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This presentation contains historical information of the Companywhich should not be regarded as an indication of future performance or results. This presentation also contains forward-looking statements that are, by their nature, subject to significant risks and uncertainties. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance or results. Actual results may differ materially from information contained in the forward-looking statements as a result of a number of factors beyond our control.
DisclaimerDisclaimer
Today’s agendaToday’s agenda
Company overviewCompany overviewCompany overview
Investment highlightsInvestment highlightsInvestment highlights
Financial updateFinancial updateFinancial update
3
2004
1994
2005
1990
1998
2001
First air cleaner
production and sales
First air cleaner
production and sales
2000
Listed on KRX
Listed on KRX
Started bidetrental serviceStarted bidetrental service
Launched system
kitchen brand
Launched system
kitchen brand
Founded
Woongjin Coway is an integrated product and rental service provider focusing on high-end health and environmental products
Entered water purifier
business
Entered water purifier
business
Launched water purifier rental service
Launched water purifier rental service
Started air cleaner
rental service
Started air cleaner
rental service
Started food waste processor
rental service
Started food waste processor
rental service
Our history Merged with WoongjinCoway Development
Merged with WoongjinCoway Development
1989
4
Source: Public filings as of June 23, 2006 Note: Foreign ownership of Woongjin Coway is 34.6% as of June 30, 2006•Based on total shares outstanding of 74,263,122 •Subsidiaries sources as of June 30, 2006
Current ownership structure and subsidiariesMajor shareholders and related partiesMajor shareholders and related parties
Seok KeumYoon27%
Others62%
Other relatedparties
1%
Mgmt.2%
FamilyMembers
3%
WoongjinThinkBig
5%
SubsidiariesSubsidiaries
Current ownership* Current ownership*
Stake %
Seok Keum Yoon 27.2%
Woongjin ThinkBig 5.2%
Direct Family Members 2.6%
Management 1.9%
Other related parties 1.3%
Stake % Description
Woongjin Coway(Thailand) Co., Ltd.
100% Thailand sales subsidiary
Woongjin Japan 50.0% Japan sales subsidiary
Woongjin Ho-wi Home Appliance Co., Ltd.
91.9% Chinese subsidiary
Woongjin Coway (M) SDN. BHD
100% Malaysia subsidiary
Today’s agendaToday’s agenda
Company overviewCompany overviewCompany overview
Investment highlightsInvestment highlightsInvestment highlights
Financial updateFinancial updateFinancial update
6
Key investment highlights
Robust demand for well-being living productsRobust demand for well-being living products
Extensive CODY network covering broad customer baseExtensive CODY network covering broad customer base
Dominant leadership with strong brand power and focus on R&DDominant leadership with strong brand power and focus on R&D
Focus on enhancing shareholder valueFocus on enhancing shareholder value
Established rental business modelEstablished rental business model
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Demand of well-being living products is robust with significant room for growth
Woongjin Coway’s products Woongjin Coway’s products
Japan
Source: National Statistics Office, Korean Water Purifier Producers Commission, Japanese industry press
Product Market Share Korean Penetration
ExpectedSaturation Rate
Growth Rate(Q1’05->Q1’06)
Water purifier
Bidet
Air purifier
46%
42%
47%
25%
9.5%
10%
55%~60% 18.0%
17.9%
29.2%
45%~50%
50%~60%
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Rental program Membership program3
Strong revenue stream with the solid income structure
Membership fees
Outright sale with lump sum payment
2
3
Member-ship serviceProduct
= +
