macquarie korea infrastructure fund 2009 … · krx-088980.ks lse-mkif.li ... (msiam). msiam is a...

MACQUARIE KOREA INFRASTRUCTURE FUND 2009 ANNUAL REPORT

04 _ Letter to shareholders

06 _ Performance review

08 _ Portfolio

10 _ Derisking of the portfolio through successful asset openings

12 _ Asset snapshot

26 _ Corporate governance statement

30 _ Environment and social responsibility management

31 _ Non-consolidated financial statements

CONTENTS

Cover and Inside cover: Incheon Grand BridgePhotographed by Bong-Eui, Hong

MARKET CAPITALISATION 1

KRW1.6 trillion (US$ 1.4 billion)

EXCHANGE

KRX - 088980.KS LSE - MKIF.LI

Established in December 2002, MKIFs mandate is to invest in concession companies that construct or operateinfrastructure assets in Korea. MKIF invests in these concession companies through equity and debt. MKIF is focusedon generating profits from its investments and distributing these profits to its shareholders.

MKIFs investment strategy is implemented by its manager, Macquarie Shinhan Infrastructure Asset Management Co.,Ltd. (MSIAM). MSIAM is a joint venture between Macquarie Capital Funds (Europe) Limited, a member of MacquarieGroup and Shinhan Bank and Shinhan Capital, which are members of the Shinhan Financial Group. MSIAM benefitsfrom the significant expertise and experience of its shareholders in the execution of complex infrastructure investmentsand from their broad array of business and other relationships in Korea.

1. Based on the share price as of 31 December 2009.2. Private Participation in Infrastructure Act (PPI Act) defines infrastructure sectors including roads, railways, ports, energy, airport, communication, water resources, etc.3. Excludes Seosuwon-Osan-Pyungtaek Expressway which was divested in January 2010.

Koreas largest and onlylisted infrastructure

investment company

SHAREHOLDERInternationally diversified with circa 25% international shareholding

MANDATE

To invest in infrastructure assets in Korea as defined under PPI Act 2

INVESTMENTS

14 project companies 3

WEIGHTED AVERAGE AGE OF ASSETS

4 years

SERVICES+550,000 people per day

Letter to shareholders

Dear Shareholders,

It has been a very busy year for the team and I ampleased to report another year of solid results and themany achievements made during the year despite achallenging environment for the industry.

MKIF started 2009 with many challenges in a difficultbusiness environment and finished the year successfullywith an improved outlook, marked most notably by theopening of the new assets. All on time and budget, thefour new assets, representing circa 30 percent ofMKIFs portfolio opened to traffic, signalling a major de-risking of the portfolio, which is now composed mostlyof fully operating businesses. Together with the existingassets, the new assets delivered steady traffic ramp-up,generally surpassing our performance expectations.

Capital management was also an important focus forthe year and MKIF was able to move swiftly to adapt toexternal market changes. Reflecting the on-goingchallenges in the economic environment, MKIFexercised caution, implementing various measures topreserve the financial flexibility of the company. Asignificant amount of cash was generated from variouscapital management activities such as well priced non-core asset sales and securitisations which helped torecycle capital back into the new assets.

Proactively managing its debt, MKIF also successfullyrefinanced its loan facility by extending its maturity toremove refinancing risk for the next five years. Mostnotably, MKIFs near to medium term distributionoutlook was re-aligned to track MKIFs earnings, amove which we believe was appropriate in the currentbusiness environment and in consideration of assetlevel debt amortisation in the medium term. Overall, wehave been able to financially reposition MKIF with moredistribution certainty and flexibility in the future.

Looking ahead, it is expected to be another busy yearfor MKIF. The management of the new assets for aspeedy ramp-up remains as an important focus andvarious efforts are in the process of being implemented.Active management of capital, both at MKIF and theasset level, will also continue with the aim to improvereturns and cash yields for MKIF shareholders in thenear term. In addition, the last construction asset in theportfolio, Busan New Port Phase 2-3, is progressingwell towards opening in early 2012.

Finally, I highlight that MKIF remains a young portfolio ofassets. The weighted average of the operational periodfor the underlying assets is only four years with around25 years of concession term remaining for ourunderlying assets. Moreover, long-term growthprospects are strong, supported by inflation-linkednatural growth built into to each concessions trafficrevenues, providing a firm basis on which MKIF cansustain growth in its distribution capacity. Theeconomic environment remains challenging, howeverMKIF remains a strong value proposition, and we areconfident that we can continue to grow value forshareholders and provide sound services to thecommunities in which MKIF operates. On behalf of theManager and MKIF Board, we thank you for yourongoing support.

Chul Hum Paik Representative DirectorMacquarie Shinhan Infrastructure Asset Management Co., Ltd. Corporate Director and Asset Manager of Macquarie KoreaInfrastructure Fund

04 MACQUARIE KOREA INFRASTRUCTURE FUND

This annual report provides an overview of MKIFs investment and

operating activities for the 12 months from 1 January 2009 to 31

December 2009, as well as information on the performance of

MKIFs assets. It also includes the audited non-consolidated

financial statements for the year.

2009 ANNUAL REPORT 05

1. On a weighted average basis based on revenue size of each asset and the MKIFs equity interest in each concession company. Excludes all new assets whichhave commenced operation since July 2009.

2. Adjusted to remove (i) capital loss of KRW3.6 billion incurred in 2009 and (ii) capital gain of KRW79.4 billion in 2008. 3. Asset level EBITDA on a proportionate basis, excluding all new assets which have commenced operation in 2008 and 2009. Estimated, unaudited figure. 4. Excludes Seosuwon-Osan-Pyungtaek Expressway which was divested in January 2010.5. Operation period of each concession company on a weighted average basis based on respective commitment amount.6. Accounting income recognised in January 2010.

ACHIEVED SOLID OPERATIONAL AND FINANCIAL RESULTS

SUCCESSFUL ASSET OPENINGS

FINANCIAL STRENGTH PRESERVED THROUGH PROACTIVE MANAGEMENT OF CAPITAL

Sale of senior loan- Divestment of MKIFs senior loan commitment of KRW188 billion to Incheon Bridge Co., Ltd., the

concession company of Incheon Grand Bridge- Net cash proceeds of KRW134.5 billion, representing drawn amount up to the divestment date

Securitisation of subordinated loan interest receivable- Securitisation of MKIFs interest receivable on the subordinated loans provided to Cheonan-Nonsan

Expressway Co., Ltd., the concessionaire of Cheonan-Nonsan Expressway- Immediate net cash inflow of KRW29.4 billion

Sale of subordinated loan- Divestment of MKIFs subordinated loan commitment to Kyunggi Highway Co., Ltd., concessionaire of

Seosuwon-Osan-Pyungtaek Expressway - Total cash proceeds of KRW85.7 billion, recognising KRW8.4 billion of income 6

Amendment of the corporate loan facility terms- Refinancing risk reduced through extension of the corporate loan facility maturity until November 2014- Eliminating external financing needs for least 5 years while securing more capital flexibility

- Four new assets commenced operation on time and on budget- Only one out of the 14 assets 4 in the portfolio new remains under construction- Weighted average operation period of the portfolio is 4 years 5

- Underlying traffic volume and revenue 1 growth of 3.0% and 4.8% respectively compared with theprevious corresponding period (pcp)

- Normalised 2 revenue and EBITDA growth of 1.2% and 5.2% respectively on pcp - Proportionate EBITDA margin of 86%3 across the portfolio compared with 85% in 2008

Performance review


FINANCIAL SUMMARY

RevenueExpenseNet incomeEBITDA

Normalised EBITDA 2

FY 2009 FY 2008 FY 2007

153,97853,755

100,223123,184

126,759

235,06451,364

183,700199,935

120,535

150,48068,44982,03183,753

83,753

1. Includes special gains on (i) securitisation of shareholders loan in Baekyang Tunnel of KRW24.5bn and (ii) divestment of the convertible bonds in New DaeguBusan Expressway of KRW54.9 billion.

2. Adjusted to remove (i) capital loss of KRW3.6 billion incurred in 2009 and (ii) capital gain of KRW79.4 billion in 2008.

Invested AssetsLiabilitiesTotal Shareholders Equity

Total liabilities and shareholders equity

31 December 2009

31 December 2008

31 December 2007

1,964,784463,894

1,690,402

2,154,296

1,929,621359,004

1,740,828

2,099,832

1,668,493112,293

1,702,698

1,824,991

DISTRIBUTION (PER SHARE)

EPSCash distribution Share distribution Number of new shares issued

Total outstanding shares

FY 2009 FY 2008 FY 2007

302390

-7,969,137

331,459,341

554460122

-

323,490,204

254440

--

323,490,204

MKIF achieved solid operational and financial results proving its defensive naturein a challenging business environment

1

(KRW million)

(KRW)


1. Operation commencement in July 2008. FY2008 figures annualised.2. Based on revenue size of each asset and the MKIF's equity interest in each concession company. Excludes all new assets which have commenced operation

since July 2009.

ANNUAL TRAFFIC AND REVENUE GROWTH

Incheon International Airport Expressway Baekyang Tunnel Gwangju Second Beltway, Section 3-1Gwangju Second Beltway, Section 1Woomyunsan Tunnel Cheonan-Nonsan Expressway Soojungsan TunnelDeagu 4th Beltway EastMachang Bridge 1

Weighted average growth rate 2

Traffic volume growthAsset Traffic revenue growth

(4.3%)(0.7%)14.5%(3.3%)11.1%6.9%

(0.2%)2.5%

17.9%

3.0%

(4.3%)(1.2%)23.7%9.7%

10.7%9.6%

(1.0%)2.5%

11.5%

4.8%

OPERATIONAL MANAGEMENT INITIATIVES IN 2009

MKIF actively manages operation of the assets within its portfolio in order to create long-term value for MKIFshareholders and improve service to the users of the infrastructure assets.

