annual report 2004 - morningstar, inc

ANNUAL REPORT 2004

215*280본문 복사 2005.7.20 1:7 PM 페이지48

P R O F I L E

Profile 01 / At a Glance 02 / Financial Highlights 04 / A Message from Chairman 05 / Vision 08 /Management Principles for 2005 09 / Management Innovation 10 / Research & Development 12 /Responsible Care 16 / Sustained Growth through Facility Investment 18 / Crop Protection 22 / Fertilizers 24 / Seeds 26 / Vet.-Pharm. & Agricultural Materials 28 / Petrochemicals 32 / Ferro-Alloys 34 /Chemical Products 36 / Trading 38 / Management’s Discussion & Analysis 40 / Financial Statements 46 /History 57 / Board of Directors 58 / Organization Chart 59 / Service Network 60 / Production Facilities 61 /Affiliates 62 / Corporate Data 63

Profile 01 / At a Glance 02 / Financial Highlights 04 / A Message from Chairman 05 / Vision 08 /Management Principles for 2005 09 / Management Innovation 10 / Research & Development 12 /Responsible Care 16 / Sustained Growth through Facility Investment 18 / Crop Protection 22 / Fertilizers 24 / Seeds 26 / Vet.-Pharm. & Agricultural Materials 28 / Petrochemicals 32 / Ferro-Alloys 34 /Chemical Products 36 / Trading 38 / Management’s Discussion & Analysis 40 / Financial Statements 46 /History 57 / Board of Directors 58 / Organization Chart 59 / Service Network 60 / Production Facilities 61 /Affiliates 62 / Corporate Data 63

한농_18일본문 2005.7.19 3:3 PM 페이지1

0.1. Innovations for a Better Life

Dongbu Hannong Chemical is Korea’s leading agrochemical company, ranking first and

second in the crop protection and fertilizer markets. We have sustained strong growth and

created a solid profit base in a variety of fields and have aggressively expanded our areas of

operation. Our business portfolio currently ranges from styrene-derived petrochemical

products to ferro-alloys, in which we are the dominant market player.

Based on our technological expertise in agricultural chemicals and materials, we have

recently advanced into value-added, environmentally friendly products such as microbial

pesticides, organic fertilizers, functional materials and electronic devices. Today, we are

rapidly emerging as an environmentally conscious enterprise on the leading edge of the

agrochemical industry.

Looking to the future, we seek to create higher value for our shareholders and clients through

improved management and continued innovation. Our ultimate goal is to enrich people’s lives

as we position ourselves as a global excellent company.

동부한농화학은지난50여년간농약사업국내 1위, 비료사업국내2위등국내최 의농업화학사업을비롯해수직계열화된

스티렌계제품을생산하는유화사업, 국내최 규모의합금철사업에이르기까지다양한분야에서성장을지속하며안정적인

수익기반을구축했습니다.

최근에는농업및재료분야에서축적한기술을바탕으로미생물농약, 유기질비료, 고기능성소재및전자재료등친환경적인

고부가치제품을개발, 상품화해환경친화적인첨단기업으로거듭나고있습니다. 또한지속적인경 혁신활동과경 체계의

전문화및선진화로고성과를창출하며인류의건강과풍요로운삶에기여하는세계일류기업이되고자노력하고있습니다.

한농_18일본문 2005.7.19 3:3 PM 페이지2

A T A G L A N C E

0.2. Dongbu Hannong Chemical

Business

Description

Product

Lines

Sales

Composition

(%)

CROP PROTECTION FERTILIZERS SEEDS VET.-PHARMACY AGRICULTURAL MATERIALS

Since launching Korea's first

pesticide production in 1953,

Dongbu Hannong Chemical has

spearheaded the development of

crop protection agents in Korea

while maintaining the largest market

share in Korea. The company boasts

leading-edge production facilities

and customer-oriented marketing

capability. The company is now

hard at work trying to develop

environment-sensitive products

tailored to satisfy consumer

demand for cost-effective and

safer crop protection.

1953년국내최초로농약생산을시작한

농약사업부는최첨단생산설비와고객지향의

마케팅력을갖추고국내시장점유율 1위를

유지하며국내농약업계를선도하고있습니다.

최근에는좀더효과적이고안전한제품에 한

고객의요구에발맞춰환경친화적제품을

개발해상품화하고있습니다.

Dongbu Hannong Chemical,

a pioneer in the compound

fertilizer sector, has an annual

capacity of 420,000 tons of

compound fertilizers for paddy rice

and 100,000 tons of value-added

products for fruit and horticulture.

In response to new trends in

agrochemicals, the company also

delivers environment-friendly

functional fertilizers, including

organic fertilizers and

Controlled-release fertilizers.

The company maintains the

second largest market share in the

field of fertilizers.

복합비료생산의선두주자인비료사업부는

수도용복합비료연간42 만톤과고부가가치

과수원예비료연간 10 만톤을생산, 공급하며

최근농업흐름에신속히 응하고있습니다.

이밖에도유기질비료, 완효성비료등환경

친화적인기능성제품을생산하며시장점유율

국내2위를차지하고있습니다.

Dongbu Hannong Chemical,

which currently supplies over 260

varieties of 15 crops, has begun

exploring the frontiers of life

science and biotechnology to

produce higher-value added

products. The Breeding Research

Institute in Anseong develops new

varieties of seeds and technology

suitable for weather conditions in

Europe as well as Asia.

The Bed Soil Factory that became

operational in Gyeonggju in 2001,

meanwhile, is dedicated to

upgrading the quality of bed soil

products overall.

15종260개의종자를개발해공급하고있는

종묘사업부는첨단연구시설을갖춘안성육종

연구소에서국내는물론아시아및유럽의기후

조건에적합한고품질품종과재배기술을개발

하며육종능력을인정받고있습니다. 또한

2001년준공한최첨단설비의경주상토공장은

균질화된고품질의제품을생산, 공급하여국내

상토제품의수준을한층높이고있습니다.

�Fungicides

�Herbicides

�Insecticides

�Plant growth regulators

�Compound fertilizers

�Organic fertilizers

�Controlled-release fertilizers

�Hot peppers, Sweet peppers

�Chinese cabbage, Cabbage

�Radishes, Watermelons

�Tomato, Squash

�Onions, Carrots

�Antibacterials

�Vitamins

�Coccidiostats

�Anthelmintics

�Disinfectants

�Insecticides

�Covering materials

�Breeding materials

�Liquid fertilizer

�Soil conditioner

�Farming equipment

�Measurement tools

�Work tools

�Hygiene materials

Dongbu Hannong Chemical

produces and markets some 100

productivity-enhancing veterinary

pharmaceuticals and supplement

feed at its large-scale Asan

Factory, including antibiotics,

antibacterials, vitamins,

coccidiostats, anthelmintics,

disinfectants, insecticides, and

marine farming products.

In 2003, the Asan Factory

acquired the KVGMP

certification, which ensures safety

in production processes.

항생∙항균및항원충제, 양및 사촉진제,

정장및생균보호제, 내∙외부구충제및일반

치료제, 방균소독및방역살충제, 수산용약제

등총100여품목의동물용의약품및보조사료를

제조∙판매하고있습니다.

아산공장은2003년3월국립수의과학검역원의

KVGMP 인증을획득하여제조공정의안정성을

보장하고있습니다.

In February 2004, Dongbu

Hannong Chemical launched its

own brand, “Dongbu Farmmart,”

of agricultural materials, including

covering materials, breeding

materials, work tools and hygiene

materials. Dongbu Farmmart

represents an integrated

agricultural mart that offers a

diverse variety of agricultural

materials to farmers and

agricultural concerns. This kind of

integrated mart has recently gained

popularity in advanced countries.

2004년2월‘동부팜마트’라는독자브랜드를

가지고농자재유통사업에본격적으로진출한

이후육묘자재, 양자재, 포장자재, 작업용구,

위생자재등 농활동에필요한우수농자재들을

일괄공급하며선진국형종합농자재전문마트를

선도하고있습니다.

19.27

1.180.24

15.11

한농_18일본문 2005.7.19 3:4 PM 페이지3


CULTURAL MATERIALS PETROCHEMICALS FERRO-ALLOYS CHEMICAL PRODUCTS TRADING

ring materials

ding materials

d fertilizer

onditioner

ing equipment

urement tools

k tools

ene materials

�SM : A material used in synthetic

resigns, etc.

�PS : GPPS, HIPS,

key intermediates for home

appliances, etc.

�EPS : A material widely used in

building insulation, etc.

�FeMn (HC), FeMn (MC), FeMn (LC)

�SiMn, SiMn (LC)

�Ash melting system in conjunction

with ferro-alloy manufacturing

�Purified Phosphoric Acid

�Nitric Acid

�Sulfuric Acid

�Major Export Items

�BTX, PE, PP, PU

�MEG, DEF, PA

ruary 2004, Dongbu

ng Chemical launched its

and, “Dongbu Farmmart,”

cultural materials, including

ng materials, breeding

als, work tools and hygiene

als. Dongbu Farmmart

nts an integrated

tural mart that offers a

variety of agricultural

als to farmers and

tural concerns. This kind of

ted mart has recently gained

rity in advanced countries.

월‘동부팜마트’라는독자브랜드를

농자재유통사업에본격적으로진출한

묘자재, 양자재, 포장자재, 작업용구,

등 농활동에필요한우수농자재들을

하며선진국형종합농자재전문마트를

있습니다.

Beginning with Korea's first

styrene monomer back in 1978,


built a vertically-integrated

production system in Ulsan

capable of producing polystyrene,

expandable polystyrene, and other

styrene products. Since acquiring

ISO 9002 certification in 1994,

the company has supplied a

diverse range of high-performance

plastic materials to Korean and

overseas markets.

지난 1978년국내최초로스티렌모노머를개발

생산한이래폴리스티렌과발포성폴리스티렌

생산체계를연차적으로완공, 스티렌계제품

분야에서수직계열화된종합적생산시스템을

완비했습니다. 1994년모든유화제품에 해

ISO 9002 인증을획득하고, 고기능플라스틱

원재료를국내외에공급하고있습니다.

Dongbu Hannong Chemical is

Korea’s largest producer of

ferro-alloys. The company

produces 160,000 tons of

high-quality manganese ferro-

alloys, which it supplies to major

steelworks. Based on its

technology and experience

accumulated over the years,

the company recently branched

out into waste incineration

business, while augmenting its

production capacity.

국내최 의생산규모를지닌합금철사업부는

현재연간 16만톤의망간계합금철생산체제를

갖추고유수의철강회사에합금철을공급하고

있습니다. 풍부한경험과축적된기술력을

바탕으로생산설비를 증설하고있으며,

소각재용융플랜트사업등사업 역을확

하고있습니다.

Dongbu Hannong Chemical

produces an array of inorganic

products, including purified

phosphoric acid, nitric acid and

sulfuric acid. Of note, the company

dominates the purified phosphoric

acid sector with a market share of

more than 65%.

In addition, the company operates a

large-scale tank terminal.

It has demonstrated its

technological prowess through

constant quality upgrades and

gaining of the ISO 9002 certification.

정제인산, 질산, 황산등의무기질화학제품을

제조판매하고있으며정제인산의경우시장의

약65%를점유하고있습니다. 또한 규모의

탱크터미널을운 하고있습니다. 지속적인품

질혁신과ISO 9002 품질시스템획득을

통해품질의우수성을인정받고있습니다.

Launched in 1999, the trading

business engages in trading of a

diverse range of products, ranging

from petrochemicals, organic and

inorganic chemicals to synthetic

resins and rubbers. Through its

specialization and proficiency in

trading chemical products,

Dongbu Hannong Chemical will

work to expand its turnover.

Of note, the company works

diligently to gather latest

information on global chemical

markets, while contributing

to the development of the

national economy.

1999년에신설된동부한농화학무역사업부는

석유화학에서유기∙무기화학, 합성수지, 합성

고무에이르기까지다양한화학제품의무역을

통해전문성을인정받고있습니다.

세계시장에서화학산업에 한각종최신

정보를수집하며한국경제발전에일조하고

있습니다.

30.07

16.71

4.5311.79

1.10

한농_18일본문 2005.7.19 3:4 PM 페이지4

AT YEAR END

Total assets ＼ 976,639 ＼ 879,135 ＼ 857,183 $ 935,657

Total liabilities 601,859 557,295 557,670 576,604

Total shareholders’ equity 374,780 321,840 299,512 359,053

FOR THE YEAR

Total Sales 2) 1,068,282 795,024 742,225 1,023,455

Cost of sales 865,696 664,598 604,085 829,370

Gross profit 202,587 130,426 138,140 194,086

Selling, general & administrative expenses 112,912 89,007 85,691 108,174

Operating income 89,675 41,419 52,449 85,912

Non-operating income 41,855 25,998 28,386 40,099

Non-operating expenses 77,087 50,434 57,748 73,852

Ordinary income 54,442 16,983 23,087 52,158

Income before income taxes 54,442 16,983 23,087 52,158

Net income 40,965 13,047 16,303 39,246

Earnings per share (KRW/USD) 4,280 1,363 1,703 4.1

FINANCIAL RATIO (%)

Debt to equity 160.6 173.2 186.2

Return on assets (ROA) 4.4 1.5 2.0

Return on equity (ROE) 11.8 4.2 5.5

2004 2003 2002 2004

* The above figures are based on non-consolidated data.1) The Korean Won amounts are translated into U.S. dollars for comparison purposes, at the exchange rate of KRW 1,043.8 to US$1.00, the basic exchange rate

on December 31, 2004.2) Sales exclude incentive paid for sales promotion in line with new accounting standards.


In Millions of Korean Won In Thousands ofU.S. Dollars1)

(In Billions of Korean Won)

Total Sales(In Billions of Korean Won)

Net Income

F I N A N C I A L H I G H L I G H T S

2002 2003 2004

1,000

800

600

400

200

742.2 795.0

(%)

Return on Equity

1,068.3

2002 2003 2004

50

40

30

20

10

16.3 13.0

41.0

2002 2003 2004

12

10

8

6

4

2

5.54.2

11.8

한농_18일본문 2005.7.19 3:4 PM 페이지5


A M E S S A G E F R O M C H A I R M A N

BBuussiinneessss RReessuullttss

In retrospect, the fiscal year 2004 was

characterized by a whirlwind of crises

and controversies in the domestic

political, economic, and social sectors,

and in the international arena as well.

Nevertheless, we were not deterred by

these challenges, and indeed reaped

impressive results in several business

areas, thanks to the steadfast support and

encouragement from our clients and

shareholders.

In the year under review, Dongbu

Hannong Chemical steadfastly pursued

management innovation, while

proactively responding to the evolving

market conditions. As a result, total

sales in 2004 surged 34.4% over the

previous year to 1,068.3 billion won.

Particularly noteworthy was the sales

performance of the Petrochemical and

Ferro-Alloy Departments, which

focused their export efforts on value-

added product lines in response to

swiftly changing global market

circumstances.

Furthermore, net income registered an

astounding 214% growth to 41 billion

won, while return on assets (ROA) rose

to 4.41% in 2004 from 1.50% in the

previous year. All major management

indicators, including return on equity,

achieved significant improvements.

Nevertheless, several challenges and

difficulties lie ahead. The global

economy and the economies of advanced

countries are showing signs of

deceleration, largely due to such negative

factors as volatile crude oil prices and

continuing depreciation of the U.S. dollar

against major currencies. Moreover, the

outlook for the Korean economy remains

uncertain as well, with few indications of

a rebound in private consumption and

corporate investment.

Dongbu Hannong Chemical has implemented

a sweeping organizational restructuring, under

which individual business divisions have been

grouped into agriculture and materials.

한농_18일본문 2005.7.19 3:4 PM 페이지6

There are also concerns that exports, the

key growth engine of the Korean economy,

may not be able to sustain the same robust

performance of 2004 in the year ahead.

BBuuiillddiinngg aann ““EExxcceelllleenntt CCoommppaannyy””

For the Dongbu Group and its affiliates,

now is the time to renew our commitment

to building an “Excellent Company.”

We define an Excellent Company as:

(1) a sound company possessing financial

strength and stability; (2) a trusted

company that earns the trust and respect

of its customers; and (3) a good company

that provides a first-rate workplace for its

employees.

To fulfill the ideals of an “Excellent

Company,” along with our mid- and

long-term management visions, we will

place a special emphasis on the following

management strategies in 2005:

First, we will move aggressively to

strengthen our business capabilities in

order to assure profitable and sustainable

growth. Long-term management visions

and strategies are required for various

business sectors, along with efforts being

stepped up to explore new business

opportunities and upgrade the business

structures of existing areas.

Second, we will continue to pursue

innovations in human resources, operating

systems, and corporate culture.

It is essential that we recruit talented

employees and provide them with

systematic training, grooming them to

become the driving force behind Dongbu’s

future growth. Also, our corporate culture

requires close and constant fine-tuning to

bolster our principles of “self-reliance”

and “accountability” and to lay a stable

foundation for advanced management.