Note: 5.8% of 2005 and 5.1% of Q1’06 revenues derived from other sources, including small electrical home appliances prior to discontinuation(only for 2005) following the merger, system kitchen, and overseas sales
: % of total revenues
1 232
Rental programmonthly rental charge≈ ( + ) / 60
Lump sum payments
1
82.4%83.7%
‘05 Q1’06
4.5%3.5% 7.2%
7.7%
‘05 Q1’06‘05 Q1’06
Monthly service fee :Approx. W21,900
ASP for water purifier :Approx. W1,590,000
Monthly membership fee :Approx. W13,000
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Illustrative cash flow structure of rental business
Source: Company¹ Rental fee with VAT excluded
Hypothetical cash flow structure of rental business (standard water purifier model : CP-01)Hypothetical cash flow structure of rental business (standard water purifier model : CP-01)
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
at sale yr1 yr2 yr3 yr4 yr5
Cash flow
-100,000
-80,000
-60,000
-40,000
-20,000
0
20,000
40,000
mth1 mth2 mth3 mth4 mth5 mth6
Cash flow in accounting perspective
[unit : KRW]
10
1,487
3,085
4,828
7,7458,561
9,434
11,168
'00 '01 '02 '03 '04 '05 May'06
Unparalleled sales network – “CODY”
23119
294457
575705 749
'00 '01 '02 '03 '04 '05 Q1'06
Number of Cody agents
Net increase in Bidet rental subscribers
Distribution platform supported by an extended network of CODYs
●Unique network marketing with a directand personalized sales agent program“CODY” (COway laDY)
●Leverage allowing the companypenetrating into new businesses
●Gaining instant market leadership throughconstant on-site customer coverage
Woongjin Coway’s unique CODY agent system enables the company to maintain its dominant leadership in the rental service markets in Korea
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Broad customer base
With a more diversified product portfolio targeting the same customers, there are plenty of cross selling opportunities to fuel our future growth as 80% of our
customers use only one rental product
Subscriber CAGR: 19.2% (’03–’06)
Subscribers(Rental + Membership) account by products (thousands unit)Subscribers(Rental + Membership) account by products (thousands unit)
1.09%1.00%
[Cancellation trend]
Q4 ‘05 Q1 ‘06Q1 ‘05
1.10%2,664
3,2463,775 3,899
2003 2004 2005 Q1 2006
Water purifier Air cleaner Water softener Bidet
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Woongjin Coway enjoys a dominant market position due to unparalleled brand recognition
Jan Feb Mar Apr Jun Aug OctMay Jul Sep DecNov
Jan 2005Award:Grand prize, 2005 First Brand Award by Korea Customers’Forum
Jan 2005Award:Grand prize, 2005 First Brand Award by Korea Customers’Forum
Mar 2005Award:1st prize, Korea Brand Power Index (K-BPI)
Mar 2005Award:1st prize, Korea Brand Power Index (K-BPI)
Apr 2005Award:1st prize, 2005 Global Brand Award by Japan Management Association
Apr 2005Award:1st prize, 2005 Global Brand Award by Japan Management Association
Apr 2005Award:Korea Marketing Award by Korea Management Association Consulting
Apr 2005Award:Korea Marketing Award by Korea Management Association Consulting
Jun 2005Award:Korea Best Brand Award by HankyungEconomic Daily
Jun 2005Award:Korea Best Brand Award by HankyungEconomic Daily
Sep 2005Award:1st prize, Korean Customer Satisfaction Index by Korea Management Association Consulting
Sep 2005Award:1st prize, Korean Customer Satisfaction Index by Korea Management Association Consulting
Oct 2005Award:1st prize, Customer Well-being Brand Award by Korea Standard Association
Oct 2005Award:1st prize, Customer Well-being Brand Award by Korea Standard Association
Nov2005Award:Gold prize, Korea Customer Satisfaction Award
Nov2005Award:Gold prize, Korea Customer Satisfaction Award
Source: Gallup research as of Dec. 2005
No.1 brand recognition in KoreaNo.1 brand recognition in Korea
Top position as a health and environment companyTop position as a health and environment company
