2014 kids&future Financial Statements

Kids & Future Financial statements for the years ended December 31, 2014 and 2013 with independent auditors’ report

Kids & Future

Table of contents Independent auditors’ report Page Financial statements Statements of financial position

2

Statements of activities

3

Statements of cash flows

4

Notes to the financial statements

5-17

Independ dent auditors’ report of Directors The Board o Kids & Futurre

We have au udited the accompanying statements of financial position p of Kids K & Futuree (the “Found dation”) as of o December 3 31, 2014 an nd 2013, and d the related d statementts of activitie es, and cashh flows all expressed e in n Korean won n for the yea ars then ende ed. These fin nancial state ements are the t responsi bility of the Foundation’ss managemen nt. Our respo onsibility is to o express an opinion on these t financial statementts based on our o audits. nt's Respon nsibility for the t Financia al Statementts Managemen Managemen nt is respon nsible for th he preparatio on and fair presentatio on of these financial sttatements in n accordance with Accou unting Standards for No on-Public En ntities in the Republic oof Korea and the Socia al Welfare Act of the Repub blic of Korea a, and for succh internal co ontrol as man nagement deetermines is necessary to o enable the p preparation of o financial statements th hat are free from f material misstatemeent, whether due to fraud d or error.

Auditors’ R Responsibilitty Our responssibility is to express e an opinion o on th ese financia al statements s based on oour audits. We W conducted d our audit in a accordance with auditing g standards g generally acc cepted in the e Republic off Korea. Those standardss require that we complyy with ethica al requireme ents and pla an and perform the auddit to obtain n reasonable e assurance a about whethe er the separa ate financial sstatements are a free from material missstatement.

An audit invvolves perforrming proced dures to obta ain audit evid dence aboutt the amountts and disclo osures in the e separate fin nancial state ements. The proceduress selected depend on th he auditors’ judgment, including i the e assessmentt of the risks of material misstatement m t of the sepa arate financia al statementss, whether du ue to fraud or error. In ma aking those risk assess sments, the e auditor considers internal control relevant to o the entity'ss preparation and fair pressentation of the t separate e financial sta atements in order to dessign audit pro ocedures tha at are appropriiate in the cirrcumstances s, but not forr the purpose e of expressing an opinioon on the effe ectiveness of o the entity's internal contrrol. An audit also include es evaluating g the appropriateness of accounting policies used d asonablenesss of accountting estimate es made by management, as well aas evaluating the overalll and the rea presentation n of the separate financia al statementss. dit evidence we w have obttained is suffficient and appropriate a too provide a basis for our We believe that the aud audit opinion n.

Opinion In our opinio on, the financcial statemen nts mentione ed above in Korean K won present fairlyy, in all mate erial respectss, the financiall position of Kids & Futu ure as at De ecember 31, 2014 and 2013, and thhe related statements s o of activities, an nd cash flow ws for the yea ars then end ded in accordance with Accounting A S Standards fo or Non-Publicc Entities in th he Republic of o Korea and the Social W Welfare Act of o the Republic of Korea. er Other matte The 2013 co omparative financial state ements have e been audite ed in accorda ance with preevious auditing standardss generally acccepted in the e Republic of Korea.

March 13, 20 015 This audit report is efffective as off March 13, 2015, the independent auditors’ reeport date. Accordingly, A certain ma aterial subse equent events or circum mstances ma ay have occ curred durinng the period from the auditors’ re eport date to o the time th his report iss used. Such h events and d circumstannces could significantly s affect the a accompanyin ng financial sttatements an nd may result in modifica ations to this report.

Kids & Future Statements of financial position as of December 31, 2014 and 2013 (Korean won in thousands and US dollars in units) Korean won Notes

December 31, 2014

Assets Current assets: Cash and cash equivalents 2, 3, 4 \ Short-term financial instruments 2, 5, 9 Other accounts receivable and accrued income Total current assets Non-current assets: Long-term financial instruments 2, 5, 9 Long-term guarantee deposits 9 Property and equipment 2, 6 Intangible assets 2, 7 Total non-current assets Total assets

\

Liabilities and equity Current liabilities: Other accounts payable Withholdings Total current liabilities

\

Non-current liabilities: Pensionbenefits Total non-current liabilities

Capital Unrestricted Temporarily restricted Permanently restricted Total capital Total liabilities and capital

December 31, 2013

6,096,993 \ 300,810

\

\

$

5,546,755 273,663

34,593

27,997

6,428,576

3,103,474

5,848,415

1,914,593 200,313 49,204 1,943 2,166,053

2,710,871 201,250 60,114 4,667 2,976,902

1,741,806 182,235 44,763 1,768 1,970,572

8,594,629 \

6,080,376 $

7,818,987

128,383 5,465 133,848

\

244,291 \

572,956 4,777,382 3,000,000 8,350,338

2, 10 2, 9

3,068,881 -

December 31, 2014

30,773

110,443 110,443

Total liabilities

US dollars (Note 2)

8,594,629

96,328 3,847 100,175

116,797 4,973 121,770

56,903 56,903

100,476 100,476

157,078 \

531,539 2,391,759 3,000,000 5,923,298 \

6,080,376

222,246

521,248 4,346,235 2,729,258 7,596,741 $

7,818,987

See accompanying notes are an integral part of the finacial statements.