MMaaxxiimmiizziinngg IInnnnoovvaattiioonn

Finally, we aim to drive innovation of

management practices. The company

aims to expand the Six Sigma campaigns,

which we assess to have generated some

8 billion won in benefits in 2004, and to

bolster productivity gains through our

management innovation educational

programs. Furthermore, we aim to

optimize management results through

strategic application of Enterprise

Resources Planning (ERP).

In an effort to create greater synergy and

to enhance its overall competitiveness,


implemented a sweeping organizational

restructuring, under which individual

business divisions have been grouped into two

business divisions: agriculture and materials.

The agricultural business division

includes pesticides, fertilizer, seeds,

veterinary pharmaceuticals and agricultural

materials, while the materials business

division relates to petrochemicals,

ferro-alloys, chemical products and trading.

A Chief Operating Officer will oversee

each business division, along with a Chief

Technical Officer being responsible for

overall technology development, in line

with management’s efforts to apply self-

reliance and accountability to all aspects

of operations.

Through these initiatives, Dongbu

Hannong Chemical will constantly

pursue management innovation and build

a stable financial and business structure

that can withstand the impact of any

business environment, while

championing the interests of our

shareholders.

During the year ahead, we will work

harder to reward our loyal customers

and shareholders for their unwavering

support through maximized corporate

and shareholder value, as Dongbu

Hannong Chemical aspires to become

a global leader.

Thank you.


A M E S S A G E F R O M C H A I R M A N

한농_18일본문 2005.7.19 3:4 PM 페이지7


NET INCOME

ROE

EV / EBITDA

41.0Billion Won

11.8%

4.6times

Korean Won

16,000

12,000

8,000

4,000

0Jan.04 Mar.04 May.04 Jul.04 Sep.04 Dec.04STOCK PERFORMANCE (JAN.~DEC. 2004)

Jan. 1, 2004 5,920 Won

지난2004년어려운여건속에서도우리그룹은임직원

들의노력과정성에힘입어여러사업부문에서괄목할

만한성과를거두었습니다. 지난해동부한농화학은

전임직원이힘을모아경 혁신및고객중심경 ,

시장 응력강화에노력한결과매출액이전년에비해

2,733억원이나늘어난 1조683억원에이르 습니다.

또한당기순이익은 214% 신장한 410억원을기록

하 으며, ROA는2003년1.5%에서2004년4.4%로

크게향상되었습니다. 이처럼동부한농화학의거의

모든주요경 지표가크게향상되었습니다.

그러나2005년새해를시작하는우리앞에는새로운

각오로도전해야할많은일들이기다리고있습니다.

세계경제는선진국의경기둔화가예상되는가운데

유가와환율에 한불안이예상되고있습니다.

국내경제상황도소비위축이지속되는가운데수출

증가세마저둔화될것으로예상되고있어성장

잠재력의확충이시급한상황입니다.

저는여기서다시한번‘좋은기업’의이상에 해 말

드리고자합니다. 우리가이루고자하는‘좋은기업’은

경 면에서우량기업을, 고객으로부터는신뢰받는

기업을, 종업원에게는좋은직장을의미합니다.

‘좋은기업’의이상과중∙장기경 비전을달성

하기위해, 동부한농화학은2005년에다음과같은

경 전략에중점을두고있습니다.

첫째,성장을위한사업역량확충에최선을다하겠

습니다. 이를위하여중장기경 전략을보완해

신규사업을적극개발하고기존사업을더욱고도화해

경쟁력을높이겠습니다. 그렇게함으로써우리의

사업 역을보다미래지향적이고고부가가치를

창출할수있는방향으로개편해나가겠습니다.

둘째,경 의기본인사람과시스템, 기업문화에 한

혁신을심화하겠습니다. 우수한인재를전략적으로

확보해체계적으로양성하고, 성과를낼수있는

시스템을정착시키겠습니다. 그리고동부의핵심

가치를바탕으로한‘자율과책임’의진취적인기업

문화를정립해선진화된경 기반을갖추겠습니다.

마지막으로경 현장에서의자율혁신활동을

더욱활성화해나가겠습니다. 지난해 80억원의

성과를낸6시그마활동을전사적으로확 함과

동시에경 혁신스쿨을운 하여업무효율을

높이고, ERP의단계적인구축을통해성과를

극 화시켜나가겠습니다.

동부한농화학은중장기비전달성의발판을마련

하기위해 2005년 3월 적인조직개편을단행

하 습니다.

기존사업부들을농업부문과재료부문으로그룹화

함으로써사업부간시너지효과를극 화하면서

사업단위의자율경 과책임경 체제를구축하고

기획∙재무∙인사∙혁신을총괄하는‘경 지원실’,

신수종사업발굴및기술개발을담당하는

‘기술지원실’을신설했습니다.

동부한농화학은어떠한경 환경에서도흔들리지

않는안정적인재무구조와사업구조를갖추고미래

기회를선점하기위해총력을기울일것입니다.

저희동부한농화학에아낌없는성원과격려를보내

주시는주주여러분께보답하기위해기업가치와

주주가치확 를위해열심히노력하겠습니다.

감사합니다.

Jun-Ki Kim _ Chairman

Dec. 31, 2004 12,250 Won

한농_18일본문 2005.7.19 3:4 PM 페이지8


V I S I O N

Vision Excellent Company Fully Committed to Creatinga Healthy and Prosperous Future for Mankind

Sales Revenue

＼ 3 trillion

Ordinary Income

＼ 180 billion

Mid-termGoals (2010)

Mid-termStrategy

Excellent Company Fully Committed to Creating

a Healthy and Prosperous Future for Mankind

An “Excellent Company” is defined as: a reputable enterprise that earns the trust and respect of its

customers; a responsible business that provides a first-rate workplace for its employees; and a sound

corporation with the financial strength and stability to promote the interests of all its stakeholders.

Based on its 50 years of technological expertise accumulated in the agrochemical industry, Dongbu Hannong

Chemical produces a diverse range of environment-friendly agrochemical products and cutting-edge materials

that enable people to enjoy greater convenience in their everyday lives. Dongbu Hannong Chemical strives to

be an “Excellent Company” that is fully committed to creating a more healthy and prosperous world.

‘Excellent Company’는 고객에게 신뢰받는 기업, 투자자의 입장에서는 우량기업, 임직원들에게는 좋은 직장이되는 것이며 고객,

투자자, 구성원 등 모든이해관계자들의관점에서 균형을유지하고 있는 기업을 말합니다. 동부한농화학은지난 50년간농업분야에서

쌓아온기술과노하우를바탕으로풍요로운인류의미래를창조하기위한친환경농업제품과생활의편리함을더하는첨단소재제품을

개발하고이를제공해왔습니다. 앞으로동부한농화학은 건강하고풍요로운 인류의미래를창조하는‘Excellent Company’로성장

할것입니다.

Maximize operating results through high-efficient systems

Increase corporate value by bolstering competitive advantages of existing business areas

Reinforce profitability base through new businesses

한농_18일본문 2005.7.19 3:4 PM 페이지9


Active Participation / High-efficiency / Self-reliant Management

Strength business capabilitiesto assure sustainable growth

�Define specific visions and strategies for business areas

�Reinforce growth engines

Maximize innovation

�Secure and retain superior personnel

�Implement efficient operating systems

�Instill an innovative corporate culture

Promote innovation throughself-reliant mind-set

�Set challenging goals to encourage innovation efforts

�Enhance employees’work ethic and mind-set

M A N A G E M E N T P R I N C I P L E S F O R 2 0 0 5

Reinforcing Business Capabilities for Sustainable Growth

Dongbu Hannong Chemical is working hard to strengthen its business capabilities and develop new growth

engines to ensure sustainable growth. For a successful medium-and long-term business strategy, we plan to

divide the main business into four divisions—Agriculture, Chemicals, Materials and Distribution. In 2005,

we will, first and foremost, strengthen our business capabilities. We will clarify vision for each field of

business and reinforce our growth potential. We will acquire superior human resources, implement efficient

operating systems and establish a progressive corporate culture to pursue management innovations. We will

set challenging goals for innovation and enhance employees’ ways of working.

동부한농화학은지속적인성장을위해 `사업역량을확충하며성장동력을강화해나가겠습니다.

중장기 사업추진 방향을농업, 화학, 재료 및 유통 부문으로 별하여 현 사업 역을 축으로 관련 사업에 한지속적인 탐색을 통해

각부문별발전전력을모색할것입니다.

2005년에는 무엇보다 먼저 사업역량을 확충하도록 할 것입니다. 각 사업부문별로 비전을 명확히 하고 성장동력을 강화할 것입니다.

경 혁신을 심화하기 위해 우수 인력을 확보하고, 탁월한시스템을 구축하고 진취적인 기업문화를 정립할 것입니다. 또한도전적인

혁신목표를운용하며일하는방법의선진화를달성해나아갈것입니다.

한농_18일본문 2005.7.19 3:4 PM 페이지10


M A N A G E M E N T I N N O V A T I O N

Dongbu Hannong Chemical strives to

build a solid foundation for an “active

participation, high-efficiency, and self-

reliant management” through innovative

initiatives that can help to yield substantial

results in such areas as company personnel,

systems and culture, which are all central

to effective management activities.

PPeerrssoonnnneell

Dongbu Hannong Chemical works

diligently to secure an abundance of

exceptional personnel and to foster them

through systematic support, so that they

can go about their day-to-day work with

enthusiasm while realizing their full

potential as well. Management seeks to

acquire a pool of talented people through

the recruitment of both new and

experienced employees and provision of

technical education/training programs.

Furthermore, the company implements an

innovative and differentiated human

resources development program in order

to place the performance-based personnel

management system on a solid footing,

along with nurturing a maximum number

of professionals and managers to

spearhead future corporate growth.

SSyysstteemmss

System management is designed to renovate

our processes, systems, and practices,

while contributing to the attainment of

extraordinary results in a consistent and

stable manner as well as maximizing

synergy effects. The company seeks to

efficiently integrate its corporate strategy

with the goals of each operating unit and

individual and to measure, based on the

performance management system,

achievements of all employees in an

objective and rational manner for the

purpose of reinforcing their workplace

dedication.

In addition, Dongbu Hannong Chemical

will implement an ERP (Enterprise

Resource Planning) system for the

enhancement of processes such as real-

time management monitoring and support

for optimal decision-making as well as

timely implementation and feedback. The

ERP system will enable us to upgrade our

competitiveness by a significant extent.

CCuullttuurree

Management encourages all employees to

contribute to our corporate vision and

advocate its core values, thereby instilling

a sense of pride among the workforce and

nurturing a culture of self-reliance and

accountability. In order to fulfill the

Dongbu Group’s core value, ‘I’mpowered

Dongbu,’ the company has a system in

place to effectively promote our corporate

culture together with a series of action

plans. In 2005, management and labor

were able to reach a collective agreement

without formal negotiations, thus

contributing to a notable boost in

productivity, cost-savings and innovation.

SSeellff--rreelliiaanntt MMaannaaggeemmeenntt IInnnnoovvaattiioonn

While continuing to attach much

importance to the Six Sigma initiatives to

address various problem areas, Dongbu

Hannong Chemical regards this campaign

as a driving force behind its management

innovation efforts. The company will

thus pursue a diverse range of Six Sigma

projects and strive diligently to achieve

practical results, all within the realm of

management’s corporate strategy. At the

same time, we will continue efforts to

nurture Six Sigma specialists.

Dongbu Hannong Chemical will accelerate

innovation in such fields as human resources,

systems and culture to ensure sustainable growth.

한농_18일본문 2005.7.19 3:4 PM 페이지11


동부한농화학은경 의기본인사람, 시스템, 문화

혁신과실질적인성과를창출하는자율혁신활동을

통하여‘전원참여, 고효율, 자율경 ’기반을마련

하고있습니다.

사람

동부한농화학은우수인력을전략적으로확보하고

체계적으로양성해구성원들의몰입과역량발휘를

이끌어내기위한노력을꾸준히하고있습니다.

적정규모의채용계획과과학적인선발체계를

운용하여신입사원및외부우수인력을확보함

으로써우수인재풀(Pool)을구축하고있는한편,

동기부여및역량개발을위해과감하고차별화된

육성프로그램을개발, 운 함으로써성과주의

인사체계를정착하며동부인재상에부합하는

미래전문가및경 자를양성하고있습니다.

시스템

시스템경 은프로세스와제도∙관행을체계화

하여경 함으로써지속적이고안정적으로고성

과를달성하고시너지를최 화하는것입니다.

동부한농화학은회사의전략과각조직및개인의

목표를효과적으로연계해수립하고, 성과주의

시스템을기반으로임직원의업무성과와보상을

객관적∙합리적으로측정해동기부여및몰입을

유도하고있습니다. 또한ERP (Enterprise

Resource Planning, 전사적자원관리) 시스템을

도입해실시간경 모니터링, 최적의의사결정

지원, 즉각적인실행및피드백등프로세스를

개선함으로써경쟁력을강화하고있습니다.

문화

회사비전을공유하고핵심가치를전파함으로써

전직원의신뢰와자긍심을고취하고자율과

책임의문화를만들어나가고있습니다. 그룹의

핵심가치인‘I’mpowered Dongbu’구현을위해

기업문화실행시스템을체계적으로구축하고

그실천수준을구체적, 지속적으로관리하고

있습니다. 2005년에는노사무교섭타결을결의

하여노사가한마음으로생산성향상, 원가절감,

혁신활동을수행해가며한단계발전한선진적인

노사문화를구축해가고있습니다.

자율경 혁신

동부한농화학은전사적인문제해결기법을

6시그마로설정하여경 혁신의원동력으로

삼고있습니다. 전사전략과연계하여다양한

6시그마과제를발굴하여실질적인성과를창출

하는활동을전개함과동시에전문인력을양성

하고전임직원의역량을개발함으로써시너지를

극 화하고있습니다.

Basic Structure for Management Innovation

Excellent Company

Outstanding

Systems

Performance Management

Progressive

Corporate

Culture

Superior

Human

Resources

�ManagementInnovation-Software(-Mindset-Actions/Behavior)

�Management Innovation-Hardware(-Structures-Practices -Systems)

�Ability-based Personnel Management

�Performance-based Compensation System

Pushing Self-reliant Innovation Activities (Six Sigma)

�Active Participation �Self-reliant Management

�Optimal EfficiencySustainable Growth

한농_18일본문 2005.7.19 3:4 PM 페이지12


R E S E A R C H & D E V E L O P M E N T

Dongbu Advanced Research Institute

With the goal of developing core

technologies independently, and keeping

abreast of global enterprises, Dongbu

Hannong Chemical established Dongbu

Advanced Research Institute in 1995.

The Pharmaceutical Research Institute,

Materials Institute and Biotech Research

Institute, all operating under the umbrella

of Dongbu Advanced Research Institute,

located at Daedeok Science Town, have

already established a proven track record.

Currently, these institutes are actively

involved in the development of new

medicine, biotechnology and electric

and electronic components, along with

exploring new business opportunities

with strong growth potential.

BBiiootteecchhnnoollooggyy RReesseeaarrcchh IInnssttiittuuttee

The Biotech Research Institute (BRI) is

pushing ahead with the development of

new functional seeds, value-added

materials to cure modern-day illnesses,

seed varieties and bed soils, which are

vital for preservation of autogenous

plants and the environment. BRI is also

engaged in various research projects

commissioned by government agencies.

Overall, BRI strives to secure

technological edge as a bioscience

enterprise through wide-ranging R&D

projects related to agriculture, health, soils

and the environment.

In 2004, BRI succeeded in developing

DNA for enhancing seed germination and

DNA for treating male sterility.

These innovations are now being

processed for domestic and PCT patents.

The institute was also successful in

developing commercial-production

technology for Siberian Ginseng

(acanthopanax).

The development of chiral, an intermediate

drug, which is used for treatment of

hypochondria, has helped to upgrade the

competitive prowess of Dongbu Hannong

Chemical as a biotechnology enterprise.

PPhhaarrmmaacceeuuttiiccaall RReesseeaarrcchh IInnssttiittuuttee

The Pharmaceutical Research Institute is

strongly committed to development of new

medicine, while trying to attain high

efficiency in such vital areas as composition,

efficacy testing and natural substances.

KR-31378, which is being developed by

the institute, has proven to have protecting

effects on optic nerve in glaucoma animal

model and brain in cerebral apoplexy

animal model. Clinical testing of this

medicine was commenced in 2004, while

the institute intends to license out its

program around 2007. In addition, the

institute is actively developing new

medicine to protect heart cells in cases of

cardiac infarction or angina pectoris.

한농_18일본문 2005.7.19 3:4 PM 페이지13


MMaatteerriiaallss RReesseeaarrcchh IInnssttiittuuttee

The Materials Institute undertakes wide-

ranging R&D activities related to core

parts and components of electronic and

IT sectors, which are expected to

spearhead industrial development in the

21st century, based on its cutting-edge

technology of refining and composition.