TRAFFIC ENHANCEMENTSeveral traffic enhancement measures have been implemented for the four newly opened assets to accelerate ramp-upof initial traffic. These measures have focused on targeted advertising and improved visual inducement signage.Furthermore Electronic Toll Collection (ETC) systems to improve the traffic flow and service levels have beenimplemented on Cheonan-Nonsan Expressway and Baekyang Tunnel. Toll exemption programs for container trucks inthe Busan area were extended with the Government continuing to compensate MKIFs assets on behalf of the roadcustomers. Similarly, a program to exempt local Inchon city residents from tolls on Incheon Grand Bridge and IncheonInternational Airport Expressway have been implemented with government compensation for the respective assets.With respect to Machang Bridge, construction commenced on a new link road to the central business district ofChangwon city, two years ahead of the citys plan, and is expected to increase the attractiveness of the bridge to users.

OPERATING COST CONTROLOperating cost reductions were achieved on many of MKIFs assets. A significant example was operating costsbudgeted on the newly opened Incheon Grand Bridge, which were reduced by approximately 20% by rationalizingcontracts and moving to direct operation of the asset. MKIFs asset managers strive to actively manage costs andimprove service quality of the assets.

IMPROVED INSURANCE TERMS AND CONDITIONSMKIF has continued to leverage Macquarie Groups global insurance program to reduce overall insurance costs by30% since the programs inception in 2007. The program now involves 12 of MKIFs assets.


INFRASTRUCTURE SECTOR

Port 13.9%

Subway 4.0%

Toll road 82.1%

INVESTMENT TYPE

Senior debt 15.1%

Sub debt 50.5%

Equity 34.4%

Portfolio

MKIF is expected to create long-term revenue stream and real capital growth forinvestors

Assets

01_ Baekyang Tunnel02_ Gwangju 2nd Beltway, Section 103_ Incheon International Airport Expressway04_ Soojungsan Tunnel05_ Daegu 4th Beltway, East 06_ Cheonan-Nonsan Expressway07_ Woomyunsan Tunnel 08_ Gwangju 2nd Beltway, Section 3-109_ Machang Bridge10_ Yongin-Seoul Expressway11_ Seoul-Chuncheon Expressway12_ Seoul Subway Line 9, Section 113_ Incheon Grand Bridge14_ Seosuwon-Osan-Pyungtaek Expressway 2

15_ Busan New Port Phase 2-3

Total

Percentage (%)

Commitment & Debt interest rate

Equity

(KRW billion)

As of 31 December 2009

Subdebt

Seniordebt Total

Proportion of MKIF portfolio (%)3Ownership (%)

1.213.158.247.157.587.710.728.948.357.848.640.974.5

-66.4

640.9

34.4

-35.251.719.332.0

182.39.6

-51.277.087.433.5 89.480.0

193.0

941.6

50.5

1

1.7142.0

-64.8

---

73.3-------

281.8

15.1

2.9190.3109.9131.289.5

270.020.3

102.299.5

134.8136.074.4

163.980.0

259.4

1,864.3

100.0

0.210.76.27.35.0

15.11.15.75.67.67.64.29.2

-14.5

100.0

100.0100.024.1

100.085.060.036.075.0

100.035.015.024.541.0

-30.0

1. Includes KRW3.2 billion working capital facility. 2. MKIF divested its subordinated loan in Seosuwon-Osan-Pyungtaek Expressway in January 2010.3. Based on the total MKIF investment commitment to all investments in the portfolio. (Excludes Seosuwon-Osan-Pyungtaek Expressway)


11

6

5

1

15492

8

01_ Baekyang Tunnel

02_ Gwangju 2nd Beltway, Section 1

03_ Incheon International Airport Expressway

04_ Soojungsan Tunnel

05_ Daegu 4th Beltway, East

06_ Cheonan-Nonsan Expressway

07_ Woomyunsan Tunnel

08_ Gwangju 2nd Beltway, Section 3-1

09_ Machang Bridge

10_ Yongin-Seoul Expressway

11_ Seoul-Chuncheon Expressway

12_ Seoul Subway Line 9, Section 1

13_ Incheon Grand Bridge

14_ Seosuwon-Osan-Pyungtaek Expressway(Divestment completed in January 2010)

OPERATING ASSETS

15_ Busan New Port Phase 2-3

ASSET UNDER CONSTRUCTION

GANGWON-DO

DAEGU

CHUNGCHEONGBUK-DO

SEOULINCHEON

CHUNGCHEONGNAM-DO

GWANGJU

BUSAN

MKIFs portfolio represents a mix of asset andinvestment types with a broad geographic

spread throughout Korea

12

73

13 1014


Opened in July 2009

Yongin-SeoulExpressway

Opened in July 2009

Seoul-ChuncheonExpressway

Derisking of the portfolio throughsuccessful asset openings


45.5%

Construction

15.2%

28.5%

10.8%

OPERATIONAL STATUS 1

2008

Opened in July 2009

Seoul SubwayLine 9, Section1

Opened in October 2009 Incheon Grand Bridge

Ramp-up Growth

Stage

Description

1.

Construction

Implementation of developmentproposal, involving constructionof the asset and pre-operationtesting andapprovals/certifications

Ramp-up

- Early stages of operation(depending on length ofconcession, could be up to 3-5years after operationcommencement)

- Generally characterised by stronggrowth in patronage and revenueas patrons begin using the asset

Growth

- Phase generally lasts from 2-5years after ramp-up period ends

- Characterised by stable growth intraffic and revenue

Mature

Characterised by steadypatronage, often growingat a rate consistent withlocal GDP, and low levelsof operating risk

42.4%

15.2%

28.5%

13.9%

2009

Mature


Yongin-Seoul Expressway

OPENED IN JULY 2009

Yongin-Seoul Expressway is a 22.9 km, dual two to three-lanetolled expressway consisting of six bridges, 10 tunnels and sixinterchanges connecting Youngduck-ri, Yongin city to Segok-dong in Seoul. This expressway eases traffic congestion problemson the Suwon-Seoul section of the Seoul-Busan Highway, one ofthe most heavily travelled expressway in Metropolitan Seoul.

Concession Company: Gyungsu Highway Co., Ltd.Opened: July 2009 Concession Term: 30 years to 2039 MRG 1 Period: 10 yearsRelevant Authority: Ministry of Land, Transport and Maritime AffairsTotal commitment: KRW134.8 billion 2

Proportion of MKIF portfolio 3: 7.6%

1. Minimum Revenue Guarantee - revenue support provided by the relevant authority under the concession agreement. 2. Excludes MKIFs conditional commitment to acquire an additional 32% equity interest.3. Based on the total MKIF investment commitment to all investments in the portfolio (Excludes Seosuwon-Osan-Pyungtaek Expressway divested in January 2010).

TRAFFIC AND REVENUE

Average daily traffic(vehicles / day)

Average daily revenue(000 KRW)

N/A

N/A

38,933

62,381

Category 2008 2009


OPENED IN JULY 2009

Seoul-Chuncheon Expressway

TRAFFIC AND REVENUE



N/A

N/A

30,432

189,115

Category 2008 2009

Seoul-Chuncheon Expressway is a 61.4 km, dual two to three-lane toll expressway providing a link between Seoul andGangwon province, a leading tourist destination in Korea. Theexpressway provides an alternative link between the east part ofSeoul and Chuncheon through Kyunggi province, where theregional expressways and highways experience heavycongestion, especially on weekends.

Concession Company: Seoul-Chuncheon Highway Co., Ltd.Opened: July 2009 Concession Term: 30 years to 2039MRG Period: 15 yearsRelevant Authority: Ministry of Land, Transport and Maritime AffairsTotal commitment: KRW136.0 billionProportion of MKIF portfolio: 7.6%


Seoul Subway Line 9, Section 1

OPENED IN JULY 2009

Seoul Subway Line 9, Section 1 is a 25.5 km subway lineproviding regular and express service east-west along thesouthside of the Han River, stopping at 25 stations including sixtransfer stations running between Gimpo Airport in western Seoulto Gangnam, through major business and residential districts ofSeoul.

Concession Company: Seoul Metro Line 9 Co., Ltd.Opened: July 2009 Concession Term: 30 years to 2039MRG Period: 15 yearsRelevant Authority: Seoul Metropolitan GovernmentTotal commitment: KRW74.4 billionProportion of MKIF portfolio: 4.2%

TRAFFIC AND REVENUE

Average daily initial boarding(passengers / day)


N/A

N/A

138,010

101,376

Category 2008 2009


OPENED IN OCTOBER 2009

Incheon Grand Bridge

Incheon Grand Bridge is a 12.3 km, dual three-lane tolled bridgewhich is Koreas longest bridge and the 5th largest cable stayedbridge in the world. It connects Incheon International Airport to therapidly developing commercial area of New Songdo City in theIncheon Free Economic Zone and reduces travel time betweenIncheon city and the airport by up to one hour.

Concession Company: Incheon Bridge Co., Ltd.Opened: October 2009 Concession Term: 30 years to 2039 MRG Period: 15 yearsRelevant Authority: Ministry of Land, Transport and Maritime AffairsTotal commitment: KRW163.9 billionProportion of MKIF portfolio: 9.2%

TRAFFIC AND REVENUE



N/A

N/A

25,467

123,188

Category 2008 2009

Incheon International Airport Expressway

Incheon International Expressway is a 40.2 km, dual three to four-lane expressway link between Yongjong Island, site of theIncheon International Airport to Koreas capital, Seoul. It iscomprised of two major bridges - the 4.4 km Yongjong Bridgeand the 2.6 km Banghwa Bridge as well as 630m of GaehwaTunnel.

