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2006 Annual Report On a Path to GLOBAL PLAYER

Contents Corporate Profile _ 03 Nong Shim at a Glance _ 04 Global Brand _ 06 Technology Initiatives _ 08 Differentiated Strategies _ 10 Message from CEO _ 12 Financial Highlights _ 14 Review of Operations _ 15 Brand Story _ 26 Globalization _ 29 Financial Review _ 36 IR Information _ 46 Affiliates _ 48 Holding Co. & Investment Structure _ 49 Overseas Factories _ 50 Globalization of Nong Shim _ 52

Nong Shim s history has been a cultural journey Our vision is to become a world class company that provides global customers with differentiated food and lifestyle services. Annual Report 2006 3

Leading in t Food The Best Leading Company in the Korean Food Industry... Nong S Business Shin Ramyun is the key pro Nong Shim s international strategy and is well on its w becoming a worldwide bra 901 1,004 1,080 1,063 1,072 216 216 209 204 206 Operations in 2 Nong Shim achieved KRW sales, down 1.2% year on y operating income was KRW in 2006. Ou The company ai of KRW1.73 tri 9.2% from 200 4 Nong Shim

im at a Glance The Best Company he Korean Industry... duct in marketing ay to nd. 006.58 trillion in ear, while 149.1 billion 66 89 106 110 124 169 250 213 215 182 tlook for 2007 s to achieve annual sales lion in 2007, an increase of 6, and ordinary income of KRW173 billion. Annual Report 2006 5

Global Brand Nong Shim strives not to only be Korea's number one company, but also be part of the world community, spreading Korea's taste and brands to countries globally. Our distinctive tastes and brands are now exported and sold all around the world including the US, China, Japan, Europe and Asia. 6 Nong Shim

Technology Initiatives The advanced technologies and great products are fundamental to our success. Consumers have many choices today. Nong Shim is the forerunner of the world s food manufacturers in advancing food technologies, developing new ingredients and researching healthful products. 8 Nong Shim

Differentiated Strategies The passion to be the best begins with looking ahead. Leading trends, understanding culture and delivering value. Nothing will stop our quest to provide people around the world with the best foods and lifestyle services. Our globalization started with differentiated strategies. 10 Nong Shim

Message from CEO To our valued shareholders We will raise our sights to the challenges ahead and advance forward to be a global player with distinctive competitiveness. 12 Nong Shim

Annual Report 2006 13

Financial Highlights 2006 1,583.8 1,071.6 206.1 123.7 182.4 548.4 149.1 158.2 112.9 1,535.8 580.9 954.9 18,681 158,085 4,000 7.1% 7.5% 12.4% 60.8% 1.4% 6,041,358 4,903 2005 1,603.6 1,062.8 216.0 110.1 214.7 548.9 150.3 165.9 118.7 1,490.4 625.0 865.4 20,562 149,952 4,000 7.4% 8.4% 14.5% 72.2% 1.4% 5,771,358 4,975 2004 1,645.0 1,080.4 208.8 105.9 249.9 535.1 155.9 189.3 128.5 1,337.2 568.9 768.2 22,274 133,114 4,000 7.8% 10.0% 17.9% 74.1% 1.7% 5,771,358 4,991 74.1% 72.2% 60.8% 1,645.0 1,603.6 1,583.8 112.9 128.5 768.2 118.7 865.4 954.9 Sales revenue was KRW 1,583.8 billion, down 1.2% Net income was KRW 112.9 billion, down 4.9% Debt-to-equity ratio was 60.8%, down 1.4%p Shareholders' equity was KRW 954.9 billion, up 10.3% 14 Nong Shim

Review of Operation

Instant Noodle Nong Shim s instant noodles have been everyone s favorite. We invite you to the world of unique flavor that comes from combining the finest ingredients. 16 Nong Shim

M/S 74.3% 73.8% 73.5% 73.2% 72.6% 1,160 1,004 1,080 1,063 1,072 27.3 27.9 28.8 29.8 29.5 70.5 72.7 72.1 71.2 70.2 Instant Noodle 67.7% 2003 2004 2005 2006 2007(E) Annual Report 2006 17

18 Nong Shim Our new products will redefine our market position and we believe our innovative ideas will lead the new trend of noodle market.