The Materials Institute is focused on the

development of new powder-coating

processes, which significantly impact

MPC powder manufacturing and core

characteristics. The institute has

successfully developed conductive

materials, such as powder for

semiconductor packaging, magnetic-alloy

materials, and powder for surface

mounted devices (SMD).

동부한농화학은 덕연구단지내에동부기술원을

자체적인연구개발로핵심기술을보유해세계적인

기업들과당당하게경쟁한다는목적으로 1995년

개원했습니다. 산하에신약연구소, 소재연구소,

생명공학연구소를설립, 우수한연구진과최신

연구시설을갖추고신약개발, 생명공학및전자

재료분야의연구개발과신사업발굴에전력을

다하며생명공학기업으로서기술경쟁력을확립

하고있습니다.

생명공학연구소

생명공학연구소는생명공학기술을이용한 신기능성

종자개발, 고부가가치질병치유물질생산, 자생

식물보존및환경기능이강화된품종육성과토양

환경을증진시키는연구를하고있습니다.

정부과제를비롯한기초연구뿐만아니라실용화

연구를수행하고있으며농업, 건강, 토양, 환경에

관련된연구를통해생명공학기업으로의발전에

필요한기술경쟁력을확립하고있습니다.

2004년에는종자발아능력을향상시키는유전자와

웅성불임개발용유전자를개발해국내특허및

PCT특허를출원, 심사중에있습니다. 또한가시

오가피 량생산기술을개발하고비만억제에사용

되는불포화지방산의생산기술을개발했습니다.

신약연구소

신약연구소는합성, 약효시험, 천연물분야에서

유기적인협조체제를구축하고신의약의개발에

모든역량을모으고있습니다. 정부과제를비롯한

다양한연구를수행하고있는신약연구소는

2004년뇌졸중에의한뇌손상의후유증에치료

효과가우수한치료제‘벤조피라닐구아니딘

유도체’의전임상을마치고임상1상에진입해

2007년경에다국적기업에기술수출할계획입니다.

또한심근경색, 협심증발병시심장세포보호

효과가우수한심장보호제및관절염치료제에

한연구를진행하고있습니다.

소재연구소

소재연구소는고도의정제기술및소재합성기술을

바탕으로21세기를선도해나갈전자정보분야의

핵심소재개발에연구력을집중하고있습니다.

2004년에는유연솔더파우더개발에이어향후

시장전망이유망한무연솔더파우더개발및

품질승인에주안점을두고있고, 반도체패키지용

재료인플라스틱솔더볼을개발하고관련국내

특허출원과더불어해외출원을준비중에

있습니다.

이외에도자성분말재료인MPC의분말제조와

코아의특성에크게 향을미치는분말코팅공정

개선을위한연구를수행하고있습니다.

Ongoing R&D Projects

1. New herbicide, Metamifop�Developed by the company’s proprietary technology, Metamifop is slated for commercialization

soon. Consultations are now under way between the company and multinational companiesfor joint development of overseas markets for Metamifop.

2. New insecticide, Bistrifluron�The company is currently engaged in negotiations with overseas pesticide makers for exploring markets

valued at US$30 million for agricultural insecticides and US$20 million for household insecticides.

3. New medicine, KR-31378�KR-31378 is effective for protecting the optic nerve of glaucoma victims and treating brain damage

after cerebral apoplexy. Clinical testing of this medicine is now under way in the U.K. as a drug for treatment of glaucoma. The company plans to license out its production around 2007.

4. Lithium polymer battery �The company earned three foreign and two domestic patents.

5. Materials for IT and semiconductors�The company has diversified into state-of-the-art materials business, such as Solder Powder,

Solder Paste, Solder Ball and SMD (Surface Mount Device).

R&D institutes are actively engaged in thedevelopment of new medicine, biotechnology andcutting-edge materials and electronic componentsin order to upgrade its competitive edge.

한농_18일본문 2005.7.19 3:4 PM 페이지14


R E S E A R C H & D E V E L O P M E N T

Technology Research Institutes

Dongbu Hannong Chemical runs three

specialized technology research institutes,

Agricultural Research Institute, Breeding

Research Institute and Petrochemical

Research Institute, all fully dedicated to

sophistication and diversification of

products, thereby upgrading the

company’s competitive edge.

AAggrriiccuullttuurraall RReesseeaarrcchh IInnssttiittuuttee

The Agricultural Research Institute,

which is reputed to be the most advanced

private research organization engaged in

R&D activities of agricultural products

and technology services, is an authorized

institute for testing registration trails,

biological efficacy, residues and fish

toxicity of agricultural chemicals and

chemical or organic fertilizers.

Of particulate note, the institute has

been designated as Korea’s first GLP

accreditation agency in the field of fish

toxicity, enabling the institute to perform

global standard tests on environmental

toxicity.

In 2004, the institute successfully

developed a new herbicide variety,

Metamifop, and an enhanced insecticide

variety with less toxicity, Bistrifluron,

in pursuit of overseas markets.

The institute also developed and released

EXTN, a new-type bed soil for

horticulture. The institute conducts

a series of tests on new application

methods, compatibility, label-extension,

local adaptability and formulation of

agricultural chemicals and fertilizers,

while being supportive of the production

and sales activities of Dongbu Hannong

Chemical.

BBrreeeeddiinngg RReesseeaarrcchh IInnssttiittuuttee

The Breeding Research Institute has

ranked first for four consecutive years in

terms of superior seed quality.

The institute has developed and released

more than 200 vegetables varieties in

support of farming households, while

contributing to raising farmers’ incomes

and satisfying the diverse needs of urban

consumers.

In 2004, the institute developed a new

radish variety Housechorong; Chinese

cabbage Cheongjeongyeoreum; and

cucumber Miinbagdadagi.

These varieties have been very popular

among farmers and consumers.

By taking advantage of its breeding

technology rooted on bioscience, the

institute is eager to explore new markets

in China, Japan and India in support of

Dongbu Hannong Chemical.

PPeettrroocchheemmiiccaallss RReesseeaarrcchh IInnssttiittuuttee

Located at the Ulsan Petrochemical Plant

of Dongbu Hannong Chemical, the

Petrochemiclas Research Institute has

been pursuing the development of

polymerized products of polystyrene and

expandable polystyrene and high value-

added processed items. In 2004, there

was a significant upgrade in the HIPS

process for quality enhancement and

output expansion.

한농_18일본문 2005.7.19 3:4 PM 페이지15


A transparent material for electronic

materials packaging was also developed

in the year.

Furthermore, the institute is working hard

to secure international standard quality of

its specialized plastics, develop leading-

edge parts of electric, electronic and

semiconductors, as well as environment-

friendly products such as high flame-

retardant EPS. The institute is also racing

against time to develop next-generation

of products that combines particular

manufacturing technology with

nanotechnology, in alliance with other

Dongbu research centers.

The Petrochemicals Research Institute is

an authorized testing agency for plastics

and related materials, including polystyrene

and foam polystyrene. The institute

acquired the KOLAS certification on

seven test categories including tensile,

solidity, curve, heat, flow and foaming

in 1997.

동부한농화학의 각사업부별전문기술연구소인

농업기술연구소, 육종연구소, 유화기술연구소에

서는제품의고도화와다양화를위한연구개발을

수행함으로써기존사업분야의경쟁력을높이고

새로운사업 역을넓히는데박차를가하고있습니다.

농업기술연구소

작물보호제의약효약해, 잔류, 어독성등에 한

국가공인시험기관인농업기술연구소는 작물보

호제, 비료, 상토, 동물약품, 친환경농자재등

농업과관련된제품의개발과기술서비스를담당

하고있는국내최고수준의민간연구기관입니다.

특히어독성분야는국내최초로GLP 인증기관

으로지정되어국제적인수준의환경독성시험을

수행하고있습니다.

2004년에는세계시장을목표로신규제초제

메타미포프(metamifop)와저독성살충제

비스트리플루론(Bistrifluron)을개발하고원예용

상토엑스텐(EXTN)을개발, 출시했습니다.

그외에도신규제형연구, 제품혼용약해시험,

적용확 시험, 처리방법개발, 지역적응성시험,

생산공정개선등의업무를전문적으로수행해

국내최 농업기업인동부한농화학의제품생산과

판매서비스를적극지원하고있습니다.

육종연구소

우량품종경연 회에서4년연속 1등을수상해수준

높은육종기술력을가진육종연구소는200여점이

넘는우량채소품종을개발, 농가에보급하여농민

소득증 에기여하고도시소비자의다양한요구에

부응해채소선택의폭을넓혔습니다.

2004년에는하우스초롱무, 청정여름배추와

미인백다다기오이를개발농민들에게큰호응을

받았고시장에서도우수한품질로인기를얻었

습니다. 생명공학기술을이용한육종기술개발과

우수한신규품목개발에전념하고있는육종연구

소는중국, 일본, 인도등해외시장개발에도

심혈을기울이고있습니다.

유화기술연구소

울산유화공장내에위치하고있는유화연구소는

폴리스티렌(Polystyrene), 발포폴리스티렌

(Expandable Polystyrene) 수지의중합연구를

통한생산성향상과특화된중합제품및고부가

가치가공제품개발을지속적으로추진해왔습

니다. 2004년에는품질향상및생산용량증 를

위해HIPS 공정개선을완료하고전자재료포장용

투명소재를개발했습니다.

또한특화된내약품수지등의세계수준의품질

및가격경쟁력확보와전기, 전자, 반도체부품

소재의개발및무독성난연수지등친환경

제품의품목을확 개발하고있습니다.

유화기술연구소는입자제조기술과나노기술을

접목시킨새로운제품 역에서사내외연구조직

과연계해미래유망첨단소재제품개발에도

박차를가하고있습니다.

Dongbu Hannong Chemical is hard at work trying to

establish itself as an “Excellent Company” through

R&D activities, thereby laying the platform for

building a more healthy and prosperous future.

한농_18일본문 2005.7.19 3:4 PM 페이지16

EEnnvviirroonnmmeenntt--ffrriieennddllyy PPrroodduuccttiioonn

FFaacciilliittiieess

The Ulsan Fertilizer Factory now

operates facilities to reduce the odor

of the raffinate storage facility and

surrounding areas. This plant has also

expended 50 million won to upgrade its

wastewater treatment. As a result of this

effort, the plant is now able to reuse

1,000 tons of wastewater on a daily basis

that will contribute to annual cost-savings

of some 100 million won due to reduction

of wastewater discharge and industrial

water usage.

Meanwhile, the Ulsan Petrochemical

Factory acquired the ISO-14001

environment management certification

(December 14, 2004) from the

international certification agency,

DNV (Det Norske Veritas of Norway).

The plant has also installed bio-filters

to help minimize pollution emission.

The Jeju Fertilizer Factory, established in

1999, is equipped with the latest dust-

collection facilities to help preserve the

island’s beautiful natural environment.

Monitoring of dust levels is performed

twice a year by accredited testing firms.

In addition, the Donghae Ferro-Alloy

Factory, Gumi Seeds Factory and

Jeongeup Bed Soil Factory are all equipped

with advanced anti-pollution facilities.

EEnnvviirroonnmmeenntt--sseennssiittiivvee PPrroodduuccttss

Based on its extensive technological

expertise, Dongbu Hannong Chemical

has developed an array of environment-

friendly pesticides, organic fertilizer and

microbial bed soil. These include Tobagi,

a microbial crop protection agent;

Baculovirus, a next-generation microbial

pesticide; Bistrifluron, a low-toxic

insecticide; and Metamifop, a plant

growth regulator with reduced toxicity.

EEtthhiiccaall MMaannaaggeemmeenntt

The Cyber Audit Office receives online

reports of any suspected irregularities,

which contributes to a curtailment of

possible wrongdoing by company

employees.

In line with the ethical code of conduct

adopted in 2002, all employees have

completed online education on corporate

and personal ethics. In 2004, workplace

employees have also received education

on ethical standards.

More stringent guidelines for ethical

conduct have been instituted in 2005

under a mandate of the CEO, who has

called for stricter ethical behavior on the

part of Dongbu management and staff.

R E S P O N S I B L E C A R E


한농_18일본문 2005.7.19 3:4 PM 페이지17

SSoocciiaall CCoommmmiittmmeenntt

As a responsible and public-minded

corporate citizen, Dongbu Hannong

Chemical willingly allocates a portion of

its financial gains to the needs of society.

Of note, company employees volunteer

their time and effort to relieve the hardship

of those in need, while extending sincere

compassion to the underprivileged,

including farmers and rural households.

In May 2003, company employees

launched a donation campaign to ‘provide

freshly cooked rice to hungry children.’

Under this campaign, Dongbu managers

and staff have deducted 5,000 won from

their monthly salaries, which goes into an

assistance fund for underprivileged

children. As of March 2005, a total of 265

employees have been participating in this

charitable endeavor, which has garnered

some 19.20 million won thus far.

In addition, the company actively

participates in the campaign to extend

support to farmers, which has been

spearheaded by the Federation of Korean

Industries and the National Agricultural

Cooperatives Federation. Many company

plants and branch offices entered into

sisterhood affiliations with designated

farming communities, which are

provided with farming technology and

related information on a regular basis.

환경친화적인생산시설

비료사업부울산공장은사업장주변악취제거를

위해정제인산제조시설중공정부산물(Raffinate)

저장시설을설치했습니다. 또한5천만원을투자해,

폐수처리장방류수재이용설비를구축함으로써

폐수배출량을감소시키고 공업용수비용을연간

1억원가량절감하는효과를보았습니다.

유화사업부울산유화공장은 2004년 12월국제적

인증기관인DNV (DET NORSKE VERITAS,

노르웨이)로부터ISO-14001 환경경 시스템

인증을획득했습니다. 출하과정에서악취및

VOC가배출되지않도록하 으며, 환경오염방지를

위해바이오필터를추가로증설했습니다.

1999년설립된제주비료공장은제주의아름다운

자연환경을보호하기위해최신의 기오염물질

(분진) 방지시설을갖추었습니다.

또한합금철사업부동해공장, 종묘사업부구미

종자공장과정읍상토공장등모든사업장이최신의

공해방지시설을운 해환경오염최소화에심혈을

기울이고있습니다.

환경친화형제품

동부한농화학은관련사업분야에서축적해온

사업경험과기술력을기반으로최근미생물

농약‘토박이’(Tobagi), ‘베큘로바이러스’

(Baculovirus), 저독성제초제‘메타미포프’

(Metamifop) 그리고유기질비료‘참조아’

(Chamjoa) 및미생물함유상토등을개발

했습니다.

윤리경

동부한농화학은온라인내∙외부신고제도인

사이버감사실을운 해제보의건전한활성을

유도하고사례를공유함으로써부정행위를예방

하는 성과를거두고있습니다. 2002년제정된

임직원직업윤리규범을기반으로 2003년부터는

전임직원들을 상으로윤리경 에 한사이버

교육을실시하고, 2004년현장직직원까지윤리

경 교육을실시하여전임직원의윤리경 의식을

고취시켰습니다.

윤리경 이기업존립의기반이라는CEO의강력한

의지로2005년임직원윤리강령을재개정하여실천

함으로써전임직원이공정하고도덕적인업무수행

방법론을습득해윤리의식을강화하고있습니다.

사회공헌활동

동부한농화학은책임있는기업시민으로서역할을

다하기위해수익의일부를사회에환원시키고자

노력하고있습니다. 이러한활동의일환으로결식

아동을돕기위해2003년5월부터‘배고픈아이

에게따뜻한밥을’캠페인을시작하여꾸준히후원

활동을하고있습니다. 임직원들이자발적으로가입

해결성한이동호회는매월회원들의급여에서5천

원씩을공제해모아서결식아동들을지속적으로

후원하고있습니다. 이동호회는 2005년 5월까지

265명이자발적으로회원에가입했으며누적후원

금이총1천9백20만원에달하고있습니다.

또한전경련과농협이추진해온‘농촌사랑 1사

1촌운동’에적극참여하고있습니다. 전국각

공장및지점들이자체적으로지역농촌마을과

자매결연을맺어 농기술정보제공등을통한

지원을하고있습니다.

To fulfill its corporate social responsibilities, Dongbu Hannong Chemicalis wholly committed to the promotion of environmental management,ethical management, and charitable contributions.


한농_18일본문 2005.7.19 3:4 PM 페이지18


P R E P A R I N G F O R T O M O R R O W

Sustained Growth Through

Facility Investment

Dongbu Hannong Chemical will

aggressively move to enlarge output

capacity through facility investment to

ensure sustained growth.

EExxppaanndd DDoonngghhaaee FFeerrrroo--AAllllooyy

FFaaccttoorryy’’ss EElleeccttrriicc FFuurrnnaaccee CCaappaacciittyy

From October 2004 through June 2005,

the company will invest 14 billion won to

expand the annual capacity of Donghae

Ferro-Alloy Factory through the

installment of a new 20,000 KVA electric

furnace. The plant’s annual output

capacity will thus be increased to 200,000

tons, enabling the company to expand its

annual sales revenue to some 200 billion

won. Dongbu Hannong Chemical

maintains a competitive edge in the

global market with its high value-added

ferro-alloys.

