Financial Overview

( in millions of won )

-	FY2006	FY2005	Rate of change	Factors
Sales	8,168	7,547	8.2%	- The Company posted record sales, as it started to supply modules and core products to the Kia New Carens, Hyundai Avante, and Hyundai Veracruz. Its share in the OEM market also improved.
Operating income	816	786	3.9%	-
Ordinary income	1,022	1,053	(2.9%)	-
Net income	686	789	(13.0%)	-

Korea
- In February, 2006, the Company announced that it will sell its car electronics research center to Hyundai Auto Net Co., Ltd. at a cost of 38,687.49 million won. The Company says the integration will allow the Group to improve the efficiency of its development activities.

- In March, 2006, KASCO held a ground breaking ceremony at the site of its new facility that will manufacture conventional brake systems (CBSs). KASCO was acquired by the Company in June, 2007.

>>>See Capital Investment for more details.

- In May, 2006, the Company's new facility in Poseung, Kyonggi, Korea started commercial production of motor-driven power electronics steering systems (MDPSs). The MDPSs manufactured at this facility will be initially supplied to the Hyundai's HD (all-new Avante), and also to all the other models assembled by Hyudai Motor and Kia Motors in the future. The planned amount of annual production is 150,000 in 2006, 750,000 in 2007, and 2 million in 2010.

Overseas

U.S.A.
- Ohio Module Manufacturing Company, which is the Company's new facility in Tredo, Ohio, U.S.A., started commercial production in June, 2006. The new plant is located in DaimlerChrysler's Supplier Park and manufactures complete chassis modules for the Jeep Wrangler.

China

- In March, 2006, Jiangsu Mobis Automotive Parts Co., Ltd. held a ground breaking ceremony for its Plant No. 2.

>>>See Capital Investment for more details

- In September, 2006, Beijing Mobis Transmission Co., Ltd. started pilot production at its Plant No. 2. Commercial production of manual transmission systems was launched in January, 2007, supplying them to the Hyundai Verna, Hyundai Avante, and Kia Pride.

Slovakia
- The Company began delivering chassis modules, cockpit modules, front-end modules, and bumpers to the Cee'd, which is Hyundai Motor's strategic model marketed in Slovakia.

R&D Organization

Facility	Location
Yong-in (CarTronics) R&D Center	Yong-in, Korea
Shanghai R&D Center	Shanghai, China
Detroit R&D Center	Detroit, China
Frankfurt R&D Center	Frankfurt, Germany

Area of devlopment

Business	Description
Module Business	Development of Modules -Chassis Modules -Cockpit Modules -Front End Modules Development of System Components -CBS/ABS/ESP Parts -MDPS/Propeller Shafts/Power Steering Pumps -Airbag Systems Advanced R&D -Components for fuel cell cars -New materials for component development -Modules for finished cars for overseas market
Aftermarket	-Automotive components development

R&D Expenditure

( in millions of won )

-	FY2006	FY2005	FY2004
Amount	80	98	88
% of sales	0.99%	1.30%	1.37%

Recent developments (FY2006)
- The Company is currently working on developing future brake systems (FBSs) for the next generation, aiming to become one of the world's largest suppliers of electronically controlled brake systems. The Company has conducted various types of brake tests in Sweden and Spain.

- The Company announced that it developed a new, environmentally friendly thermoplastic polyurethane (TPU) after its five-year joint development project with Hosung Chemex, a Korean materials manufacturer. With its high level of durability and heat resistance, the TPU is odor-free and can be recycled. The Company expects to generate over 500 billion won in sales over the next five years by utilizing TPU in cockpit modules for various models made by Korean automakers.

Recent development

Area of development	Achievements
Steer By Wire	-X-by wire steering system for next generation vehicles.
Center facia (dashboard) modules	-Developed an integrated center facia (dashboard) modules.
Aluminum parts	- Developed aluminum parts for chassis models. (These parts are made by extrusion molding and composite molding).
Passenger detection systems (in-house development)	- Developed own logics and systems in the area of passenger detection systems for advanced airbag systems.
Electronic parking brakes (EPBs)	- Developed performance simulation program in the area of (static and dynamic calculation for parking control). - Designed parts and developed logics that achieve control and fail safe features.
Face-type calipers	- Designed parts and conducted analysis, establishing a method to optimize the systems. - Manufactured prototypes and products.
Bumpers	- Developed simulation systems to optimize design - Manufactured products
Water-based painting materials	- Solved environmental issues including those dealing with volatile organic compounds.
Diesel particulate filters (DePF) and diesel oxidation catalysts (DeOC)	-Developed and released continuous DPFs for heavy-duty diesel vehicles in Korea. The Company obtained national certification for this product. -Developed and released DOCs for light-duty diesel vehicles in Korea. The Company obtained national certification for this product.
Plastic fenders	- Developed plastic fenders to replace steel fenders. - Developed dies for making BH fenders.
Optimum injection systems	- Achieved uniformity in terms of chilling molds. - Developed an optimum production program. - Developed dies that can be used in a program to check verifications. - Reduced molding cycle time.
HARD IP paintless technology	- Developed coat-less dies, enhancing the appearance of the products.
Ultrafine foaming technology	- Reduced product weight and materials costs.

Technical Alliance (License-in)

Partner (Country)	Area of alliance	Contract period
TRW (U.K)	Production of power steering systems	Feb. 17, 2005 - Feb. 16, 2015

Capital investment
Korea
- In March, 2006, KASCO held a ground breaking ceremony at its new plant site in Changwon, Korea in order to bolster production of conventional brake systems (CBSs). The new plant will have the capacity to manufacture 1 million brakes, increasing KASCO's total annual production volume on its all CBS lines to 2.5 million. The Company, which acquired KASCO in June, 2007, will invest some 500 billion won in this new plant.

China
- In March, 2006, Jiangsu Mobis Automotive Parts Co., Ltd. held a ground breaking ceremony for its Plant No. 2. The new facility, which is scheduled to be completed in February, 2007, involves a total investment of 36.2 billion won. The plant will manufacture cockpit modules, front-end modules, and rear chassis modules for Dongfeng Yueda Kia Motors. It will have an annual production capacity of 300,000 units.