2016 New Year's Address by Chairman

Seung Youn Kim, Chairman

Dream, hope, challenge, and success:
If there was a single phrase that can embody all of these words, it would be "the New Year."

Dear members of Hanwha family!

We have ushered in the New Year together. I hope that every wish you and your family have for the New Year comes to fulfillment.

I would also like to express my deepest appreciation to all of you for dedicating yourselves to the development of the Group even under difficult circumstances. Thanks to the efforts of Hanwha employees at home and abroad last year, the Group gained a stronger foothold for a renewed leap forward while pursuing substantiality and investing for our future.

However, it is the outlook that this year will continue to be difficult and challenging amidst increasing uncertainties in the global economy. Some even warn of an economic crisis more grave in nature than the Asian Financial Crisis.

However, even a harsh winter cannot stop our hearts from burning. We perceive the times of crisis as an opportunity to forge ourselves into an even stronger company and respond actively to changes in the market. To that end, it is time we focus more on the trees rather than the forest. We must face the stark reality that even a tiny hole can sink an entire ship. We should stay vigilant, pay close attention to volatilities, such as the exchange rate, interest rate, and oil prices, and proactively prevent and control potential risks.

Fortunately, the Group has been carrying out essential structural reforms and improving our fundamentals over the past years. We have been reorganizing our business to create a company that is more competitive and more efficient. We must walk a path that few others dare to and create a business that only Hanwha can undertake.

We should make 2016 "a year of creating the foundation for sustainable growth through innovation and substantiality," concentrating all our energies on "reinforcing world-class competitiveness."

To this end, we should continuously elevate the Group's
"core business competitiveness" to the level of a global leader.

Our goals should no longer be "No. 1 in revenue" or "No. 1 in production." We must become No. 1 in quality, No. 1 in profitability, and No. 1 in customer value in order to meet the needs of the "New Normal era," which requires us to stop following the business-as-usual practices of the past and live up to the new standards of the new age for us to be able to develop core capabilities and make them the source of our world-class competitiveness. The "No. 1 DNA" must be embodied and become like second nature to all of us. We must build a core R&D capability that cannot be matched by any other company as the source of our world-class competitiveness.

I ask the defense and petrochemical businesses to go beyond their competitive edge achieved through scale and focus on expanding real synergy. Solar energy, which is rebuilding its competitiveness following the merger, will witness its value and role growing in importance as a new and renewable energy as highlighted at the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change. It should aim at becoming the undisputed world leader driving green growth across the globe.

The financial business needs to accelerate the pace of global management as it explores future business opportunities in overseas markets. I would like to ask every business under the umbrella of Hanwha Group to secure independent survivability and develop the highest level of competitiveness through sheer determination.

We must advance our "system competitiveness"
to maximize the Group's management efficiency and productivity.

Every work across all areas of business management must be operative in an organic and integrated system without interruption. We must systemize our way of working and enhance the quality and speed of our work. The goal-oriented culture, strength of the new members of Hanwha family, is another core competency to be shared by the entire Group. As we share and absorb each other's strengths, the Group's competitive capabilities will be further amplified.

Selecting and nurturing key personnel, through which we can harvest a hundredfold of what we sow, should be another area of our interest. Each company shall establish a fair evaluation and reward system and promote a performance-driven culture.

Ineffective rules, unnecessary procedures, departmental selfishness, and other evils of outdated practices must be overhauled completely.

We must strengthen our "communication competitiveness"
based on trust, both inside and outside of the organization.

As a start, it is important that the Group, internally, breaks down the barriers of prejudice and builds a consensus towards a common goal. We should take the initiative in fostering not only smooth communication between our headquarters and production plants, main offices and overseas subsidiaries, and among departments, but also transparent and sincere communication with stakeholders outside of the Group. We must create an open and horizontal corporate culture, under which diversity and creativity are given due recognition. We must forge win-win relationships built on trust with our customers and partner companies. As a member of society, we should evolve into an organization that keeps in tune, grows, and creates synergies with our communities.

Fellow members of Hanwha family!

Those who lead the world see light even in the depths of darkness.

Hanwha must become a company that presents the light of hope and trust to humankind. We must adhere to the belief that creating jobs for the youth is the best investment for the future of the country, no matter how harsh the business environment may be. We need to fully commit ourselves to creating new values to ensure a better life for our customers. It is our responsibility to support the Chungnam Center for Creative Economy & Innovation¹, launched last year, in its mission to invigorate the local economy and achieve tangible outcome.

Just as trees grow together to make a forest, the noble and enduring duty of every Hanwha employee would be the fulfillment of the philosophy of "Going Further Together,” in every corner of the society.

Once again, we stand on the starting line of a new year.
We are sailing together on the long voyage of life—a voyage that we will continue to successfully accomplish. There is no storm we cannot weather and no towering wave we cannot overcome as long as the hearts of every member of Hanwha family continue to beat in unison.

A small flower bud sprouting after a long, cold winter brings hope to everyone. Let each one of us do our part to bear good tidings in the New Year that give every member of Hanwha family strength and hope.

January 4, 2016
Hanwha Group Chairman Seung Youn Kim

¹ The Chungnam Center for Creative Economy & Innovation: Launched jointly by Hanwha Group and Chungcheong Province of Korea in 2015, the Center carries out the establishment of a solar energy industry cluster, creating higher value added for agro-fishery products, and global market entry of SMEs and venture businesses as its core projects.

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