2

Kids & Future Statements of activities for the year ended December 31, 2014 and 2013 (Korean won in thousands and US dollars in units) Korean won 2014

Notes Changes in unrestricted capital Revenues, gains and other support General donations Interest income

US dollars (Note 2) 2013

2014

2 468,629 \ 133,148 601,777

348,918 $ 151,446 500,364

426,336 121,132 547,468

232,666 54,126 324,191 610,983 (9,206)

96,705 69,636 386,347 552,688 (52,324)

211,668 49,241 294,934 555,843 (8,375)

50,830 50,830

2,546 4,677 7,223

46,243 46,243

207 207

932 151 1,083

188 1 188

41,417

(46,184)

37,680

10,467,707 6,572 10,474,279

6,096,520 1,770 6,098,290

9,523,023 5,979 9,529,002

Operating profit

7,187,781 900,875 8,088,656 2,385,623

4,834,853 563,955 5,398,808 699,482

6,539,102 819,573 7,358,675 2,170,327

Increase in temporaily restricted capital

2,385,623

699,482

2,170,327

-

-

-

Changes in total capital

2,427,040

653,298

2,208,007

Total capital at beginning of the year

5,923,298

5,270,000

5,388,735

8,350,338 \

5,923,298 $

7,596,742

Operational expenses General social welfare activities Promotional activities General and administrative expenses

\

8

Operating loss Other revenues, net Gain from assets contributed Others

6, 7

Other expenses, net Loss on disposals of property and equipment Others

Increase (decrease) in unrestricted capital Changes in temporarily restricted capital Revenues, gains and other support Designated donations Interest income Operational expenses Designated donations activity General and administrative expenses

2, 10, 11

8, 10

Changes in permanently restricted capital

Total capital at end of the year

\

See accompanying notes are an integral part of the finacial statements.

3

Kids & Future Statements of cash flows for the years ended December 31, 2014 and 2013 (Korean won in thousands and US dollars in units) US dollars (Note 2

Korean won 2014 Cash flows from operating activities: Cash inflows from general donations Cash inflows from designated donations Interest received Cash inflows from other operating activities Cash outflows for general social welfare activities Cash outflows for payroll and other operating activities Net cash provided by operating activities Cash flows from investing activities: Decrease in short-term financial instruments Increase in long-term investment securities Acquisition of furniture and fixtures, and software Net cash provided by (used in) investing activities

\

2013

2014

266,404 \ 348,918 $ 10,415,840 6,071,598 138,392 153,487 50,622 6,140 (7,183,277) (4,996,695) (1,181,141) (893,275) 2,506,840 690,173

1,136,821 (604,533) (11,016) 521,272

868,951 (903,060) (3,565) (37,674)

242,362 9,475,837 125,902 46,053 (6,535,005) (1,074,546) 2,280,603

1,034,226 (549,975) (10,022) 474,229

-

-

-

Net increase in cash and cash equivalents

3,028,112

652,499

2,754,832

Cash and cash equivalents at the beginning of the year

3,068,881

2,416,382

2,791,923

Cash flows from financing activities:

Cash and cash equivalents at the end of the year

\ 6,096,993 \ 3,068,881 $

5,546,755

See accompanying notes are an integral part of the finacial statements.

4

Kids & Future Notes to the financial statements December 31, 2014 and 2013

1.

General Kids & Future (the “Foundation”) is a non-profit organization founded on March 28, 2000 in accordance with the Social Welfare Service Act of the Republic of Korea, and approved as a social welfare foundation by the Ministry of Health, Welfare and Family Affairs on March 30, 2000. The Foundation was originally funded by contributions from KTB Investment & Securities Co., Ltd., VirtualTek Corp., Daum Communications Corp., eBay Auction Co., Ltd., HANDYSOFT Corp. and others in Korea with an initial contribution amount of \5,600,000 thousand. The Foundation’s mandate is to improve the conditions and social opportunities of Korean children and youth.

The financial statements of the Company for the year ended December 31, 2014 were approved by the Board of Directors on March 16, 2015.

2.

Summary of significant accounting policies Basis of financial statement preparation The Foundation maintains its official accounting records in Korean won and prepares financial statements in the Korean language in conformity with accounting principles for private, non-profit and social welfare foundations established under the Social Welfare Act of the Republic of Korea and, where applicable, accounting principles generally accepted in the Republic of Korea. The accompanying financial statements have been condensed, restructured and translated into English (with certain expanded descriptions) from the Korean language financial statements. In the event of any differences in interpreting the financial statements or the independent auditors’ report there on, the Korean version, shall prevail.

The significant accounting policies followed by the Foundation in the preparation of its financial statements are summarized as follows: Financial statement translation The accompanying 2014 financial statements are expressed in Korean won, and solely the convenience of the reader, have been translated into United States dollars at the rate of \1,099.2 to US$1, the year-end exchange rate on December 31, 2014. Such translation should not be construed as a representation that the Korean won amounts can actually be converted into United States dollars at the exchange rate used for the purpose of such translation.