Concession Company: New Airport Hiway Co., Ltd.Opened: December 2000 Concession Period: 30 years to 2030 (21 years remaining) MRG Period: 20 years Relevant Authority: Ministry of Land, Transport and Maritime AffairsTotal commitment : KRW109.9 billionProportion of MKIF portfolio: 6.2%


TRAFFIC AND REVENUE



64,956

375,192

62,165

359,025

Category 2008 2009

Baekyang Tunnel

Baekyang Tunnel is a 2.3 km, dual two-lane tolled tunnel that runsunderneath Baekyang Mountain in Busan city, providing a linkbetween the Busan central business district, Busan port and thenorthern and western residential areas as well as GimhaeInternational Airport. Beakyang Tunnel was set up to solve severetraffic congestion problems, which are created by the increasingnumber of traffic in and out of Busan port and Gimhae Area, bydistributing urban traffic flows to adjacent major roads.

Concession Company: Baekyang Tunnel Ltd.Opened: January 2000Concession Period: 25 years to 2025 (15 years remaining)MRG Period: 25 years Relevant Authority: Busan Metropolitan CityTotal commitment: KRW2.9 billionProportion of MKIF portfolio: 0.2%


TRAFFIC AND REVENUE



66,989

49,001

66,523

48,426

Category 2008 2009

Gwangju 2nd Beltway, Section 3-1

Gwangju 2nd Beltway Section 3-1 is a 3.5 km dual three-lanetolled expressway running east-west along the southern edge ofGwangju, Koreas fifth largest city with two bridges, two tunnelsand one interchange. This is the second private sector section ofGwangju 2nd Beltway and it provides better access to surroundingcities and eases traffic congestion in and around Gwangju.

Concession Company: Kwangju Ring Road Co., Ltd.Opened: December 2004 Concession Period: 30 years to 2034 (25 years remaining) MRG Period: 30 years Relevant Authority: Gwangju Metropolitan CityTotal commitment: KRW102.2 billionProportion of MKIF portfolio: 5.7%


TRAFFIC AND REVENUE



25,411

20,414

29,091

25,242

Category 2008 2009

Gwangju 2nd Beltway, Section 1

Gwangju 2nd Beltway Section 1 is a 5.6 km dual three-laneexpressway consisting of four tunnels and 10 bridges, runningfrom Kwangju Dooam Interchange to Sotae Interchange. It wasconstructed in response to city expansion and the developmentof industrial areas and to ease traffic congestion on the 1st Beltwayby providing better links to surrounding cities.

Concession Company: Kwangju Beltway Investment Co., Ltd.Opened: January 2001Concession Period: 28 years to 2029 (19 years remaining) MRG Period: 28 years Relevant Authority: Gwangju Metropolitan CityTotal commitment: KRW190.3 billion 1

Proportion of MKIF portfolio: 10.7%


1. Includes KRW 3.2 billion working capital facility.

TRAFFIC AND REVENUE



35,743

31,241

34,576

34,261

Category 2008 2009

Woomyunsan Tunnel

Woomyunsan Tunnel is a 3 km dual lane tolled tunnel runningunderneath Mount Woomyun, providing a direct route betweenthe Seoul suburbs, Kwachon and Anyang. The Tunnel enablestraffic to avoid the longer route of Sadang and Yangjae area,instead travelling directly through Woomyunsan Tunnel viaBanpo-Bridge and the Seoul Arts Centre.

Concession Company: Woomyunsan Infraway Co., Ltd.Opened: January 2004 Concession Period: 30 years to 2034 (24 years remaining) MRG Period: 30 years Relevant Authority: Seoul Metropolitan GovernmentTotal commitment: KRW20.3 billionProportion of MKIF portfolio: 1.1%


TRAFFIC AND REVENUE



21,137

36,778

23,479

40,730

Category 2008 2009

Cheonan-Nonsan Expressway

Cheonan-Nonsan Expressway is an 81 km, dual two-lane tollexpressway between Cheonan and Nonsan, connecting thenorthwestern and southwestern provinces of Korea as part of thenational highway system. It has two major tunnels, 44 bridges andseven interchanges.

Concession Company: Cheonan Nonsan Expressway Co., Ltd.Opened: December 2002Concession Period: 30 years to 2032 (23 years remaining) MRG Period: 20 years Relevant Authority: Ministry of Land, Transport and Maritime AffairsTotal commitment: KRW270 billionProportion of MKIF portfolio: 15.1%


TRAFFIC AND REVENUE



32.209

232,459

34,437

254,698

Category 2008 2009


Soojungsan Tunnel

Soojungsan Tunnel is 2.3 km, dual two-lane tolled tunnel locatedin Busan, Koreas second largest city. Soojungsan Tunnel servesas an important connection between Busan central businessdistrict, Busans port area which is the largest port in Korea andthe northern and western residential areas as well as GimhaeInternational Airport.

Concession Company: Soojungsan Investment Co., Ltd.Opened: April 2002 Concession Period: 25 years to 2027 (17 years remaining) MRG Period: 25 years Relevant Authority: Busan Metropolitan CityTotal commitment: KRW131.2 billionProportion of MKIF portfolio: 7.3%

TRAFFIC AND REVENUE



39,343

29,793

39,283

29,482

Category 2008 2009

Photo does not depict Soojungsan Tunnel


Daegu 4th Beltway, East

Daegu 4th Beltway, East is a 7.3 Km, dual three-lane expresswayconsisting of three bridge, one underpass and one viaduct. Theexpressway forms the east section of Daegu citys proposedcirculation road, running between north-south along the easternperimeter of Daegu City.

Concession Company: Daegu East Circulation Road Co., Ltd.Opened: September 2002Concession Period: 24 years to 2026 (17 years remaining) MRG Period: 20 years Relevant Authority: Daegu Metropolitan CityTotal commitment: KRW89.5 billionProportion of MKIF portfolio: 5.0%

TRAFFIC AND REVENUE



18,359

18,403

18,813

18,865

Category 2008 2009

Machang Bridge

Machang Bridge is a 1.7 km, dual two-lane, cable stayed bridge,providing a bypass for vehicles travelling between the cities ofMasan and Changwon and shortens the costal route betweenBusan and southwestern areas in Gyungsangnam-do Province.Machang Bridge also provides better access to the new Masanport facilities and relieves traffic congestion on existing nationalhighways and expressways.

Concession Company: Machang Bridge Co., Ltd.Opened: July 2008Concession Period: 30 years to 2038 (28 years remaining)MRG Period: 30 years Relevant Authority: Gyungsangnam Provincial GovernmentTotal commitment: KRW99.5 billionProportion of MKIF portfolio: 5.6%


TRAFFIC AND REVENUE



10,170

21,736

11,990

24,247

Category 2008 2009

Busan New Port Phase 2-3

One of the national priority projects designed to meet future demanddriven by Busan's position as a regional shipping and logistics hub

Busan New Port Phase 2-3 is a container terminal, consisting of four 50,000 ton berths with a design capacity of 2.7million TEU per year.

Concession Company: Busan New Container Terminal Co., Ltd.Opening: Expected in January 2012Concession Period: 29 years and 3 months from the start of the

operationRelevant Authority: Ministry of Land, Transport and Maritime AffairsTotal commitment: KRW259.4 billionProportion of MKIF portfolio: 14.5%


UNDER CONSTRUCTION

Photo does not depict Busan New Port Phase 2-3

Corporate governance statement


MKIFS STRUCTURE

LEGAL FRAMEWORK

MKIF operates under the legal and regulatoryframework established by the Financial InvestmentService and Capital Market Act (FSCMA), and thePrivate Participation in Infrastructure Act (PPI Act). MKIFis required under FSCMA to appoint an asset manager,a custodian, an administrator and a sales agent(collectively the Service Providers).

MKIF BOARD OF DIRECTORS

The MKIF Board of Directors, comprising a majority ofindependent supervisory directors, is responsible foroverseeing MKIF operations, monitoring MKIF businessaffairs (including overseeing the performance of theasset manager and other service providers), capitalmanagement (including share issues) and approvingand monitoring financial and other reporting. The Boardis required to act in the best interests of MKIF and itsshareholders.

The Board is currently comprised of four directors: onecorporate director and three supervisory directors.Under FSCMA and MKIFs Articles of Incorporation(AOI), MKIF is required to have at least one corporatedirector at all times. In accordance with FSCMA, MKIFsmanager, MSIAM is the corporate director and willappoint one of its officers or employees as itsrepresentative on the MKIF Board. MSIAM represents,manages and conducts the business of MKIF and mustreport to the MKIF Board the status of businessconduct and asset management at least once everyquarter.

The directors are appointed by the shareholders at ageneral meeting held in accordance with MKIFs AOI.Pursuant to the Korean Commercial Code and MKIFsAOI, the maximum length of a directors term of office isthree years, after which the director can stand forreappointment.

However, under the FSCMA promulgated in 2008 theterm of corporate director was changed to thedissolution of MKIF from three years.

SHAREHOLDERS

MKIF

DISTRIBUTIONS/ DIVIDENDSINVESTMENTS

Private Participation inInfrastructure Act

(PPI Act)

Financial Investment Service and Capital Market Act (FSCMA)

REGULATORY FRAMEWORK

MSIAM(Asset manager)

Administrator

Custodian

Sales agents


Board meetings are held at least once every quarter.Directors are provided with board papers in advance ofeach meeting to enable informed discussion of agendaitems.

The supervisory directors may request the corporatedirector or any of MKIFs service providers to report tothe Board the status of MKIF business or assetswhenever the supervisory directors deem necessary.