UUppggrraaddee HHIIPPSS PPrroodduuccttiioonn PPrroocceessss

From December 2003, the company has

invested 7.5 billion won to expand the

capacity output of HIPS (high-impact

polystyrene). As such, the annual HIPS

capacity will be expanded to 50,000 tons

in 2005, from the current level of 35,000

tons. Accordingly, annual sales of high-

performance HIPS products are forecast

to reach 15,000 tons, as compared to the

With the aim of ensuring continued growth,

Dongbu Hannong Chemical will implement a flurry

of innovative initiatives starting 2005, including

expansion of capacity output and sales growth

through new investment.

한농_18일본문 2005.7.19 3:4 PM 페이지19


previous 7,000 tons. Of note, the

application of newly developed

technology has enabled product quality to

be upgraded to international standards.

EExxppaanndd AAnnnnuuaall SSMM OOuuttppuutt

Since October 2004, the company has

invested a total of 36 billion won to

increase the annual production capacity

of styrene monomer by 70,000 tons.

Accordingly, the plant’s production

capacity is set to reach 290,000 tons in

2006, as compared to the current 220,000

tons. In light of the current worldwide

shortage of styrene monomer, the

company anticipates increased annual

sales of some 82 billion won.

In particular, the newly introduced

SMART production method, based on

state-of-the-art technology developed by

ABB Lummus of the U.S., assures an

environment-friendly operating process

that eliminates the use of corrosive

materials.

설비투자를통한지속적인성장

동부한농화학은지속적인성장을위해기존생산

설비를활발히확충하고있습니다.

동해합금철공장전기로증설

2004년 10월부터 2005년6월까지 140억원을

투자해합금철을4만톤가량추가생산할수

있는전기로 20,000 KVA를증설했습니다.

독자적인정련기술을보유해고부가가치합금철

제품을생산하는동부한농화학은 세계적인기술

우위를확보하고있으며, 이번설비증설을통해

연생산능력이20만톤으로확 되며이에따른

연매출액도 2,000억원으로증가될것으로전망

됩니다.

울산유화공장 HIPS 공장공정개선

2003년 12월부터 2004년 12월까지 75억원을

투자해고강도폴리스티렌(HIPS)설비를보완

증설했습니다. 기존연 3만 5천톤이었던HIPS의

생산량이2005년부터 5만톤으로늘어나고,

특화HIPS는판매량이7천톤에서 1만 5천톤으로

증가할예정입니다. 또한신기술적용으로특화

HIPS 품질을세계적수준으로높 습니다.

울산유화공장 SM 공장공정개선

2004년 10월부터 2006년 2월까지 360억원을

투자해기초석유화학제품인스티렌모노머

생산량을연 7만톤증 하기위한신공정설비를

구축하고있습니다. 세계적으로스티렌모노머의

공급이부족한가운데동부한농화학은공정개선을

통해생산능력을기존연22만톤에서29만톤으로

증가시킴으로써연 820억원의매출액을증가

시킨다는전략을가지고있습니다. 특히이번에

도입하는SMART 공법은미국ABB 루머스

(ABB LUMMUS)社의신기술로부식물질을

사용하지않아공해를방지하는친환경적인

공법입니다.

Dongbu Hannong Chemical will aggressively move to enlarge outputcapacity through facility investment to ensure sustained growth.

한농_18일본문 2005.7.19 3:4 PM 페이지20

Dongbu Hannong Chemical’s agricultural business division iscomprised of crop protection, fertilizers, seeds, veterinary-pharmaceuticals, and agricultural materials. Moreover, thecompany is moving forward with efforts to establish itself as aleading bioscience enterprise through the creation of newtechnology and synergy.

Agricultural Business Division

R E V I E W O F O P E R A T I O N S 22 C R O P P R O T E C T I O N

24 F E R T I L I Z E R S

26 S E E D S

28 V E T . - P H A R M . &

A G R I C U L T U R A L M A T E R I A L S

한농_18일본문 2005.7.19 3:4 PM 페이지21

한농_18일본문 2005.7.19 3:4 PM 페이지22

REVIEW OF OPERATIONS


C R O P P R O T E C T I O N

In 2005, the Agrochemical Business Department will focuson the development of environmentally sensitive productsand expansion of its presence in the Asian market, along withenhancing its customer services.

한농_18일본문 2005.7.19 3:5 PM 페이지23

Review of 2004

The domestic business environment for

pesticide products has been adversely

affected by sharp price hikes in some raw

materials, an increase in the collective

purchases of agricultural chemicals,

and decreased usage of pesticides.

In addition, several small-scale pesticide

producers have recently entered the

market, thereby adding to the already

fierce competition of the agricultural

chemical market.

Despite this market adversity, Dongbu

Hannong Chemical has managed to reap

impressive results. Crop protection sales

amounted to 205.9 billion won in 2004,

up 2.4% over a year earlier.

The company’s market share remained

unchanged at 26.9%, but it did retain its

leadership position.

Outlook for 2005

In 2005, Agrochemical Business

Department will seek to further expand

its market share to the 30% level, through

stepped-up marketing efforts and

building closer relations with mainstay

clients along with accelerated

development of environment-sensitive

products including new materials.

The company will focus its long-term

sales strategy on Asian markets,

including China and Vietnam.

농약시장환경은일부원자재가격의상승, 집단

구매증가와사용량감소등의 향을받아위축

되었습니다. 또한중소규모회사의시장진입

증가는농약시장의경쟁을더욱심화시켰습니다.

이러한어려운환경에도불구하고동부한농화학

농약사업부는높은경 실적을거두어,

매출액은 2003년 비 2.4% 증가한 2,059억원,

시장점유율은 26.9%로 1위를고수했습니다.

2005년농약사업부는 고객서비스등마케팅

강화, 신물질농약을포함한친환경제품의개발

및판매강화등으로시장점유율을 30%까지

끌어올리고장기적인목표아래중국, 베트남등

아시아시장개발에주력할계획입니다.


�Market Position (%)

* Source : Korea Crop Protection Association

Jijon Fullcourse

Limousine

Gunstar

�Sales Revenue

(Millions of Won)

’02 ’03 ’04

188,182

201,141205,886

14.4

10.29.8

38.72266..99

KyungnongBayer CropscienceDongbang Others

(%)

Dongbu

Hannong

New Products

한농_18일본문 2005.7.19 3:5 PM 페이지24


Fertilizer Business Department will focus on expanding

sales of organic fertilizer and diversifying its export target

markets in 2005.


F E R T I L I Z E R S

한농_18일본문 2005.7.19 3:5 PM 페이지25

Review of 2004

From the time that Dongbu Hannong

Chemical became the domestic producer

of compound fertilizers in 1967, it has

constantly committed all available

resources to the development of

innovative products and exploration of

new markets. Since 2000 the company

has operated an organic fertilizer facility

on Jeju Island, with an annual production

capacity of 60,000 tons, in an effort to

address fast-growing demand for

environment-friendly fertilizers.

As for overall sales, the company also

recorded an impressive growth of 33.0%

in 2004. Domestic sales were up a brisk

32.5%, along with a healthy 34.7% gain

in exports. Sales of compound fertilizers

increased sharply thanks to sales of

‘21-17-17’ products. As a result, the

company’s market share in the compound

fertilizer segment swelled to 21.0% from

the previous year’s 15.0%.

Outlook for 2005

In 2005, Fertilizer Business Department

will focus on expanding sales of organic

fertilizers and diversifying its export target

markets. The company plans to expand its

facility investment in China and Vietnam

two large-scale agricultural countries.

동부한농화학비료사업부는 1967년국내최초로

복합비료를생산한이래혁신적인제품과새로운

시장개척에온힘을쏟아왔습니다. 2000년에는

연간60,000톤규모의유기질비료공장을제주에

건설해고품질친환경제품을생산, 판매하고

있습니다.

2004년에는매출액이전년 비33.0% 증가했으며,

내수는 32.5%, 수출은 34.7% 늘어났습니다.

특히복합비료‘21-17-17’제품판매증가로

복합비료판매가크게늘어, 시장점유율을전년

15%에서 21%로넓혔습니다.

2005년비료사업부는유기질비료의판매증가와

고품질∙고부가가치제품으로수출시장다변화에

집중적인노력을경주할것입니다. 한편두거

농업국, 중국과베트남에 한투자를강화할

계획입니다.


�Market Position (%)

* Source : NACF Database

15

51

15

117

�Sales Revenue Compound Fertilizer

(Millions of Won)

’02 ’03 ’04

115,816

121,356

161,386

2211

(%)

3817

12

12

Namhae Chemical Pungnong KG Chemical Others

DongbuHannong

Longstar Gummaek

Powerengari

Gamgyulcheonha

New Products

한농_18일본문 2005.7.19 3:5 PM 페이지26


Seed Business Department will launch the sale of “well-

being” items, including tomato, broccoli, lettuce and

seedless watermelon.


S E E D S

한농_18일본문 2005.7.19 3:5 PM 페이지27

Review of 2004

In 2004, the business environment was

characterized by intensified price

competition and growing forays into the

market by small-scale seed suppliers

amid continued shrinkage of vegetable

acreage. The company responded to

this adverse situation by accelerating

its efforts to develop new varieties and

bed-soil for planting.

In addition, measures are being stepped

up to place proprietary products,

like cumber, Chinese cabbage,

and radish, under increased legal

protection, and to develop additional

environment-friendly items, such as

“EXTN,” a bed-soil for vegetable crops.

In the year under review, the turnover of

seeds edged downward to 12.6 billion

won, from 12.9 billion won a year earlier,

reflecting the difficult nature of the

market environment.

Outlook for 2005

In 2005, the company will launch the

sale of “well-being” products, including

tomato, broccoli, lettuce, and seedless

watermelon in response to the increase

in salad consumption, along with high

value-added bed soil and soil-mixed

seeds for vegetable crops. Furthermore,

the company will push forward with

efforts to advance into the vast Chinese

market in order to further boost exports

of various seed varieties.

2004년종묘업계는군소업체의난립으로가격

경쟁이심화되고채소류의재배면적이감소하는

등어려움을겪은한해 습니다. 동부한농화학

종묘사업부는이를타계하기위해종자, 상토등의

신제품개발을확 하고종자품종보호등록을

강화했습니다. 그결과미인백다다기오이,

청정여름배추, 하우스초롱무등의품종보호출원과

친환경EXTN 상토를개발하는성과를

거두었습니다.

재배면적감소등의이유로종묘사업부매출은

2003년 129억원에서 2004년 126억원으로

소폭감소했습니다. 2005년종묘사업부는

토마토, 브로콜리, 양상추, 씨없는수박등

웰빙상품과매트형, 작물전용상토등고품질

제품을개발하여적극적으로판매하고,

또한중국시장개발을통하여수출확 에도

박차를가할계획입니다.


’02 ’03 ’04

11,96712,931 12,598

�Applications for Legal Product Protection

Gyeongju Bed-Soil Factory

Jeongeup Bed-Soil Factory

�Sales Revenue(Millions of Won)(Thousand Parcels)(2004)

�Production Capacity

Heungena (hot pepper) Jowayu (seedless watermelon)

EXTN (bed soil )

Jungpumbagdadagi (cucumber)

New Products

�Cucumber : Miinbagdadagi

�ChineseCabbage : Cheongjeongyeoreum

�Radish : Housechorong

2,000

4,000

한농_18일본문 2005.7.19 3:5 PM 페이지28



V E T. - P H A R M. &

A G R I C U L T U R A L M A T E R I A L S

Dongbu Hannong Chemical has pushed forward with thedevelopment of high-quality veterinary pharmaceuticals. Thecompany launched its own brand, “Dongbu Farmmart,” ofagricultural materials in 2004.

한농_18일본문 2005.7.19 3:5 PM 페이지29

Vet.-Pharm.

In line with the receipt of KVGMP

(Korean Veterinary Good Manufacturing

Practices) certification in 2003, the

company has pushed forward with the

development and production of high-

quality veterinary pharmaceuticals and

supplement feed. In 2004, the turnover

of veterinary pharmaceuticals slipped

1.3%, from the previous year, to 2.5

billion won.

The market for veterinary

pharmaceuticals is rapidly becoming

mature, while the government is moving

to reinforce regulations in order to ensure

a steady supply of safe products for

animals. The company has plans to

diversify its product portfolios centered

on strong growth potential, and expand

alliances with leading venture firms for

development of better products.

Agricultural Materials

Dongbu Hannong Chemical launched its

own brand, “Dongbu Farmmart,” of

agricultural materials in early 2004.

Dongbu Farmmart is an integrated

agricultural mart that offers more than

10,000 kinds of agricultural materials to

farmers and agricultural concerns.

The company has already set up a 300-

branch nationwide service network to

play a leading role in the domestic

agricultural materials market. Of note,

Dongbu Farmmart is expected to play a

pivotal role in upgrading the domestic

agricultural distribution system.

Agricultural Materials Business

Department is hard at work providing

“one-stop shopping” for agricultural

materials by capitalizing on its existing

agricultural expertise. The development of

a range of high-quality product portfolios

is another priority. Its mid-term goal is to

enjoy the No.1 brand power in the

domestic agricultural materials market.

동물약품 2003년의KVGMP 인증획득을계기로

동부한농화학동물약품사업부는고성능동물약품

및보조사료 개발과생산에박차를가하고있습니다.

2004년에는메토졸, 독시크린, 골드 크, 스프락

플러스등을개발, 생산했습니다. 매출은전년보다

1.3% 감소한 25억원에이르 습니다.

2005년은약품시장규모가완숙기에이르고

있으며, 정부의축산물안전성확보를위한규제

강화가우려됩니다. 이에따라동물약품사업부는

안정적인제품포토폴리오구성으로사업을다각화

하고, 국내기술우위벤처기업과제휴를확 할

계획입니다.

농자재유통 동부한농화학은 2004년초농자재

유통전문브랜드‘동부팜마트’를구축했습니다.

300여개의가맹점을통해 10,000종이상의각종

농자재를농민과관련단체들에공급하고있으며,

국내농자재시장선도에많은노력을기울이고있습

니다. 당사는농업유통시스템선진화, 품질표준화

실현을위해 다각적인노력을경주할것입니다.


�Vet..-Pharm. / Sales Revenue

(Millions of Won)

’02 ’03 ’04

2,9542,556 2,522

�Agricultural Materials / Sales Revenue

(Millions of Won)

’04

11,796

* Note: Agricultural Materials Division was launched in 2004.

Sflacplus Metzole

A range ofenvironment-friendly products

Cost-efficient agricultural materials

New Products

한농_18일본문 2005.7.19 3:5 PM 페이지30

R E V I E W O F O P E R A T I O N S

Dongbu Hannong Chemical’s materials business division includespetrochemicals, chemical products, ferro-alloys, and internationaltrade. The company is fully dedicated to becoming a key player in thefield of materials.

32 P E T R O C H E M I C A L S

34 F E R R O - A L L O Y S

36 C H E M I C A L P R O D U C T S

38 T R A D I N G

Materials Business Division

한농_18일본문 2005.7.19 3:5 PM 페이지31

한농_18일본문 2005.7.19 3:5 PM 페이지32


Dongbu Hannong Chemical will strive to expand sales of HIPS,

semiconductor -packing materials, and high-performance

compound resin.


P E T R O C H E M I C A L S

한농_18일본문 2005.7.19 3:5 PM 페이지33

Review of 2004

As a result of record-high oil prices and

increased demand for high-function

products, sales of petrochemicals in 2004

jumped 59.1% from a year earlier,

reaching 321.3 billion won. This stellar

sales performance was in large part

attributable to rising prices of raw

materials, like benzene, and an

unbalanced supply-demand situation that

fueled sharp price hikes for

petrochemical items. By product, sales of

SM (styrene monomer) amounted to 123

billion won, up 92.3% over a year earlier;

PS (polystyrene) 101.6 billion won, up

33.0%; and EPS (expandable polystyrene)

58.2 billion won, up 25.4%.

Outlook for 2005

In 2005, marketing activities will focus

on specialized HIPS (high impact

polystyrene), semiconductor-packing

materials, and high value-added, high-

function, and environment-friendly

products, which enjoy strong price

competitiveness. Meanwhile, the

company will accelerate its development

of new products, such as compound

resins, in order to cope with the rapid

expansion of China’s petrochemicals

sector and growing price competitiveness

of Middle East countries. In addition,

the company intends to diversify into the

high-function resins and construction

materials businesses.

2004년유화사업은유가상승및원자재가격폭등에

따라벤젠등원재료구매가격이평년보다높게형성

되고수급불균형으로인해유화제품의가격이상승

했습니다. 원유가에의한가격변동과고기능제품에

한수요증가로 2004년유화사업부의매출액은

전년 비 59.1% 상승한3,213억원을기록했습니다.