Annual Report 2006 19

Snack Nong Shim s popular snack items, with their carefully selected ingredients and crispy flavor, are family favorites that everyone finds difficult to resist. 20 Nong Shim

35.8% 216 M/S 33.3% 209 35.3% 216 36.9% 206 38.1% 230 Snack 13.0% 2003 2004 2005 2006 2007(E) Annual Report 2006 21

Beverage We always provide clean and refreshing drinks filled with nature s fresh and aroma such as Samdasoo, Capri Sun and Welch s Juice. 22 Nong Shim

M/S 39.0% 42.1% 44.0% 44.6% 45.8% 89 35 106 44 110 40 124 41 148 53 Beverage 7.8% 54 62 70 83 95 2003 2004 2005 2006 2007(E) Annual Report 2006 23

Others Nong Shim s advanced technologies have brought traditional rice up to date. Now you can enjoy home-cooked dishes anytime, anywhere. 24 Nong Shim

213 76 250 103 215 89 182 56 193 60 Others 11.5% 137 147 126 126 133 2003 2004 2005 2006 2007(E) Annual Report 2006 25

[ Shin Ramyun ] 26 Nong Shim

[ ] Shrimp Cracker Annual Report 2006 27

[ ] Samdasoo 28 Nong Shim

Globalization

Nong Shim in the Global Market Nong Shim has managed to achieve rapid growth in overseas sales, thanks to the quality and uniqueness of its products and services. 128.9 95.0 91.0 63.7 37.2 31.3 139.8 139.0 58.4 87.2 81.4 51.8 173.8 64.0 109.8 2003 2004 2005 2006 2007(E) 30 Nong Shim

139.8 173.8 China 47.2 (33.8%) US 47.7 (34.1%) Others 44.9 (32.1%) China 63.8 (36.7%) US 61.8 (35.6%) Others 48.2 (27.7%) Annual Report 2006 31

Nong Shim in the US The US people also fall in love with the taste of Nong Shim. Our products are not only becoming part of the food culture of Americans, but to other regions of the world. 42.1 35.8 30.8 36.8 5.3 61.8 47.7 15.8 13.8 46.0 33.9 2003 2004 2005 2006 2007(E) 32 Nong Shim

Annual Report 2006 33

63.8 Nong Shim in China Nong shim has charmed Chinese households with the high quality and distinctive taste of Korea. We are envisioning a better future in this market. 31.9 10.2 9.5 12.2 46.4 38.0 15.6 11.7 13.6 11.4 17.2 14.9 47.2 21.5 16.5 18.5 12.1 23.8 18.6 2003 2004 2005 2006 2007(E) 34 Nong Shim

Annual Report 2006 35

Financial Review

1,645 250 (15.2) 106 (6.4) 209 (12.7) 1,584 1,604 215 (13.4) 110 (6.9) 216 (13.5) 182 (11.5) (7.8) 124 206 (13.0) 1,072 (67.7) 1,063 (66.3) (65.7) 1,080 2004 2005 2006 73.2% 72.6% 36.9% 44.0% 44.6% 35.3% 2005 2006 Annual Report 2006 37

2006 1,583.8 149.1 9.4% 112.9 7.1% 2005 1,600.3 150.3 9.4% 118.7 7.4% 2004 1,645.0 155.9 9.5% 128.5 7.8% 2006 617.4 918.4 1,535.8 480.5 100.4 580.9 954.9 2005 606.0 884.4 1,490.4 422.3 202.7 625.0 865.4 2004 451.3 885.9 1,337.2 438.0 130.9 568.9 768.3 38 Nong Shim

Corporate No. of Shares Ownership (%) Acquisition Cost (KRW in millions) Nong Shim (BVI) Holdings Ltd. Nong Shim Taekyung Holdings Ltd. Nong Shim (H.K.) Holdings Ltd. Nong Shim Holdings USA, Inc. Nong Shim Japan Inc. Total 26,100,000 5,000,000 23,050,000 596,000 572,955 100.00 71.43 100.00 100.00 19.10 29,870 5,333 25,408 70,344 501 131,456 ROE ROA 17.9 14.5 10.0 8.4 12.4 74.1 7.5 72.2 60.8 2004 2005 2006 2004 2005 2006 Annual Report 2006 39