Cash equivalents Highly liquid deposits and marketable securities with original maturities of three months or less, and which have no significant risk of loss in value by interest rate fluctuations, are considered as cash equivalents.

Financial instruments Financial instruments, such as time deposits and restricted bank deposits, which are traded by financial institutions and are held for short-term cash management purposes or which will mature within one year, are accounted for as short-term financial instruments. Financial instruments other than cash equivalents and short-term financial instruments are recorded as long-term financial instruments.

Investments in securities Investments in securities are classified as either trading, held-to-maturity or available-for-sale securities, as appropriate, and are initially measured at cost, including incidental expenses, with cost being determined using the weighted average method for equity securities and the specific identification method for debt securities. The Foundation determines the classification of its investments after initial recognition, and, where allowed and appropriate, re-evaluates this designation at each financial year end.

Securities that are acquired and held principally for the purpose of selling them in the near term are classified as trading securities. Debt securities which carry fixed or determinable payments and fixed

5

Kids & Future Notes to the financial statements December 31, 2014 and 2013

2.

Summary of significant accounting policies (cont’d) Investments in securities (cont’d) Maturities are classified as held-to-maturity if the Company has the positive intention and ability to hold to maturity. Securities that are not classified as either trading or held-to-maturity are classified as availablefor-sale securities.

After initial measurement, available-for-sale securities are measured at fair value with unrealized gains or losses being recognized directly in equity as other comprehensive income. Likewise, trading securities are also measured at fair value after initial measurement, but with unrealized gains or losses reported as part of net income. Held-to-maturity securities are measured at amortized cost after initial measurement. The cost is computed as the amount initially recognized minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initially recognized amount and the maturity amount.

The fair value of trading and available-for-sale securities that are traded actively in the open market (marketable securities) is measured at the closing price of those securities at the reporting date. Nonmarketable equity securities are measured at cost subsequent to initial measurement if their fair values cannot be reliably estimated. Non-marketable debt securities are carried at a value using the present value of future cash flows discounted using an appropriate interest rate which reflects the issuer’s credit rating announced by a public independent credit rating agency. If the application of such measurement method is not feasible, estimates of fair values may be made using a reasonable valuation model or quoted market prices of similar debt securities issued by entities conducting business in similar industries.

Trading securities are classified as current assets. Available-for-sale and held-to-maturity securities are classified as long-term investments, except that securities maturing within one year or that are certain to be disposed of within one year from the reporting date are classified as short-term investments.

The Foundation recognizes an impairment loss on its investments in securities if there is objective evidence that the securities are impaired. The impairment loss is charged to the statement of activities.

Property and equipment Property and equipment are stated at cost less accumulated depreciation, which includes the expenses directly related to prepare such assets for its intended use.

Maintenance and repairs are expensed in the year in which they are incurred. Expenditures which enhance the value or extend the useful life of the related assets are capitalized. The Foundation does not capitalize financing costs associated with acquisitions of assets, but the financing costs are expensed as incurred. Depreciation of furniture and fixtures is provided using the straight-line method over 5 years.

An asset whose use is discontinued and held for disposal or retirement is no longer depreciated. The carrying amount of the asset upon discontinuance of its use is reclassified to an investment asset and tested for impairment at each year-end. An asset whose use is discontinued and held for future use is depreciated and the depreciation expense is recorded as a non-operating expense. There was no recognized depreciation expense of an asset whose use is discontinued and held for future use in prior and current years.

Intangible assets Intangible assets are initially recognized at acquisition cost (purchase cost plus expenditures directly related to preparing the asset for its intended use) and subsequently presented at amortized cost.

Intangible assets are amortized using the straight-line method over 5 years. Amortization is included in general and administrative expenses.

When the recoverable amount (the higher of net sales price or value in use) of intangible assets is significantly lower than the carrying amount due to obsolescence and others, the difference is recognized as an impairment loss. When the recoverable amount subsequently exceeds the carrying amount of the impaired asset, the excess is recorded as a reversal of impairment loss to the extent that the reversed asset does not exceed the carrying amount before previous impairment as adjusted by amortization.

6

Kids & Future Notes to the financial statements December 31, 2014 and 2013

2.

Summary of significant accounting policies (cont’d) Pension benefits In accordance with the Employee Retirement Benefit Security Act (“ERBSA”) and the Company’s employment benefits policy, employees with at least one year of service are entitled to severance and retirement benefits based on the rates of pay in effect at the time of termination, years of service and certain other factors. The provision is determined based on the amount that would be payable assuming all employees were to terminate their employment as of the reporting date.

Revenue & expense recognition Donations are recognized as revenue at fair value when the donations are received. Generally, revenues are recognized when cash is received rather than when earned and expenses are recognized on an accrual basis.

2.