The Board has the right to decide the following matters:

- Execution and/or termination of the ManagementAgreement, Custodian Agreement, Sales AgencyAgreements an Administration Agreement;

- Convening general meetings of shareholders; - Issuance of new shares; - Payment of expenses or fees (or commissions)

payable to service providers in connection with themanagement, custody or distribution of MKIF assets,the administration of MKIF or other services;

- Matters relating to the allocation of distributionseither in the form of cash or shares; and

- Any matters which require the resolution of the MKIFBoard under the MKIF AOI, FSCMA, or otherrelevant legislation and regulations.

MSIAM, as Manager, is a corporate director. Thecurrent supervisory directors of MKIF are as follows:

Dae Yun Cho Reappointed as MKIF Supervisory Director in March2007 (Initially appointed in December 2002)

- Attorney-at-law, Senior Partner of Kim & Chang- National Candidate of Korea for the World Trade

Organisation (WTO) Panel and for the WTOsSubsidy and Countervailing Duties Committee

- President of the International Association of KoreanLawyers

- Arbitrator of the Korean Commercial ArbitrationBoard

- Former President of the Korea International TradeLaw Association

- Former consultant for various Korean Ministries,including the Ministry of Strategy and Finance andthe Ministry of Knowledge Economy

Kyung Soon SongReappointed as MKIF Supervisory Director in March2008 (Initially appointed in March 2005)

- Founding Representative Director of Korea ExpertConsulting Group (KECG)

- Steering Committee Member of Korea InvestmentCorporation (Chairman of Investment Sub-committee)

- Member of International Development CooperationCommittee of the Republic of Korea

- Former senior staff member of World Bank- Former chief operating officer of Nomura Project

Finance International Limited- Visiting professor at the Graduate School of

International Studies of Seoul National University(2003-2009)

Tae Hee YoonReappointed as MKIF Supervisory Director in March2008 (Initially appointed in September 2004)

- Chairman, Lutronic Corporation Inc, Korea- Chairman, Korea Economic Intelligence, NY, NY- Chairman, EnerTech International, Seoul - Senior Advisor, IFC of the World Bank, DC - Vice Chairman, Hyundai Group, Hyundai Investment

Network. Seoul - Former president, Seoul National University of

Foreign Studies, Seoul- Former Vice-Chairman, Financial Advisory Services,

PricewaterhouseCoopers- Former Chairman of Arirang International TV- Founding chairman of Korea Economic Intelligence,

New York Wall Street

MKIFs Approach to CorporateGovernance

The MKIF Board is committed to achieving sustainablefinancial performance for the benefit of MKIF securityholders, while meeting the expectations of allstakeholders for responsible corporate governance.Accordingly, the Board has established clear corporategovernance arrangements for MKIF, includingdelegation of responsibilities to MSIAM and otherservice providers. The Board monitors thesedelegations, and periodically reviews the effectiveness


of arrangements to ensure they are in the best interestof MKIF and its security holders.

MKIF relies extensively on its corporate director andasset manager, MSIAM, for effective day-to-day controlof MKIFs operations. This reliance is established by theManagement Agreement, MKIFs AOI, and applicableKorean laws and regulations, which together giveMSIAM full authority with respect to the management ofMKIF assets. Consequently, MSIAM is an importantcomponent of MKIFs corporate governanceframework.

As an affiliate of the Macquarie Group Ltd.(Macquarie),MSIAM has, to the extent possible and relevant,adopted the corporate governance framework thatMacquarie applies to its funds management activities.

The requirements of the framework and its relatedpolicies are broadly consistent with the Australian StockExchanges Corporate Governance Principles and BestPractice Recommendations (the Standards). TheStandards are designed to maximise corporateperformance and accountability in the interests ofshareholders and the broader economy, and addressmatters such as board structure, promotion of ethicaland responsible decision-making, timely and balanceddisclosure, recognition and management of risk, andrecognition of the interests of stakeholders.

The MKIF and MSIAM Boards have adopted fundmanagement policies that are consistent with theprinciples contained in the Macquarie fundsmanagement framework, although they have beenamended to take account of Korean legal andregulatory requirements. The policies address thefollowing key areas:

- Risk management- External communications- Staff trading- Conflict of interest management- Auditor independence- Employee conduct- Employee health and safety- Environmental and social responsibility management- Related party transactions

MSIAM BOARD OF DIRECTORS

The MSIAM Board of Directors (MSIAM Board) isresponsible for establishing an effective corporategovernance framework and MSIAM managementoversight, with a view to ensuring that MSIAM performsits duties with due care and diligence in accordancewith the management agreement. In particular, theBoard is responsible for:

- Considering and approving the submission ofinvestment or divestment recommendations toMKIF;

- Setting objectives, goals and strategic direction formanagement, with a view to maximizing shareholderwealth;

- The oversight of control and accountability systems; - Ensuring MSIAM is performing its functions and

providing services to MKIF as provided for under theManagement Agreement;

- Review and ratification of systems for riskmanagement framework and internal compliancestandards;

- Approving and monitoring financial and otherreporting; and

- Setting the highest business standards and codesfor ethical behavior.

Board meetings are held at least quarterly or morefrequently as required. Directors are provided withboard papers in advance of each meeting to enableinformed consideration of agenda items.

MSIAMs current board of directors comprises threerepresentatives nominated by the Macquarie Groupand two nominated by the Shinhan Financial Group.

Chul Hum Paik Reappointed as MSIAM Representative Director inDecember 2009 (Initially appointed in December 2006)

- Representative Director of MSIAM - Former Head of the Financial Products division of

Shinhan Macquarie Financial Advisory from 2001 to2006

- Lead financial adviser to MKIF on its successful IPOand listing in March 2006

- Joined Shinhan Bank in 1993, with responsibilities forinternational banking and investment banking division


Nick van Gelder Reappointed as MSIAM Director in December 2008(Initially appointed in December 2002)

- Head of Macquarie Capital Funds in Asia- Founding Representative Director of MSIAM from

2002 to 2006- Joined Macquarie Group in 1997 with responsibilities

for infrastructure and real estate investment- Worked over 10 years in financial advisory and

investment management prior to joining MacquarieGroup

Jason PakReappointed as MSIAM Director in November 2008(Initially appointed in June 2008)

- Chief Operating Officer of Macquarie ShinhanInfrastructure Asset Management Co., Ltd.

- Joined Macquarie Group in 2002 and spent 4 yearson the equity capital market and M&A advisory sidewith Macquarie Securities

- Worked over 5 years in the Corporate Financedivision of KPMG, in Seoul and London on the M&Aadvisory side

Young Sub Hwang Appointed as MSIAM Director in March 2009

- Vice President at Shinhan Capital- Joined Shinhan Capital in 1991 and worked in the

investment management division- Became the Head of Investment Banking Division at

Shinhan Capital in 2006

Chang Soo Oh Reappointed as MSIAM Director in November 2008(Initially appointed in November 2007)

- Head of Project Financing Team in InvestmentBanking Group of Shinhan Bank

- Joined Shinhan Bank in 1981 with responsibilities forvarious transactions and investment banking division

SHAREHOLDER INFORMATION ANDDISCLOSURE

It is MKIFs policy to provide timely, open and accurateinformation to shareholders. Shareholders will beinformed to the release of MKIFs annual report, auditreport and financial statements and other regularreports. These reports will keep shareholders informedof MKIFs performance.

FSCMA requires MSIAM to upload a quarterly assetmanagement report in the MKIF website, and an annualand quarterly business report to the Financial ServiceCommission (FSC) and the Korea Financial InvestmentAssociation (KOFIA). The FSC and KOFIA areresponsible for disclosure of the reports to investorsunder the FSCMA.

MKIF is required to disclose information to investmentmarkets in accordance with the regulations of the KoreaExchange and the London Stock Exchange.

COMPLIANCE

Under the FSCMA, MSIAM, as MKIFs asset manager,is required to establish MSIAM Board-approved internalcontrol standards. Internal control standards are basicprocedures and standards to be followed by MSIAMsofficers and employees when they perform their dutiesin order to observe relevant laws and regulations,manage the companys assets effectively, and protectits investors.

MSIAM appointed a compliance officer who isresponsible for reviewing and monitoring the efficiencyof compliance systems on an ongoing basis so thatappropriate compliance procedures, staff educationand board reporting arrangements are in place toenable observance of the internal control standards.

Environmental and social responsibilities


MKIFs environmental and social responsibilities are managed throughout theinvestment process through our asset selection, ongoing asset management andshareholder reporting

MKIF recognises that its infrastructure investmentsinvolve both environmental and social responsibilities as aresult of the essential services provided by such assets.

MKIFs environmental and social responsibility arisesfrom the impact (both positive and negative) on naturalresources, the community, customers, employees andinvestors by the operations of the fund and itsinvestments.

MKIFs environmental and social responsibilities aremanaged throughout the investment process as follows:

- Asset selection - environmental and socialresponsibilities are reviewed as part of theacquisition due diligence process. Where they exist,regulatory obligations are viewed as minimumstandards for environmental and social responsibilitymanagement post-acquisition.

- Ongoing asset management - MKIFs ability tocontrol or influence the ongoing environmental andsocial responsibility management at each assetdiffers based on its level of investment and theregulatory framework that governs those issues.Importantly, the regulatory framework is notcontrolled by MKIF or its assets.

In general, it is MKIFs policy to ensure compliance byits assets within the regulatory framework and theminimum standards under which an asset operates.

Through participation on the Boards of concessioncompanies, MKIF representatives actively participate inthe consideration of environmental issues. Each

concession company provides regular reports to itsBoard on environmental matters, and this enablescompliance with environmental requirements to bemonitored and environmental and social responsibilityissues to be identified and resolved on a timely basis.

