 12 - 50

Samil PricewaterhouseCoopers is the Korean member firm of PricewaterhouseCoopers. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity

1

Report of Independent Auditors

To the Board of Directors and Shareholders of Daishin Securities Co., Ltd. We have audited the accompanying consolidated balance sheets of Daishin Securities Co., Ltd. and its subsidiaries (collectively referred to as the “Company”) as of March 31, 2009 and 2008, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended, expressed in Korean won. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Daishin Investment Trust Management Co., Ltd. and Daishin Securities Asia Ltd., whose financial statements reflect combined total assets representing 0.81% and 1.00%, respectively, of the consolidated total assets as of March 31, 2009 and 2008, respectively, and combined total revenues representing 0.25% and 0.22%, respectively, of the consolidated total revenues for the years then ended, respectively. Those statements were audited by other auditors whose reports thereon has been furnished us, and our opinion expressed herein, insofar as it relates to the amounts included for Daishin Investment Trust Management Co., Ltd. and Daishin Securities Asia Ltd., is based solely on the reports of the other auditors. 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.

www.samil.com LS Youngsan Tower Building 191 Hangangno 2-ga, Yongsan-gu Seoul 140-702, KOREA (Yongsan P.O. Box 266, 140-600)

A member firm of

2

In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements as of and for the year ended March 31, 2009 and 2008, referred to above present fairly, in all material respects, the financial position of Daishin Securities Co., Ltd. and its subsidiaries as of March 31, 2009 and 2008, and the results of their operations, the changes in its shareholders’ equity and their cash flows for the years then ended in conformity with accounting principles generally accepted in the Republic of Korea. Accounting principles and auditing standards and their application in practice vary among countries. The accompanying consolidated financial statements are not intended to present the financial position, results of operations, changes in shareholders’ equity and cash flows in conformity with accounting principles and practices generally accepted in countries and jurisdictions other than the Republic of Korea. In addition, the procedures and practices used in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by those who are informed about Korean accounting principles or auditing standards and their application in practice. Seoul, Korea June 11, 2009

This report is effective as of June 11, 2009, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.

Daishin Securities Co., Ltd. and Subsidiaries Consolidated Balance Sheets March 31, 2009 and 2008

3


Assets

Cash and cash equivalents (Note 3) ￦ 433,537,252 ￦ 411,986,200

Deposits segregated under regulation (Note 3) 972,071,355 648,848,349

Trading securities (Note 4) 2,697,372,812 1,976,078,127

Available-for-sale securities (Note 6) 248,900,815 244,213,001

Equity-method investments (Note 7) 8,343,250 4,950,000

Structured securities (Note 5) 433,176,449 755,122,814

Derivative assets (Note 5) 366,332,382 491,492,701

Loans receivable, net (Note 8) 519,859,176 731,803,971

Property and equipment, net (Note 9) 547,541,264 539,026,821

Intangible assets, net (Note 10) 30,465,021 12,513,569

Accounts receivable, net (Note 8) 34,313,048 14,279,772

Accrued revenue, net (Note 8) 42,117,858 29,685,814

Advanced payments 11,967,424 7,731,479

Guarantee deposits 64,022,028 65,708,968

Collective fund for default loss (Note 3) 5,403,190 6,565,910

Deferred income tax assets (Note 20) 2,008 -

Others 49,203,838 36,489,033

Total assets ￦6,464,629,170 ￦5,976,496,529

Daishin Securities Co., Ltd. and Subsidiaries Consolidated Balance Sheets March 31, 2009 and 2008

4


Liabilities and Shareholders' Equity Liabilities

Deposits from customers (Note 12) ￦1,134,342,809 ￦ 811,363,881

Borrowings (Note 13) 409,583,235 613,498,183

Securities sold under repurchase agreements (Note 4) 1,719,443,051 1,222,806,209

Securities sold 2,579,222 13,007,866

Structured securities sold (Note 5) 1,165,433,853 1,382,751,472

Derivative liabilities (Note 5) 160,310,563 2,636,760

Debentures, net (Note 14) 59,679,998 10,000

Accrued severance benefits, net (Note 15) 1,824,318 1,563,301

Income taxes payable 97,801 46,291,887

Other accounts payable 29,443,514 15,184,955

Accrued expenses 15,993,581 19,979,397

Guarantee deposits received 63,988,019 69,268,093

Deferred income tax liabilities ( Note 20) 40,093,889 33,045,986Withholdings 2,653,823 9,305,275Others 1,542,541 5,494,200 Total liabilities 4,807,010,217 4,246,207,465 Commitments and contingencies (Note 11) Shareholders' equity Capital stock (Note 17) Common stock 254,867,000 254,867,000 Preferred stock 180,000,000 180,000,000Capital surplus 715,771,296 717,846,169Capital adjustments (Note 19) (139,041,646) (78,044,740)Accumulated other comprehensive income (Note 19) 61,081,074 62,538,914Retained earnings (Note 18) 584,941,229 593,081,721 Total shareholders' equity 1,657,618,953 1,730,289,064 Total liabilities and shareholders' equity ￦ 6,464,629,170 ￦5,976,496,529

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

Daishin Securities Co., Ltd. and Subsidiaries Consolidated Statements of Income For the years ended March 31, 2009 and 2008

5

(in thousands of Korean won, except per share amounts) 2009 2008 Operating revenues

Commissions received (Note 21) ￦ 297,493,590 ￦ 435,348,190

Gain on sales of trading securities 104,131,639 108,483,176

Gain on valuation of trading securities 33,372,056 9,275,435

Gain on disposal of available-for-sale securities 2,429,515 9,310,161

Gain on valuation of securities sold - 631,233

Gain on structured securities transactions 38,755,058 76,217,703

Gain on structured securities sold transactions 1,676,233,143 943,923,599

Gain on derivatives transactions 410,669,648 898,777,264

Interest income 211,675,093 163,311,698

Dividend income 4,322,427 3,549,639

Gain on valuation of deposits segregated

under regulation 39,746,681 40,205,358 Reversal of allowance for doubtful accounts 4,166,517 5,856,758 Others 7,673,844 1,551,729 2,830,669,211 2,696,441,943Operating expenses

Commissions expenses 19,812,902 29,468,720

Loss on sales of trading securities 138,523,886 95,617,617

Loss on valuation of trading securities 4,420,568 4,219,199

Loss on disposal of available-for-sale securities 804,869 170,263

Loss on impairment of available-for-sale Securities (Note 6) 6,029,315 333,697

Loss on valuation of securities sold 263,882 51,326

Loss on structured securities transactions 225,828,176 105,175,500

Loss on structured securities sold transactions 200,001,803 941,149,877

Loss on derivatives transactions 1,681,569,405 882,198,109

Interest expense 130,696,558 90,997,255

General and administrative expenses (Note 22) 303,017,236 320,116,386 Bad debts expense 19,270,143 2,798,526 Others 408,628 32,031 2,730,647,371 2,472,328,506 Operating income 100,021,840 224,113,437

Daishin Securities Co., Ltd. and Subsidiaries Consolidated Statements of Income For the years ended March 31, 2009 and 2008

6

(in thousands of Korean won, except per share amounts) 2009 2008 Non-operating income

Office rental income ￦ 13,346,309 ￦ 13,010,044

Gain on disposal of property and equipment 7,330 24,957,831 Others 13,278,491 3,592,020 26,632,130 41,559,895Non-operating expenses Loss on disposal of property and equipment 253,963 2,263,350 Loss on valuation of equity-method investments (Note 7) 98,473 - Donation 1,221,943 5,525,912 Others 9,009 1,447,685 1,583,388 9,236,947

Net income before income taxes 125,070,582 256,436,385

Income tax expense (Note 20) 21,819,237 78,595,539

Net income ￦ 103,251,345 ￦ 177,840,846

Parent interest in net income ￦ 103,251,345 ￦ 177,840,846Minority interest in net income - - Basic earnings per share (in Korean won) (Note 23) ￦ 1,317 ￦ 2,043

Diluted earnings per share (in Korean won) (Note 23) ￦ 1,317 ￦ 2,043


Daishin Securities Co., Ltd. and Subsidiaries Consolidated Statements of Changes in Shareholders' Equity For the years ended March 31, 2009 and 2008

7

(in thousands of Korean won)

Capital stock Capital surplusCapital

adjustments

Accumulated other

comprehensiveIncome

Retained earnings Total

Balance as of April 1, 2007 ￦ 384,867,000 ￦ 647,935,312 ￦ (11,875,373) ￦ 5,366,482 ￦ 495,441,615 ￦ 1,521,735,036Cumulative effects of restatement - 7,984,533 (5,223,286) - (2,761,247) -Restated beginning Balance 384,867,000 655,919,845 (17,098,659) 5,366,482 492,680,368 1,521,735,036Cash dividends - - - - (77,439,493) (77,439,493)Retain earnings after appropriations - - - - 415,240,875 1,444,295,543Issuance of shares 50,000,000 62,850,437 - - - 112,850,437Increase of gain on consolidated subsidiaries - - (6,691) - - (6,691)Net income - - - - 177,840,846 177,840,846Changes in treasury stock - (924,113) (60,939,390) - - (61,863,503)Gain and loss on valuation of available-for-sale securities - - - 56,483,184 - 56,483,184

Gain and loss on transaction of foreign operations - - - 689,248 - 689,248

Balance as of March 31, 2008 ￦ 434,867,000 ￦ 717,846,169 ￦ (78,044,740) ￦ 62,538,914 ￦ 593,081,721 ￦ 1,730,289,064

