0 Information Information MemorandumMemorandum

December 2005

WOONGJIN COWAY CO., LTD. (021240)

Information Information MemorandumMemorandum

December 2005

WOONGJIN COWAY CO., LTD. (021240)

1

Outstanding Shares

Listing Date (KSE)

Total Employees

Market Capitalization

: May 2, 1989

: KRW 39.0 billion

: 73,851,611 shares (ordinary shares only)

: August 7, 2001 (IPO), May 24, 2005 (re-listed post merger)

: 1,150 employees (excluding 13,032 contracted sales agents)

: KRW 1,647 billion (as of Dec. 5)

CCompany fact sheetompany fact sheet

Establishment

Paid-in Capital

2

20002000 2004200419941994 20052005

First air cleaner production and

sales

Launched system

kitchen brand

19891989 19901990

Entered into water purifier

business

19981998

Launched water purifier rental

service

Started bidet rental service

20012001

Started air cleaner rental

service

Listed on KSE

Started kitchen garbage processor

rental service

R&D and manufacturing

Rental and maintenance service

HHistory of istory of WoongjinWoongjin CowayCoway

Woongjin Coway is an integrated product and rental service provider focusing on high-end health and environmental products

Woongjin Coway is an integrated product and rental service provider focusing on high-end health and environmental products

Founded

NEW WOONGJIN COWAY

Integrated productand service provider focusing

on high-end health andenvironmental products

NEW NEW WOONGJIN COWAYWOONGJIN COWAY

Integrated productIntegrated productand serviceand service provider focusingprovider focusing

on highon high--end healthend health andandenvironmentalenvironmental productsproducts

3

Customers

Prod

ucts

Sale

s C

hann

els

Water PurifierAir cleanerWater Softener and IonizerBidetKitchen Garbage ProcessorOxygen Generator

Rental Purchase Customization

Kitchen FurnitureKitchen System Design & Installation

BBusiness model overviewusiness model overview

Living Designers

GalleryDisplay ShopsExport DoorDoor--toto--DoorDoor

SalesSales

Environment & Health System Kitchen

4

5.2%

0.01%

Subsidiaries

30.4%

28.3%

2.9%

0.2%

Foreign Investors29.2%

Seok-Kuem Yoon Woongjin Think Big (KRX listed)

36.0%

Source: Company Data. Foreign ownership as of December 5, 2005.

WoongjinCosmetics

Chinese subsidiaryfor cosmetics

business

42.9%

WoongjinJapan

Japanesesales subsidiary

WoongjinUSA INC

35.0%

US salessubsidiary

WoongjinThailand

98.9%

Thailandsales subsidiary

OOwnership structure and affiliateswnership structure and affiliates

Woongjin Food

Treasury Shares

ESOP

Woongjin Coway’s Share Ownership Structure

5

Maintain dividend payout ratio above 20% and continue share buyback programs

Health and environment-related products and system kitchen productsIncreasing customer demand for ‘well-being’ items

Broad customer base of over 3 million with stable cash flow from rental and membership servicesCross selling opportunities to penetrate customers with new product offerings backed by over 16,100 contracted door-to-door sales and customer care agents

1 Ranked no.1 in both customer satisfaction index (4 consecutive years) and brand power (6 consecutive years) by Korea Management Association Consulting

Leader in water purifier and air cleaner markets (No. 1 market share in both markets in Korea)Strong brand equity and track record of high customer satisfaction1

More efficient and transparent decision making under combined single leadershipSignificant cost-savings

KKey investment highlightsey investment highlights

1. Dominant Market Position in Korea

2. Broad Customer Base and Strong Sales Agents

3. Growing Product Line-up

4. Focus on Shareholder Value

5. Post-merger Synergies

6

Woongjin’s capability of generating strong revenue growth and stable cash flow is ultimately due to its successful Rental Program

Woongjin’s capability of generating strong revenue growth and stable cash flow is ultimately due to its successful Rental Program

Member-ship

service

ProductProduct

2

33

1

One-time lump sum payment

Membership Program

Rental Program Monthly rental charge ≈ ( + )/602 33

Rental program (78% of total 2004 revenues)Option to assume ownership after 5th yearFree periodical filter replacement and inspection by CODYRegistration fee: approx. KRW 58,000Monthly service fee: approx. KRW 22,000