Classification of capital Donations received, revenues and operational expenses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the activities and capital of the Foundation and changes therein are classified and recorded as follows: (i) Unrestricted capital: Capital that are not subject to donor-imposed stipulations. (ii) Temporarily restricted capital: Capital whose usage has been limited by donors to a specific time period and/or purpose. When the donor restriction expire, which is when the stipulated time restriction ends or purpose has been met, temporarily restricted capital are reclassified to unrestricted capital and reported in the statement of activities as capital released from restrictions. (iii) Permanently restricted capital: Capital that were contributed when the Foundation was established. These capital will be used solely upon the approval of the Board of Directors and relevant governmental body.

Expenses are reported as decreases in unrestricted capital. Income, gains and losses on investments are reported as increase or decreases in unrestricted capital unless their use is restricted by explicit donor stipulations or by relevant law.

3. Cash and cash equivalents, and short-term financial instruments Cash and cash equivalents and short-term financial instruments as of December 31, 2014 and 2013 are summarized as follows (Korean won in thousands):

Classification Cash and cash equivalents: Cash on hand Ordinary deposits

Financial institution

2014 \

Shinhan Bank KTB Investment&securities

Translation into US$ (Note 2) 2014

2013 -

5,596,993 500,000 \ 6,096,993

\

-

3,068,881 \ 3,068,881

US$

5,091,879 454,876 US$ 5,546,755

7

Kids & Future Notes to the financial statements December 31, 2014 and 2013

4. Restricted cash and cash equivalents Cash and cash equivalents whose use had been restricted by donor stipulations to designated activities as of December 31, 2014 and 2013 are summarized as follows (Korean won in thousands):

Cash and cash equivalents

Translation into US$ (Note 2) 2014 US$ 15,011

Bank Shinhan Shinhan Shinhan Shinhan Woori Shinhan Kookmin Shinhan Shinhan Kookmin Shinhan Kookmin Kookmin Shinhan Shinhan Shinhan Shinhan

2014 \ 16,500 14,410 56,179 76,461 105,536 1,170 846,388 3,707 37,524 39,630 8,668 12,411 406,898 735 15,537 23,546

2013 \ 14,000 23,994 57,384 71,720 1 3,156 834,235 2,404 71,749 16,372 4,627 5,299 414,200 7,309 14,444 48,061 15,142

Shinhan

19,951

23,317

18,150

Shinhan

15,574

47,626

14,168

Shinhan Shinhan Shinhan Shinhan Shinhan Shinhan Shinhan Shinhan Shinhan

25,864 105,601 459 12,960 12,662 10,724

22,656 83,658 298 48,686 2,411 5,213 13,639 26,907 17,731

23,530 96,071 418 -

Shinhan

15,034

8,220

13,677

Kookmin Shinhan

328,696 -

73,137 7,176

299,032 -

Shinhan

-

102

-

Kookmin

11,161

1,558

10,154

Kookmin Shinhan Kookmin

58,722 40 -

110,426 41,977 2,586

53,422 36 -

13,110 51,109 69,561 96,012 1,064 770,004 3,372 34,138 36,053 7,886 11,291 370,176 669 14,135 21,421

11,790 11,519 9,756

Designated activity Financial Education For Youth Concert Musician Of Love Happy Jump Fund Hope Spring Fund Guss Hiddink Foundation Hometown Love KB Study Star, KB Study Sharp KIAMCO Marathon Fund Shinhan Arumin Library Exploring Science (Hanwha) Steppingstone-sharing Sindoh Mongolia Huree University KB Sentimentality Good Memory(Hynix) Happy Harmony Siemens Mobile clinic Johnson & Johnson Love-i Samsung Fire & Marin scholarship for children of car accident victims Sponsoring children of mentally disables Success School Golden bell college track P.O. Box Sunshine 60 Aidaum Posco AST RunEU Malawi Team Support K&F Talent Scholarship Shinhan Arumin Point Hyundai AutoEver IT Hope Sharing KB Youth Music College Hanhwa L&C Win-Win Project Hanhwa L&C Environmental Camp Johnson & Johnson Fundraising Korea Janssen Angel For You Overseas Region Survey Improvement Support

8

Kids & Future Notes to the financial statements December 31, 2014 and 2013

4. Restricted cash and cash equivalents (cont’d)

Cash and cash equivalents

Bank Shinhan Shinhan Kookmin Shinhan

2014 753,254 113,471 10 46,642

2013 458,194 34,014 81,849

Translation into US$ (Note 2) 2014 685,275 103,231 9 42,433

Shinhan

-

1

-

Shinhan

11,049

5,113

10,052

Shinhan

7,291

1,770

6,633

Shinhan

-

1,253

-

Shinhan

7,689

-

6,995

Shinhan Kookmin

10,830 478

-

9,853 435

Kookmin

133

-

121

Shinhan

176,198

-

160,297

Shinhan

856,494

-

779,198

Shinhan

9,247

-

8,412

Kookmin

83,229

-

75,718

Shinhan

103,180

-

93,868

Shinhan

7

-

6

Shinhan Shinhan

5,684 20

-

5,171 18

Shinhan

69

-

63

Shinhan

320,000

-

291,121

Shinhan

287,830

-

261,854

Shinhan

45,543

-

41,432

\5,121,096

\2,723,615

US$ 4,658,930

Designated activity Samsung Card Open Sharing Adidas miDreamFC Hyundai motor multi study Green School Hanhwa Chemical Birthday Party Support Voice of Light Hope Fund Samsung Fire Kkumteo Study Room Busan Donation Korea Janssen Epilepsy Patient Support Chukhospital Future Hope Fund Bin Dream Tree Samsung Fire Dream Playground(1) Samsung Fire Dream Playground(2) MB Social Contribution POSCO P&S diversity education Financial Education For Youth(2) Hyungdai Construction raising dream mentoring Hynix Hope nest study(Gyeonggi) Hanhwa Green campaign Shinhan Arum Library Hynix Hope nest study(Chunbuk) Samsung Card Opened Family Project Samsung C&T Junior Construction Dream Academy Shinhan Life Kkumnamu talent scholarship