KEY ENVIRONMENTAL AND SOCIALRESPONSIBILITY FACTORS

Following a review of the specific regulatoryrequirements and concession agreements related toeach asset, MKIF has identified its key environmentaland social responsibility factors as:

- Air quality- Noise and other pollution-Waste management- Landscaping- Flora and fauna management- Occupational health and safety- Recruitment and business contracting compliance- Community relations

ENVIRONMENTAL AND SOCIALRESPONSIBILITY-RELATEDREGULATORY REQUIREMENTS

MKIF is not aware of any significant breaches ofrelevant environmental and social responsibility-relatedregulatory standards by its assets during the yearended 31 December 2009.

Non-Consolidated Financial Statements

December 31, 2009 and 2008

Report of Independent Auditors

Non-consolidated Statements of Financial Position

Non-consolidated Statements of Income

Non-consolidated Statements of Changes in Shareholders Equity

Non-consolidated Statements of Cash Flows

Notes to Non-consolidated Financial Statements

CONTENTS32

33

34

35

36

37

MACQUARIE KOREA INFRASTRUCTURE FUND


Samil PricewaterhouseCoopersLS Yong San Tower, 191, Hangangno 2-go, Yongsan-gu, Seoul 140-702, KOREA (Yongsan P.O. Box 266, 140-600) www.samil.com

Samil PricewaterhouseCoopers is the Korean network firm of PricewaterhouseCoopers International Limited (PwCIL). PricewaterhouseCoopers and PwC referto the network of member firms of PwCIL. Each member firm is a separate legal entity and does not act as an agent of PwCIL or any other member firm.

To the Shareholders and Board of Directors of MACQUARIE KOREA INFRASTRUCTURE FUND

Report of Independent Auditors

We have audited the accompanying statements of financial position of MACQUARIE KOREA INFRASTRUCTUREFUND (the Company) as of December 31, 2009 and 2008, and the related statements of income, changes inshareholders' equity and cash flows for the years then ended, expressed in Korean won. These financial statementsare the responsibility of the Company's management. Our responsibility is to express an opinion on these financialstatements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements, referred to above, present fairly, in all material respects, the financial position ofMACQUARIE KOREA INFRASTRUCTURE FUND as of December 31, 2009 and 2008, and the results of itsoperations, the changes in its shareholders' equity and its cash flows for the years then ended in conformity withaccounting principles generally accepted in the Republic of Korea.

The amounts expressed in U.S. dollars, which are provided solely for the convenience of the readers as described inNote 2(b) to the accompanying financial statements, do not form part of the non-consolidated financial statementsand are unaudited.

Accounting principles and auditing standards and their application in practice vary among countries. Theaccompanying financial statements are not intended to present the financial position, results of operations, changes inshareholders' equity and cash flows in conformity with accounting principles and practices generally accepted incountries and jurisdictions other than the Republic of Korea. In addition, the procedures and practices used in theRepublic of Korea to audit such financial statements may differ from those generally accepted and applied in othercountries. Accordingly, this report and the accompanying financial statements are for use by those who are informedabout Korean accounting principles or auditing standards and their application in practice.

Seoul, KoreaFebruary 1, 2010

This report is effective as of February 1, 2010, the audit report date. Certain subsequent events or circumstances, which may occur between the audit reportdate and the time of reading this report, could have a material impact on the accompanying financial statements and notes thereto. Accordingly, the readers ofthe audit report should understand that there is a possibility that the above audit report may have to be revised to reflect the impact of such subsequent eventsor circumstances, if any.


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

Non-consolidated Statements of Financial Position

MACQUARIE KOREA INFRASTRUCTURE FUNDDecember 31, 2009 and 2008(In thousands of Korean won and U.S. dollars, except per share data)

Invested assets:Cash and deposits (notes 3 and 8)Loans receivable (notes 4, 7 and 20)Equity securities (notes 6 and 9)

Total invested assets

Other assets: Interest receivable (note 7)Other receivablesDeferred costs, net (note 5)

Total other assets

Total assets

239,693,5231,112,569,724

612,520,450

1,964,783,697

168,342,2523,178,181

17,991,462

189,511,895

2,154,295,592

182,411,9031,144,655,688

602,553,300

1,929,620,891

160,031,0792,427,4557,752,226

170,210,760

2,099,831,651

$ 205,287,361952,868,897524,597,850

1,682,754,108

144,178,0162,721,978

15,408,926

162,308,920

$ 1,845,063,028

2009 2008 2009Assets

Won (thousands) U.S. dollars(note 2(b))

Liabilities:Accounts payableManagement fee payable (note 8)Other liabilities (notes 8 and 10)Long-term debts (notes 8 and 11)

Total liabilities

Shareholders equity:Share capital - no par value

Authorized - 4,000,000,000 shares; Issuedand outstanding: 331,459,341 shares in2009 and 323,490,204 shares in 2008

Retained earningsNet asset value per share in Korean won and U.S. dollars: 5,100($4.37) in 2009 and 5,381($4.28) in 2008 (note 16)

Total shareholders equity

Total liabilities and shareholders equity

7,3365,814,322

77,985,267380,087,014

463,893,939

1,670,985,755

19,415,898

1,690,401,653

2,154,295,592

9,605,6355,974,5912,900,647

340,523,026

359,003,899

1,631,530,557

109,297,195

1,740,827,752

2,099,831,651

$ 6,2834,979,721

66,791,082325,528,446

397,305,532

1,431,128,601

16,628,895

1,447,757,496

$ 1,845,063,028

Liabilities and Shareholders Equity


Non-consolidated Statements of Income

MACQUARIE KOREA INFRASTRUCTURE FUNDFor the years ended December 31, 2009 and 2008(In thousands of Korean won and U.S. dollars, except earnings per share)

Revenue:Interest income (notes 4, 7 and 8)Arrangement feesDividend income (note 6)Gain (loss) on sale of investment, net(notes 4 and 6)Loss on valuation of debt securities Other income (expense)

Expenses:Management fees (note 8)Custodian fees (note 8)Administrator fees (note 8)Interest expense (note 8)Other expense (notes 8 and 13)

Net income

Earnings per share in Korean won and U.S. dollars (note 17)

157,818,013143,640

-(3,574,935)

-(409,038)

153,977,680

23,381,797337,509295,320

22,960,9716,779,020

53,754,617

100,223,063

302

154,387,6072,895,000

482,00079,399,902

(2,921,659)821,149

235,063,999

27,835,500387,173301,863

16,235,4946,604,027

51,364,057

183,699,942

554

$ 135,164,451123,022

-(3,061,781)

-(350,324)

131,875,368

20,025,520289,062252,929

19,665,1005,805,944

46,038,555

$ 85,836,813

$ 0.26

2009 2008 2009




Non-consolidated Statements of Changes in Shareholders Equity

MACQUARIE KOREA INFRASTRUCTURE FUNDFor the years ended December 31, 2009 and 2008(In thousands of Korean won and U.S. dollars, except per share data)

Balance at January 1, 2008Net incomeCash distribution (note 12)(Net asset value per share inKorean won and US dollars: 5,381 ($4.28) (note 16)

Balance at December 31, 2008

Stock dividends (note 12)Net incomeCash distribution (note 12)(Net asset value per share inKorean won and US dollars:5,100 ($4.37) (note 16)

Balance at December 31, 2009

323,490,204--

323,490,204

7,969,137--

331,459,341

1,652,985,097-

(21,454,540)

1,631,530,557

39,455,198--

1,670,985,755

49,713,305183,699,942

(124,116,052)

109,297,195

(39,455,198)100,223,063

(150,649,162)

19,415,898

1,702,698,402183,699,942

(145,570,592)

1,740,827,752

-100,223,063

(150,649,162)

1,690,401,653

$1,458,289,142157,331,228

(124,675,053)

1,490,945,317

-85,836,813

(129,024,634)

$1,447,757,496

Number ofshares Share capital

Retainedearnings Total Total




Non-consolidated Statements of Cash Flows

MACQUARIE KOREA INFRASTRUCTURE FUNDFor the years ended December 31, 2009 and 2008(In thousands of Korean won and U.S. dollars)

Cash flows from operating activities:Cash inflows from operating activities:

Interest incomeDividend incomeArrangement feesCollection of loans receivableOther incomeSale of invested assetsAdvance receipt

Cash outflows from operating activities:Purchases of equity securitiesIssuances of loans receivablePayment of deferred costsManagement feesCustodian feesAdministrator feesInterest expenseOther expenses

Net cash provided by operating activities

Cash flows from financing activities:Repayment of long-term debtsProceeds from long-term debtsDistribution

Net cash provided by (used in) financing activities

Net increase in cash and deposits

Cash and deposits at beginning of the year

Cash and deposits at end of the year

115,764,888 -

143,640 5,396,250

302,840 183,051,00072,764,508

377,423,126

(38,714,910)(107,856,357)(10,239,237)(23,542,066)

(339,895)(297,408)(783,812)

(4,721,201)

(186,494,886)

190,928,240

(120,000,000) 137,000,000

(150,646,620)

(133,646,620)

57,281,620

182,411,903

239,693,523

101,540,741482,000

2,895,000-

890,018280,318,848

-

386,126,607

(118,660,750)(195,824,340)

(2,462,641)(29,999,731)

(428,102)(300,351)(765,617)

(7,231,972)

(355,673,504)

30,453,103

(100,000,000)314,000,000

(145,570,592)

68,429,408

98,882,511

83,529,392

182,411,903

$ 99,147,729 -

123,0224,621,660

259,368156,775,437 62,319,722

323,246,938

(33,157,682)(92,374,406)(8,769,473)

(20,162,783)(291,106)(254,717)(671,302)

(4,043,509)

(159,724,978)

163,521,960

(102,774,923)117,334,704

(129,022,457)

(114,462,676)

49,059,284

156,228,077

$ 205,287,361

2009 2008 2009Assets




Notes to Non-consolidated Financial Statements

MACQUARIE KOREA INFRASTRUCTURE FUNDDecember 31, 2009 and 2008

2. Summary of Significant Accounting Policies and Basis of Presenting Financial Statements

(a) Basis of Presenting Financial Statements

The Company maintains its accounting records in Korean won and prepares financial statements in conformity withthe FSCMA, the Statement of Korea Accounting Standards (SKAS) No. 104, Collective investment Vehicle andaccounting principles generally accepted in the Republic of Korea (Korean GAAP).