Membership program (6% of total 2004 revenues)Same level of maintenance service provided as partof the Rental Program while the customer keeps the

ownershipMonthly membership fee: approx. KRW 13,400

One-time lump sum payment (9% of total 2004 revenues)

ASP for water purifier: approx. KRW 2,000,000ASP for air cleaner: approx. KRW 950,000

2

33

1

Membership fee

Membership fee

Purchase price

Purchase price

KKey sources of revenuesey sources of revenuesRental Program and Alternative Sales Methods

7

10%

15%

15%

60%

FY04 Rental RevenueKRW 708.8 billion

FY04 Rental RevenueKRW 708.8 billion

Water Purifiers

* Source: Company Data

Bidets Air Cleaners Water Softeners

Rental Registration FeeRental Fee Membership Fee D2D Sales Home Appliances Others

Forecasted FY05Forecasted FY05

SSales breakdownales breakdown

10%

14%

16%

59%

1%

3%3%9%

6%78%

FY04 Revenue: KRW 902.4 billionFY04 Revenue: FY04 Revenue:

KRW 902.4 billionKRW 902.4 billion

2%7% 81%

4% 4%1%

Forecasted FY05Forecasted FY05Forecasted FY05

2004 Actual 2005 Forecast

8

DDominant market position in Koreaominant market position in Korea

Source: Company data

2005 Market Size (Forecast) : 952 thousand units 2005 Market Size (Forecast) : 688 thousand units

Company A9%

Others37%

Company B8%

WoongjinCoway46%

WoongjinCoway42%

Company Y12%

Company Z8%

Others22%

Company X16%

Woongjin Coway maintains its metropolis market leadership in both the Korean water purifier and air cleaner market with 46% and 42% market shares respectively

Woongjin Coway maintains its metropolis market leadership in both the Korean water purifier and air cleaner market with 46% and 42% market shares respectively

Water Purifier Market Share Air Cleaner Market Share

9

2,6722,965

3,423

3,958

18% 19% 22% 25%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

'02 '03 '04 '05(F)0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Source: National Statistical Office, Korea Water Purifier Industry Cooperative and Company Data¹ Accumulated shipment/total number of household in Korea

CAGR 14.0%

CAGR 35.4%

Accumulated Shipment (’000 units) Penetration Rate1 (%)

MMarket overviewarket overview

603

938

1,227

1,497

4% 6% 8% 9%

0

500

1,000

1,500

2,000

2,500

'02 '03 '04 '05(F)0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Water Purifier Market Share Air Cleaner Market Share

10

897

1,715

2,664

3,246

3,829

'01 '02 '03 '04 '05(F)

Subscribers(Rental +Membership)

Subscriber CAGR 43%

BBroad customer baseroad customer base

The merger with Woongjin Coway Development will bring in a stable flow of cash, generated by its broad rental customer base

The merger with Woongjin Coway Development will bring in a stable flow of cash, generated by its broad rental customer base

507

897

1,715

2,664

3,246

3,829

'00 '01 '02 '03 '04 '05(F)

BidetWater SoftenerAir CleanerWater Purifier

Total Subscriber Accounts (’000 units) Product Mix and Account Growth (’000 units)

11

¹ ARPU = Revenue/Average Number of Total Accounts

ARPU has recently declined due to diversification of rental product offerings with lower rental fees, but starting in 2005, as rental customers begin to transition into

membership customers, we expect our profitability to improve

ARPU has recently declined due to diversification of rental product offerings with lower rental fees, but starting in 2005, as rental customers begin to transition into

membership customers, we expect our profitability to improve

AARPU trend of service RPU trend of service

298,797284,665

259,501

187,195

'02 '03 '04 3Q'05

297,362

157,302

116,925

272,473296,534

197,721

160,355

195,256

'02 '03 '04 3Q'05

Rental Membership

Total ARPU (KRW)¹ Rental ARPU and Membership ARPU

12

Woongjin Coway started a unique network marketing campaign in 1998, building up a direct and personalized sales agent program “CODY” (COway laDY)

Evidenced by the success of our recent brand LooLoo, the Cody program gives us the leverage that we need in effectively penetrating into new businesses

LooLoo’s bidets and water softeners has gained instant market leadership (56% market share as of YE2004) through the constant on-sight customer coverage provided by the Cody program

UUnparalleled sales network nparalleled sales network –– ““CODYCODY””

18119

294460

581712

'00 '01 '02 '03 '04 '05(F)