Daishin Securities Co., Ltd. and Subsidiaries Consolidated Statements of Changes in Shareholders' Equity For the years ended March 31, 2009 and 2008

8


Capital stock Capital surplusCapital

adjustments

Accumulated other

comprehensiveIncome

Retained earnings Total

Balance as of

April 1, 2008 ￦ 434,867,000 ￦ 717,846,169 ￦ (78,044,740) ￦ 62,538,914 ￦ 593,081,721 ￦ 1,730,289,064

Other appropriation - - 5,229,977 - (5,229,977) -

Cash dividends - - - - (106,161,860) (106,161,860)

Retain earnings after

Appropriations - - - - 481,689,884 1,624,127,204

Net income - - - - 103,251,345 103,251,345

Changes in treasury

stock - (2,074,873) (66,226,883) - - (68,301,756)

Gain and loss on

valuation of available-

for-sale securities - - - (4,052,870) - (4,052,870)

Gain and loss on

translation of foreign

operations - - - 2,595,030 - 2,595,030

Balance as of

March 31, 2009 ￦ 434,867,000 ￦ 715,771,296 ￦ (139,041,646) ￦ 61,081,074 ￦ 584,941,229 ￦ 1,657,618,953


Daishin Securities Co., Ltd. and Subsidiaries Consolidated Statements of Cash Flows For the years ended March 31, 2009 and 2008

9


Cash flows from operating activities

Net income ￦ 103,251,345 ￦ 177,840,846

Adjustments to reconcile net income

to net cash provided by operating activities

Loss(Gain) on disposal of trading securities, net 34,392,247 (12,865,559)

Gain on valuation of trading securities, net (28,951,488) (5,056,236)

Loss on structured securities, net 187,073,118 28,957,797

Gain on disposal of available-for-sale securities, net (1,624,645) (9,139,898)

Gain on structured securities sold, net (1,476,231,340) (2,773,722)

Loss(Gain) on valuation of securities sold, net 263,882 (579,907)

Loss(Gain) on derivatives transactions, net 1,270,899,757 (16,579,155)

Provision for severance benefits 1,672,857 1,618,286

Depreciation and amortization 23,561,052 20,668,993

Bad debts expense 19,270,143 2,798,526

Reversal of allowance for doubtful accounts (4,166,517) (5,856,758)

Loss on impairment of available-for-sale

securities, net 6,029,315 9,891

Loss(Gain) on disposal of property and equipment, net 246,633 (22,694,480)

Gain on valuation of deposits segregated under

regulation (39,746,681) (40,205,358)

Others, net 7,531,788 10,809,686

103,471,466 126,952,952


10


Changes in operating assets and liabilities

Deposits segregated under regulation ￦ (283,476,325) ￦ 105,421,819

Trading securities (726,735,444) (468,811,522)

Loans receivables 216,111,312 (103,470,384)

Structured securities 131,773,660 448,452,457

Accounts receivable (24,727,539) 83,805,231

Accrued revenue (10,334,110) 356,628

Advanced payments (4,163,967) 9,740,725

Prepaid expenses (86,012) 437,365

Prepaid income taxes (4,607,081) -

Income taxes payable (45,407,065) 37,924,707

Collective fund for default loss 1,162,720 387,575

Derivative assets (1,149,138,387) (261,441,566)

Derivative liabilities 162,323,277 4,197,518

Deferred income tax 13,539,556 (1,742,354)

Deposits from customers 322,955,786 (85,181,583)

Structured securities sold 1,258,913,721 (99,455,650)

Securities sold (10,692,527) 10,186,300

Other accounts payable 14,257,001 (9,339,420)

Accrued expenses (3,994,113) 7,672,706

Payment of serverance benefits (908,414) (2,500,558)

Payment of retirement trust 55,093 103,118

Pension plan asset (3,822,759) -

Withholdings (6,623,770) 3,312,238

Securities sold under repurchase agreements 496,636,842 327,573,722

Others, net (704,196) (2,024,103)

342,307,259 5,604,969

Net cash provided by operating activities 445,778,725 132,557,921


11


Cash flows from investing activities

Decrease in time deposits, net ￦ 1,000,000 ￦ -

Decrease(Increase) in guarantee deposits, net 1,554,714 (9,396,214)

Disposal of property and equipment 14,812 101,833,421

Aquisition of property and equipment (32,261,298) (51,926,700)

Increase in intangible assets (18,012,148) (12,531,336)

Aquisition of available-for-sale securities (72,320,670) (127,303,070)

Disposal of available-for-sale securities 38,151,814 75,970,853

Increase in equity-method investments (3,491,723) -

Others, net (8,021,261) (4,798,363)

Net cash used in investing activities (93,385,760) (28,151,409)

Cash flows from financing activities

Increase(Decrease) in borrowings, net (203,914,948) 251,898,183

Issuance of debentures 59,678,900 -

Retirement of debentures (10,000) -

Decrease in guarantee deposits received, net (5,102,877) (7,521,135)

Issuance of new shares - 132,013,836

Payments of dividends (106,147,158) (77,439,494)

Disposal of treasury shares - 5,887,500

Acquisition of treasury shares (77,503,777) (79,876,528)

Others, net (2,588,100) (18,881,831)

Net cash provided by(used in) financing activities (335,587,960) 206,080,531

Effect of exchange rate changes on cash and

cash equivalents 5,746,047 658,108

Net increase in cash and cash equivalents 22,551,052 311,145,151

Cash and cash equivalents (Note 26)

Beginning of year 410,944,700 99,799,549

End of year ￦ 433,495,752 ￦ 410,944,700


Daishin Securities Co., Ltd. and Subsidiaries Notes to Consolidated Financial Statements March 31, 2009 and 2008

12

1. The Company Daishin Securities Co., Ltd. (the Controlling Company) was incorporated as Samrak Securities Co., Ltd. on July 27, 1962, under the Commercial Code of the Republic of Korea, to engage in the securities business operations, including brokerage transactions, trading and underwriting of securities and other related business activities. The Company changed its corporate name to Daishin Securities Co., Ltd. on April 22, 1975, and has been listed on the Korea Exchange since October 1, 1975. The Company has issued global depositary receipts (“GDR”), representing 10 million shares of preferred stock at the London Stock Exchange’s Professional Securities Market since November 2, 2007. The head office of the Company is in Seoul, and the Company has 116 domestic branches and three representative overseas offices. Consolidated Subsidiaries The consolidated financial statements include the accounts of Daishin Securities Co., Ltd. and its controlled subsidiaries (collectively referred to as “the Company”). Consolidated subsidiaries include majority-owned entities and entities in which Daishin Securities Co., Ltd. owns more than 30% of the total outstanding voting stock and is the largest shareholder.

The following table sets forth certain information with regard to consolidated subsidiaries as of March 31, 2009:

Subsidiary Capital Percentage of Ownership (%) Location

Daishin Investment Trust Management Co., Ltd. ₩ 39,457 million 100 Korea Daishin Securities Asia Ltd. ₩ 12,914 million 100 Hong Kong

Subsidiaries excluded from the consolidated financial statements as of March 31, 2009, are as follows:

Subsidiary Capital Percentage of Ownership (%) Location

Daishin Economic Research Institute ₩ 5,042 million 99.00 Korea

Daishin Factoring Co., Ltd. - 33.25 Korea


13

In accordance with consolidation accounting standards generally accepted in the Republic of Korea, the financial statements of the above subsidiaries are excluded from the consolidated financial statements either because their total assets at the end of the prior fiscal year end were less than ￦7,000 million, or were in the process of being liquidated.

2. Summary of Significant Accounting Policies

The significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below. Basis of Financial Statement Presentation The Company maintains its accounting records in Korean won and prepares statutory consolidated financial statements in the Korean language in conformity with accounting principles generally accepted in the Republic of Korea. Certain accounting principles applied by the Company that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with generally accepted accounting principles in other countries. Accordingly, these consolidated financial statements are intended for use by those who are informed about Korean accounting principles and practices. The accompanying consolidated financial statements have been condensed, restructured and translated into English from the Korean language consolidated financial statements. Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Company's financial position, results of operations or cash flows, is not presented in the accompanying consolidated financial statements. Accounting Estimates The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein. Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. Application of the Statements of Korean Financial Accounting Standards The Company’s consolidated financial statements were prepared in conformity with accounting principles generally accepted in Korea, including Korean Financial Accounting Standards (“SKFAS”) No. 1 through No. 24, except for No. 14.


14

In accordance with the new Interpretations & Opinions of the Financial Supervisory Service, the Company reclassified cash flows from available-for-sale securities transactions as cash flows from investing activities, instead of cash flows from operating activities, while cash flows from collective fund for default loss was reclassified from cash flows from investing activities to cash flows from operating activities. The Company’s statement of cash flows for the year ended March 31, 2008, has been restated to reflect above changes.

Principles of Consolidation The Company records differences between the investment account and corresponding capital account of subsidiaries as goodwill or negative goodwill, and such differences are amortized over five years using the straight-line method. However, differences which occur from additional investments acquired in consolidated subsidiaries are reported in a separate component of shareholders' equity, and are not included in the determination of the results of operations. In accordance with accounting principles generally accepted in the Republic of Korea, minority interests in consolidated subsidiaries are presented as a component of shareholders' equity in the consolidated balance sheet. All significant intercompany transactions and balances have been eliminated during consolidation. Unrealized profits, arising from sales by the Controlling Company to consolidated subsidiaries, or equity-method investees, are fully eliminated and charged to the equity of the Controlling Company. Unrealized profits, arising from sales by the consolidated subsidiaries, or equity-method investees, are fully eliminated, and charged to the equity of the controlling Company and minority interest, based on the percentage of ownership.