Certain accounting principles applied by the Company that conform with financial accounting standards andaccounting principles in the Republic of Korea may not conform with generally accepted accounting principles inother countries. Accordingly, non-consolidated financial statements are intended for use only by those who areinformed about Korean accounting principles and practices.

The accompanying non-consolidated financial statements include only the accounts of the Company, and do notconsolidate the accounts of any of the Companys subsidiaries.

1. Organization and Description of Business

MACQUARIE KOREA INFRASTRUCTURE FUND (the Company) was incorporated on December 12, 2002, underthe Securities Investment Company Act (the SICA) and the Private Participation in Infrastructure Act (the PPIA).The Company is an investment company that operates by investing in entities that have entered into long-termconcession agreements with central, provincial and city governments in Korea implemented under the framework ofthe PPIA. During 2004 the Korean Government enacted (and subsequently amended) the Indirect Investment AssetManagement Business Act (IIAMBA), replacing the SICA. During 2009 the Korean Government enacted theFinancial Investment Services and Capital Markets Act (the FSCMA), replacing the IIAMBA. The Company, whichwas classified as an investment company for the IIAMBA purposes, was registered as the investment company underthe FSCMA on April 30, 2009 and amended its Articles & Incorporation on June 15, 2009.

Under the FSCMA, the Company shall not have any employees. Instead, the Company is required under FSCMA toappoint a manager, custodian, administrator and sales agents. As described in note 8, Macquarie ShinhanInfrastructure Asset Management Co., Ltd. (the Manager) is the Companys asset manager. The Manager is a jointventure between entities in the Macquarie Group and Shinhan Financial Group. On November 11, 2005, the Managerwas licensed as an infrastructure fund asset management company under the IIAMBA and on February 4, 2009, theManager was re-licensed as an infrastructure fund asset management company under the FSCMA.

The Company listed its Depository Receipts (DR) on the London Stock Exchange Professional Securities Market onMarch 14, 2006, and its common shares on the Korea Exchange on March 15, 2006. Through its initial public offering(IPO), the Company issued 71,428,572 shares and received proceeds of 500,199 million. In addition, theCompany issued 11,984,713 shares and raised new capital of 82,291 million through the exercise of the over-allotment option in 2006. The Company deducted the share issuance costs related to the IPO, of 18,856 million and267 million, from share capital in 2006 and 2007, respectively. On February 26, 2009, the Company additionallyissued 7,969,137 shares through stock dividends.


(b) Basis of Translating Financial Statements

The Company operates primarily in Korean won and its accounting records are maintained in Korean won. TheU.S. dollars amounts as of and for the year ended December 31, 2009, provided herein, represent supplementaryinformation, solely for the convenience of the reader. All won amounts are expressed in U.S. dollars at US$1:1,167.6. Such presentation is not in accordance with accounting principles generally accepted in the Republic ofKorea, and should not be construed as a representation that the won amounts shown could be readily converted,realized or settled in U.S. dollars at this or any other rate.

(c) Revenue Recognition

Revenue is recognized when the Companys revenue-earning activities have been substantially completed, theamount of revenue can be measured reliably, and it is probable that the economic benefits associated with thetransaction will flow to the Company. Interest income on loans is recognized on an accrual basis. In principle, theCompany recognizes interest income using the effective interest rate method over the term of the loan.

(d) Cash and Deposits

The Company considers cash and deposits to include funds deposited in money market deposit accounts,negotiable certificates of deposit and time deposits.

(e) Loans receivable

The acquisition costs of loans receivable are initially carried at cost. The costs related to loan acquisitions aredeferred and amortized over the term of the respective loan. Under the effective interest rate method, the loans arerecorded at amortized costs, including allowance for doubtful loans.

The Company assesses the potential impairment of loans receivable when there is evidence that events orchanges in circumstances have made the recovery of an assets carrying value unlikely. The carrying value of theasset is reduced to its estimated realizable value by recording an impairment loss charged to current operationsand presenting it as a reduction from the said carrying value.

(f) Investment Securities

Under the SKAS No.8, Investment Securities, investment securities are initially recognized and carried at cost,including incidental expenses.

The Company as the investment company also accounts for investment securities under the provision of SKAS No.104, Collective Investment Vehicle.

Investment securities are subsequently measured at fair value and changes in the fair values of the securities arerecognized in the current operations. Under SKAS No. 104, the fair value is determined by valuation methodologiesstipulated in FSCMA.

Under the provision of FSCMA and its presidential decree, when a reliable market price is not readily determinableat the assessment date, investment securities are measured at fair value which is the price determined by the

2. Summary of Significant Accounting Policies and Basis of Presenting Financial Statements, Continued

Notes to Non-consolidated Financial Statements, Continued


Collective Investment Property Appraisal Committee (Appraisal Committee) of Macquarie Shinhan InfrastructureAsset Management Co., Ltd. In this case, the Appraisal Committee should determine the price of unlisted and non-marketable securities considering, amongst other things, the acquisition cost, transaction price and third partyvaluation. As of December 31, 2009, the Appraisal Committee has chosen to adopt acquisition cost as itsassessment of fair value for the unlisted equity securities.

Investment securities shall be assessed at each statement of financial position date to determine whether there isany objective evidence of impairment. When such evidence exists, and unless there is clear counter evidence thatrecognition of impairment is unnecessary, the entity shall estimate the recoverable amount of the impaired securityand recognize any impairment loss in current operations.

(g) Share Issuance Costs

The Companys shares have no par value, and share issuance costs are recorded as a reduction fromshareholders equity.

(h) Distributions Payable

Distributions are declared and recorded when approved by the Companys board of directors as defined under theCompanys Articles of Incorporation.

( i ) Provisions

When there is a probability that an outflow of economic benefits will occur due to a present obligation resulting froma past event, and whose amount is reasonably estimable, a corresponding amount of provision is recognized in thefinancial statements. However, when such outflow is dependent upon a future event, is not certain to occur, orcannot be reliably estimated, a disclosure regarding the contingent liability is made in the notes to the financialstatements.

( j ) Net Asset Value Per Share

Net asset value per share is calculated as the carrying value of net assets of the Company divided by theoutstanding numbers of shares.

(k) Earnings Per Share

Earnings per share are calculated by dividing net income by the weighted-average numbers of shares outstandingduring each period.

( l ) Income Taxes

As described in note 1, the Company is an investment company under the FSCMA, which is defined as a collectiveinvestment vehicle established in the form of a corporation under the Korean Commercial Code to distribute to itsshareholders the profits made by managing investments. Accordingly, for Korean corporate income tax purposes,the Company, as an investment company under the FSCMA, is entitled to deduct from its taxable income (up to anamount equal to its taxable income) for any fiscal year the amount of distributions the Company declares in the



same year as long as such amount is equal to 90% or more of the Companys distributable income for such year.Distributable income is defined as non-consolidated net income after deduction of income taxes as set forth in theCompanys non-consolidated financial statements prepared under Korean GAAP, further adjusted to includeretained earnings or deficit and any reserves pursuant to applicable laws and regulations. If the Company does notdeclare distributions equal to 90% or more of the Companys distributable income in a particular fiscal year, theCompany will be liable for the Korean corporate income tax for the entire amount of its taxable income.

(m) Use of Estimates

The preparation of non-consolidated financial statements in accordance with Korean GAAP requires managementto make estimates and assumptions that affect the amounts reported in the non-consolidated financial statementsand related notes. Therefore, actual results could differ from those estimates.

(n) Approval of financial statements

The December 31, 2009, financial statements of the Company were approved by the board of directors onFebruary 1, 2010.

3. Cash and Deposits

Cash and deposits as of December 31, 2009 and 2008, are as follows:

(*1) As of December 31, 2009, the interest rate of MMDA is 1.80%.(*2) As of December 31, 2009, the interest rates of TDs are 2.77%~3.50%, and the maturities of TDs are less than 1 year.

Money Market Deposit Accounts (MMDA) (*1): SC Korea First Bank

Time Deposits (TD) (*2):Kookmin BankWoori BankShinhan Bank

Negotiable Certificate of Deposits (NCD)Kookmin BankNACFWoori Bank

17,693,523

100,000,000100,000,00022,000,000

222,000,000

---

-

239,693,523

21,881,753

50,000,000 -

10,000,000

60,000,000

20,185,440 30,088,822 50,255,888

100,530,150

182,411,903

$ 15,153,754

85,645,769 85,645,76918,842,069

190,133,607

---

-

$ 205,287,361

2009 2008 2009





(*1) The interest rate on this loan was 13% per annum until March 9, 2008, and was increased to 15% per annum thereafter. InJanuary 2008, the Company sold the loan and the related interest receivable to BYT Securitization Specialty Co., Ltd. (BYTSPC) for 172,000 million and recognized gain of 24,454 million on investment sales. The Company acquired both 0.8%shares of Baekyang Tunnel Ltd. and additional loan of 992 million for 2,100 million.

(*2) On March 26, 2009, the Company sold the senior loan of Incheon Bridge Co., Ltd. to Industrial Bank of Korea and KookminBank for 134,499 million.