26

1,487

3,085

4,828

7,7458,561

10,600

'99 '00 '01 '02 '03 '04 3Q'05

Woongjin Coway’s unique CODY agent system enables the company to maintain its dominant leadership in the rental service markets in Korea

Woongjin Coway’s unique CODY agent system enables the company to maintain its dominant leadership in the rental service markets in Korea

Number of Cody Agents “CODY” – Direct and Personalized Sales Agents

Net Increase in Bidet Rental Subscribers

13

FFocus on shareholdersocus on shareholders’’ valuevalue

Maintain minimum dividend payout ratio above 20%

2004 DPS: KRW 250 (vs. KRW150 in 2003)

2004 dividend payout ratio: 34%

Purpose: to stabilize stock price and to increase shareholder’s value

Share buyback programs in 2003 and 2004

Elimination of related party transactions with Woongjin Coway Development will enhance transparency

Conservative approach to new accounting rules throughout accounting steps of consolidation

Focus on Enhancing

Shareholder Value

Woongjin Coway management is focusing on enhancing shareholders’ value by continuously addressing investors’ concerns and returning value to shareholders Woongjin Coway management is focusing on enhancing shareholders’ value by

continuously addressing investors’ concerns and returning value to shareholders

Woongjin Coway EPS

458635

742

2003 2004 3Q2005

Dividend Payout Policy Profit-oriented Management

Share Buyback & Cancellation Increase Company Transparency

14

SSales & profit trendales & profit trend

1 Excluding KRW49bn of deferred registration revenue

CAGR 5.9%(’02-’04)

CAGR 11.4% (’02-’04)ㅋ

Prof

orm

aD

ata

Prof

orm

aPr

ofor

ma

Dat

aD

ata

Including the deferred sales effects (after 2004) Excluding the deferred sales effects

The combined company will benefit from the stellar financial performance of Woongjin Coway Development with higher top line and bottom line growth

The combined company will benefit from the stellar financial performance of Woongjin Coway Development with higher top line and bottom line growth

738888 903

738888 953

514493

'02 '03 '04 1H'05

81

123 113

81

123 129

6756

10.9% 13.9% 13.5% 13.0%

11.4%12.5%

'02 '03 '04 1H'05

Act

ual D

ata

Act

ual D

ata

Act

ual D

ata

739

827 828

738

'02 '03 '04 3Q'05

91 87113

63

8.5%13.7%12.2% 10.5%

'02 '03 '04 3Q'05

Sales Trend (KRW bn) EBIT and Margin (KRW bn)

15

KKey financial ratiosey financial ratios

Woongjin Coway (before merger) Woongjin Coway Development Woongjin Coway (post-merger)

We expect our key financial ratios to improve after the mergerby integrating manufacturing and distribution

We expect our key financial ratios to improve after the mergerby integrating manufacturing and distribution

58 42 49

152146 173218

'02 '03 '04 3Q'05

1079

458 635 7428741,159

1,439

'02 '03 '04 3Q'05

2315

30

1622

'03 '04 3Q'05

26.010.8

19.1 18.6

37.3 40.3 34.7

'02 '03 '04 3Q'05

EPS (KRW) EBITDA (KRW billion)

ROE (%) EBITDA/Interest Coverage (x)

16

OOther financial information ther financial information

We expect our financial and operational efficiencies in terms of asset and capital utilization will improve following the merger

We expect our financial and operational efficiencies in terms of asset and capital utilization will improve following the merger

Classification FY 2003 FY 2004 3Q FY2005 1. Borrowings

Borrowings 231 127 155

2. Cash

Cash 19 22 39

Net cash (212) (105) (116)

3. CapEX

R&D/Facility 41 16 15

Rental Asset 173 196 137

Total 214 212 152

KRW billion

17

PProduct portfolio diversificationroduct portfolio diversification

Product Line Product Line CompositionComposition

Brand NameBrand Name

Kitchen furniture design and installation

200120020011199819919988 200420020044

Water softener, bidet, etc bathroom appliances

Air cleaners, oxygen

generators, etc

Water purifiers, other kitchen appliances

health-related electronics

With more diversified product portfolio targeting the same customers, there are plenty of cross selling opportunities for our future growth as 80% of our customers use only one rental productWith more diversified product portfolio targeting the same customers, there are plenty of cross selling opportunities for our future growth as 80% of our customers use only one rental product

200020020000