Daishin Securities Co., Ltd. and its consolidated subsidiaries follow the same fiscal year end. Revenue Recognition The Company recognizes commissions, trading gains and losses on the contract date. Securities The Company accounts for equity and debt securities under the provision of SKAS No. 8, Investments in Securities. This statement requires investments in equity and debt securities to be classified into three categories: trading, available-for-sale and held-to-maturity.


15

Securities are initially carried at cost, including incidental expenses, with cost being determined using the moving average method. Debt securities, which the Company has the intent and ability to hold to maturity, are generally carried at cost, adjusted for the amortization of discounts or premiums. Premiums and discounts on debt securities are amortized over the term of the debt using the effective interest method. Trading and available-for-sale securities are carried at fair value, except for non-marketable securities, classified as available-for-sale securities, which are carried at cost. Unrealized valuation gains or losses on trading securities are charged to operations and those resulting from available-for-sale securities are charged to accumulated other comprehensive income and expense, the accumulated amount of which shall be charged to operations when the related securities are sold, or when an impairment loss on the securities is recognized. Impairment losses are recognized in the statement of income when the recoverable amounts are less than the acquisition cost of securities or adjusted cost of debt securities for the amortization of discounts or premiums. If the realizable value subsequently recovers, in case of a security stated at fair value, the increase in value is recorded in current operations, up to the amount of the previously recognized impairment loss, while for the security stated at amortized cost or acquisition cost, the increase in value is recorded in current operation, so that its recovered value does not exceed what its amortized cost would be as of the recovery date if there had been no impairment loss.

Privately placed funds among beneficial certificates are accounted for as if the assets included were actually owned by the Company. When these funds are not managed by a guideline set by the Company and are substantially different from the assets actually owned by the Company, the funds are accounted for as non-specific investment funds managed by third parties.

Equity Method Investments In the consolidated financial statements of the Company, investments in business entities in which the Company has control or the ability to exercise significant influence over the operating and financial policies are accounted for using the equity method of accounting. Under the equity method, the original investment is recorded at cost and adjusted by the Company's share in the net book value of the investee with a corresponding charge to current operations, a separate component of shareholders´ equity, or retained earnings, depending on the nature of the underlying change in the net book value. All significant unrealized profits resulting from intercompany transactions of property and equipment have been eliminated.


16

After computing the difference between the cost of the investment and the share of investee's net value of the identifiable assets and liabilities at the date of acquisition, any residual cost over (under) fair value of the net identifiable assets and liabilities is assigned to the unidentifiable asset, goodwill (or the unidentifiable liabilities, negative goodwill), which are recorded as part of investments and are amortized over five years using the straight-line method. However, differences which occur from additional investments or investment of associates made after the Company has control in its subsidiaries are recognized as capital surplus or capital adjustments. Assets and liabilities of the Company’s foreign investees are translated at current exchange rates, while income and expense are translated at average rates for the period. Adjustments resulting from the translation process are reported in a separate component of shareholders’ equity, and are not included in the determination of the results of operations. Structured Securities and Structured Securities Sold Equity-linked securities are recorded as assets at the purchase price, and equity linked securities sold are recorded as a liability at the issuance price. Gains or losses upon redemption are recorded as a gain or loss on the redemption, and the difference with the estimated value and the book value at the balance sheet date is recorded as a gain or loss on valuation. Derivative Instruments Derivative instruments for trading or hedging purpose are recorded as assets and liabilities at a fair value. And unrealized gain and loss resulting from changes in the market or fair value of such instruments are reported as current operations except for the effective portion of derivative transactions entered into for the purpose of cash-flow hedges, recorded as accumulated other comprehensive income under shareholders’ equity. Allowance for Doubtful Accounts The Regulation on Financial Investment Business prescribed by the Financial Investment Business and Capital Market Act provides guidelines for calculating the allowance for doubtful accounts. These guidelines require the minimum level of allowances that securities firms should maintain. These guidelines require that all loans and receivables should be classified based on a number of factors including the financial position of the debtors, the repayment history, the Company’s past relationship and dealings with the debtors and the value of any security interest. In accordance with these guidelines, loans and receivables have been classified as normal, precautionary, substandard, doubtful and estimated loss.


17

Loans which are modified during the court receivership, court mediation or restructuring of customers are revalued at the present value discounted by the effective interest rate at the inception of the debt. The difference between the book value and the readjusted value is offset against the provision for possible loan losses, and the remaining difference is recognized as bad debts expense in the year incurred. The difference between the book value (nominal value) and the present value is amortized using the effective interest rate method and is recorded as interest income. Property and Equipment, and Intangible assets Property and equipment are stated at cost, except for certain assets subject to upward revaluation in accordance with the Asset Revaluation Law of Korea. The revaluation presents production facilities and other buildings at their depreciated replacement cost, and land at the prevailing market price, as of the effective date of revaluation. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets as follows:

Assets Estimated useful lives (years)

Buildings 40 Vehicles 4~5 Furniture and equipment 4~5

Intangible assets are stated at cost, net of amortization calculated using the straight-line method based on the estimated useful lives of the assets. Maintenance and Repairs Routine maintenance and repairs are charged to expense as incurred. Expenditures which enhance the value or extend the useful life of the related asset are capitalized. Securities Sold under Repurchase Agreements Under the repurchase agreements, the Company records securities sold under repurchase agreements at the amount of securities sold. Also the Company records the difference between the repurchase price and the price of the securities sold as interest expense. Meanwhile under the resale agreements, the securities purchased under resale agreements are stated at acquisition cost. The Company records the difference between the securities resale price and acquisition cost as interest income.


18

Securities Sold If securities are borrowed from Korea Securities Finance Corporation, the Company presents the borrowed securities in the balance sheet. In addition, if the related securities are sold, the Company recognized securities sold as liability in the balance sheet. Discounts and Premiums on Debentures The difference between the face value and the proceeds on issuance of the debenture is treated as either a discount or premium on the debenture, which is amortized over the term of the debenture using the effective interest rate method. The discount or premium is reported as a direct deduction from or addition to the face value of the debenture in the balance sheet. Amortization of the discount or premium is treated as part of interest expense. Accrued Severance Benefits Employees and directors with at least one year of service are entitled to receive a lump-sum payment upon termination of their employment with the Company based on their length of service and rate of pay at the time of termination. Accrued severance benefits represent the amount which would be payable assuming all eligible employees and directors were to terminate their employment as of the balance sheet date. For defined contribution pension plan, the Company recognizes as expense the severance benefits provided for the period. The Company has a defined benefit pension plan, and accrues severance benefits for current employees and pension payables for retired employees. Pension plan assets are presented as a deduction from the total accrued severance benefits and pension payables. The excess of pension plan assets over pension plan liabilities is recorded as investment assets.

Leases The Company accounts for lease transactions as either operating lease or finance lease, depending on the terms of the lease agreement. A finance lease is a lease that transfers substantially most of the risks and rewards incidental to ownership of an asset, while an operating lease is a lease other than a finance lease. In addition, the lesser between the present value of minimum lease payments and the fair value of the lease asset is recognized as the value of the finance lease asset or liability. The costs incurred during lease inception process are also recognized as part of other finance lease cost.


19

Annual minimum lease payments, excluding residual value, are allocated to interest expense or for the redemption of finance lease liability using the effective interest method. Machinery and equipment acquired under finance lease agreements are recorded as property and equipment at cost and depreciated using the same depreciation method as that of other similar assets held by the Company. If it is certain that the Company is expected to obtain ownership of the lease asset upon or before maturity of the lease term, the lease asset is depreciated over its useful life. Otherwise, it is depreciated over its useful life or the term of the lease, whichever is shorter. The acquisition cost of the lease asset, less any expected or guaranteed residual value, is subject to depreciation. Foreign Currency Translation Assets and liabilities denominated in foreign currencies are translated into Korean won at the rate of exchange in effect as of the balance sheet date. Gains and losses resulting from the translation are reflected as either income or expense for the period. Translation of Foreign Operations Accounts of foreign subsidiaries are maintained in the currencies of the countries in which they operate. In translating the foreign currency financial statements of these subsidiaries into Korean won, income and expenses are translated at the average rate for the year, while assets and liabilities are translated at the rate prevailing on the balance sheet date. Resulting translation gains or losses are recorded as a cumulative translation adjustment presented as part of shareholders’ equity. Treasury Stock Treasury stock is stated at cost. Gain on disposal of treasury stock is charged to capital surplus. Loss on disposal of treasury stock is first offset against gain on disposal of treasury stock, if any, and the remainder is charged to capital adjustment, a component of shareholders’ equity. Deferred Income Tax Assets and Liabilities The Company recognizes deferred income taxes for anticipated future tax consequences resulting from temporary differences between amounts reported for financial reporting and income tax purposes. Deferred tax assets and liabilities are computed on such temporary differences, including available net operating loss carry forwards and tax credits, by applying enacted statutory tax rates applicable to the years when such differences are expected to reverse. Deferred tax assets are recognized when it is more likely that such deferred tax assets will be realized. The total income tax provision includes the current tax expense under applicable tax regulations and the change in the balances of deferred tax assets and liabilities during the year.


20

Trust Account The Company accounts for the trust assets separately from other assets. In terms of operating, managing and disposing of the trust assets among the trust accounts, the Company records as operating revenues the fees it earns from trust accounts.