103,319,779,155 (-)36,988,124 617,422,076,860 541,193,711,115 90,978,817,831 325,000,000,000 1,741,860,000 103,282,791,031 1,527,445,127 11,064,151,553 339,440,400 5,126,237,034 2,132,968,139 76,228,365,745 17,123,330,622 22,088,930,035 16,353,391 4,505,116,506 621,284,775 552,994 10,369,787,647 2,251,858,120 370,000 476,805,029 18,773,976,626 101,018,058,712 (-)137,990,142 606,028,483,199 523,157,868,928 64,745,705,813 340,000,000,000 1,241,100,000 100,880,068,570 1,224,427,207 8,493,903,285 609,370,000 4,111,104,630 1,852,189,423 82,870,614,271 19,033,541,192 17,265,672,837 2,230,186 5,389,328,122 951,632,914 746,221 11,524,219,239 1,510,929,327 1,258,000 412,837,251 26,778,218,982 347,082,322,127 (-)82,807,533,592 29,797,597,816 (-)12,685,188,879 312,635,478,849 (-)231,765,905,820 8,247,269,595 (-)6,901,253,530 918,402,148,166 77,517,938,041 12,500,000 1,972,064,792 61,067,727,795 6,064,682,154 8,400,963,300 839,804,993,971 354,878,974,954 264,274,788,535 17,112,408,937 80,869,573,029 1,346,016,065 346,770,474,793 (-)71,148,249,493 29,092,102,859 (-)10,876,406,065 284,288,345,743 (-)199,153,616,752 8,507,497,197 (-)7,467,432,500 884,422,373,218 110,468,013,928 15,500,000 2,480,241,592 92,878,826,011 6,600,052,365 8,493,393,960 772,850,629,705 354,957,474,627 275,622,225,300 18,215,696,794 85,134,728,991 1,040,064,697 40 Nong Shim

70,551,104,719 (-)61,953,399,432 8,597,705,287 112,725,527,164 1,079,216,154 868,731,860 5,583,884 204,900,410 70,300,133,840 (-)59,434,270,480 10,865,863,360 27,014,575,936 1,103,729,585 812,370,751 28,620,484 262,738,350 1,535,824,225,026 1,490,450,856,417 20,327,580,000 (-)7,675,200 480,555,433,209 231,640,327,549 4,914,000,000 20,829,211,408 63,744,781,943 432,608,152 3,150,900,888 64,857,090,336 26,533,909,036 18,193,360 10,677,015,258 11,868,000,000 13,620,133,610 2,723,703,407 5,225,653,462 20,319,904,800 - - 422,262,593,199 231,743,262,187-31,268,462,211 26,040,792,165 430,853,384 3,436,552,828 66,857,997,875 26,153,673,417 42,939,870 15,442,789,769 496,000,000 14,250,893,006 2,851,381,016 3,246,995,471-10,610,000,000 (-)404,265,832 (-)136,115,923 191,144,618,174 (-)116,073,335,083 (-)4,116,947,100 100,377,339,574 10,069,618,245-11,620,000,000 70,954,335,991 7,733,385,338 102,361,040,000 (-)4,520,943,204 (-)1,596,876,933 186,657,501,604 (-)114,204,400,419 (-)4,570,389,250 202,757,748,897 96,243,219,863 248,000,000 25,325,000,000 67,882,711,935 13,058,817,099 580,932,772,783 625,020,342,096 Annual Report 2006 41

30,206,790,000 30,206,790,000 28,856,790,000 28,856,790,000 364,574,391,283 113,296,188,561 248,628,813,235 2,649,389,487 299,439,175,333 45,212,932,902 248,633,422,661 5,592,819,770 631,257,334,383 19,000,000,000 8,948,580,600 13,940,000,000 37,499,999,998 428,000,000,000 123,868,753,785 541,482,228,236 19,000,000,000 8,948,580,600 13,940,000,000 37,666,666,665 343,000,000,000 118,926,980,971 (-)71,147,063,423 (-)59,113,136,730 3,488,395 921,701,804 (-)12,959,116,892 (-)4,347,679,248-9,489,075 3,499,918,877 (-)7,857,087,200 954,891,452,243 1,535,824,225,026 865,430,514,321 1,490,450,856,417 42 Nong Shim

1,587,020,567,758 1,297,621,610,353 50,551,120,141 232,846,032,466 5,175,860,179 272,705,970 553,238,649 (-)5,225,653,462 1,581,794,914,296 1,603,558,631,528 1,297,270,435,585 78,964,895,161 216,144,148,569 10,328,386,465 224,293,600 626,472,148 (-)3,246,995,471 1,600,311,636,057 863,869,203,019 19,033,541,192 887,790,167,317 906,823,708,509 14,744,472,854 (-)40,575,647,722 (-)17,123,330,622 154,023,223,697 4,952,186,600 261,950,692 10,300,135,225 1,033,406,699,233 880,105,086,360 18,401,243,438 904,825,348,533 923,226,591,971 15,278,210,155 (-)39,366,174,574 (-)19,033,541,192 149,589,499,052 9,939,600,037 223,304,366 11,591,033,342 1,051,448,523,157 548,388,215,063 548,863,112,900 72,756,489,101 11,678,667,671 7,600,621,546 3,587,815,835 30,195,000 165,270,874 1,327,937,144 250,610,215 1,074,718,754 1,246,128,744 1,004,817,055 8,687,293,807 2,837,989,699 15,443,507,321 373,483,945 1,495,610,573 803,647,919 399,252,078,250 68,039,614,107 9,308,293,384 7,193,476,047 4,197,958,274 23,325,000 185,505,454 1,091,301,562 242,314,390 1,208,363,245 1,542,458,604 1,056,162,155 7,824,961,300 2,182,005,681 15,971,633,690 403,541,996 1,828,667,880 435,075,237 398,594,200,813 Annual Report 2006 43