9

Kids & Future Notes to the financial statements December 31, 2014 and 2013

5. Long-term and short-term investment securities Long-term and short-term investment securities as of December 31, 2014 and 2013 consist of availablefor-sale securities and held to maturity securities, as follows: Available-for-sale securities Available-for-sale securities as of December 31, 2014 and 2013 consist of the following (Korean won in thousands): 2014 Number of shares

Equity Interest (%)

<Current> Daesung Industrial Bonds <Non-current> Kalton Chemistry(*1) Kyungnam Bank New Bonds Bond prices KOFC Bond LS MTRON Bond

14,000

Acquisition cost

Fair value

Book value

Translation into US$ (Note 2)

\300,810

\300,810

\ 300,810

US$ 273,663

7,000

7,000

7,000

6,365

903,060

903,060

903,060

821,554

200,000 200,000 604,533

200,000 200,000 604,533

200,000 200,000 604,533

181,948 181,948 549,991

\2,215,403

\2,215,403

US$ 2,015,469

0.88

(*1) Above available-for-sale securities are non-marketable equity securities were received through donation. Such securities are recorded at cost since their fair values are not available or readily determinable. Also, the Foundation did not recognize impairment losses on such securities as there were no objective evidence of any impairment as of December 31, 2014 and 2013.

2013 Number of shares

Equity Interest (%)

Acquisition cost

Fair value

Book value

Translation into US$ (Note 2)

Non-marketable securities: Kalton Chemistry Kyungnam Bank New Bonds

14,000

0.88

\

7,000

\

7,000

\

7,000

US$

6,633

\903,060

\903,060

855,738

\910,060

\910,060

US$ 862,371

Held-to-maturity securities Held-to-maturity securities as of December 31, 2014 and 2013 are as follows (Korean won in thousands):

Maturity Bonds(*1)

Later than 1 year but no later than 5 years

2014 â&#x201A;Š -

2013 â&#x201A;Š 1,800,811

Translation into US$ (Note 2) 2013 US$ 1,638,292

(*1) The Company reclassified held-to-maturity securities to available-for-sale securities due to disposal before maturity during 2014.

10

Kids & Future Notes to the financial statements December 31, 2014 and 2013

6.

Property and equipment Details of property and equipment as of December 31, 2014 and 2012 are as follows (Korean won in thousands):

2014 Account Furniture and fixtures

Jan. 1, 2014

Purchase

60,114

\

11,015

Disposal 207

Depreciation 21,718

Dec. 31, 2014 \

49,204

Translation into US$ (Note 2) US$ 44,763

2013 Account

Purchase (*1)

Jan. 1, 2013

Furniture and fixtures

76,038

\

5,521

Disposal 931

Depreciation 20,514

Dec. 31, 2013 \

60,114

Translation into US$ (Note 2) US$ 56,964

(*1) Current purchase amounts include assets contributed amounting to \1,956 thousand.

7.

Intangible assets Details of intangible assets as of December 31, 2014 and 2013 are as follows (Korean won in thousands):

2013 Jan. 1, 2014 Software

\

Assets contributed

4,667

Disposals -

Amortization -

2,724

Dec. 31, 2014 \

1,943

Translation into US$ (Note 2) US$

1,768

2013 Jan. 1, 2013 Software

\

Assets contributed(*)

10,763

589

Disposals

Amortization -

6,685

Dec. 31, 2013 \

4,667

Translation into US$ (Note 2) US$

4,422

(*) Recovered through donation

11

Kids & Future Notes to the financial statements December 31, 2014 and 2013

8.

General and administrative expenses Details of intangible assets as of December 31, 2014 and 2013 are as follows (Korean won in thousands):

Account

2014 \ 867,290 64,576 83,089 21,718 2,724 8,239 4,185 139,232 2,539 8,098 1,199 22,177 \ 1,225,066

Salaries Pension benefits Employee welfare benefits Depreciation of property and equipment Amortization of intangible assets Taxes and dues, and utility expenses Travel Commissions Maintenance Honorariums Meeting expenses Miscellaneous administrative expenses Total

2013 \ 648,158 42,269 57,499 20,514 6,685 8,872 4,913 134,734 791 7,954 17,914 \ 950,303

Translation into US$ (Note 2) 2014 US$ 789,019 58,748 75,590 19,758 2,478 7,495 3,807 126,667 2,310 7,367 1,091 20,176 US$ 1,114,506

9. Permanently restricted capital The Foundation received District Office approval to hold and make changes to the value of its permanently restricted capital in accordance with the Social Welfare Service Act. The carrying amount of the Foundations permanently restricted capital is \3 billion and is managed through long-term investment securities and deposits. (See accompanying Notes 3 and 5).