각제품별로는SM이92.3% 성장한1,230억원,

PS는33.0% 증가해 1,016억원, 그리고EPS는

25.4% 확 된 582억원의매출을올렸습니다.

2005년유화사업부는중국유화업계의초고속

성장과원가경쟁력을앞세운중동국가들의위협

요인등에 처하기위해특화HIPS, 반도체포장재

등고부가가치, 고기능, 친환경제품판매를확

하겠습니다. 또한고성능컴파운드수지등신제품

개발과고기능성수지사업, 건축자재사업등

신규사업에도박차를가하겠습니다.


�Product Capacity�Sales Revenue

(ton)

’02 ’03 ’04

183,774201,976

321,275

SM PS EPS

210,000

100,000

50,000

(Millions of Won)

ESCR* HIPS

* ESCR refers to Environmental Stress Crack Resistance

High Gloss HIPS

Environment-sensitive EPS

High Flame-retardant EPS

New Products

한농_18일본문 2005.7.19 3:5 PM 페이지34


Ferro-Alloys Business Department has reinforced its existing

business capabilities and branched out into environment-

friendly new businesses with the aim of becoming a world-

class ferro-alloys company.


F E R R O - A L L O Y S

한농_18일본문 2005.7.19 3:5 PM 페이지35

Review of 2004

Ferro-alloy Business Department

benefited significantly from sharp rises

in product prices due to serious supply-

demand imbalances in the international

market. As a result, sales of ferro-alloy

skyrocketed 66.9% in 2004, from a

year ago, amounting to 178.5 billion

won. Moreover, export performance

enjoyed a 2.2-fold improvement, thanks

in large part to expanded global

recognition of Dongbu Hannong

Chemical products and active

marketing efforts overseas.

By product, FeMn (MC) recorded sales

of 68.6 billion won in 2004, up a sharp

72.2% from a year earlier, followed by

SiMn at 44.1 billion won, and FeMn

(HC) at 35.5 billion won.

Outlook for 2005

Dongbu Hannong is currently

expanding its production facilities to

boost its annual output level to 200,000

tons by the end of 2005, in order to

establish itself as a world-class

ferro-alloy manufacturer.

Moreover, management’s business

diversification plans call for entry into

the environmental protection sector,

through application of its accumulated

technology.

Global demand for ferro-alloys is

expected to remain robust in the near

term as a result of the rapid growth of

China's steel industry.

당사는세계적인합금철수급불균형등에따른

국제가격의상승으로 2004년매출이전년 비

66.9% 상승한1,785억원을기록했습니다.

특히수출은 2.2배의기록적인성장을달성했습

니다. 품목별로는FeMn (MC)이72.2% 상승한

686억원, SiMn는441억원그리고FeMn (HC)는

355억원의매출을기록했습니다.

국제적인합금철수요는중국의제철산업의급속한

성장에힘입어당분간강세를보일것으로전망됩니다.

합금철사업부는세계적인합금철회사로발전하기

위해 2005년까지합금철생산능력을 20만톤으로

증가시키기위한생산시설을확장하고, 기존기술을

응용한환경산업으로사업 역을확 하고있습니다.


�Market Position�Sales Revenue

(Millions of Won) (%)

’02 ’03 ’04

93,458106,943

178,516

’02 ’03 ’04

53 53 53

SiMn, SiMn (LC)

FeMn (HC),FeMn (MC),FeMn (LC),

Ash melting system in conjunction with ferro-alloy manufacturing

Major Products

한농_18일본문 2005.7.19 3:5 PM 페이지36


In 2005, the Chemical Products Department will acceleratethe efforts to boost its sales performance through theproduction of high-quality products and reinforcement of itsmarketing activities.


C H E M I C A L P R O D U C T S

한농_18일본문 2005.7.19 3:5 PM 페이지37

Review of 2004

Steady improvement of product quality

and aggressive marketing of domestic

customers have yielded impressive gains

in the sales of chemical products, in

particular purified phosphoric acid.

In 2004, sales of chemical products,

which also include nitric acid and sulfuric

acid, expanded by a significant 18.5%

from a year earlier, amounting to 48.4

billion won.

A sharp decline in the import of

Chinese-made powdered phosphoric

acid, for which prices have risen sharply,

helped to boost the company's sales

of phosphoric acid.

There has been much concern that

shortages of fertilizer ingredients will

continue to persist, due to shortages of

electricity in China, thereby driving up

the prices of finished products.

Outlook for 2005

However, consumption of regular nitric

acid is expected decline steadily in the

future, primarily due to more stringent

environmental regulations. In 2005, the

company will bolster efforts to enhance

product quality and intensify its

marketing activities.

품질의향상과적극적인마케팅으로전년보다

18.5% 증가한 484억원의매출을기록한

동부한농화학화공사업부는 2004년중국건식인산

수입량급감으로인한판매증 와틈새시장에 한

적극적인공략을통하여정제인산최 판매를

달성했습니다.

중국의경제성장으로인한원자재부족현상으로

원가상승이예상되는가운데 2005년화공사업부는

시황에탄력적으로 응해매출을증 시키고

적극적시장공략을펼칠계획입니다.

또한신규수요처를확보하기위해지속적으로

고품질제품을생산하고마케팅을강화할것입니다.


�Production Capacity

* Note : Chemical Product Department was established in September 2002. ’03 ’04

40,86548,404

�Sales Revenue

(Millions of Won) (Ton)

500,000

100,000

25,000

Sulfuric acidNitric acid Purified phosphoric acid

Sulfuric Acid

Nitric Acid

Purified Phosphoric Acid

Major Products

한농_18일본문 2005.7.19 3:5 PM 페이지38



T R A D I N G

Review of 2004

Strong growth of trade transactions with

China and Africa resulted in a

noteworthy 21.4% growth in turnover of

the Trading Department in 2004. The

department's sales amounted to 125.9

billion won, as compared to 103.7

billion won a year earlier. Transport of

petrochemical products using large-size

liquid-bulk carriers (BTX and MEG)

has also contributed to increasing the

department's turnover, along with the

signing of long-term sales contracts and

increased intermediate trade.

In 2004, key raw material prices have

jumped due to surging oil prices, along

with hikes in logistic costs.

Trade liberalization in China,

meanwhile, helped to intensify

competition in the Chinese market.

Outlook for 2005

As such, in 2005, Trading Business

Department plans to strengthen its

marketing activities in the oil-rich

Middle East region and South and Latin

America, as well as China and Africa.

The department is also carefully

weighing plans to launch an import

business for consumer items and

develop resources in foreign countries,

while seeking to develop into an

integrated trading firm.

중국과아프리카에 한수출증가로인해 2004년

무역사업부의매출은 21.4% 증가한1,259억원을

기록했습니다. 2004년에는원유가상승으로인한

원자재가격인상및물류비상승과중국내무역업

자유화에따른참여업체과다로경쟁이심화되었

습니다.

이러한악조건속에서 형Liquid Bulk Cargo

(BTX, MEG 등) 판매증가와해외공급선개발을

통한삼국간거래비중증 , 그리고장기거래계약

증 에매진함으로써매출증 를거두었습니다.

2005년무역사업부는중국및아프리카는물론

중동과중남미에 한시장공략을강화할계획입

니다. 또한수입내수판매, 자원개발등사업을

다각화함으로서복합무역업체로의발전을검토

하고있습니다.

�Sales Revenue

(Millions of Won)

’02 ’03 ’04

104,948 103,682125,899

한농_18일본문 2005.7.19 3:5 PM 페이지39

40 M A N A G E M E N T ’ S

D I S C U S S I O N & A N A L Y S I S

46 F I N A N C I A L S T A T E M E N T S

(Non-consol idated)

56 R E P O R T O F I N D E P E N D E N T

P U B L I C A C C O U N T A N T S

In fiscal 2004, Dongbu Hannong Chemical overcame a harsh business

environment and managed to reap best-ever performances in sales

revenue and bottom-line results.

Financial Statements

한농_18일본문 2005.7.19 3:5 PM 페이지40


M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

I OVERVIEW / 시장 환경 I

In fiscal 2004, Dongbu Hannong Chemical faced a challenging

business environment that was characterized by sharp rises in major

raw materials prices, the relative strength of the Korean currency and

increased competition in global markets. However, the company

resolutely took on these challenges and reaped the best performances

in sales revenue and bottom-line results.

동부한농화학은 2004년 원자재값의 상승과 원화의 강세, 경쟁력 심화 등

전반적으로불리한시장환경을극복하여매출과수익성면에서뛰어난실적을

나타냈습니다.

In the crop protection sector, the overall consumption of

pesticides has been declining in Korea, due to slippage in

farmland and growing concerns on environmental safety.

However, the company posted slight sales increases in 2004 on

the back of its dominating market leadership.

농약부문은 농경지 감소와 환경안전에 한 관심고조로 농약소비가 감소

했으나, 당사 농약 매출은 시장점유율 1위의 안정적 시장 지위를 바탕으로

소폭 증가했습니다.

In 2004, fertilizer sales surged by a larger margin 33.0%, which

was primarily attributed to increased sales prices of the National

Federation of Agricultural Cooperatives, which were derived

from rises in ingredient prices. Another major positive factor was

the company’s steady development of new, innovative products

and enlarging its overseas markets. The company’s fertilizer

shipments to North Korea amounted to 59,000 tons in 2004.

South Korea’s annual shipments of fertilizers to North Korea are

expected to continue in line with increased inter-Korean

economic cooperation.

비료사업매출액은원료가격의상승에따른농협공급가상승으로인해33.0%의

증가세를나타냈습니다. 또한지속적인신제품개발과해외시장개척도매출액

증가에 기여했습니다. 당사는 2004년 59,000톤의 비료를 북한에 보냈으며

남북경협이증가함에따라북한에 한비료지원이계속될전망입니다.

The petrochemicals business also recorded brisk sales, with the

result of 2004 showing a robust 59.1% growth. The notable sales

growth was primarily derived from soaring oil prices and

increases in purchasing prices in raw materials like benzene

which increased sharply over the previous year.

2004년도 유화산업은 유가상승 및 원자재 가격 폭등에 따라 벤젠 등 원재료

구매가격의 등락폭이 매우 크고 가격 또한 평년보다 높게 형성되어 60%에

달하는 높은매출 신장률을 보 습니다.

In 2004, Dongbu Hannong Chemical continued to sustain robust

growth in the area of ferro-alloys, supported by its enhanced

product recognition by clients the world over and aggressive

marketing efforts. With the aim of becoming a global leader in

the ferro-alloy industry in the near term, the company expanded

the production output of its electric furnace from October 2004

through June 2005. As a result, its annual production capacity

will rise to 200,000 tons from 160,000 tons. The company plans

to diversify into new environmental and waste incineration

business sectors by harnessing its technology accumulation.

합금철 사업은 수요가들의 당사 제품에 한 인지도 향상 및 적극적인 마케팅

으로성장을지속해가고있습니다. 세계적인합금철회사로발돋움하기위해

2004년10월부터2005년6월까지전기로를증설했으며, 이에따라생산능력이

16만톤에서20만톤으로증가할것입니다. 또한기존기술을활용, 새로운환경

사업인소각재용융플랜트사업을전개해사업 역을확 하고있습니다.

In 2004, the Trade Business Department recorded a year-on-year

21.4% growth in turnover, which reached 125.9 billion won.

This impressive result was primarily attributable to the

company’s extensive efforts to explore new markets and quick

responses to trends in international markets of petrochemicals.

무역사업부는 2004년 매출액이 1,259억원을 달성하여, 예년에 비해 21.4%의

큰폭의 증가를 기록했습니다. 이러한 결과는 새로운 시장개척 노력과 국제

무역환경변화에빠르게 처한결과입니다.

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지1


I RESULTS OF OPERATIONS / 업실적 I

Sales Performance / 매출

In fiscal 2004, Dongbu Hannong Chemical overcame an

extremely business environment and recorded an exceptional

sales performance. Total sales in the year under review grew

34.4% over a year earlier to reach 1,068.3 billion won, the best

performance in as many years. Domestic sales recorded a hefty

26.3% to 697.9 billion won. The performance of exports was

equally impressive, recording a 52.7% growth over the previous

year.

2004년 동부한농화학은 놀라운 매출성장을 나타냈습니다. 총 매출은 예년에

비해 34.4% 증가한 1조 683억원에 이르 으며, 내수 매출은 26.3% 증가한

6,979억원에 달했으며, 수출은 52.7% 성장한 3,704억원에 이르 습니다.

Analysis of Income Statement / 이익분석

The company’s dramatic sales growth resulted in a significant

increase in sales costs. The cost of gross sales in 2004 grew

30.3% over a year earlier. Gross profit, totaling 202.6 billion

won, represented an increase of 55.3%, year-on-year, much

higher than the growth rate of sales. Gross profit margin, as a

result, rose to 19.0% in 2004 from 16.4% a year earlier, a gain of

2.6% points.

큰 폭의 매출증가로 인해, 매출원가는 예년에 비해 30.3% 상승했습니다.

2004년총이익은2,026억원으로55.3%의기록적인증가를나타냈으며, 매출총

이익률은2003년 16.4%에 비해2.6% 포인트 개선된 19%에 이르 습니다.

Note : Agricultural materials business was launched in 2004.

�Gross Profit (Millions of Won)

(%)

�Breakdown of Sales by Business Area (%)

�Sales Trend (Millions of Won)

’02 ’03 ’04

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0Domestic SalesExports

Crop protection Fertilizer Seeds Vet.-Pharm.Agricultural materialsPetrochemicals Ferro-AlloysChemical products Trading business

498,823

243,402

742,225

552,471

242,553

795,024

697,874

370,408

1,068,282

’02 ’03 ’04

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

21.5

17.5

14.0

10.5

7.0

3.5

0

SalesCost of Gross SalesGross Profit Gross Profit Margin

19.27

30.07

16.71

4.5311.79

15.11

1.180.24

1.10

742,225604,085 138,140

18.6

16.4

19.0

795,024664,598 130,426

1,068,282865,696

202,587

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지2



Operating income / 업이익

While total sales in 2004 surged 34.4%, selling, general and

administrative expenses grew by a significantly smaller margin

of 26.9%. This means that the company succeeded in controlling

SG&A expenses. Operating income, as a result, expanded

116.5%, year-on-year. The operating income margin also

improved significantly to 8.4%.

총매출증가율34.4%에반해판매및일반관리비의증가율은26.9%에 그쳐,

당사가 판매 및일반관리비의 절감에 성공함을 보여주고 있습니다. 한편 업

이익도 116.5%의 폭 신장을 기록, 897억원에 이르 습니다. 업이익률은

전년5.2%에서 3.2% 성장한8.4%를 기록했습니다.

Non-operating Income / 업외수익

Non-operating income also posted robust growth. Non-

operating income in 2004 grew to 41.9 billion won, a gain of

61.0% over the previous year. Interest income grew 15.6%.

Income from equity investment in subsidiaries amounted to 5.7

billion won, as compared to 5.2 billion won a year earlier.

업외수익 또한 예년에 비해 61% 증가해 419억원을 기록했습니다. 이자

수익은 15.6% 증가하 고, 지분법에 의한 이익증가는57억원에 달했습니다.

Non-operating Expense / 업외비용

In 2004, despite a decrease of 2.1 billion won in interest

expense over the previous year, non-operating income rose to

77.1 billion won, due in large part to a significant rise in foreign

currency-related losses. Losses on disposal of trade accounts

receivable stood at 4.2 billion won, a slight decrease of 186

million won from a year earlier.

이자비용이 21억원 감소 했음에도 불구하고 외환관련 손실의 증가로 인해

업외 비용은 2003년 504억원에서 2004년 771억원으로 증가했습니다.

한편매출채권처분손실은 42억원에이르 습니다.

Net Income / 순이익

In the year under review, net profit, aided by a significant

boost in operating income, posted a more than two-fold growth

over the previous year. Accordingly, net income margin more

than doubled to 3.8% in 2004 from 1.6% a year earlier. Pre-tax

income also rose by a big margin of 37.5 billion won.

순이익은 업이익의 폭적인 신장에 힘입어 2배 이상의 높은 증가를 기록

했습니다. 따라서 순이익율은 2003년 1.6%에서 2004년 3.8%로 크게 신장

했습니다. 세전수익도 전년 비375억원 증가했습니다.