9,470,435,221 5,100,629,396 229,385,093 1,540,258,094 49,714,690,431 58,336,576,885 25,760,633,898 1,017,006,023 1,881,941,671 79,101,703,101 59,497,441 4,581,340,221 1,034,692,527 29,041,492,818 2,016,990,227 8,407,940,990 4,258,161,878 272,599,490 1,579,461,571 60,493,911,511 55,051,351,885 21,725,242,595 1,194,869,582 1,460,034,571 80,800,791,255 144,249,268 10,396,854,328 1,086,837,691 26,489,025,285 2,498,210,907 149,136,136,813 150,268,912,087 25,554,756,297 190,010,000 4,090,131,255 1,629,327,545 2,176,875,574 4,718,606,009 1,546,952,223 601,584,852 101,002,018 10,820,629,488 51,429,875,261 14,605,786,168 570,035,450 4,989,676,455 1,530,936,605 1,299,728,701 5,068,679,594 2,545,048,192 181,336,470 26,204,362 8,838,539,919 39,655,971,916 6,955,829,741 346,625,349 14,500,337 15,869,724,766 560,039,309 9,981,139,235 5,283,451,491 2,430,660 2,084,567,629 1,231,269,307 42,329,577,824 3,628,371,692 566,086,458 113,097,363 6,227,634,046 1,288,664,470 7,804,261,678 3,481,727,696 - - 915,162,644 24,025,006,047 44 Nong Shim

158,236,434,250 165,899,877,956 - - - - 158,236,434,250 165,899,877,956 45,375,936,103 47,230,978,471 112,860,498,147 118,668,899,485 Annual Report 2006 45

11,008,255,638 112,860,498,147 123,868,753,785 258,081,486 118,668,899,485 118,926,980,971 9,499,999,998 9,499,999,998 133,368,753,783 6,166,666,667 6,166,666,667 125,093,647,638 6,000,000,000 94,000,000,000 23,290,656,000 23,290,656,000 123,290,656,000 6,000,000,000 85,000,000,000 23,085,392,000 23,085,392,000 114,085,392,000 10,078,097,783 11,008,255,638 46 Nong Shim

112,860,498,147 115,892,306,944 2,430,660 9,981,139,235 560,039,309 28,367,443,505 54,523,110,373 373,483,945 1,928,972,651 9,046,562 5,283,451,491 14,863,189,213 (-)6,967,972,768 101,002,018 1,546,952,223 601,584,852 4,718,433,675 (-)36,412,997,503 (-)2,300,118,136 (-)2,570,248,268 269,929,600 (-)1,015,132,404 1,358,797,035 (-)102,934,638 1,754,768 (-)285,651,940 (-)2,009,165,139 380,235,619 (-)4,765,774,511-621,195,898 1,978,657,991 (-)4,494,289,841 (-)23,933,695,687 453,442,150 185,371,834,820 118,668,899,485 92,702,708,295-7,804,261,678 1,288,664,470 23,535,951,479 55,814,227,176 403,541,996 262,636,337 111,697,463 3,481,727,696 - (-)7,051,205,139 26,204,362 2,545,048,192 181,336,470 4,298,616,115 (-)25,503,038,348 5,123,267,781 460,398,658 (-)401,777,785 (-)797,333,136 (-)4,747,456,971 (-)12,970,064,875 (-)584,563,580 (-)781,348,193 5,960,423,424 (-)7,179,859,749 3,714,770,085 (-)5,782,192 2,851,381,016 3,246,995,471 (-)3,233,899,122 (-)16,534,228,080 376,038,900 178,817,364,293 355,546,001,159 29,175,000 348,000,000,000 (-)108,556,751,947 68,963,156,492 11,905,000 60,000,000,000 (-)205,312,587,281 Annual Report 2006 47