Provisions and Contingent Liabilities When there is a probability that an outflow of economic benefits will occur due to a present obligation resulting from a past event, and whose amount is reasonably estimable, a corresponding amount of provision is recognized in the consolidated financial statements. However, when such outflow is dependent upon a future event, is not certain to occur, or cannot be reliably estimated, a disclosure regarding the contingent liability is made in the notes to the consolidated financial statements. Earnings Per Share Earnings per share are computed based on earnings available to common shareholders, using the weighted average number of common shares outstanding during the year.

3. Restricted Deposits and Others

Restricted deposits and others as of March 31, 2009 and 2008, consist of the following: (in thousands of Korean won) 2009 2008 Cash and cash equivalents ￦ 41,500 ￦ 41,500Deposits segregated under regulations

Reserve for claims of customers' deposits ￦ 2,410,000 ￦ 4,380,000Reserve for claims of customers' deposits (trust) 933,637,400 639,006,351Securities borrowed 73,955 73,955Deposits for futures and options - 5,388,043Other deposits 25,980,000 -

￦ 962,101,355 ￦ 648,848,349Guarantee deposits (surety guarantee) ￦ 1,000 ￦ 1,000Collective fund for default loss 5,403,190 6,565,910 According to the Regulation on Financial Investment Business (“RFIB”), the Company is required to deposit with the Korea Securities Finance Corporation (“KSFC”) or other banks the amount of deposits from customers for the customers’ claims.


21

Pursuant to the Financial Investment Business and Capital Market Act, the collective fund for default loss is reserved to compensate losses resulting from breaching securities in the Korea Exchange. As of March 31, 2009, 25,980 million ₩ in time deposits is pledged as collateral for derivative transaction to Nomura Int’l (HK) Ltd. As of March 31, 2009, cash and bank deposits related to maintain checking accounts are subject to withdrawal restrictions.

4. Trading Securities

Trading securities as of March 31, 2009 and 2008, consist of the following: (in thousands of Korean won) 2009 2008 Stocks ￦ 58,699,808 ￦ 71,971,645Government and public bonds 2,499,661,060 1,835,567,866Corporate bonds 106,966,879 56,629,201Beneficiary certificates 32,045,065 11,356,137Foreign currency certificates - 553,278 ￦2,697,372,812 ￦1,976,078,127 Debt securities as of March 31, 2009 and 2008, consist of the following:

2009 2008 (in millions of Par Acquisition Fair Book Book Korean won) Value Cost Value Value Value Government and public bonds ￦2,485,044 ￦2,473,527 ￦2,499,661 ￦2,499,661 ￦1,835,568Corporate bonds 108,830 106,637 106,967 106,967 56,629 ￦2,593,874 ￦2,580,164 ￦2,606,628 ￦2,606,628 ￦1,892,197

As of March 31, 2009, ￦1,845,479 million (2008: ￦1,325,559 million) of the above debt securities are pledged as collaterals against securities sold under repurchase agreements. Interest income from trading securities for the year ended March 31, 2009, was ₩123,635 million (March 31, 2008: ₩85,497 million).


22

The Company has provided government and public bonds, and others with a total face value of ￦128,100 million as collaterals for reserve for futures transactions to Korea Exchange, and for debt and credit transactions to Korea Securities Depository and others with a total face value of ￦19,500 million. It also provided securities with a total face value of ￦61,200 million to Korea Securities Finance Corporation as a margin to customers from KSFC, securities with a total face value of ￦525 million to a court as performance guarantee in the trust business, and securities with a total face value of 81,100 million to Socie₩ te Generale and others for its derivative transactions.

5. Structured Securities, Structured Securities Sold and Derivative Instruments Structured securities and structured securities sold as of March 31, 2009 and 2008, are as follows:

2009 2008 Fair Gain on Loss on Fair (in thousands of Korean won) Value Valuation Valuation Value Structured securities Equity-linked securities ￦ 431,928,767 ￦ 8,807,659 ￦ 175,908,536 ￦ 738,587,415 Derivatives-linked securities 1,247,682 98,046 3,791,539 16,535,399 ￦ 433,176,449 ￦ 8,905,705 ￦ 179,700,075 ￦ 755,122,814Structured securities sold Equity-linked securities sold ￦ 806,110,145 ￦ 335,931,902 ￦ 4,692,271 ￦ 858,354,665 Warrant securities sold 357,581,930 356,896,206 30,290,929 490,849,226Derivatives-linked securities sold 1,741,778 3,826,941 98,046 33,547,581

￦ 1,165,433,853 ￦ 696,655,049 ￦ 35,081,246 ￦ 1,382,751,472 Interest and redemption price on maturity date of equity-linked securities are affected by the fluctuation of the stock index. The redemption price on maturity date of warrants is also affected by the fluctuation of stock index. The principal of warrant is not guaranteed, however, and only option premiums will be received. The above structured securities and structured securities sold are carried at fair value and unrealized valuation gains or losses are recognized in the current operations.


23

Derivative instrument contracts outstanding as of March 31, 2009 and 2008, are as follows:

2009 2008


OutstandingContract Amount

Gain on Valuation

Loss on Valuation

OutstandingContract Amount

Purpose ofTransaction

Interest rate futures purchased ￦ - ￦ - ￦ - ￦ 17,821,972 - Interest rate futures sold 391,619,418 4,243,418 - 487,404,760 Trading Currency swaps 65,688,000 - 1,741,670 - Hedging Currency forwards purchased - - - 1,532,623 - Currency forwards sold 198,704 16,195 - 9,179,053 Hedging Stock index futures purchased (domestic) 19,371,850 - 150,550 - Trading Stock index futures sold (domestic) 24,671,575 16,500 261,425 5,440,000 Trading Stock index futures purchased (foreign) - - - 1,114,795 - Stock index futures sold (foreign) - - - 214,891 - Long position on stock index options (domestic) 611,145 243,600 357,665 - Trading

Stock and stock index options purchased 1 3,178,806,680 27,450,585 360,238,335 7,260,675,602 Hedging Stock and stock index options sold 2 81,584,989 29,941,863 103,274 87,835,929 Hedging Other forwards purchased - - - 4,898,740 - Other forwards sold - - - 4,941,490 - Other options purchased 1 - - - 17,680,131 - Other options sold 2 441,634,591 - 152,339,756 - Hedging ￦4,204,186,952 ￦61,912,161 ￦515,192,675 ￦7,898,739,986

1 The Company purchased these instruments to hedge against fluctuations in maturity amounts of equity-linked securities sold and recorded them as derivative instrument assets. Since the above option transaction does not meet the condition of hedge accounting, the Company does not apply hedge accounting.

2 The Company sold these instruments to hedge against fluctuations in maturity amounts of derivative instrument assets and recorded them as derivative instrument liabilities. Since the above option transaction does not meet the condition of hedge accounting, the Company does not apply hedge accounting.

The Company provided time deposits and trading securities to Korea Exchange as collateral for derivative instrument transactions (Note 11).


24

6. Available-for-sale Securities

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

(in thousands of Korean won) 2009 2008 Stocks ￦ 108,321,385 ￦ 118,748,965Investments in partnerships 2,001,200 2,101,200Corporate bonds 71,071,542 67,797,677Beneficiary certificates 26,806,454 51,372,367Overseas securities 40,228,972 3,271,515Others 471,262 921,277 ￦ 248,900,815 ￦ 244,213,001

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

(in thousands of Korean won, except for the number of shares owned and percentage of ownership) 2009 2008

Number of

Shares Owned

Percentage of

OwnershipAcquisition

Cost

Market or Net Asset

Value Book Value

Book Value

Stocks in listed companies

Namsun Aluminum Co., Ltd 4 - ￦ 42 ￦ 15 ￦ 15 ￦ 213,650Daishin Information & Communication Co., Ltd. 1,713,700 4.46 6,433,185 762,596 762,596 2,177,316

Tongyang Investment Bank Co., Ltd. - - - - - 24,296

6,433,227 762,611 762,611 2,415,262


25

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

2009 2008

Number of

Shares Owned

Percentage of

OwnershipAcquisition

Cost

Market orNet Asset

Value Book Value

Book Value

Stocks in unlisted companies

Songchon Construction Co., Ltd. 347,821 - 4,834,712 - - ￦ 2,592,658Micro Science Tech Co., Ltd. 221,157 11.06 675,000 245,729 247,382 247,382Ecomaister Co. 100,000 1.47 1,250,000 284,754 258,957 258,957IGLOO Security, Inc. 300,000 5.00 3,000,000 560,446 301,577 301,577K.S.F.C. 2,944,130 4.33 14,780,423 22,610,918 22,610,918 22,192,852Korea Securities Depository 122,556 1.95 1,026,605 10,260,143 10,260,143 9,727,912KIDB Co., Ltd. 76,000 6.06 380,000 531,020 380,000 380,000Korea Securities Computer Corp. 58,117 1.09 290,585 1,810,345 1,810,345 1,630,356Korea Exchange 644,885 3.22 3,209,846 68,273,330 68,273,330 76,278,932K.M.B. Co. 10,000 0.05 50,000 229,980 229,980 192,520S&W Co. 250,160 3.91 2,002,000 1,129,842 2,002,000 2,002,000Others 3,352,547 1,023,531 1,184,142 528,557 34,851,718 106,960,038 107,558,774 116,333,703 ￦41,284,945 ￦107,722,649 ￦108,321,385 ￦118,748,965

The fair values of the available-for-sale non-marketable equity securities, such as Korea Exchange and five others, were reliably measured by an independent appraisal institute using reasonable judgment. The fair values ware determined based on several valuation models such as discounted cash flow (DCF), and market approach model depending on the equity securities.