(*3) In accordance with the loan agreement, 50% of the accrued interest (10,012 million) during the construction period was addedto the principal. The Company has accrued interest using an effective interest rate of 9.35%.

4. Loans receivable

Loans receivable as of December 31, 2009 and 2008, are as follows:

Senior loans receivable:Kwangju Beltway Investment Co., Ltd.Kwangju Ring Road Co., Ltd. Soojungsan Investment Co., Ltd. Baekyang Tunnel Ltd. (*1)

Incheon Bridge Co., Ltd. (*2)

Subordinated loans receivable:Kwangju Beltway Investment Co., Ltd. MCB Co., Ltd. (*3)

New Airport Hiway Co., Ltd.Soojungsan Investment Co., Ltd.Cheonan Nonsan Expressway Co., Ltd. (*4)

Daegu East Circulation Road Co., Ltd. Incheon Bridge Co., Ltd. Seoul-Chuncheon Highway Co.,Ltd (*5)

Gyungsu Highway Co., Ltd (*6)

Kyunggi Highway Co., Ltd (*7)

Busan New Container Terminal Co., Ltd. (*8)

Seoul Metro Line 9 Co., Ltd.Woomyunsan Infraway Co., Ltd. (*9)

Working capital loans receivable:Kwangju Beltway Investment Co., Ltd.

107.858.5

13~15 8

2020

13.920

6~2017

11.4911~11.5913 ~ 159 ~ 1110~12

1520

15

2018~20242010~20192009~2018

20242010~2024

2024~20262024~20292015~2017

20172024~20292022~20242020~20262026~20312029~20342025~20292028~20322033~20352024~2026

2027

Annual InterestRate(%)

Repayment Period

142,000,00073,354,84664,755,0001,660,271

-

31,950,00061,266,31951,670,40019,260,587

182,250,00032,045,00087,429,56087,450,00077,000,00068,455,00085,726,00033,460,0009,576,000

3,260,741

1,112,569,724

142,000,000 73,354,846 70,151,2501,707,342

113,063,000

31,950,000 61,266,319 51,670,400 19,260,587

182,250,00032,045,00063,789,20387,450,00072,400,00045,555,00060,022,000 33,460,000

-

3,260,741

1,144,655,688

$ 121,616,99262,825,32255,459,9181,421,952

-

27,363,82352,472,01044,253,511 16,495,878

156,089,41527,445,187 74,879,719 74,897,22565,947,24258,628,811 73,420,69228,657,074 8,201,439

2,792,687

$ 952,868,897

2009 2008 2009



(*4) Interest rates per annum are as follows: 6% from 2005 to 2007, 8% in 2008, 16% from 2009 to 2012 and 20% from 2013 tomaturity in 2029, and an effective interest rate of 11.58% is used to recognize interest income. Due to financial covenantsrestricting payment of interest on subordinated loans, Cheonan Nonsan Expressway (CNEC) have the limitation to pay interestson the subordinated loan. In May 2009, the Company entered a debt securitization agreement with NH Investment andSecurities Co., Ltd (NHISC) to securitize the accumulated interest receivable from CNEC. Under the agreement, NHISC agreedto take over the debt securities amounting 157,200 million through seven transactions. The Company paid an underwriting feeof 1.5% (2,358 million) of the total underwriting amount to NHISC. In May 2009, the Company sold the debt securities of33,789 million for 30,214 million as the first transaction under the agreement.

(*5) The interest rate during the construction period is 11% per annum and increases to 11.59% per annum thereafter. The Companyhas accrued interest income using an effective interest rate of 11.9%.

(*6) The interest rate during the construction period and for three years following commencement of operations is 13% per annumand increases to 15% per annum thereafter.

(*7) The interest rate during the construction period is 9% per annum and increases to 11% per annum thereafter. On January 25,2010, the Company sold the loan of Seosuwon-Osan-Pyungtaek Expressway (SOPE) (Note 20).

(*8) The interest rate during the construction period is 10% per annum and increases to 12% per annum thereafter.

(*9) In January 2009, the Company acquired the subordinated loan for 9,576 million, and the interest rate is 20% per annum.

4. Loans receivable, Continued

Deferred costs as of December 31, 2009 and 2008, are as follows:

(*1) The fees regarding the securitization and credit facility are included (Notes 4 and 11).

5. Deferred Costs


Costs deferred on investments prior to acquisitionLoans receivable costs, netOthers (*1)

137,5007,089,564

10,764,398

17,991,462

137,500 7,585,962

28,764

7,752,226

$ 117,7636,071,912 9,219,251

$ 15,408,926

2009 2008 2009



(a) Equity securities as of December 31, 2009 and 2008, are as follows:

6. Investments

(*1) Kwangju Beltway Investment Co., Ltd. (KBICL) operates the Gwangju Second Beltway, Section 1 and collects toll revenuesgenerated by the beltway under the concession agreement with the Gwangju City government.

(*2) Kwangju Ring Road Co., Ltd. (KRRCL) operates the Gwangju Second Beltway, Section 3-1 and collects toll revenuesgenerated by the beltway under the concession agreement with the Gwangju City government.

(*3) MCB Co., Ltd. (MCB) holds the concession right to operate Machang Bridge under a concession agreement with theGyeongsangnamdo provincial government and commenced its operation on July 15, 2008. On July 31, 2008, the Companyadditionally acquired 51% of shares in MCB for 20,464 million from Bouygues and Hyundai Construction Co.,Ltd.

(*4) New Airport Hiway Co., Ltd. (NAHC) operates the Incheon International Airport Expressway and collects toll revenuesgenerated by the Highway under the concession agreement with the Ministry of Land, Transport and Maritime Affairs (MLTM).In 2008, NAHC paid dividends amounting to 2,000 million and the Company received dividend income of 482 million fromNAHC.

(*5) Baekyang Tunnel Ltd. (BYTL) operates and manages Baekyang Tunnel under its concession agreement with the Busan Citygovernment.

Kwangju Beltway Investment Co., Ltd. (*1)

Kwangju Ring Road Co., Ltd. (*2)

MCB Co., Ltd. (*3, 17)

New Airport Hiway Co., Ltd. (*4)

Baekyang Tunnel Ltd. (*5)

Soojungsan Investment Co., Ltd. (*6)

Cheonan Nonsan Expressway Co., Ltd. (*7, 17)

Woomyunsan Infraway Co., Ltd. (*8, 17)

Private Infrastructure Investment Korea (*9)

Korea Road Infrastructure Investment Co., Ltd. (*10)

Seoul-Chuncheon Expressway Co., Ltd. (*11, 17)

Busan New Container Terminal Co., Ltd. (*12, 17)

Gyungsu Highway Co., Ltd. (*13, 17)

Seoul Metro Line 9 Co., Ltd. (*14)

BYT Securitization Specialty Co., Ltd. (*15)

CN First Securitization Specialty Co., Ltd. (*16)

100.075.0

100.024.1

100.0100.060.036.0

100.085.015.030.035.024.50.50.5

Owner-ship (%)

13,050,000 29,494,766 48,464,342 59,880,2481,231,000

47,247,83093,815,0612,723,725

75,286,809 57,552,156 49,439,04334,825,957 58,361,765 41,147,648

5050

612,520,450

13,050,00029,494,766 48,464,34259,880,248 1,231,000

47,247,83093,815,06121,875,72557,046,80957,552,156 49,439,043 27,446,85754,861,765 41,147,648

50 -

602,553,300

$ 11,176,77325,261,02041,507,65751,284,8991,054,299

40,465,76780,348,6302,332,755

64,479,96749,290,98742,342,44929,826,95949,984,38235,241,220

4343

$ 524,597,850

2009 2008 2009



(*6) Soojungsan Investment Co., Ltd. (SICL) operates Soojungsan Tunnel under a concession agreement with the Busan Citygovernment.

(*7) CNEC operates Cheonan-Nonsan Expressway under a concession agreement with the MLTM.

(*8) Woomyunsan Infraway Co., Ltd. (WIC) operates Woomyunsan Tunnel under a concession agreement with the Seoul City. InJanuary 2009, according to the shareholders agreement, WIC reduced its capital by purchasing 50% of outstanding shares at10,000 per share (par value 5,000 per share), decreasing the Companys shares in WIC from 3,830,400 shares to 1,915,200shares. In this regard, the Company received 19,152 million of proceeds for the capital reduction from WIC.

(*9) Private Infrastructure Investment Korea (PIIK) is a special purpose company established to acquire Incheon Bridge Co., Ltd.(IBC), the concession company with the right to operate Incheon Grand Bridge, under a concession agreement with the MLTM.As of December 31, 2009, PIIK holds 40.86% of the equity in IBC. Incheon Bridge commenced its operations on October 19,2009.

(*10) Korea Road Infrastructure Investment Co., Ltd. (KRIIC) is a special purpose company established to provide funding to DaeguEast Circulation Road Co., Ltd. (DECRC), the concession company with the right to operate and maintain the Daegu 4thBeltway East. As of December 31, 2009, KRIIC holds 100% of the shares of DECRC.

(*11) Seoul-Chuncheon Expressway Co., Ltd. (SCE) has the right to operate and manage Seoul-Chuncheon Expressway under theconcession agreement with MLTM and commenced its operations on August 12, 2009.

(*12) Busan New Container Terminal Co., Ltd. (BNCT) has been granted a concession from MLTM to construct, operate andmanage Busan New Port Phase 2-3.

(*13) Gyungsu Highway Co., Ltd. (YSE) has the right to operate and manage Yongin-Seoul Expressway under the concessionagreement with MLTM and commenced its operations on July 1, 2009. The Company has the option to increase its stakefurther to 67% depending on the toll revenues of the Yongin-Seoul Expressway over the first 2 years of operations.