1,030,055,298 4,931,500,135 3,000,000 543,426,771 90,000,000 291,044,530 141,950,306-9,004,500 401,380,438 75,464,181 (-)464,102,753,106 30,035,000 333,000,000,000 1,310,834,014 5,234,518,055-8,056,560 1,868,934,664 2,093,000 136,280,160 35,034,000 5,979,616,194 1,290,570,058 2,236,151,208 112,621,659,679 348,970,514 1,232,237,037 6,041,351,880-770,518,546-667,719,548 76,761,573 555,062 11,747,900 93,825,482 56,534,464 (-)274,275,743,773 26,680,000 200,000,000,000 1,558,338,214 5,770,723,655 9,245,620,000 679,322,918 2,347,501,544 1,647,010 262,375,608 27,112,000 3,593,549,929 605,858,589 1,108,311,283 48,794,148,635 254,554,388 609,109,743,009 4,914,000,000 - - 218,114,775,037 386,080,967,972 (-)659,691,713,864 9,849,925,997 180,410,785,259 496,000,000 - - (-)50,581,970,855 603,292,167,148-31,757,721,630 80,000,000,000 112,529,796,082 379,004,649,436 (-)558,992,605,172 41,535,080,011 113,087,432,423 496,000,000 1,600,000,000 770,000,000 44,299,561,976 48 Nong Shim

386,711,727,368 59,113,136,730 23,110,138,510 26,233,112,018 64,745,705,813 90,978,817,831 378,422,491,578-23,081,601,160 17,804,338,988 46,941,366,825 64,745,705,813 Annual Report 2006 49

IR Information 15 189 20.0% 4.9% 137 115 25.7% 3.6% 4.9% 173 32.9% 8.0% Total 482,897 1,990,070 1,554,188 1,209,775 293,955 218,681 291,792 6,041,358 8.0 32.9 25.7 20.0 4.9 3.6 4.9 100.0 50 Nong Shim

IR Information 325,000 (1/11) 110 292,500 (5/11) 287,000 (12/11) 105 100 95 251,500 (4/25) 90 85 80 75 2006/01 02 03 04 05 06 07 08 09 10 11 12 2006 2005 2004 6,041,358 5,771,358 5,771,358 325,500 / 216,000 329,500 / 231,000 262,500 / 189,500 18,681 20,562 22,273 17.4 / 11.6 16.0 / 11.2 11.8 / 8.5 158,085 149,761 129,628 2.1 / 1.4 2.2 / 1.5 2.0 / 1.5 4,000 4,000 4,000 20.6 19.5 17.7 Annual Report 2006 51

Affiliates http://www.nongshimholdings.co.kr http://www.mega-mart.co.kr http://www.youlchon.com http://http://www.itaekyung.com http://nds.nongshim.co.kr http://www.adleague.co.kr http://www.nong shimeng.com http://www.hotelnongshim.com http://www.ildonglakes.co.kr 52 Nong Shim

Holding Co. & Investment Structure (32.94%) Shanghai Nong Shim Qingdao Nong Shim Shenyang Nong Shim Nong Shim Holdings(USA) Nong Shim (B.V.I.) Holdings Nong Shim Tae Kyung Holdings Nong Shim (H.K.) Holdings Nong Shim Japan (40.32%) (51.67%) (50.0%) (100.00%) (96.92%) Annual Report 2006 53

Overseas Plants 54 Nong Shim

Annual Report 2006 55

Globalization of Nong Shim - - - Address: 3JIA 1HAO, SHENYANGJINGJIJISHUKAIFAQU 4HAOJIE, SHENYANG, LIAONING, CHINA - Tel: 86-24-2536-7480 - - - Address: #1388, WUZHONG ROAD, MINHANG DISTRICT, SHANGHAI, CHINA - Tel: 86-21-3431-7680 - - - Address: GONGYEYUANDI, YINGHAIZHEN, JIAOZHOU, QINGDAO, SANDONG, CHINA - Tel: 86-532-8527-0155 - - Address: TORANOMON JITSUGYO KAIKAN BLDG 8F. 1-1-21, TORANOMON MINATO-KU, TOKYO, JAPAN - Tel: 81-3-3595-0882 56 Nong Shim

Domestic Plants - - - - - - - - - - - - - Address: 12155, 6Th STREET, RANCHO CUCAMONGA, CA91730,USA - Tel: 1-909-481-3690 - - - Address: 12155, 6Th STREET, RANCHO CUCAMONGA, CA91730,USA - Tel: 1-909-484-1888 - - - - - - - - - - - - Annual Report 2006 57

Tel: 02-820-7114 Fax: 02-820-7089 www.nongshim.com Copyright 2006 by Nongshim Produced by IR-Plus