10. Income and expense of significant designated contributions Details of income and expense of significant designated contributions at 2014 is as follows (Korean won in thousands):

Project name Samsung Securities Co Ltd Concert Musician of Love KTB Securities AstraZeneca

2014 Donations(*2)

Jan.1, 2014(*1)

Financial Education For Youth \ Concert Musician of Love Happy Jump Fund Hope Spring Fund multi- cultures Guus Hiddink Foundation Dream Soccer Field Pangyo Middle School 20th Hometown Love Scholarship Graduating Class (Pangyo Scholarship) Kookmin Bank KB Study Star KIAMCO KIAMCO Marathon Fund Shinhan Card Co., Ltd. Shinhan Arumin Library(1) Hanwha Corp Hanwha, to the Future SINDOH Co., Ltd. Steppingstone-Sharing Mongolia Huree University Mongolia Huree University Kookmin Bank The Rice Of Hope Hynix, Community Chest of Korea Multi- cultures family Ernst&Young Sharing One Heart One Heart Math Mentoring school

14,000 23,994 57,384

Expenses(*3)

Dec.31, 2014

500,071 \ 16 118,804

497,571 \ 9,600 120,009

71,720 1

100,799 260,086

96,058 154,551

76,461 105,536

3,156 834,235 2,404 71,749 16,372 4,627 5,299 414,200

3,063 750,304 60,019 892,612 145,036 26,072 12,405 300,188

5,048 738,151 58,716 926,837 121,778 22,030 5,293 307,489

1,171 846,388 3,707 37,524 39,630 8,669 12,411 406,899

7,309

202,813

209,387

735

14,444

60,012

58,919

15,537

\

16,500 14,410 56,179

12

Kids & Future Notes to the financial statements December 31, 2014 and 2013

10. Income and expense of significant designated contributions (contâ&#x20AC;&#x2122;d)

Siemens Johnson & Johnson Samsung Fire & Marine Insurance Co., Ltd Janssen Korea Ltd. World Future Forum Samsung Securities Co., Ltd Hanhwa Life Insurance Co., Ltd and 26 affiliates Samsung Everland Inc. Posco AST Samsung Card Co., Ltd. Private Designated Private Designated Shinhan Card Client.

Hyundai AutoEver KB Financial Group Hanwha L & C Co., Ltd. Hanwha L & C Co., Ltd. Private Designated Janssen Korea Ltd. KOICA ISdongseo and Other Samsung Card Co., Ltd. Adidas Hyundai Motor (Community Chest) Siemens Hanwha Chemical Hanmi Pham. affiliates Samsung Fire & Marine Insurance Co., Ltd Amorepacific Coporation Private (Community Chest) Samsung Fire & Marine Insurance Co., Ltd (Community Chest) Samsung Fire & Marine Insurance Co., Ltd Mercedes-Benz POSCO Samsung Securities Co Ltd (Community Chest) Hyungdai Construction SK Hynix (Community Chest) Hanwha Shinhan Card Co., Ltd. (Community Chest) SK Hynix (Community Chest) Samsung Card Co., Ltd. (Community Chest) Samsung C&T Corporation

2014 Donations(*2) 23 73,404

Expenses(*3) 48,084 65,001

23,317

203,989

207,355

19,951

47,626 22,656

126,279 22,018

158,331 18,810

15,574 25,864

Golden bell college track

83,658

123,830

101,888

105,600

P.O. Box Sunshine 60 Aidaum Posco AST New Business RuntoYou Samsung Card Happy walk Malawi Teams Support K&F Talent Scholarship Shinhan Arumin Library(2) IT Hope Sharing KB Youth Music Collage Win-Win Project Hanwha L&C Environment Camp Johnson & Johnson raising Janssen Korea Angel For You KOICA Support Private Sector Business Opportunities New CSR (Improvement Support) Samsung Card Open Sharing Adidas miDreamFC Hyundai Motor Multi Learning Study Room Siemens Green School Birthday Party Support Business Voice of light Hope Fund New CSR (Samsung Fire Kkumteo Study Room)

298 48,686

17

298 48,703

-

2,411

23,006

24,958

459

5,213 13,639 26,907 17,731 8,220 73,137 7,176

32,026 21,292 62,782 47,281 620,179 -

5,213 32,705 35,537 69,789 40,467 364,621 7,176

12,960 12,662 10,724 15,034 328,695 -

102 1,558

32,832 14,052

32,934 4,449

11,161

110,426

63

51,767

58,722

41,977

17,998

59,935

40

2,586

3

2,589

-

458,194 34,014

1,078,033 257,956

782,974 178,499

753,253 113,471

81,849

30,006 117,227

29,996 152,434

10 46,642

1 4,933

79,848

1 73,732

11,049

1,950 1,253 13,639

36,945

7,291

32,026

31,604 1,253 32,705

12,960

-

280,133

280,000

133

-

284,062 1,950,223

107,864 1,093,729

176,198 856,494

-

40,006

30,759

9,247

-

200,078

116,849

83,229

-

135,036

31,856

103,180

-

50,007 96,015

50,000 90,331

7 5,684

-

70,020

70,000

20

-

100,025

99,95

70

-

320,000

-

320,000

-

287,830

-

287,830

Project name Siemens mobil clinic Johnson & Johnson Love-i Samsung Fire & Marin sponsoring children of car accident victims Sponsoring children of mentally disables Success School