26

Corporate bonds and foreign currency bonds among available-for-sale securities as of March 31, 2009 and 2008, consist of the following:

2009 2008 Acquisition Book Book

(in thousands of Korean won) Cost Value Value Corporate bonds ￦ 123,318,332 ￦ 122,249,771 ￦ 104,290,030Less: Allowance - (51,178,229) (36,492,353)

123,318,332 71,071,542 67,797,677Foreign currency bonds 38,131,170 39,389,209 1,983,400

￦ 161,449,502 ￦ 110,460,751 ￦ 69,781,077

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

(in thousands of Korean won) Acquisition Fair Book Book Cost Value Value Value

Stock-type ￦ 20,342,028 ￦ 9,876,952 ￦ 9,876,952 ￦ 15,732,517Bond-type 8,500,000 8,577,520 8,577,520 30,516,300Real estate-type 8,199,500 8,351,982 8,351,982 5,123,550 ￦ 37,041,528 ￦ 26,806,454 ￦ 26,806,454 ￦ 51,372,367

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

2009 2008 (in thousands of Korean won )

Acquisition Book Book Cost Value Value

Bonds ￦ 38,131,17

0￦ 39,389,20

9 1,983,400Others 1,142,779 839,763 1,288,115

￦ 39,273,94

9￦ 40,228,97

2￦ 3,271,51

5


27

Maturities of available-for-sale debt securities as of March 31, 2009 and 2008, are as follows:


Maturity Acquisition Fair Book Book Cost Value Value Value

Within 1 year ￦ 44,034,153 ￦ 45,381,235 ￦ 45,381,235 ￦ 2,000,0001 ~ 5 years 78,324,384 78,793,287 78,793,287 64,977,056More than 10 years - - - 499,596 ￦ 122,358,537 ￦ 124,174,522 ￦ 124,174,522 ￦ 67,476,652

Interest income from available-for-sale securities for the year ended March 31, 2009 was 5,210 million (March 31, 2008: 1,322 million)₩ ₩ . The Company recognized impairment loss of 4,981 million on stocks such as ₩

Daishin Information & Communication Co., Ltd., Songchon Construction Co., Ltd. and others, and 1₩ ,048 million on other available-for-sale securities during the year ended March 31, 2009. Changes in unrealized gains and losses on valuation of available-for-sale securities for the years ended March 31, 2009 and 2008, are as follows:

2009

BeginningBalance

Valuation Amount

Realized amount

Deferred Tax Assets

(Liabilities)Ending Balance (in thousands of Korean won)

Unrealized gains Stocks ￦64,615,441 ￦ (6,837,856) ￦ 1,540,367 ￦ 6,067,308 ￦65,385,260Beneficiary certificates (2,878,005) (5,749,112) (516,300) 1,160,060 (7,983,357)Securities in foreign currency 112,230 506,273 (154,800) (68,810) 394,893 ￦61,849,666 ￦(12,080,695) ￦ 869,267 ￦ 7,158,558 ￦57,796,796

2008

BeginningBalance

Valuation Amount

Realized amount

Deferred Tax Assets

(Liabilities)Ending Balance (in thousands of Korean won)

Unrealized gains Stocks ￦(575,335) ￦89,918,312 ￦ - ￦(24,727,536) ￦64,615,441Beneficiary certificates 953,642 (4,112,300) (1,172,730) 1,453,383 (2,878,005)Securities in foreign currency 4,988,175 154,800 (6,880,242) 1,849,497 112,230 ￦5,366,482 ￦85,960,812 ￦(8,052,972) ￦(21,424,656) ￦61,849,666


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

(in thousands of Korean won, except for the number of shares owned and percentage of ownership) 2009

Investee

Number ofShares Owned

Percentage ofOwnership

AcquisitionCost

Net AssetValue

Book Value

Daishin Factoring Co., Ltd. 1 3,990,000 33.25 ₩20,804,920 ₩ - ₩ -Daishin Economic Research Institute 2 495,000 99 4,950,000 4,991,725 4,950,000

Daishin-Pegasus I PEF 3 - 26.08 3,491,723 3,393,250 3,393,250 ₩29,246,643 ₩8,384,975 ₩8,343,250 (in thousands of Korean won, except for the number of shares owned and percentage of ownership)

2008

Investee

Number ofShares Owned

Percentage of Ownership

AcquisitionCost

Net AssetValue

Book Value

Daishin Factoring Co., Ltd. 1 3,990,000 33.25 ￦20,804,920 ￦ - ￦ - Daishin Economic Research Institute 2 495,000 99.00 4,950,000 5,781,901 4,950,000

￦25,754,920 ￦ 5,781,901 ￦ 4,950,000 1 The Company discontinued applying the equity method to account for this

investment as the Company’s share in the accumulated losses exceeded the cost of the investment. The Company recognized impairment loss of 20,805 million ₩

for this investee prior to the year ended March 31, 2009. This investee is now non-operational.

2 This investment was excluded from the application of equity-method of

accounting due to its immateriality to the financial statements. This investment is measured at its original cost due to the absence of an active market price to determine its fair value.

3 Daishin-Pegasus I PEF comes under a jointly controlled entity according to SKAS

No.18, Interests in Joint Ventures. The Company’s capital commitments in relation to its interests in Daishin-Pegasus I PEF amount to ₩11,500 million.


29

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

2009


Beginning Acquisition

Gain(loss) on

Valuation

Increase (Decrease) Ending

Balance in Others Balance Investee Daishin Economic Research Institute ￦ 4,950,000

￦ - ￦ - ￦ - ￦ 4,950,000

Daishin- Pegasus I PEF - 3,491,723 (98,473) - 3,393,250

￦ 4,950,000 ￦ 3,491,723 ￦ (98,473) ￦ - ￦ 8,343,250

2008


Beginning Acquisition

Gain(loss) on

Valuation

Increase (Decrease) Ending

Balance in Others Balance Investee Daishin Economic Research Institute ₩ 4,950,000 ₩ - ₩ - ₩ - ₩ 4,950,000

Financial information of investees as of and for the years ended March 31, 2009 and 2008, follows:

(in thousands of Korean won) 2009

Investee Assets Liabilities Sales Net

Income(Loss)

Daishin Economic Research Institute ￦ 6,352,700 ￦ 1,310,553 ￦ 2,603,905 ￦ (362,065)

Daishin-Pegasus I PEF 13,033,081 20,655 54 (377,574)


Investee Assets Liabilities Sales Net

Income(Loss)

Daishin Economic Research Institute ￦ 6,927,831 ￦ 1,087,527 ￦ 1,998,876 ￦ (305,056)


30

8. Loans Receivables and Allowance for Doubtful Accounts Loans receivables as of March 31, 2009 and 2008, consist of the following:

(in thousands of Korean won) 2009 2008 Call loans ￦ - ￦ 20,000,000Broker's loans 434,814,887 693,345,080Bonds purchased under repurchased agreements

74,800,000 -

Loans 6,631,183 4,212,336Others 73,756,357 88,590,614 590,002,427 806,148,030Less: Allowance for losses (70,143,251) (74,344,059) ￦ 519,859,176 ￦ 731,803,971

Loans receivables and other accounts as of March 31, 2009 and 2008, by risk classification applied in order to determine the allowance for doubtful accounts, are as follows:


Description Normal Precautionary Substandard Doubtful Estimated Loss Total Loan Receivables Broker's loans ￦434,757,562 ￦ 57,123 ￦ 202 ￦ - ￦ - ￦ 434,814,887

Loans 5,798,270 - - - 832,913 6,631,183

Replaced payment - - 5,917,386 - 42,431,566 48,348,952

Troubled loans 91,333 - - - 23,481,704 23,573,037

Loan receivables

Purchased 1,834,368 - - - - 1,834,368

Other Assets

Accounts receivable 1 8,004,660 - - 1,849,061 5,398,016 15,251,737

Accrued revenue 1 41,985,692 - - 1,092,438 1,590,219 44,668,349

Corporate bonds 2 105,019,857 - 2,090,910 17,173,062 37,355,151 161,638,980

Others - - 22,547 - - 22,547

￦597,491,742 ￦ 57,123 ￦ 8,031,045 ￦20,114,561 ￦111,089,569 ￦ 736,784,040


31

(in thousands of Korean won) 2008 Description Normal Precautionary Substandard Doubtful Estimated Loss Total

Loan Receivables Broker's loans ￦692,437,311 ￦ 708,592 ￦ 199,177 ￦ - ￦ - ￦ 693,345,080

Loans 3,379,423 - - - 832,913 4,212,336

Replaced payment - - 6,252,867 - 45,175,938 51,428,805

Troubled loans 182,666 - - - 23,488,678 23,671,344

Loan receivables

Purchased 12,390,465 - - - - 12,390,465

Other Assets

Accounts receivable 1 8,245,734 - - - 3,755,573 12,001,307

Accrued revenue 29,763,279 - - - 1,202,624 30,965,903

Corporate bonds 2 62,983,656 - 5,392,189 1,222,368 34,182,220 103,780,433

Others - - 24,801 - - 24,801

￦809,382,534 ￦ 708,592 ￦11,869,034 ￦1,222,368 ￦108,637,946 ￦ 931,820,474

1 The balance does not include accounts receivable of ￦25,886 million (March 31,

2008: ￦6,075 million) and accrued revenue of ￦18 million for which allowances were not provided as of March 31, 2009.