Product Top of mind brand
Water purifier 94.3%
Air purifier 62.7%
Bidet 90.5%
Company P WJ Coway Company S Company L Company C
[unit : %]
13.7
29.9
19.2
36.242.4
13
173218
274
2003 2004 2005
Focus on enhancing shareholder value
Dividend payout policy
Woongjin Coway’s DPS1 (KRW)
Strong cashflowgeneration
Woongjin Coway’s EBITDA2 (KRWbn)
Share buyback & cancellation
Focus on enhancing
shareholder value
Share buybacks and cancellations
2003: 1 million share buyback2004: 5 million share buyback2005: 3 million shares cancelled
Increase companytransparency
Merger with Woongjin CowayDevelopment eliminates complex related-party transactions
1 Figures of Woongjin Coway Development 2 2003 and 2004 figures of pre-merger Woongjin Coway Development
150250
340
2003 2004 2005
Today’s agendaToday’s agenda
Company overviewCompany overviewCompany overview
Investment highlightsInvestment highlightsInvestment highlights
Financial updateFinancial updateFinancial update
15
Sales & profit trend
The combined company will benefit from the stellar financial performance of WoongjinCoway Development with higher top line and bottom line growth
Sales trend (KRW billions) Sales trend (KRW billions) EBITDA (KRW billions)EBITDA (KRW billions)
EBIT (KRW billions)EBIT (KRW billions) EPS (KRW)EPS (KRW)
Woongjin Coway (before merger) Woongjin Coway Development Woongjin Coway (post-merger)
Woongjin Coway (before merger) Woongjin Coway Development Woongjin Coway (post-merger)
309828
1,2001,008
‘04 ‘05 06EQ1 ‘06
267
635 9511,439 1,341
‘04 ‘05 ‘06E
49
218 274350
67
‘04 ‘05 06EQ1 ‘06
33
113 97154
20
‘04 ‘05 06EQ1 ‘06
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Other financial information Total debt and cash (KRW billions) Total debt and cash (KRW billions)
Rental asset and capital expenditure (KRW billions)Rental asset and capital expenditure (KRW billions)
Total debt Cash
Rental Asset Capital expenditure
Net debt
2004 2005
11669 191
9768
2004 2005 2006E
183176196
2311 23
Q1 2006
139171
31
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Appendix
Income StatementIncome StatementIncome Statement
Balance SheetBalance SheetBalance Sheet
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Income statement
2003 2004 2005 Sales 827.1 827.8 1,008.1 Growth 0.1% 21.8% COGS 265.8 303.8 363.7
% of sales 32.1% 36.7% 36.1% Gross profit 561.3 523.9 644.4 Gross profit margin 67.9% 63.3% 63.9% Selling and administrative expenses 474.7 412.5 547.5
Operating income 86.7 111.5 96.8 Operating income margin 10.5% 13.5% 9.6% Non-operating income (expenses) (4.7) (10.9) (10.9)
Ordinary income 82.0 100.6 86.0 Ordinary income margin 9.9% 12.2% 8.5% Income tax 24.4 29.6 25.1
Net income 57.6 71.0 60.9 Net income margin 7.0% 8.6% 6.0%
(KRW billions)(KRW billions)
Note: 2003 and 2004 figures are for Woongjin Coway Development
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Balance sheet
2003 2004 2005 Cash 1.7 0.9 18.6 Short-term financial instruments, investment securities and loans
0.8 0.2 0.2
Trade, accounting and other receivables 91.6 31.6 63.3 Inventories 32.3 37.8 42.2 Other current assets 43.1 92.5 148.9 Total current assets 169.5 162.9 273.2 PPE, net 303.9 337.4 369.8 Intangibles, net 2.4 0.6 23.7 Other non-current assets 67.9 25.8 48.5 Total assets 543.7 526.8 715.2 Trade payables 77.1 76.0 32.6 ST borrowings 83.8 0.0 69.8 Accounts payable-other 73.7 61.5 75.7 Other current liabilities 74.7 112.3 176.1 Total current liabilities 309.2 249.8 354.2 Debentures 51.5 36.0 0.0 Other non-current liabilities 40.0 36.1 19.0 Total liabilities 400.8 321.9 373.2 Total shareholders' equity 142.8 204.9 342.0 Total liabilities and shareholders' equity 543.7 526.8 715.2
Note: 2003 and 2004 figures are for Woongjin Coway Development
(KRW billions)(KRW billions)
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