Jan.1, 2014(*1) 48,061 15,142

Busan Donation Bin Dream Tree Samsung Fire Dream Playground (1) Samsung Fire Dream Playground (2) MB Social Contribution POSCO P&S diversity education Financial Education For Youth (2) Hyungdai Construction raising dream mentoring Hynix Hope nest study room (Gyeonggi) Hanhwa Green campaign Shinhan Arumin Library(3) Hynix Hope nest study room (Chunbuk) Samsung Card Opened Family Project Samsung C&T Junior Construction Dream Academy

-

Dec.31, 2014 23,545

-

13

Kids & Future Notes to the financial statements December 31, 2014 and 2013

10. Income and expense of significant designated contributions (cont’d)

Shinhan Life Hunet Janssen Korea Ltd. Happy Money I&C Chuk Hospital.(*1) KB Financial Group S-1

2014 Project name Jan.1, 2014(*1) Donations(*2) Expenses(*3) Dec.31, 2014 Shinhan Life Kkumnamu talent scholarship 45,543 45,543 New CSR (Hunet talent scholarship) 5,000 5,000 New CSR (Korea Janssen Epilepsy Patient Support 15,000 7,311 7,689 New CSR (Happy House) 10,000 10,000 New CSR (Chuk Hospital Future Hope Fund 11,130 7,670 7,970 10,830 New CSR (Improvemnet learning environment of underserved elementary school 10,000 10,000 S-1 designated fund deposited 12,000 12,000 \ 2,734,745 \ 10,422,063 \ 8,035,712 \ 5,121,096

(*1) ₩180 thousand among beginning balance, designated contributions that were not replaced between projects, was replaced during 2014. And, ₩11,130 thousand among general contributions of 2013 was changed to designated contribution project (Chuk Hospital Future Hope Fund) and it is included in beginning balance. (*2) Donations include ₩5,670 thousand except for ₩902 thousand of prepaid income taxes among ₩6,572 thousand of interest income. Also, general contribution amounting to ₩553 thousand is included and will be replaced in the next year.

Also, in-kind donation income amounting ₩51,867 thousand is included in the designated donation income on statement of activities. (*3) Current year’s expense column shown above includes ₩364 thousand of prior year’s not-transferred funds and ₩980 thousand of CMS charges. Current year’s expense column excludes ₩2,420 thousand of general operating expenses.

Except for expense shown above, in-kind donation amounting to ₩51,867 thousand is included in designated donations activity expenses on statement of activities. (*4) The balances of RunToYou supported by Samsung Card Co., Ltd. and Win-Win project supported by Hanwha L & C Co., Ltd. have been terminated in December 2013 and were transferred to Malawi Teams Support and Hanhwa L&C Environmental Camp.

14

Kids & Future Notes to the financial statements December 31, 2014 and 2013

11. Significant projects Details of significant projects recently designated as contributions are as follows (Korean won in thousands):

Project name Financial Education For Youth

Period 2005.05~ 2015.12

Donors Samsung Securities Co., Ltd.

Hope Spring Fund

2005.06~ 2015.12

AstraZeneca

Dream Soccer Field Happy Jump Fund Green School KB Hope Study Room KB Study Star KIAMCO Marathon Fund Exploring

Science

Shinhan Arumin Library

Steppingstone-Sharing

Good Memory KB Sentimentality Mentor School Success School Samsung Fire & Marine sponsoring for children of car accident victims Sponsoring children of mentally disables Golden bell college track Johnson & Johnson Love-I Siemens Mobile Clinic Open Sharing Adidas miDreamFC Voice of Light Hope Fund Hyundai Motor Multi Learning Study Room

2006.10~ 2015.12 2007.03~ 2015.12 2013.10~ 2015.12 2008.09~ 2015.12 2010.01~ 2015.12 2011.04~ 2015.12 2010.08~ 2015.12 2011.08~ 2015.12 2012.01~ 2014.12 2012.01~ 2015.12 2012.01~ 2015.05 2012.05~ 2015.12 2012.03~ 2016.02

\

Amounts of designated contribution Total After 2015 During 2014 Before 2014 2,926,000 \ 550,000 \ 500,000 \ 1,876,000 928,471

91,800

100,735

735,936

1,439,280

-

260,000

1,179,280

1,135,541

90,000

118,744

926,797

257,482

120,000

117,152

20,330

4,917,000

750,000

750,000

3,417,000

360,000

60,000

60,000

240,000

719,200

150,000

145,000

424,200

6,970,607

930,800

892,448

5,147,359

SINDOH Co., Ltd.