Interest income 3,604 5,654 6,533

Dividend income 729 1,701 1,210

Foreign exchange-related income 11,490 6,453 26,153

Equity method income 8,709 5,173 5,656

Non-operating income 28,386 25,998 41,855

2002 2003 2004

(Millions of Won)

Interest expenses 34,867 32,643 30,551

Foreign exchange-related losses 3,320 9,127 14,766

Loss on disposal of

trade accounts receivable 3,259 4,414 4,228

Non-operating expenses 57,748 50,434 77,087

2002 2003 2004

(Millions of Won)

�Operating Income (Millions of Won)

(%)

’02 ’03 ’04

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

9

6

3

0

SalesSG&A ExpensesOperating IncomeOperating Income Margin

742,22585,69152,449

7.1

8.4

5.2

795,02489,007

41,419

1,068,282112,912

89,675

�Net Income (Millions of Won)

SalesIncome before

Income TaxesNet IncomeNet Income Margin

(%)

’02 ’03 ’04

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

4

3

2

1

0

742,22523,08716,309

2.2

3.8

1.6

16,98313,047

54,44240,965

795,024

1,068,282

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지3


I ANALYSIS OF BALANCE SHEET / 차 조표분석 I

Assets /총자산

Total assets in 2004 rose 11.1% to 976,639 million won over a

year earlier, primarily attributable to sharp rises in current assets

and inventories. Current assets, including cash and cash

equivalents and trade accounts receivable, recorded a robust

37.0% year-on-year growth. Inventories, amounting to 245.2

billion won, grew 47.2%. By contrast, non-current assets

declined 0.7% to 599.3 billion won. Of note, stocks subject to the

equity method increased 13.4%, while investment securities were

down 20.9% to 71.8 billion won.

총 자산은 11.1% 증가한 9,767억원을 기록했습니다. 이는 유동자산과 재고

자산이 상승했기 때문입니다. 현금 및 현금 등가물을 포함한 유동자산은

37.0% 증가한 반면 고정자산은 0.7% 감소했습니다. 투자자산 중 지분법적용

투자주식은13.4% 증가했으나매도가능증권은20.9% 감소했습니다.

As of liabilities, a sharp decline in non-current liabilities resulted

in a moderate increase of 8.0% in total liabilities. Current

liabilities swelled 19.6%, while non-current liabilities dropped

sharply by 28.4% to 96.4 billion won. Total shareholders’ equity

in 2004 rose 16.5% over the previous year to 374.8 billion won,

on the back of sharply increased net income. Due to a substantial

decrease in R&D funds, intangible assets declined to 9.1 billion

won, over the previous year’s 14.7 billion won.

총 부채는 고정부채의 폭적인 감소에 힘입어 8% 증가하는데 그쳤으며,

유동부채는 19.6% 늘어난 반면, 고정부채는 28.4% 줄었습니다. 한편, 자기

자본은순이익의 높은 신장에 힘입어 전년에 비해 16.5% 증가한 3,748억원에

이르 습니다. 개발비의 폭적인 감소로 인해 무형자산은 2003년 147억원

에서 91억원으로 크게감소했습니다.

Liabilities / 부채

As mentioned above, total liabilities in 2004 were up 8.0%

over a year earlier to 601.9 billion won. Current liabilities

expanded 19.6%, year-on-year, while non-current liabilities

dwindled to 96.4 billion won from 134.6 billion won, a drop of

28.4%. Overall, the debt to equity ratio showed a significant

improvement to 160.6% in 2004, from 173.2% a year earlier.

앞서 언급했듯이, 2004년 총 부채는 8% 상승한 6,019억원을 기록했으며,

유동부채는 19.6% 상승한 반면, 고정부채는 28.4%의 감소했습니다. 그 결과

부채비율은예년의 173.2%에서 160.6%로 크게 개선되었습니다.

Investment assets 155,612 140,637 131,089

Investment securities 130,725 90,822 71,840

Investment securities subject to

variation under equity method 30,265 39,239 44,503

Property, plant &

equipment machinery 446,726 448,350 459,114

Intangible assets 13,347 14,696 9,074

2002 2003 2004

(Millions of Won)

Current liabilities 384,713 422,701 505,445

Trade accounts payable 100,272 95,916 155,655

Non-current liabilities 172,957 134,594 96,415

Total liabilities 557,670 557,295 601,859

Debt to equity ratio (%) 186.19 173.16 160.59

2002 2003 2004

(Millions of Won)

�Non-current Assets

�Assets (Millions of Won)

1,000,000

750,000

500,000

250,000

0’02 ’03 ’04

857,183557,670

299,512Total AssetsTotal LiabilitiesTotal Shareholders’ Equity

879,134557,295 321,840

976,639601,859 374,780

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지4



I ANALYSIS OF CASH FLOW /현금흐름분석 I

Cash flow provided by operating activities in 2004 expanded

by a big margin of 242.5% to 44.6 billion won. The major factor

behind this astounding growth was a significant rise of 27.9

billion won in net income. By contrast, cash flow from investing

activities turned negative, reaching 53.8 billion won. Cash flow

from financing activities also turned negative, amounting to 26.0

billion won. Net decrease in cash, as a result, totaled to 35.2

billion won.

업활동으로인한현금유입액은순이익이크게증가한것에힘입어전년 비

242.5% 증가한 446억원에 달했습니다. 반면, 투자활동과 재무활동으로 인한

현금 유출액은 538억원과 260억원을 각각 기록했으며, 현금 순 감소액은

352억원에 달했습니다.

I MAJOR FINANCIAL INDICATORS /주요재무지표 I

Current Ratio / 유동비율

The current ratio, current assets divided by current liabilities,

rose to 74.66% in 2004 from 65.33% a year earlier. Current

assets, totaling 377.4 billion won, represented a hefty increase of

37.0% over the previous year. By comparison, current liabilities

rose 19.6% to 505.4 billion won, year-on-year.

유동비율은 예년의 65.33%에서 2004년 74.66%로 크게 개선되었습니다.

이는 유동자산이 37% 증가했기 때문입니다. 반면, 유동부채는 19.6% 증가한

5,054억원에이르 습니다.

Interest Coverage Ratio / 이자보상비율

The interest coverage ratio, operating income divided by

interest expenses, rose sharply to a 2.94 multiple in 2004 vs. a

1.27 multiple in the previous year. Operating income in 2004 was

up 116.5% over a year earlier, while interest expense dipped

6.4% to 30.6 billion won.

이자보상비율은 1.27배에서 2.94배로 크게 상승했습니다. 이는 업이익이

116.5% 폭적인 증가했기 때문입니다. 반면, 이자비용은 6.4% 감소한 306

억원 입니다.

EV/EBITDA / 기업가치/이자, 세금, 감가상각전이익

(EV=Enterprise Value (number of stocks including preferred shares) x

share price at the end of 2004) + net liabilities. EBITDA=Earnings

Before Interest, Tax, Depreciation, Amortization

The company’s EV/EBITDA declined to 4.63 times from the

previous year’s 6.01 times, mainly due to sharp rises in its fair

market price, despite increased pretax income. This result means

more opportunities for investors.

Cash flow from operating activities 55,354 13,024 44,607

Cash flow from investing activities (62,242) 12,947 (53,806)

Cash flow from financing activities 10,016 6,164 (25,975)

Net increase (decrease) in cash 3,128 32,135 (35,174)

2002 2003 2004

(Millions of Won)�Cash Flow Statement

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지5


시가총액의 큰 폭의 증가로 인해 2004년 EV/EBITDA는 2003년 6.01배에서

2004년 4.63배로 감소했습니다. 이러한 감소는 투자가들에 더 많은 투자

기회를 제공함을 의미합니다.

ROE & ROA / 자기자본이익율& 총자산이익율

Return on equity (ROE), net income divided by equity capital,

skyrocketed to 11.76% in 2004 from 4.20% a year earlier, driven

by a sharp rise in net income. Return on assets (ROA) also showed

a big improvement from 1.50% to 4.41%, thanks to the expanded

net income. Net income in 2004, totaling 41.0 billion won,

represented an astounding 214.0% increase over the previous year.

자기자본순이익율 (ROE)은 순이익의 괄목할 만한 신장에 힘입어 전년의

4.20%에서 올해 11.76%로 개선되었습니다. 또한, 총자산순익율 (ROA)은

1.50%에서 4.41%로 크게 상승했습니다.

Dividends / 배당

Corporate Credit Rating / 신용등급

Dongbu Hannong Chemical maintains an investment-grade

rating for its corporate bonds, which have remained unchanged at

BBB in 2003 and 2004, respectively.

동부한농화학은 회사채 부문의 안정적 신용등급을 획득, 투자적격 업체의

등급을 계속 유지하고 있습니다.

Note: NICE refers to National Information & Credit Evaluation.

No. of shares entitled to receive dividends 9,572,263 9,572,263

Dividend ratio per share (%) 10 10

Dividends (mil. won) 4,786 4,786

Net income (mil. won) 13,047 40,965

Dividend yield (%) 8.47 3.79

Earnings per share (won) 1,363 4,280

2003 2004

�EV/EBITDA (times)

’02 ’03 ’04

9.00

6.00

3.00

0

5.626.01

4.63

Classification 2002 2003 2004 Rating Agency

Corporate bonds BBB- BBB BBB Korea Ratings

CP - A3 - NICE

�ROE / ROA (%)

’02 ’03 ’04

12

9

6

3

0ROEROA

5.502.00

4.20

11.764.41

1.50

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지6


B A L A N C E S H E E T S / 차 조 표

2004 2003 2004 2003

In Thousands of KRW In Thousands of U.S. Dollars

As of December 31, 2004 and 2003

Assets 자산

I. Current assets 유동자산 377,362,121 275,451,086 361,527 263,893

1. Quick assets 당좌자산 132,173,444 108,864,683 126,627 104,296

Cash & cash equivalents 현금및현금등가물 4,968,679 40,182,240 4,760 38,496

Short-term financial instruments 단기금융상품 29,113,770 9,148,000 27,892 8,764

Marketable securities 매도가능증권 18,694,369 - 17,910 -

Trade accounts receivable 매출채권 57,904,386 45,194,059 55,475 43,298

Short-term loans 단기 여금 2,085,200 1,068,340 1,998 1,024

Other accounts receivable 미수금 12,226,691 7,992,355 11,714 7,657

Accrued revenues 미수수익 360,134 1,298,760 345 1,244

Prepayment 선급금 2,237,045 718,480 2,143 688

Prepaid expense 선급비용 1,339,044 1,425,231 1,283 1,365

Customs duties deposits 관세보증금 3,168,417 1,696,901 3,035 1,626

Deposits for guarantees and receivables 예치보증금 75,709 87,337 73 84

Derivatives 통화선도자산 - 52,980 - 51

2. Inventories 재고자산 245,188,677 166,586,403 234,900 159,596

Merchandise 상품 10,738,663 1,793,232 10,288 1,718

Finished products 제품 115,191,411 93,261,218 110,358 89,348

Work-in-process 재공품 3,446,410 2,811,439 3,302 2,693

Raw materials 원재료 68,902,459 51,916,666 66,011 49,738

Goods in transit 미착품 41,539,820 11,013,631 39,797 10,551

Stocks 저장품 4,899,193 4,952,788 4,694 4,745

By-products 부산물 470,722 837,428 451 802

II. Non-current assets 고정자산 599,276,961 603,683,518 574,130 578,352

1. Investment assets 투자자산 131,089,038 140,637,286 125,588 134,736

Long-term financial instruments 장기금융상품 2,656,500 2,349,500 2,545 2,251

Long-term loans 장기 여금 1,026,610 297,376 984 285

Investment securities 투자유가증권 71,840,173 90,822,360 68,826 87,011

Investment securities subject to

the application of equity method 지분법적용투자주식 44,503,022 39,238,599 42,636 37,592

Guarantee deposits 보증금 11,062,449 7,929,168 10,598 7,596

Long-term receivables 장기미수금 284 284 - -

2. Property, plant & equipment 유형자산 459,114,340 448,350,471 439,849 429,537

Land 토지 284,359,709 284,003,723 272,427 272,086

Building 건물 83,694,241 82,250,610 80,182 78,799

Structures 구축물 16,071,291 13,204,245 15,397 12,650

Machinery 기계장치 48,711,255 54,160,944 46,667 51,888

Vehicles 차량운반구 262,332 235,073 251 225

Tool & equipment 공구와 기구 2,385,927 2,071,965 2,286 1,985

Furniture 비품 8,888,927 5,659,009 8,516 5,422

Construction in progress 건설중인자산 14,740,657 6,764,902 14,122 6,481

3. Intangible assets 무형자산 9,073,583 14,695,761 8,693 14,079

Industrial possession rights 산업재산권 488,850 364,181 468 349

R&D expenses 개발비 8,584,733 14,331,580 8,224 13,730

Total assets 자산총계 976,639,082 879,134,604 935,657 842,244

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지7


2004 2003 2004 2003


Liabilities 부채

I. Current liabilities 유동부채 505,444,501 422,701,463 484,235 404,964

Trade accounts payable 매입채무 155,654,968 95,915,634 149,123 91,891

Short-term borrowings 단기차입금 243,044,089 216,520,258 232,845 207,435

Other account payable 미지급금 10,358,677 9,106,315 9,924 8,724

Unearned revenue 선수금 1,922,573 1,975,448 1,842 1,893

Deposit 예수금 847,472 762,304 812 730

Accrued expenses 미지급비용 1,778,196 1,576,693 1,704 1,511

Income tax payable 미지급법인세 9,328,680 1,411,247 8,937 1,352

Long-term current liabilities 유동성장기부채 82,509,846 95,433,563 79,048 91,429

II. Non-current liabilities 고정부채 96,414,515 134,593,640 92,369 128,946

Debentures 사채 49,887,121 88,708,019 47,794 84,986

Long-term borrowings 장기차입금 25,298,478 28,102,487 24,237 26,923

Estimated debt of returned goods 반품추정부채 7,443,827 - 7,131 -

Retirement & severance benefits 퇴직급여충당금 5,183,820 10,166,940 4,966 9,740

Guarantee deposit 예수보증금 2,220,011 3,314,213 2,127 3,175

Long-term accounts payable 장기미지급금 215,892 215,892 207 207

Deferred income tax payable 이연법인세 6,165,366 4,086,088 5,907 3,915

Total Liabilities 부채총계 601,859,015 557,295,104 576,604 533,910

Shareholders’ equity 자본

I. Paid in capital 자본금 49,645,225 49,645,225 47,562 47,562

Common stock 보통주자본금 49,645,225 49,645,225 47,562 47,562

II. Capital surplus 자본잉여금 215,793,525 215,793,525 206,738 206,738

Paid-in capital in excess of par value 주식발행초과금 25,814,841 25,814,841 24,732 24,732

Asset evaluation surplus 재평가적립금 188,036,148 188,036,148 180,146 180,146

Others 기타자본잉여금 1,942,536 1,942,536 1,861 1,861

III. Retained earnings 이익잉여금 99,203,674 63,025,199 95,041 60,381

Legal reserve 이익준비금 6,152,810 5,674,197 5,895 5,436

Reserve for business rationalization 기업합리화적립금 11,738,759 11,738,759 11,246 11,246

Reserve for financial structure improvement 재무구조개선적립금 7,808,416 7,808,416 7,481 7,481

Reserve for technological development 기술개발준비금 6,766,667 9,233,333 6,483 8,846

Unappropriated retained earnings to be carried over

to subsequent year처분전이익잉여금 66,737,023 28,570,494 63,937 27,372

IV. Capital adjustments 자본조정 10,137,643 (6,624,448) 9,712 (6,346)

Treasury stock 자기주식 (4,719,479) (2,119,657) (4,521) (2,031)

Income (loss) on valuation of marketable securities

매도가능증권평가이익 (손실) 17,721,374 (2,755,228) 16,978 (2,640)

Loss on valuation of investment securities subject to

application of equity method 지분법적용투자주식평가손실 (1,588,211) (531,664) (1,522) (509)

Loss on disposal of treasury stock 자기주식처분손실 (1,276,041) (1,217,899) (1,222) (1,167)

Total shareholders’ equity 자본총계 374,780,067 321,839,500 359,054 308,334

Total liabilities and shareholders’ equity 부채와자본총계 976,639,082 879,134,604 935,657 842,244

I Note I The Korean Won amounts are translated into U.S. dollars for comparison purposes, at the exchange rate of ＼1,043.8 to US$1.00, the basic exchange rate on December 31, 2004.