(*14) Seoul Metro Line 9 Co., Ltd. (SM9) has the right to operate and manage Subway Line 9 under the concession agreement withSeoul City government and commenced its operations on July 24, 2009.

(*15) In December 2007, the Company acquired 0.5% of the shares of BYT SPC for the purchase price of 50 thousand. TheCompany also provided Shinhan Bank with its equity shares in the BYT SPC as a pledge in relation to any potential loss whichmay arise due to BYTLs default on the loan.

(*16) In April 2009, the Company acquired 0.5% of the shares of CN First Securitization Specialty Co., Ltd.

(*17) The Company provided its equity shares as collaterals for subsidiaries long-term debts (Note 9).

(b) In 2008, the Company sold the debt securities of New Daegu-Busan Expressway Co.,Ltd. for 108,319 million,recognizing 54,946 million as gain on disposal of the convertible bond.

6. Investments, Continued



(a) Details of significantly invested companies as of December 31, 2009, are as follows:

(*1) SKAS 104 does not require disclosure of transactions and balances with related parties. However, in order to provide relevantinformation to the shareholders, the Company classifies the subsidiaries where greater than 50% equity shares are held assignificantly invested companies, and discloses the transactions and balances with such entities.

(*2) 100% subsidiary of Korea Road Infrastructure Investment Co., Ltd.

(b) Significant transactions which occurred in the normal course of business with the significantly invested companiesas of and for the years ended December 31, 2009 and 2008, are summarized as follows:

(c) Compensation for the supervisory directors for the years ended December 31, 2009 and 2008, consists of:

7. Transactions with Significantly Invested Companies and Supervisory Directors

Kwangju Beltway Investment Co., Ltd.Kwangju Ring Road Co., Ltd.Baekyang Tunnel Ltd.Cheonan Nonsan Expressway Co., Ltd.Soojungsan Investment Co., Ltd.Private Infrastructure Investment Korea Co., Ltd.Korea Road Infrastructure Investment Co., Ltd.Daegu East Circulation Road Co., Ltd. (*2)

MCB Co., Ltd.

10075

10060

10010085

-100

Operation of toll roadOperation of toll road

Operation of tunnelOperation of toll road

Operation of tunnelInvestmentInvestment

Operation of toll roadOperation of toll road

Ownership(%) Principal BusinessSignificantly Invested Companies (*1)

Statements of income:Interest income

Statements of financial position:Loans receivableInterest receivable

90,865,271

611,802,764156,580,669

88,847,286

617,246,085 143,268,396

$ 77,822,260

523,983,183$ 134,104,718

2009 2008 2009


Salaries 144,000 133,419 $ 123,330

2009 2008 2009



(a) On December 13, 2002, the Company appointed Macquarie Shinhan Infrastructure Asset Management Co., Ltd.as the Companys Manager, with the terms of the appointment stipulated in a management agreement executedbetween the Company and the Manager. The management agreement was finally amended and restated onFebruary 16, 2006 (the Management Agreement). Pursuant to the Management Agreement, the Company paidmanagement fees and performance fees to the Manager on the following basis:

(i) Post-listing Management Fees: The Manager receives a fee, paid quarterly in arrears, calculated as a proportionof the net investment value and the commitments of the Company. The net investment value of the Company isthe aggregate of the market value of the Company plus debt incurred by the Company less cash and cashequivalents (*) (Net Investment Value). Commitments represent the aggregate of amounts which the Companyhas firmly committed for future investments (other than cash and cash equivalents (*)). Each of the NetInvestment Value and Commitments are calculated as at the end of each calendar quarter.

- In relation to the Net Investment Value portion of the Post-listing Management Fees, the amount is calculated atthe rate of 1.25% per annum of the Net Investment Value where Net Investment Value plus Commitments isless than or equal to 1.5 trillion, and 1.10% per annum for that part of the Net Investment Value where NetInvestment Value plus Commitments exceeds 1.5 trillion.

- In relation to the Commitments portion of the Post-Listing Management Fee, the amount is calculated at therate of 1.15% per annum of Commitments where Commitments plus Net Investment Value is less than or equalto 1.5 trillion, and 1.05% per annum for that part of Commitments where Commitments plus Net InvestmentValue exceeds 1.5 trillion.

(*) Cash and cash equivalents include all cash and deposits held at the banks.

(ii) Post-listing Performance Fees: Post-listing Performance Fees are payable to the Manager quarterly, calculatedas 20% of the out-performance (as measured by an accumulation index for shares over the last 15 trading daysof each quarter) over an 8% per annum benchmark rate of return, after taking into account any deficit andsurplus from previous periods.

(iii) Termination of Management Agreement: Under the terms of the Management Agreement, the Company mayonly terminate the agreement upon 90 days written notice to the Manager and approval by the holders of atleast two thirds of the Companys shares. However, if the Company terminates the Management Agreement forreasons other than willful misconduct, gross negligence by the Manager or underperformance, the Company isrequired to pay to the Manager an amount equal to:

- three times the management fees paid to the Manager over the four quarters immediately precedingtermination; and

- if the Company was not listed, a listing performance fee assuming the Company had listed as at the time of

8. Related Party Transactions and Balances with the Manager and its Associates



termination; or

- if the Company is listed, performance fees for the 12 quarters after termination as though the Manager was stillengaged as the Manager and the Management Agreement was still operating.

Underperformance is deemed to have occurred where the share price performance and distributions of theCompany, as measured by an accumulation index, underperforms an adjusted benchmark rate of return, being thelower of 3% per annum or the annualized rate of inflation, for 14 out of 16 consecutive quarters.

(b) As of December 31, 2009, the Company has the Korean Securities Finance Corporation and KEB InvestorServices Co., Ltd. as its Custodian and Administrator, respectively. The Company also has Good Morning ShinhanSecurities Co., Ltd., Macquarie Securities Korea, Ltd., Hanwha Securities Co., Ltd., Samsung Securities Co., Ltd.,Tongyang Investment Bank Co., Ltd. and Kyobo Securities Co., Ltd. as its Sales Agents. Pursuant to the relevantservice provider agreements, the Company pays administrator fees, custodian fees and sales agent fees. Thedetails are as follows:

(i) Custodian fees: 0.02% per annum of the average balance of the net asset value of the Company. This fee is paidin arrears on a quarterly basis.

(ii) Administrator fees: 0.0175% per annum of the average balance of the net asset value of the Company. This feeis paid quarterly in arrears.

(iii) Sales agent fees: According to sales agent agreements, no fee is payable.

8. Related Party Transactions and Balances with the Manager and Associates, Continued


Significant transactions:Macquarie Shinhan Infrastructure AssetManagement Co., Ltd.

Shinhan Bank

Shinhan Macquarie Financial Advisory Co., Ltd. (SMFA)

Macquarie SecuritiesLimited

Account balances:Macquarie Shinhan Infrastructure Asset Management Co., Ltd.

Shinhan Bank

Management fee

Cash and deposits(*1)

Long-term debt (*2)

Repayment of long-term debt (*2)

Interest income (*1)

Interest expense (*2)

Upfront fee and other feesregarding the credit facility (*2)

Advisory fee

Advisory fee

Management fee payable

Cash and deposits (*1)

Long-term debt (note 11) (*2)

Other liabilities (*2)

23,381,797

22,000,00038,360,00033,600,000

765,2936,429,072

4,815,084

3,049,063

-

5,814,322

22,000,000106,424,364

647,305

27,835,500

10,000,00087,920,00028,000,000

128,9264,545,938

182,488

2,662,464

4,084,344

5,974,591

10,000,000 95,346,447

755,772

$ 20,025,520

18,842,06932,853,717 28,776,978

655,4415,506,228

4,123,916

2,611,393

-

$ 4,979,721

18,842,069 91,147,965

554,389

2009 2008 2009

Won (thousands)U.S. dollars

(note 2(b))

8. Related Party Transactions and Balances with the Manager and Associates, Continued

(c) Significant transactions and account balances which occurred with the Manager and its related parties as of andfor the years ended December 31, 2009 and 2008, are summarized as follows:

(*1) In 2009, the Company held Time Deposit (TD) amounting to 22,000 million with Shinhan Bank and also recognized interestincome from the TD.

(*2) In 2009 and 2008, the Company withdrew 38,360 million and 87,920 million, respectively, from Shinhan Bank. TheCompany has paid interest expense, an upfront fee, an agent banking fee and a commitment fee regarding this credit facility. TheCompany made an early repayment of the long-term debt in the amount of 120,000 million on August 17 and November 17,2009 of which repayment of 33,600 million was made to Shinhan Bank. As of December 31, 2009, the long-term debtamounted to 106,424 million including the capitalized interest payable to Shinhan Bank. Other liabilities consist of the interestexpense, the commitment fee accrued for the long-term debt and the remaining credit facility from Shinhan Bank.



Equity securities:MCB Co., Ltd.

Cheonan Nonsan Expressway Co., Ltd.

Woomyunsan Infraway Co., Ltd.

Seoul-Chuncheon Highway Co., Ltd.

Busan New Container Terminal Co.,Ltd.

Gyungsu HighwayCo.,Ltd.

Kookmin Bank and others

KoreaDevelopment Bank, CNESecuritizationSpecialty LLC and Shinhan Bank

Shinhan Bank and others



Korea Development Bank and others

MCB Co., Ltd.

Cheonan Nonsan Expressway Co., Ltd.

WoomyunsanInfraway Co., Ltd.

Seoul-Chuncheon Highway Co., Ltd.

Busan New Container Terminal Co.,Ltd.

Gyungsu Highway Co.,Ltd.

48,464,342

macquarie korea infrastructure fund 2009 … · krx-088980.ks lse-mkif.li ... (msiam). msiam is a...

Documents