131,422

26,000

26,000

79,422

Hynix,

466,615

-

202,742

263,873

1,500,000

300,000

300,000

900,000

Ernst & Young Sharing One Heart

197,600

25,000

60,000

112,600

World Future Forum

133,991

30,000

22,000

81,991

Samsung Fire & Marine Insurance Co., Ltd

723,407

204,000

203,968

315,439

Janssen Korea Ltd.

515,594

120,000

126,244

Samsung Card Co., Ltd.

423,007

127,100

123,792

172,115

Johnson & Johnson

249,829

15,000

73,393

161,436

Siemens

120,609

-

-

120,609

2,733,240

890,000

1,074,836

768,404

Guus Hiddink Foundation KTB Securities Siemens Kookmin Bank KIAMCO Hanhwa Corp.

Shinhan Card Co., Ltd.

Kookmin Bank

2012.06~ 2015.05 2012.06~ 2015.05 2012.06~ 2015.05 2012.04~ 2014.12 2013.06~ 2015.12 2013.06~ 2015.12 2013.02~ 2015.12

Adidas Korea

542,327

207,411

257,916

77,000

Hanmi Pharm Co., Ltd.

232,221

92,500

79,831

59,890

2013.01~ 2014.12

Hyundai Motor/ Community Chest

60,000

-

30,000

30,000

Samsung Card Co., Ltd.

269,350

15

Kids & Future Notes to the financial statements December 31, 2014 and 2013

11. Significant projects (contâ&#x20AC;&#x2122;d)

Amounts of designated contribution Project name Kkumteo Study Room IT Hope Sharing Angel For You

Period 2013.01~ 2015.12 2013.01~ 2015.12 2013.06~ 2015.06

Donors Samsung Fire & Marine Insurance Co., Ltd

Total

After 2015

During 2014

Before 2014

141,920

46,480

36,940

58,500

Hyundai AutoEver

124,938

40,000

47,270

37,668

Janssen Korea Ltd.

196,200

60,000

-

136,200

684,000

400,000

284,000

-

280,000

-

280,000

-

Samsung Fire & Marine Insurance Co., Ltd Samsung Fire & Marine Insurance Co., Ltd (Community Chest)

Samsung Fire Dream Playground (1)

2014.03~ 2015.12

Samsung Fire Dream Playground (2)

2014.03~ 2014.12

MB Mobile Kids

2014.04~ 2015.12

Mercedes-Benz Korea & Dealers

1,359,560

800,000

559,560

-

MB Industry-academic cooperation

2014.04~ 2015.12

Mercedes-Benz Korea & Dealers

1,465,860

862,900

602,960

-

MB Distribution business

2014.04~ 2015.12

Mercedes-Benz Korea & Dealers

1,667,374

880,000

787,374

-

Financial Education For Youth

2014.06~ 2015.12

Samsung Securities Co., Ltd. (Community Chest)

348,965

148,965

200,000

-

Hynix Hope nest study room (Gyeonggi)

2014.07~ 2015.11

SK Hynix (Community Chest)

300,000

150,000

150,000

-

Hyungdai Construction raising dream mentoring

2014.07~ 2015.07

Hyungdai Construction

135,000

-

135,000

-

POSCO P&S diversity

2014.05~ 2015.04

POSCO P&S

60,000

20,000

40,000

-

Bin Dream Tree

2014.01~ 2014.12

Community Chest

50,000

-

50,000

-

2014.08~ 2015.12

Hanwha Group

196,000

100,000

96,000

-

2014.07~ 2014.12

Shinhan Card (Community Chest)

70,000

-

70,000

-

Hanhwa Green campaign

Shinhan Arumin Library

16

Kids & Future Notes to the financial statements December 31, 2014 and 2013

12. Shinhan Arumin Library Program funded by Shinhan Card Co., Ltd. Details of funds earmarked are as follows (Korean won in thousands)

Contents Donations Program activity Monitoring and evaluations Community relations Project operation Project management Total

Amount \ 878,745,498 11,153,042 12,336,874 4,642,000 7,365,179 152,503,496 \ 1,066,746,089

Portion of fund (%) 79.85% 3.24% 0.68% 5.29% 0.86% 10.08% 100%

The Shinhan Arumin Library Program is to provide learning spaces and reading programs for national local children’s centers and children’s hospital. Also The Shinhan Arumin Library Program was supported by donations (Shinhan Card) and private donations (Shinhan Card points and employee donations of Shinhan Card). And, Shinhan Card’s designated contribution of Community Chest has been added to donor of the Shinhan Arumin Library Program during 2014.

The Foundation was donated with \ 0.89 billion from designated contribution of companies, \65 million from private donations and \70 million from Community Chest in 2014. With these funds, the Shinhan Arumin Library Program provides foundation of library and support of books. In addition, maintenance service of existing library needed repair is also provided.

The fund of Shinhan Arumin Library Program may only be used in accordance with provisions specified in the agreement. Some remaining funds of 2014 were made by reducing promotion and operating expenses and are carried forward to the next year and will be executed in 2015.

17