2 Includes present value discounts of ￦303 million and ￦462 million as of March 31, 2009 and 2008, respectively.

. The ratio of allowance for doubtful accounts as of March 31, 2009, 2008 and 2006, are as follows: (in millions of Korean won) 2009 2008 2007 Amount of receivables ￦ 736,784 ￦ 931,820 ￦ 871,062Allowance for doubtful accounts 130,770 115,990 137,841Ratio(%) 17.75 12.45 15.82


32

The book values and the present values of restructured loans as of March 31, 2009 and March 31, 2008, are as follows:


Account Company Type Date of

Restructuring

Final Repayment

Date DiscountRate (%)

Nominal Value

Present Value Difference

Corporate bonds

Namsun AluminiumCo., Ltd.

Work-outApril 3, 2006 Dec. 31, 2009 10.5 ￦ 1,556,350 ￦1,350,717 ￦ 205,633

Corporate bonds

Pantech Co., Ltd. Conversion to Equity Aug. 10, 2007 Dec. 31, 2011 6.9 1,672,731 1,593,661 79,070

Corporate bonds

Pantech & Curitel Communications, Inc.

Conversion to Equity

Aug.10, 2007 Dec. 31, 2011 5.70-6.45 515,302 497,249 18,053 ￦ 3,744,383 ￦3,441,627 ￦ 302,756 (in thousands of Korean won)

2008

Account Company Type Date of

Restructuring

Final Repayment

Date DiscountRate (%)

Nominal Value

Present Value Difference

Corporate bonds

Namsun AluminiumCo., Ltd.

Work-outApril 3, 2006 Dec. 31, 2009 10.5 ￦ 1,556,350 ￦1,222,368 ￦ 333,982

Corporate bonds

Pantech Co., Ltd. Conversion to Equity Aug. 10, 2007 Dec. 31, 2011 6.9 1,672,731 1,568,432 104,299

Corporate bonds

Pantech & Curitel Communications, Inc.

Conversion to Equity

Aug. 10, 2007 Dec. 31, 2011 5.70-6.45 515,302 491,437 23,865 ￦ 3,744,383 ￦3,282,237 ￦ 462,146


33

For the year ended March 31, 2009, changes in the allowance for doubtful accounts are as follows: (in thousands of Korean won)

Beginning Balance

Bad debts Expense

Interest Income Reversal

Ending Balance

Allowance for doubtful accounts ￦ 1,790,896 ￦ 102,470 ￦ 159,389 ￦ - ￦ 1,733,977 As of March 31, 2009, uncollectible loans whose legal expiration dates have not fallen due or claims to guarantor were still effective, amounted to ￦110,787 million.

9. Property and Equipment, and Real Estate Investment

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

(in thousands of Korean won) 2009 2008 Buildings ￦ 282,370,054 ￦ 282,370,054Vehicles 927,956 915,513Furniture and equipment 192,598,700 175,771,077 475,896,710 459,056,644Less: Accumulated depreciation (205,607,358) (184,751,608) 270,289,352 274,305,036Land 264,574,945 264,574,945Construction-in progress 12,676,967 146,840 ￦ 547,541,264 ￦ 539,026,821


34

Changes in property and equipment for the years ended March 31, 2009 and 2008, consist of the following:

2009 (In thousands of

Land Buildings Vehicles

Furniture

Total Korean won) and Construction- Equipment In-Progress Beginning

￦264,574,945 ￦224,031,620 ￦ 397,959 ￦49,875,457 ￦ 146,840 ￦539,026,821 balance

Acquisition/

- - 58,788 6,866,936 25,335,574 32,261,298 Capitalized

Replacement - - - 12,805,448 (12,805,448) -

Disposal - - (6,579) (254,866) - (261,445)

Depreciation - (7,059,251) (144,946) (16,296,159) - (23,500,356)

Translation

adjustment - - - 14,946 - 14,946

Ending balance ￦264,574,945 ￦216,972,369 ￦ 305,222 ￦53,011,762 ￦ 12,676,966 ￦547,541,264

2008 (In thousands of

Land Buildings Vehicles

Furniture

Total Korean won) And Construction- Equipment In-Progress Beginning

￦300,126,637 ￦236,913,360 ￦ 521,141 ￦36,558,961 ￦ 12,756,704 ￦586,876,803 balance

Acquisition/

1,046,845 1,810,184 137,347 25,053,621 23,878,703 51,926,700 Capitalized

Replacement 1,453,160 33,076,639 - 1,958,768 (36,488,567) -

Disposal (38,051,697) (40,647,201) (122,231) (317,811) - (79,138,940)

Depreciation - (7,121,362) (138,298) (13,378,190) - (20,637,850)

Translation

adjustment - - - 108 - 108

Ending balance ￦264,574,945 ￦224,031,620 ￦ 397,959 ￦49,875,457 ￦ 146,840 ￦539,026,821

As of March 31, 2009, the government-appraised value of land is ￦248,040 million (2008: ￦231,799 million). As of March 31, 2009, depreciable assets are insured against fire and other casualty losses for up to approximately ￦139,282 million. As March 31, 2009, the real estate investment mainly represents land with the government-appraised value of ￦6,013 million (2008: ￦6,195 million).


35

10. Intangible Assets

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

2009 (in thousands of Development Korean won) Costs Others Total Beginning balance ￦ 12,352,905 ￦ 160,664 ￦ 12,513,569Acquisition 17,962,035 50,113 18,012,148Amortization - (60,696) (60,696)Ending balance ￦ 30,314,940 ￦ 150,081 ￦ 30,465,021 2008 (in thousands of Development Korean won) Costs Others Total

Beginning balance ￦ - ￦ 13,376 ￦ 13,376Acquisition 12,352,905 178,431 12,531,336Amortization - (31,143) (31,143)Ending balance ￦ 12,352,905 ￦ 160,664 ￦ 12,513,569


36

11. Commitments and Contingencies (A) As of March 31, 2009, legal actions involving the Company include 14 cases as

the defendant with total claims amounting to ￦5,701 million, and nine cases as the plaintiff with total claims amounting to ￦4,005 million, including a cautionary obligation action. Considering these legal cases and various other claims and proceedings pending as of March 31, 2009, the Company's management believes that, although the outcome of these matters is uncertain, the conclusion of these matters will not have a material adverse effect on the operations or financial position of the Company.

A fund manager, employed by Daishin Investment Trust Management Co., Ltd., a subsidiary of the Company, withdrew ₩16.4 billion from certain funds, transferred a portion into other funds and misappropriated the rest. Daishin Investment Trust Management Co., Ltd.’s management is still investigating this matter is uncertain and cannot estimate the effects on its financial statements. Therefore, no amount is recorded in the financial statements of Daishin Investment Trust Management Co., Ltd. to reflect the effects of this matter as of March 31, 2009.

Daishin Investment Trust Management Co., Ltd. is a defendant in a lawsuit filed by Daeyeong Savings Bank in connection with a loan provided to Daishin Investment Trust Management’s certain fund amounting to approximately ￦ 5,500 million, including related interest. The ultimate outcome of this case can not be determined at this time. Since the amount of Daishin Investment Trust Management’s obligation is uncertain, the effects of this matter on the Company’s consolidated financial statements can not be reasonably determined.


37

(B) As of March 31, 2009, the contractual obligations and maximum amounts with financial institutions as of March 31, 2008, are as follows :

(in thousands of Korean won) Financial Institutions Maximum Limit Bank overdraft agreements Shinhan Bank and

other banks ￦148,000,000

Short-term borrowing agreements Kookmin Bank ￦100,000,000 Margin finance borrowings Korea Securities Finance

Corporation ￦400,000,000

Margin finance borrowings Korea Securities Finance Corporation

Limited to amounts deposited

Margin finance borrowings Korea Securities Finance Corporation

￦400,000,000

Working capital currency loans Korea Securities Finance Corporation

￦373,932,000

Working capital currency loans Korea Securities Finance Corporation


Working capital borrowings Korea Securities Finance Corporation

￦200,000,000

Working capital borrowings Korea Securities Finance Corporation


Discounted notes Korea Securities Finance Corporation

￦500,000,000

Discounted notes (subscription) Korea Securities Finance Corporation

Limited to amounts subscribed

(C) The Company has provided government and public bonds, and others with a

total face value of ￦128,100 million as collaterals for reserve for futures transactions to Korea Exchange, and for debt and credit transactions to Korea Securities Depository and others with a total face value of ￦19,500 million. It also provided securities with a total face value of ￦61,200 million to Korea Securities Finance Corporation as a margin to customers from KSFC, securities with a total face value of ￦525 million to a court as performance guarantee in the trust business, and securities with a total face value of 81,100 million to ₩

Societe Generale and others for its derivative transactions.

The Company has provided 25,980 million in₩ the time deposits as collaterals for derivative transaction to Nomura Int’l(HK) Ltd.

(D) Financial lease contract with IBM Korea Inc. expired during the year ended

March 31, 2009.


38

12. Deposits from Customers Deposits from customers as of March 31, 2009 and 2008, are as follows: (in thousands of Korean won) 2009 2008 Customers’ deposits for brokerage ￦ 912,948,663 ￦ 671,092,579Customers’ deposits for futures and options trading 208,052,023 126,907,778

Customers’ deposits for savings 9,107,744 8,504,756Customers’ deposits for Repo 1,807,051 448,563Customers’ deposits for beneficiary 2,413,290 4,407,088Others 14,038 3,117 ￦ 1,134,342,809 ￦ 811,363,881

13. Borrowings

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


Annual Interest Rates (%)

2009 2009 2008 Call money 2.08 ￦ 280,000,000 ￦ 450,000,000Korea Securities Finance Corporation

4.55 ~ 6.75 129,583,235

163,498,183

￦ 409,583,235 ￦ 613,498,183 14. Debentures

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

(in thousands of Korean won) Date of issue

Date of maturity

Annual Interest

Rates(%) 2009 2008 9-1st Non guaranteed debenture (public) March 27,2009 March 27,2012 6.50 ￦ 60,000,000 ￦ -6-1st Non guaranteed debenture (private) March 14,2006 March 14, 2009 5.77 - 10,000

Less : Discount (320,002) -

￦ 59,679,998 ￦ 10,000

Debentures are to be redeemed at maturity.