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지8


I N C O M E S T A T E M E N T S / 손 익 계 산 서

2004 2003 2004 2003


For the years ended December 31, 2004 and 2003

I. Sales 매출액 1,068,282,276 795,024,394 1,023,455 761,664

Sales of merchandise 상품매출액 200,524,281 137,037,415 192,110 131,287

Sales of finished products 제품매출액 913,798,785 708,619,998 875,454 678,885

Sales of by-products 부산물매출액 7,390,361 5,982,141 7,080 5,731

Sales promotion 판매장려금 (54,660,564) (57,564,117) (52,367) (55,149)

Others 기타 1,229,413 948,957 1,178 909

II. Cost of Sales 매출원가 865,695,632 664,598,457 829,369 636,711

1. Cost of merchandise sold 상품매출원가 192,090,451 129,812,846 184,030 124,366

Inventory of basic items 기초상품재고액 1,793,232 5,219,343 1,718 5,000

Cost of products bought 당기상품매입액 206,628,977 126,391,193 197,958 121,088

Transfer from other accounts 타계정에서 체액 417,563 - 400 -

Transfer to other accounts 타계정으로 체액 (5,856,647) (4,457) (5,611) (4)

Inventory of goods at end of term 기말상품재고액 (10,892,673) (1,793,232) (10,436) (1,718)

2. Cost of finished products sold 제품매출원가 666,379,295 528,584,662 638,417 506,404

Inventory of basic items 기초제품재고액 93,261,218 106,600,186 89,348 102,127

Cost of production of finished products 당기제품제조원가 919,448,901 703,932,688 880,867 674,394

Transfer from other accounts 타계정에서 체액 39,776,588 7,637,599 38,107 7,317

Transfers to other accounts 타계정으로 체액 (269,641,186) (196,324,593) (258,326) (188,086)

Inventory of goods at end of term 기말제품재고액 (116,466,226) (93,261,218) (111,579) (89,348)

Cost of sales of by-products 부산물매출원가 7,225,886 6,200,950 6,923 5,941

III. Gross profit 매출총이익 202,586,644 130,425,936 194,086 124,953

IV. SG&A expenses 판매비와관리비 112,911,959 89,006,881 108,174 85,272

Salaries 급여 16,093,806 13,484,912 15,418 12,919

Retirement benefits 퇴직급여 2,210,062 2,002,269 2,117 1,918

Severance benefits 법정복리비 1,200,736 1,079,226 1,150 1,034

Welfare expenses 복리후생비 1,803,174 1,418,164 1,728 1,359

Transportation expenses 여비교통비 2,205,943 1,869,232 2,113 1,791

Communications expenses 통신비 708,165 700,949 678 672

Taxes & fees 세금과공과 749,926 646,031 718 619

Expenses for supplies 소모품비 550,510 834,261 527 799

Current R&D expenses 경상연구개발비 12,935,875 5,295,479 12,393 5,073

Expenses for books & publications 도서인쇄비 238,298 188,288 228 180

Rents paid 지급임차료 2,861,744 3,122,911 2,742 2,992

Amortizations 감가상각비 2,860,830 2,572,208 2,741 2,464

Repair expense 수선비 59,682 63,297 57 61

Vehicle maintenance expenses 차량유지비 2,271,003 2,071,547 2,176 1,985

Insurance premiums 보험료 600,807 396,679 576 380

Payment fees 지급수수료 4,514,713 4,150,648 4,325 3,976

Service charges 용역비 2,848,551 2,738,804 2,729 2,624

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지9


2004 2003 2004 2003


Compensation 포상비 365,184 192,904 350 185

Advertisement expenses 광고선전비 4,898,504 3,713,914 4,693 3,558

Education & training expenses 교육훈련비 1,693,356 773,352 1,622 741

Computerization expenses 전산운 비 2,500,653 1,196,718 2,396 1,147

Business promotion expenses 업무촉진비 1,228,094 958,796 1,177 919

Association fees 협회비 343,079 340,835 329 327

Sales commissions 판매촉진비와수수료 8,541,883 7,528,548 8,183 7,213

Overseas branch maintenance expenses 해외지사비용 348,796 366,223 334 351

Expenses for supplies 보급비 1,753,490 1,393,945 1,680 1,335

Transportation & storing expenses 운반보관료 32,076,903 25,455,243 30,731 24,387

Expenses for claims 클레임비용 155,546 252,422 149 242

Expenses for samples 견본비 805,975 445,166 772 426

Bad debt expenses 손상각비 898,658 372,240 861 357

Electricity expenses 전력비 45,224 44,232 43 42

Depreciation of intangible assets 무형자산상각비 2,242,331 3,077,886 2,148 2,949

Others 기타 300,458 259,551 288 249

V. Operating income 업이익 89,674,686 41,419,055 85,912 39,681

VI. Non-operating income 업외수익 41,854,780 25,997,975 40,098 24,907

Interest income 이자수익 6,533,187 5,653,533 6,259 5,416

Dividend income 배당금수입 1,210,191 1,701,022 1,159 1,630

Rentals received 수입임 료 820,420 792,488 786 759

Gain on foreign currency transactions 외환차익 15,654,033 5,695,813 14,997 5,457

Gain on foreign currency translations 외화환산이익 10,499,357 757,410 10,059 726

Gain on disposal of marketable securities

매도가능증권처분이익 123,820 659,748 119 632

Gain on disposal of investment securities subject to

application of equity method 지분법적용투자주식처분이익 - 3,183,887 - 3,050

Gain on valuation of investment securities subject to

application of equity method 지분법평가이익 5,655,535 5,172,819 5,418 4,956

Gain on disposal of tangible assets 유형자산처분이익 356,756 140,201 342 134

Reversal of income taxes 법인세환급액 453,655 1,629,533 435 1,561

Derivatives 통화선도이익 - 52,980 - 51

Miscellaneous income 잡이익 547,827 558,541 525 535

(continued / 계속)

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지10


2004 2003 2004 2003



VII. Non-operating expenses 업외비용 77,087,282 50,433,924 73,853 48,318

Interest expenses 이자비용 30,551,183 32,643,313 29,269 31,274

Loss on foreign currency transactions 외환차손 14,047,525 6,527,410 13,458 6,254

Loss on foreign currency translations 외화환산손실 718,407 2,599,810 688 2,491

Loss on disposal of accounts receivable 매출채권처분손실 4,228,190 4,414,306 4,051 4,229

Loss on valuation of inventories 재고자산평가손실 - 776,418 - 744

Loss on inventory liquidation 재고자산폐기손실 556,088 42,146 533 40

Loss on disposal of marketable securities

매도가능증권처분손실 14,859,465 3 14,236 -

Loss on marketable securities impairment

매도가능증권감액손실 63,050 394,282 60 378

Loss on disposal of stocks subject to equity method

지분법적용투자주식처분손실 - 2,507,071 - 2,402

Loss on disposal of tangible assets 유형자산처분손실 475,236 18,225 455 17

Loss on intangible assets impairment 무형자산감액손실 4,959,947 - 4,752 -

Donations 기부금 19,654 138,551 19 133

Additional payments of income taxes 법인세추납금 2,281,894 2,642 2,186 3

Loss on modifications of transcript errors 전기오류수정손실 3,726,160 - 3,570 -

Miscellaneous losses 잡손실 600,484 369,747 575 354

VIII. Ordinary income 경상이익 54,442,184 16,983,106 52,158 16,270

IX. Extraordinary gains 특별이익 - - - -

X. Extraordinary losses 특별손실 - - - -

XI. Income before income taxes 법인세비용차감전순이익 54,442,184 16,983,106 52,158 16,270

XII. Income tax expenses 법인세비용 13,477,577 3,936,289 12,912 3,771

XIII. Net income 당기순이익 40,964,607 13,046,817 39,246 12,499

Net earnings per common stock : 주당순이익

＼4,280 for the year and ＼1,363 for prior year

I N C O M E S T A T E M E N T S / 손 익 계 산 서

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지11


S T A T E M E N T S O F A P P R O P R I A T I O N S O F R E T A I N E D

E A R N I N G S / 이 익 잉 여 금 처 분 계 산 서

For the years ended December 31, 2004 and 2003 2004 2003 2004 2003



I. Unappropriated retained earnings 처분전이익잉여금 66,737,023 28,570,494 63,937 27,372

Unappropriated retained earnings carried over

from prior year 전기이월이익잉여금 25,772,416 15,523,676 24,691 14,872

Net income 당기순이익 40,964,607 13,046,817 39,246 12,499

II. Transfer from voluntary reserves 임의적립금등의이입액 2,066,667 2,466,667 1,980 2,363

Reserve for technological development 기술개발준비금 2,066,667 2,466,667 1,980 2,363

III. Appropriation 이익잉여금처분액 20,264,745 5,264,745 19,414 5,044

Reserve for technological development 기술개발준비금 15,000,000 - 14,371 -

Legal reserve 이익준비금 478,613 478,613 459 459

Dividends 배당금 4,786,132 4,786,132 4,585 4,585

Cash dividend (ratio) : 현금배당 4,786,132 4,786,132 4,585 4,585

＼500 (10%) for 2004 and ＼500 (10%) for 2003

＼500 (10%) for 2004 and 2003

IV. Unappropriated retained earnings

to be carried over subsequent year 차기이월이익잉여금 48,538,945 25,772,416 46,502 24,691

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지12


S T A T E M E N T S O F C A S H F L O W S / 현 금 흐 름 표

2004 2003 2004 2003



I. Cash flows from operating activities 업활동으로인한현금흐름 44,606,786 13,023,966 42,735 12,477

1. Net income 당기순이익 40,964,607 13,046,817 39,246 12,499

2. Addition of expenses not involving cash outflows

현금의유출이없는비용등의가산 58,863,339 40,727,371 56,393 39,018

Bad debts expenses 손상각비 898,658 372,240 861 357

Depreciation and amortization 감가상각비 17,456,493 16,790,569 16,724 16,086

Intangible asset depreciation 무형자산상각비 2,242,331 3,077,886 2,148 2,949

Provision for severance benefits 퇴직급여 5,669,170 4,358,527 5,431 4,176

Interest expenses 이자비용(사채할인발행차금상각) 1,482,172 5,375,889 1,420 5,150

Loss on foreign currency translations 외화환산손실 544,527 2,599,810 522 2,491

Loss on disposal of accounts receivables 매출채권처분손실 4,228,190 4,414,306 4,051 4,229

Loss on valuation of inventories 재고자산평가손실 1,692,104 776,418 1,621 744

Loss on liquidation of inventories 재고자산폐기손실 556,088 42,146 533 40

Loss on disposal of investment securities

매도가능증권처분손실 14,859,465 3 14,236 -

Loss on disposal of investment securities impairment

매도가능증권감액손실 63,050 394,282 60 378

Loss on disposal of investment securities subject

to application of equity method 지분법적용투자주식처분손실 - 2,507,071 - 2,402

Loss on disposal of tangible assets 유형자산처분손실 475,236 18,225 455 17

Loss on intangible assets impairment 무형자산감액손실 4,959,947 - 4,752 -

Expenses on repairs 수선비 9,748 - 9 -

Loss on modifications of transcript errors

전기오류수정손실 3,726,160 - 3,570 -

3. Reduction of income not involving cash inflows

현금의유입이없는수익등의차감 (16,635,468) (9,967,045) (15,937) (9,549)

Gain on foreign currency translation 외화환산이익 10,499,357 757,410 10,059 726

Gain on disposal of investment securities

매도가능증권처분이익 123,820 659,748 119 632

Gain on disposal of investment securities subject

to application of equity method 지분법적용투자주식처분이익 - 3,183,887 - 3,050

Gain on valuation of investment securities subject

to application of equity method 지분법평가이익 5,655,535 5,172,819 5,418 4,956

Gain on disposal of tangible assets 유형자산처분이익 356,756 140,201 342 134

Gain on currency forward 통화선도이익 - 52,980 - 51

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지13


2004 2003 2004 2003


4. Changes in assets and liabilities from operating activities

업활동으로인한자산부채의변동 (38,585,692) (30,783,177) (36,967) (29,491)

Increase (Decrease) in trade accounts receivable

매출채권의증가 (감소) (18,122,158) (8,848,743) (17,362) (8,477)

Increase (Decrease) in accounts receivable

미수금의 증가 (감소) (4,257,878) (51,755) (4,079) (50)

Decrease in accrued revenues 미수수익의감소 938,626 172,740 899 165

Decrease (Increase) in prepayment 선급금의감소 (증가) (1,518,565) 2,172,291 (1,455) 2,081

Decrease (Increase) in prepaid expense

선급비용의감소 (증가) 86,188 (218,423) 83 (209)

Decrease (Increase) in merchandise 상품의감소 (증가) (9,099,441) 3,426,111 (8,718) 3,282

Decrease (Increase) in finished goods 제품의감소 (증가) (23,761,096) 12,520,404 (22,764) 11,995

Increase in work-in-process 재공품의증가 (634,971) (632,187) (608) (606)

Increase in raw materials 원재료의증가 (17,068,584) (12,082,262) (16,352) (11,575)

Increase in goods-in-transit 미착품의증가 (30,526,190) (4,043,404) (29,245) (3,874)

Decrease (Increase) in inventories 저장품의감소 (증가) (126,378) 108,670 (121) 104

Decrease (Increase) in by-products 부산물의감소 (증가) 366,194 (330,381) 351 (317)

Increase (Decrease) in accounts payable

매입채무의증가 (감소) 60,586,309 (5,462,134) 58,044 (5,233)

Increase (Decrease) in other accounts payable

미지급금의증가 (감소) 1,256,369 (1,450,236) 1,204 (1,389)

Increase (Decrease) in unearned revenue 선수금의증가 (감소) (52,874) 1,006,663 (51) 964

Increase (Decrease) in deposit 예수금의증가 (감소) 85,169 (11,991,839) 82 (11,489)

Increase (Decrease) in accrued expense

미지급비용의증가 (감소) 201,502 (335,487) 193 (321)

Increase (Decrease) in income tax payable

미지급법인세의증가(감소) 7,917,433 (1,729,547) 7,585 (1,657)

Increase in deferred income tax payable

이연법인세 의증가 2,079,278 237,644 1,992 228

Increases in estimated debt of returned goods

반품추정부채의 증가 3,717,666 - 3,562 -

Payment of severance benefits 퇴직급의지급 (21,568,600) (4,857,300) (20,664) (4,653)

Decrease in transfer to national pension

국민연금전환금의감소 599,145 163,278 574 156

Deposits of insurance for retirement 퇴직보험의예치 10,317,165 1,442,718 9,884 1,382

(continued / 계속)

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지14


2004 2003 2004 2003



II. Cash flows from investing activities

투자활동으로인한현금흐름 (53,805,420) 12,947,014 (51,548) 12,404

1. Cash inflows from investing activities

투자활동으로인한현금유입액 6,748,034,508 1,411,236,956 6,464,873 1,352,019

Decrease in short-term financial instruments

단기금융상품의 감소 6,730,950,793 1,090,901,654 6,448,506 1,045,125

Decrease in short-term loans 단기 여금의감소 41,140 3,190,657 39 3,057

Decrease in guarantee for customs duties

관세보증금의감소 4,801,680 2,175,609 4,600 2,084

Decrease in guarantee deposit

예치보증금의감소 47,330 40,278 45 39

Decrease in currency forward assets 통화선도자산의감소 52,980 - 51 -

Decrease in long-term financial instruments

장기금융상품의감소 2,714,000 11,065,378 2,600 10,601

Decrease in long-term loans 장기 여금의감소 293,156 2,509,304 281 2,404

Disposal of investment securities 매도가능증권의처분 5,774,711 291,519,922 5,532 279,287

Disposal of investment capital applied to equity method

지분법적용투자주식의처분 766,188 7,040,065 734 6,745

Decrease in guarantee 보증금의감소 1,570,643 1,761,540 1,505 1,688

Decrease in long-term guarantee 장기성보증금의감소 - 98,800 - 95

Disposal of land 토지의처분 456,918 135,089 438 129

Disposal of buildings 건물의처분 8,508 181,159 8 174

Disposal of structures 구축물의처분 5,104 - 5 -

Disposal of machinery 기계장치의처분 35,499 - 34 -

Disposal of vehicles 차량운반구의처분 1,667 7,182 2 7

Disposal of furniture 비품의처분 1,248 - 1 -

Increase in state grant 국고보조금의증가 512,944 610,320 491 585

2. Cash outflows from investing activities

투자활동으로인한현금유출액 (6,801,839,928) (13,398,289,943) (6,516,421) (12,836,070)

Increase in short-term financial instruments

단기금융상품의증가 6,751,731,563 1,083,679,481 6,468,415 1,038,206

Increase in short-term loans 단기 여금의증가 1,058,000 4,034,000 1,014 3,865

Increase in guarantee for customs duties

관세보증금의증가 6,273,196 3,189,305 6,010 3,055

Increase in guarantee deposit 예치보증금의증가 35,703 40,150 34 38

Purchase of long-term financial instruments

장기금융상품의취득 2,206,000 3,929,173 2,113 3,764

Increase in long-term loans 장기 여금의증가 1,022,390 - 979 -

Purchase of investment securities 매도가능증권의취득 2,466,950 271,452,490 2,363 260,062

Purchase of investment securities subject

to application of equity method 지분법적용투자주식의취득 1,431,623 6,218,341 1,372 5,957

S T A T E M E N T S O F C A S H F L O W S / 현 금 흐 름 표

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지15

Increase in guarantee 보증금의증가 4,703,925 1,993,932 4,507 1,910

Purchase of land 토지의취득 504,851 9,306 484 9

Purchase of buildings 건물의취득 866,782 445,905 830 427

Purchase of structures 구축물의취득 1,193,024 637,889 1,143 611

Purchase of machinery 기계장치의취득 2,395,513 4,993,665 2,295 4,784

Purchase of vehicles 차량운반구의취득 125,770 11,800 120 11

Purchase of tool & equipment 공구와기구의취득 962,221 710,763 922 681

Purchase of furniture 비품의취득 2,326,734 1,269,763 2,229 1,216

Purchase of property in construction 건설중인자산의취득 20,482,640 10,537,061 19,623 10,095

Increase in industrial rights 산업재산권의증가 180,837 266,959 173 256

Increase in R&D expenses 개발비의증가 1,714,208 4,690,959 1,642 4,494

Others 기타 158,000 179,000 151 171

III. Cash flows from financing activities

재무활동으로인한현금흐름 (25,974,928) 6,164,054 (24,885) 5,905

1. Cash inflows from financing activities

재무활동으로인한현금유입액 1,451,079,675 1,122,761,526 1,390,189 1,075,648

Increase in short-term borrowings 단기차입금의증가 1,406,704,875 1,071,469,484 1,347,677 1,026,508

Increase in guarantee deposit 예수보증금의증가 2,526,000 916,811 2,420 878

Increase in long-term notes payable 장기미지급의증가 - 44,831 - 43

Increase in long-term borrowings 장기차입금의증가 2,000,000 14,373,000 1,916 13,770

Increase in debentures 사채의증가 39,848,800 36,957,400 38,177 35,407

2. Cash outflows from financing activities

재무활동으로인한현금유출액 (1,477,054,603) (1,116,597,472) (1,415,074) (1,069,743)

Redemption of short-term borrowings 단기차입금의상환 1,370,768,672 1,023,692,164 1,313,248 980,736

Decrease in guarantee deposit 예수보증금의감소 3,620,202 1,411,600 3,468 1,352

Redemption of long-term current liabilities

유동성장기부채의상환 96,543,598 86,707,577 92,492 83,069

Redemption of long-term borrowings 장기차입금의상환 1,336,000 - 1,280 -

Payment of dividends 배당금의지급 4,786,132 4,786,132 4,585 4,585

IV. Net increase (Decrease) in cash and cash equivalents

현금의증가 (감소) (35,173,562) 32,135,034 (33,698) 30,787

V. Cash and cash equivalents at beginning of year

기초의현금 40,182,240 8,047,206 38,496 7,710

VI. Cash and cash equivalents at end of year 기말의 현금 5,008,679 40,182,240 4,799 38,496


2004 2003 2004 2003



한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지16


R E P O R T O F I N D E P E N D E N T P U B L I C A C C O U N T A N T S

To the Shareholders and Board of Directors of

Dongbu Hannong Chemical Co., Ltd.