39

15. Accrued Severance Benefits

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


Beginning Balance Increase

Decrease

Ending Balance

Provision for severance benefits ￦ 4,882,635 ￦ 1,672,857 ￦ 908,415 ￦ 5,647,077Deposits to severance insurance fund (3,264,241) (445,115) (3,709,356) -

Deposits to retirement trust (55,093) - (55,093) -

Pension plan assets - (3,835,306) (12,547) (3,822,759) ￦ 1,563,301 ￦ (2,607,564) ￦ (2,868,581) ￦ 1,824,318

As of March 31, 2009, 67.7% of the accrued severance benefits of the Company are funded under defined benefit plans with two financial companies. Pension plan assets as of March 31, 2009, consist of cash and bank deposits, securities and others.

16. Monetary assets and liabilities denominated in foreign currencies

Monetary assets and liabilities denominated in foreign currencies as of March 31, 2009 and 2008, and the related gains and losses on foreign exchange translation for the year ended March 31, 2009, are as follows:

(in thousands of Korean won and foreign currencies)

Foreign Companies Domestic Companies 2009 2008 2009 2008

Account Foreign

Currency

Foreign Currency Amount

Korean WonEquivalent


Foreign Currency Amount



Cash and cash equivalents

JPY - ￦ - ￦ - 14,230,348 ￦ 201,331 ￦ 689,023 USD 9,189 12,654,222 19,464,542 - - 5,016

Deposits for futures and options

USD

-

- - -

- 5,388,043Accrued revenue USD 37 51,291 71,352 - - -Guarantee deposits USD 119 163,581 118,611 - - -Deposits from customers

JPY

-

- - 333,774

4,736 15,200

Accrued expenses USD 50 68,931 5,329 - - - ￦12,938,025 ￦19,659,834 ￦ 206,067 ￦ 6,097,282


40

Monetary assets and liabilities of overseas subsidiary after eliminating intercompany transactions are translated at the foreign exchange rate in effect as of the balance sheet date. Foreign currency translation gains and losses for the year ended March 31, 2009, amounted to ￦6 million and ￦19 million, respectively.

17. Shareholders’ Equity

The Controlling Company is authorized to issue 600 million shares of capital stock. As of March 31, 2009, 50,773,400 shares of common stock, excluding retired stocks, and 36,000,000 shares of preferred stock have been issued. The capital stock amounts to ￦434,867 million, including preferred stock of ￦180,000 million. On September 16, 2002, the Company retired 200,000 treasury shares. Due to the retirement of its treasury stock, the book value per share of issued shares is ￦5,020 as of March 31, 2009. As of March 31, 2009, the Company holds 5,388,808 common shares and 2,500,000 preferred shares as treasury stock recorded as a capital adjustment.

18. Retained Earnings and Dividends

Retained earnings as of March 31, 2009 and 2008, consist of: (in thousands of Korean won) 2009 2008

Appropriated Legal reserve ￦ 97,866,005 ￦ 87,249,819Reserve for loss on futures transactions 120,628 132,735Voluntary reserves 360,000,000 290,000,000 457,986,633 377,382,554Unappropriated 126,954,596 215,699,167 ￦ 584,941,229 ￦ 593,081,721

The Commercial Code of the Republic of Korea requires the Company to appropriate, as a legal reserve, an amount equal to a minimum of 10% of cash dividends paid, until such reserve equals 50% of its issued capital stock. The reserve is not available for the payment of cash dividends, but may be transferred to capital stock, or used to reduce accumulated deficit, if any, with the ratification of the Company’s majority shareholders.


41

Details of year-end dividends are as follows: (in thousands of Korean won, 2009 2008 except for number of shares) Number of shares eligible for dividends Common stock

45,384,494 47,889,487

Preferred stock 23,799,999 26,000,000 2nd Preferred stock 9,699,996 10,000,000

Dividend amount Common stock ￦45,384,494 ￦ 59,861,859

Preferred stock 24,989,999 33,800,000 2nd Preferred stock 9,699,996 12,500,000

Dividend rate Common stock 20% 25%

Preferred stock 21% 26% 2nd Preferred stock 20% 25%

Dividend payout ratio 77.55% 59.69% Dividend yield rate Common stock 5.88% 5.52%

Preferred stock 14.83% 10.88% 2nd Preferred stock 15.34% 11.90%

19. Capital Adjustments and Accumulated Other Comprehensive Income

Capital adjustments and accumulated other comprehensive income as of March 31, 2009 and 2008, are as follows: (in thousands of Korean won) 2009 2008 Capital Adjustments Treasury stock ￦ (139,041,646) ￦ (72,814,763) Others - (5,229,977) ￦ (139,041,646) ￦ (78,044,740)Accumulated Other Comprehensive Income

Unrealized gain and loss on valuation of available-for-sale securities ￦ 57,796,796 ￦ 61,849,666

Unrealized gain on valuation of equity –method investments 3,284,278 689,248

￦ 61,081,074 ￦ 62,538,914


42

20. Income Tax

Income tax expense for the years ended March 31, 2009 and 2008, consists of: (in thousands of Korean won) 2009 2008 Current income tax ￦ 7,492,661 ￦ 79,987,366Changes in deferred income tax 7,045,893 19,941,204Income taxes allocated directly to shareholders’ equity 7,280,683 (21,333,031)Income tax expense ￦ 21,819,237 ￦ 78,595,539 Deferred income taxes allocated directly to the shareholders’ equity are as follows: (in thousands of Korean won) 2009 2008 Gain and loss on disposal of the treasury securities ￦ 787,021 ￦ 350,526

Gain and loss on valuation of available-for-sale securities 7,158,558 (21,424,656)Gain and loss on translation of foreign operations (664,896) (261,439)Capital adjustments (others) - 2,538 ￦ 7,280,683 ￦ (21,333,031)

The following table reconciles the expected amounts of income tax expense based on statutory rates to the actual amount of taxes recorded by the Company for the years ended March 31, 2009 and 2008: (in thousands of Korean won) 2009 2008 Income before taxes ￦ 125,070,582 ￦ 256,436,385Income tax based on statutory tax rate ￦ 34,368,010 ￦ 70,506,806Non-temporary differences (246,606) (223,547)Additional income taxes for prior years (Income tax refund) (4,695,065) 8,539,742Effect of changes in the statutory tax rate (3,117,576) -Tax credit for the current year (5,403,400) -Others 913,874 (227,462)Income tax expense ￦ 21,819,237 ￦ 78,595,539Effective tax rate 17.4% 30.6%


43

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

Temporary Differences Deferred Tax Assets (Liabilities)(in thousands of Korean won)

Beginning Balance

Increase(Decrease)

Ending Balance

Beginning Balance

Increase(Decrease)

EndingBalance

Deferred tax liabilities arising from temporary differences Accrued income ￦(17,837,401) ￦ 1,654,537 ￦(16,182,864) ￦(4,905,285) ￦ 989,032 ￦ (3,916,253) Gain and loss on valuation of structuredsecurities sold (414,208,776) (319,727,619) (733,936,395) (113,907,414) (63,705,194) (177,612,608)

Gain and loss on valuation of trading securities (2,903,702) (22,471,650) (25,375,352) (798,518) (5,342,317) (6,140,835) Assets revaluation reserves (69,230,864) - (69,230,864) (19,038,488) 2,284,619 (16,753,869) (504,180,743) (340,544,732) (844,725,475) (138,649,705) (65,773,860) (204,423,565) Deferred tax assets arising from temporary differences Gain and loss on valuation of tradingsecurities 1,594 - 1,594 438 (438) - Loss on impairment of securities 25,747,155 (8,252,053) 17,495,102 7,080,468 (2,846,653) 4,233,815 Equity-method investments 14,085,106 794,924 14,880,030 3,749,460 (496,079) 3,253,381 Gain and loss on valuation of securitiessold 21,409 242,473 263,882 5,888 57,971 63,859

Allowance for doubtful accounts 16,385 11,850 28,235 4,506 2,327 6,833 Goodwill 4,070,000 (4,070,000) - 1,119,250 (1,119,250) - Gain and loss on valuation of structured securities 90,188,362 135,144,774 225,333,136 24,801,800 29,728,819 54,530,619 Gain and loss on valuation of derivatives 325,961,931 159,498,240 485,460,171 89,639,529 27,841,832 117,481,361 Others 3,419,094 (3,393,359) 25,735 940,252 (934,224) 6,028 463,511,036 279,976,849 743,487,885 127,341,591 52,234,305 179,575,896 Deferred tax charged directly to shareholders' equity Available-for-sale securities (85,309,884) 11,211,428 (74,098,456) (23,460,218) 7,158,558 (16,301,660) Capital adjustments(others) 7,213,762 - 7,213,762 1,983,784 - 1,983,784 Gain and loss on translation of foreignoperations (950,687) (3,259,925) (4,210,612) (261,439) (664,896) (926,335)

(79,046,809) 7,951,503 (71,095,306) (21,737,873) 6,493,662 (15,244,211) ￦(119,716,516) ￦ (52,616,380) ￦ (172,332,896) ￦(33,045,987) ￦ (7,045,893) ￦ (40,091,880)


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Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the period during which the temporary differences reverse, the outlook of the Korean economic environment, and the overall future industry outlook. Management periodically considers these factors in reaching its conclusion and recognized the deferred income tax asset since all the future (deductible) tax benefits are determined to be realizable as of March 31, 2009. Deferred tax assets and liabilities are computed based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities by applying enacted tax rates in effect in the years in which the differences are expected to reverse. The enacted income tax rates are 24.2% and 22% for 2009, and 2010 and thereafter, respectively. Accordingly, deferred tax assets and deferred tax liabilities as of March 31, 2009, decreased by ₩1 million and ₩7,425 million, respectively, compared to the amount computed at statutory income tax rate of 27.5% for 2008. As of March 31, 2009, income tax refund receivable amounts to ￦9,302 million, while the income tax payable amounts to ￦98 million.

21. Commissions received

Commissions received for the years ended March 31, 2009 and 2008, are as follows: (in thousands of Korean won) 2009 2008 Brokerage commissions ￦ 272,870,832 ￦ 402,408,093Underwriting commissions 3,694,850 6,207,760 Sales commissions on structured securities

5,888,979 8,844,474

Brokerage commissions on beneficiary certificates

7,986,865 9,638,827

Trust fees and commissions received from trust account

4,277,346 4,038,874

Others 2,774,718 4,210,162 ￦ 297,493,590 ￦ 435,348,190


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

(in thousands of Korean won) 2009 2008 Wages and salaries ￦ 91,529,111 ￦ 85,059,510 Severance benefits 10,132,184 8,682,288 Employee fringe benefits 83,081,044 109,408,606 Computer system operation expenses

22,691,545 23,653,996

Rental expense 7,434,407 5,730,156 Commission expense 20,822,877 18,439,166 Entertainment expense 3,302,623 3,537,421 Advertising expense 5,615,506 8,587,001 Depreciation 23,500,356 20,637,850 Research and study expense 6,799 8,650 Training expense 1,426,745 1,189,032 Amortization 60,696 31,143 Taxes and dues 9,573,948 11,884,159 Business consignment commission 936,792 1,074,295 Others 22,902,603 22,193,113

￦ 303,017,236 ￦ 320,116,386


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23. Earnings per Share

Earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the year. Basic earnings per share for the years ended March 31, 2009 and 2008, is calculated as follows: (in thousands of Korean won, except for per share amounts) 2009 2008 Parent interest in net income as reported on the statements of income ￦ 103,251,345 ￦ 177,840,846

Adjustments Dividends for preferred stock (44,532,492) (77,060,035)Difference between the repurchase amount and carrying amount of the preferred shares 1,590,526 -

Net income available for common stock 60,309,379 100,780,811Weighted-average number of common

shares outstanding 45,791,649 49,321,705Basic earnings per share(in Korean won) ￦ 1,317 ￦ 2,043 Diluted earnings per share is identical to the basic earnings per share since there are no diluted securities outstanding as of March 31, 2009 and 2008.

24. Consolidated Comprehensive Income

Consolidated comprehensive income for the years ended March 31, 2009 and 2008, consists of:

(in thousands of Korean won) 2009 2008 Consolidated net income ￦ 103,251,345 ￦ 177,840,846Other comprehensive income

Gain on valuation of available-for-sale securities, net of related income taxes ￦(7,158,558) thousand (2008: ￦21,424,656 thousand) (4,052,870) 56,483,184 Gain on translation of foreign operation, net

of related income taxes ￦664,896 thousand (2008: ￦261,439 thousand)

2,595,030 689,248 Consolidated comprehensive income ￦ 101,793,505 ￦ 235,013,278 Parent interest in comprehensive income ￦ 101,793,505 ￦ 235,013,278 Minority interest in comprehensive income ￦ - ￦ -


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25. Related Party Transactions Significant transactions with consolidated subsidiary, which have been eliminated during consolidation, for the years ended March 31, 2009 and 2008, and the related receivables and payables as of March 31, 2009 and 2008, are as follows:

(in thousands of Korean won) Revenues Expense

2009 2008 2009 2008 Subsidiary

Daishin Investment Trust Management Co., Ltd. ￦ 432,897 ￦1,632,897 ￦ 32,573 ￦ 47,323

(in thousands of Korean won) Receivables Payables

2009 2008 2009 2008 Subsidiary

Daishin Investment Trust Management Co., Ltd. ￦ - ￦ - ￦23,065,842 ￦ 2,716,054

With the exception of the above, as of March 31, 2009, the Company has ￦516 million of fee receivables under trust assets, which were accounted separately from the assets of Daishin Investment Trust Management Co., Ltd. For the year ended March 31, 2009, the commission income amounted to ￦2,816 million.


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Significant transactions transactions with related parties for the years ended March 31, 2009 and 2008, and the related receivables and payables as of March 31, 2009 and 2008, are as follows :

(in thousands of Korean won) Revenues Expense

2009 2008 2009 2008 Equity-method Investees Daishin Factoring Co., Ltd. ￦ - ￦ - ￦ - ￦ -Daishin Economic Research Institute 66,450 66,450 2,862,565 1,998,060Daishin Champs Elysees Hwit 558,000 558,000 - - Joint venture in which the Company is a partner

Daishin-Pegasus I PEF 118,258 - - - Others Daishin Information & Communication Co., Ltd. 10,899 10,899 3,887,436 3,532,022Daishin Songchon Culture Foundation - - 1,000,000 5,000,000 ￦ 753,607 ￦ 635,349 ￦ 7,750,001 ￦10,530,082

(in thousands of Korean won) Receivables Payables

2009 2008 2009 2008 Equity-method Investees Daishin Factoring Co., Ltd. ￦33,481,704 ￦33,488,678 ￦ - ￦ -Daishin Economic Research Institute - - 1,184,905 972,800Daishin Champs Elysees Hwit - - 800,000 800,000 Others Daishin Information & Communication Co., Ltd. - - 2,343 801,415

￦33,481,704 ￦33,488,678 ￦ 1,987,248 ￦ 2,574,215

Number of shares owned, percentage of ownership, acquisition cost, market value or net book value of the non-marketable investments to related parties are disclosed in Note 6, Available-for-sale Securities, and Note 7, Equity Method Investments. With regard to the above receivables, the Company provided allowances for doubtful accounts amounting to ₩33,482 million.


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Key Management Compensation For the year ended March 31, 2009, the Company recognized short-term benefits of ￦3,140 million and severance benefits of ￦301 million as key management compensation. Key management consists of registered executive officers who have the authority and responsibility in the planning, directing and controlling of the Company’s operations.

26. Supplemental Cash Flow Information

Cash and cash equivalents as of March 31, 2009 and 2008, consist of the following

(in thousands of Korean won) 2009 2008 Cash and bank deposits ￦ 433,537,252 ￦ 411,986,200 Less: Time deposits - (1,000,000) Other bank deposits (41,500) (41,500) Cash and cash equivalents ￦ 433,495,752 ￦ 410,944,700 Significant transactions not affecting cash flows for the years ended March 31, 2009 and 2008, are as follows:

(in thousands of Korean won) 2009 2008 Unrealized gain and loss on valuation of available-for-sale securities ￦ 4,052,870 ￦ 56,483,184

Gain and loss on translation of foreign operations 2,595,030 689,248

Reclassification of construction-in-progress to other accounts 12,805,448 36,488,567

Tax effects applicable to gain on sale of treasury stock 787,021 350,526

Write-off of accounts receivable 116,342 -Write-off of accrued income 13,707 -

In accordance with the new Interpretations & Opinions of the Financial Supervisory Service, the Company reclassified cash flows from available-for-sale securities transactions as cash flows from investing activities, instead of cash flows from operating activities, while cash flows from collective fund for default loss was reclassified from cash flows from investing activities to cash flows from operating activities. The Company’s statement of cash flows for the year ended March 31, 2008, has been restated to reflect above changes.


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27. Supplementary Information for Computation of Value Added

The accounts and amounts, included in general and administrative expenses and development costs, needed for computation of value added for the years ended March 31, 2009 and 2008, are as follows:

General and administrative expenses

Development Costs Total

(in thousands of

Korean won) 2009 2008 2009 2008 2009 2008

Wages and salaries ￦91,529,112 ￦85,059,510 ￦1,022,009 ￦ 587,345 ￦92,551,121 ￦85,646,855

Severance benefits 10,132,184 8,682,288 136,579 73,862 10,268,763 8,756,150

Employee fringe

benefits 83,081,044 109,408,606 - - 83,081,044 109,408,606

Rental expenses 7,434,406 5,730,156 93,642 118,552 7,528,048 5,848,708

Depreciation 23,500,357 20,637,850 - - 23,500,357 20,637,850

Amortization 60,696 31,143 - - 60,696 31,143

Taxes and dues 9,573,947 11,884,159 8 80 9,573,955 11,884,239

28. Securities in Custody and Borrowing Securities

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

(in millions of Korean won) 2009 2008 Trustor securities in custody ￦ 12,795,081 ￦ 17,497,465Saver securities in custody 43,545 68,209Beneficiary securities in custody 2,496,553 2,521,869Others 5,162 8,406 ￦ 15,340,341 ￦ 20,095,949 As of March 31, 2009 and 2008, borrowing securities are as follows: (in thousands of Korean won) 2009 2008 Borrowing securities ￦ 256,900 ￦ 340,374 The Company has provided government and public bonds and others as collaterals for the borrowing securities to Korea Securities Depository and others.

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