We have audited the accompanying balance sheets of Dongbu Hannong Chemical Co., Ltd. (“the Company”) as of December 31, 2004 and as of December

31, 2003, and the related statements of income, disposition or retained earnings and cash flows for the fiscal year, 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 audit.

We performed audits in accordance with auditing standards generally accepted in the Republic of Korea. These standards require that we plan and perform

the audit to obtain reasonable assurance about where the financial statements are free of material misstatements. An audit also includes assessing the

accounting principles and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our

audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Dongbu Hannong Chemical Co.,

Ltd., results of its operations, the changes in retained earnings and the cash flows as of December 31, 2004 and 2003, in conformity with financial

accounting standards generally accepted in Korea.

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

Transactions with Related Parties

As discussed in Note 7 to the accompanying financial statements, the Company sells its products and purchases certain materials from related parties, such

as Dongbu Fine Chemicals Co. Ltd. During the fiscal year ended December 31, 2004, total sales and other revenues from these transactions amounted to

84,775 million won. The related accounts receivable amounted to 12,264 million won. Purchases of raw materials from related parties totaled 48,031

million won and the related accounts payable stood at 25,393 million won as of Dec. 31, 2004.

Seoul, Korea

Feb. 5, 2005

Notice to Readers

This report is effective of Feb. 5, 2005, the auditor’s report date. Certain subsequent events or circumstances may have occurred between the auditor°Øs report date and the time

that the auditor’s report is read. Such events or circumstances could significantly impact the accompanying financial statements and may result in modifications of the auditor’s

report.

KPMG Samjong Accounting Corp.

Star Tower Bld. 10th/11th Fl. Tel +82 (2) 2112 0100

737, Yeoksam-dong, Gangnam-gu, Fax +82 (2) 2112 0101

135-984, Seoul, Republic of Korea. www.kr.kpmg.com

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지17


H I S T O R Y

Period for takeoff

Dec. 2004 Expanded output cap. of Ulsan HIPS plant to 15,000 ton

and launched Innovative Corporate Cultural Programs

(I’mpowered Dongbu, 6 Sigma, Innovation Activities)

Feb. 2004 Established Agricultural Materials Business Dept.

Sep. 2003 Established the Battery Division

and acquired Dongbu Finecell Co., Ltd.

Jan. 2003 First IGR “Bistrifluron” developed in Korea

Sep. 2002 Established Chemical Product Business Dept.

Jan. 2002 Head Office relocated to Dongbu Financial

Center in Daechi-dong, Gangnam-gu, Seoul

Oct. 2001 Completed Gyeongju Bed Soil plant

(20,000mt annual cap.)

Mar. 2000 Completed Jeju Fertilizer Factory

Jan. 2000 Merged with Dongbu Hannong Seeds Co., Ltd.

Period for vertical integration for petrochemical business

Nov. 1999 Acquired Ferro-Alloy Business Division

Sep. 1999 Established Trading Business Division

Mar. 1997 Dongbu Hannong Chemical Co., Ltd.

merged with Dongbu Chemical Co., Ltd.

Dec. 1996 Hannong Co., Ltd.

renamed Dongbu Hannong Chemical Co., Ltd.

Feb. 1995 Dongbu Group acquired Hannong Co., Ltd.

June 1992 Dongbu Chemical Co., Ltd. completed Purified

phosphoric acid plant (30,000 mt annual cap.)

Jan. 1992 Dongbu Chemical Co., Ltd. completed

Ulsan EPS plant (45,000 mt annual cap.)

Mar. 1991 Dongbu Chemical Co., Ltd. completed Nitric acid

plant (100,000 mt annual cap.)

May 1990 Dongbu Chemical Co., Ltd. established with a

merger of Dongbu Petrochemical Co., Ltd. and

Youngnam Chemical Co., Ltd. ; launched basic

chemical, compound fertilizer and tank

terminal businesses

Period for business diversification

Dec. 1989 Dongbu Petrochemical listed on Korea

Stock Exchange

Oct. 1989 Dongbu Petrochemical Co., Ltd. completed Ulsan

SM plant #2 (100,000 mt annual cap.)

Dec. 1988 Dongbu Petrochemical Co., Ltd completed Ulsan

PS plant (50,000 mt annual cap.)

Nov. 1987 Dongbu Group acquired controlling stake in

Youngnam Chemical Co., Ltd.

Sep. 1986 Dongbu Group acquired Ulsan Petrochemical Co.,

Ltd. and renamed Dongbu Petrochemical Co., Ltd.

Period for entering into petrochemical business

Mar. 1978 Ulsan Petrochemical Co., Ltd. completed Ulsan #1

SM plant (60,000 mt annual cap.)

June 1973 Ulsan Petrochemical Co., Ltd. established

(later renamed Dongbu Petrochemical Co., Ltd.);

launched petrochemical business

Period for entering into fertilizer business

Mar. 1967 Youngnam Chemical Co., Ltd. completed Ulsan

fertilizer plant

Aug. 1965 Youngnam Chemical Co., Ltd. established;

launched fertilizer production business

Period for entering into pesticide business

Mar. 1956 Korea Agrochemical Co., Ltd. completed Incheon

pesticide plant

Apr. 1953 Korea Agrochemical Co., Ltd. established

(later renamed Hannong Co., Ltd.); launched

pesticide production business

한농_MD&A/재무_14일 2005.7.15 9:6 AM 페이지18


B O A R D O F D I R E C T O R S

Standing

�Young-Kyun Shin �Vice Chairman & CEO

�Jae-Kwang Ha �Director / Audit

�Dong-Shik Min �Director / Chief of Ferro-Alloy Business Department

Non-standing

�Young-Tae Kwon �Outside Director

�Jung-Il Kang �Outside Director

한농_18일본문 2005.7.19 3:5 PM 페이지41


O R G A N I Z A T I O N C H A R T

CEO

Auditor

Corporate Management Division

∙Incheon Agrochemical Factory∙Gumi Agrochemical Factory∙Agricultural Research Institute∙25 Branches

Planning Team

Corporate Innovation Team

Audit Team

Human Relations Management Team

Agricultural Business Division

Corporate Technology Division

∙Ulsan Fertilizer Factory∙Jeju Fertilizer Factory∙Fertilizer Research Institute∙9 Branches

Fertilizer Business Department

∙Gumi Seed Factory∙Gyeongju Bed Soil Factory∙Breeding Research Institute∙7 Branches

Seed Business Department

∙Ulsan Petrochemical Factory∙Petrochemical Research Institute∙2 Offices

Petrochemical Business Department

∙Chemical Product Research Institute

∙Asan Vet.-Pharmacy Factory

Corporate Technology Planning Team

∙9 Branches

∙Pharmaceutical Research Institute∙Materials Research Institute∙Biotechnology Research Institute

Dongbu Advanced Research Institute

Agricultural Planning

& Coordination Team

Materials Business Planning &

Coordination TeamMaterials Business Division

∙Donghae Ferro-Alloy Factory∙3 Offices

Ferro-Alloy Business Department

∙2 Overseas OfficesTrading Business Department

Agricultural Materials

Business Department

Chemical Product

Business Department

Finance & Accounting Team

Agrochemical Business Department

Vet.-Pharm. Business Department

한농_18일본문 2005.7.19 3:5 PM 페이지42


S E R V I C E N E T W O R K

Agrochemical Business Department

�Jungbu Regional Headquarter

�Seongnam Branch

�Uijeongbu Branch

�Suwon Branch

�Gimpo Branch

�Chuncheon Branch

�Wonju Branch

�Gangueung Branch

�Chungcheng Regional Headquarter

�Daejeon Branch

�Hongseong Branch

�Asan Branch

�Cheongju Branch

�Chungju Branch

�Honam Regional Headquarter

�Gwangju Branch

�Mokpo Branch

�Suncheon Branch

�Jeonju Branch

�Gimje Branch

�Yeongnam Regional Headquarter

�Daegu Branch

�Andong Branch

�Gimcheon Branch

�Gyeongju Branch

�Masan Branch

�Jinju Branch

�Busan Branch

�Jeju Regional Headquarter

�Jeju Branch

Fertilizer Business Department

�Gyeonggi Branch

�Gangwon Branch

�Chungbuk Branch

�Chungnam Branch

�Jeonbuk Branch

�Jeonnam Branch

�Gyeongbuk Branch

�Gyeongnam Branch

�Jeju Branch

Seed Business Department

�Gyeonggi Branch

�Wonju Branch

�Daejeon Branch

�Jeonju Branch

�Gwangju Branch

�Gyeongbuk Branch

�Gyeongnam Branch

Agricultural Materials Business

Department

�Gyeonggi Branch

�Gangwon Branch

�Chungbuk Branch

�Chungnam Branch

�Jeonbuk Branch

�Jeonnam Branch

�Gyeongbuk Branch

�Gyeongnam Branch

�Jeju Branch

Petrochemical Business Department

�Daegu Office

�Masan Office

Ferro-Alloy Business Department

�Busan Office

�Pohang Office

�Gwangyang Office

Trading Business Department

(Overseas Branches)

�Tehran Office

�Shanghai Office

■■■ Agrochemical Business Department

■■■ Fertilizer Business Department

■■■ Seed Business Department

■■■ Agricultural Materials Business Department

■■■ Petrochemical Business Department

■■■ Ferro Alloy Business Department

한농_18일본문 2005.7.19 3:5 PM 페이지43

6.1. Innovations for Better Life

P R O D U C T I O N F A C I L I T I E S

Incheon Agrochemical Factory

∙Address : 401 Hakik-dong, Nam-gu, Incheon

∙Scale : 5,825m2 ∙Products : Pesticides

Asan Vet.-Pharmacy Factory

∙Address : 312-23 Deuksan-dong, Asan-si, Chungnam

∙Scale : 7,729m2 ∙Products : Veterinary Pharmaceuticals

Donghae Ferro-Alloy Factory

∙Address : 882 Songjeong-dong, Donghae-si, Gangwon

∙Scale : 274,787m2

∙Products : FeMn(HC), FeMn(MC), FeMn(LC), SiMn, SiMn(LC)

Gumi Agrochemical Factory & Gumi Seed Factory

∙Address : 323 Gongdan-dong, Gumi-si, Gyeongbuk

∙Scale : 144,380m2 ∙Products : Pesticides, Vegetable Seeds

Gyeongju Bed Soil Factory

∙Address : San 178-1 Yongdang-ri, Yangbuk-myeon, Gyeongju-si, Gyeongbuk

∙Scale : 11,901m2 ∙Products : Bed Soil

Ulsan Fertilizer Factory

∙Address : 523 Meam-dong, Nam-gu, Ulsan

∙Scale : 828,327m2

∙Products : Compound Fertilizers, Sulfuric Acid, Nitric Acid, Purified Phosphoric Acid

Ulsan Petrochemical Factory

∙Address : 665 Bugok-dong, Nam-gu, Ulsan

∙Scale : 251,821m2 ∙Products : SM, PS, EPS

Jeju Fertilizer Factory

∙Address : 290-39 Hamduk-li, Jochon-eup, Bukjeju-gun, Jeju

∙Scale : 10,529m2 ∙Products : Organic Compound Fertilizers

Ulsan

Incheon

Donghae

Gumi

Asan

Jeju

Gyeongju

한농_18일본문 2005.7.19 3:5 PM 페이지44


A F F I L I A T E S

Dongbu, the World’s Best Quality

Since its founding in 1969, the Dongbu Group has been led by Chairman Jun-Ki Kim, who remains firmly dedicated to building an

“Excellent Company.” Over the years, the Dongbu Group has successfully developed multifaceted businesses in four major areas:

materials, chemicals, construction/logistics and finance. This exceptional result was in large part attributable to all company employees’

strong dedication to building an ‘Excellent Company’ under the leadership of Chairman-Founder Jun-Ki Kim.

The Dongbu Group will continue to invest heavily in high value-added and new growth businesses based on a corporate culture in which

heavy emphasis is placed on development of human resources, while striving to reinforce the competitive power of its existing

businesses. As such, the Dongbu Group aspires to grow into a world-class “Excellent Company” that stays competitive in domestic and

overseas markets.

Financial Status of Dongbu Group (As of 2004)

�Total Sales: 9.05 trillion won

�Total Assets: 13.48 trillion won

* Source: FSS

Dongbu Steel Co., Ltd. ListedMaterials 2

DongbuAnam Semiconductor Inc. Listed

Dongbu Hannong Chemical Co., Ltd. Listed

Chemicals 3 Dongbu Fine Chemicals Co., Ltd. Listed

Dongbu Finecell Co., Ltd. Unlisted

Construction &2

Dongbu Corporation Listed

Logistics Dongbu Engineering Co., Ltd. Unlisted

Dongbu Insurance Co., Ltd. Listed

Dongbu Securities Co., Ltd. Listed

Finances 6Dongbu Life Insurance Co., Ltd. Unlisted

Dongbu Savings Bank Co., Ltd. Unlisted

Dongbu Capital Co., Ltd. Unlisted

Dongbu Investment Trust Management Co., Ltd. Unlisted

Support 2Dongbu Inc. Unlisted

Dongbu Information Technology Co., Ltd. Listed (on KOSDAQ)

Business Line No. of Company Company Name Listed/Unlisted

한농_18일본문 2005.7.19 3:5 PM 페이지45

C O R P O R A T E D A T A

(As of December 31, 2004)

�Establishment April 28, 1953

�Head Office #891-10, Daechi-dong, Gangnam-gu, Seoul, Korea (135-523)

Tel. +82-2-3484-1500 Fax. +82-2-565-8531

http://www.dongbuchem.com

�Number of Employees 1,222

�Paid-in Capital 49,645 million won

�Number of Registered Common Stocks 9,929,045

�Number of Stockholders 4,408

�Stockholders

�Stock Listing Listed on Korea Stock Exchange in 1975

�General Shareholders’ Meeting March 17. 2005

�Independent Accounting Corporation KPMG / SAMJONG

46.84

20.27

5.52

27.37

(%)

�Tel : 82-2-3484-1637 �Fax : 82-2-565-8531

�E-mail : [email protected]

■■■ Dongbu Steel Co., Ltd.

■■■ Dongbu Corporation

■■■ Jun-Ki Kim

■■■ The Others

한농_18일본문 2005.7.19 3:5 PM 페이지46

19th-21st Flrs.,Dongbu Financial Center Bldg.,891-10,Daechi-dong,Gangnam-gu,Seoul,135-523,KoreaTel: +82-2-3484-1500Fax: +82-2-565-8531http://www.dongbuchem.com

215*280본문 복사 2005.7.20 1:7 PM 페이지47

annual report 2004 - morningstar, inc

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