investor relations 2013

www.megastudy.net

Investor Relations2013

ENG133Q_131108

www.megastudy.net

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Contents

1. Business Sectors

2. Business Expansion

3. Education System

4. Business Model

5. Membership & Sales in Online

6. Offline Infrastructure

7. High Loyalty & Entry Barrier

8. Educational expenditure

9. Growth & Market Size

10. Sales Breakdown

11. 2012 FY Performance

12. Guidance for 2013 Consolidated Performance

13. 2013 3Q Performance

14. 2013 3Q Accumulated Performance

15. Consolidated I/S & B/S Summary

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www.megastudy.net

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Business Sectors

Megastudy Subsidiaries

▪ High School(on) : www.megastudy.net - provide online lectures for high school students and re-takers Korean SAT - Main Contents GPA Essay & Interview

▪ High School (off) : developing contents / producing contents - running 9 offline schools in Seoul & Near Seoul Korean SAT - Main Contents GPA Essay & Interview

▪ Middle School(on) : www.mbest.co.kr

- provide online lectures on term-based courses

- hiring administrators for each student to communicate their

academic improvement with students and parents by phone

or e-mail

▪ MegaMD (65%) : www.megamd.co.kr / www.megaut.com - provide lectures for special graduate school entrance exam (Medical, Dental, Pharmaceutical, and Law) - provide contents for University transfer exam (Merged with MegaUT, Jun 1st. 2013)

▪ IvyKimyoung (46%) : www.kimyoung.co.kr - provide contents for University transfer exam

▪ MegaFood&Service (60%) - operating food service company for students and employees

▪ MegaBooks (100%) - publishing learning materials and textbook supplementary

▪ HyungsulEdu (100%) - took over offline school in 2009 and currently operating them just like other offline institutions of Megastudy

▪ IL Deung Law School (MegaMD: 90%) - provide lectures for law school entrance exam

▪ SE Global (MegaMD: 50%) www.megacst.com - provide lectures for police employment test

▪ Megastudy Forever Joint Stock Company (62%) - running offline schools in Hanoi, Vietnam

▪ Plus Edu Co., LTD (M.F.J.S.C: 100%) - running offline schools(2rd) in Hanoi, Vietnam

▪ MegaInvestment (99%) - established investment company, searching for the new growth engine

▪ MegaNext (37%) : www.megahrd.co.kr - provide job related contents and English contents

Megastudy

6 months : KRW 760,00012 months: KRW 1,280,000

GPA Special courses for elite-high school

- Price

- Main Contents

www.megastudy.net

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Business Expansion

High school online

High school offline

Mbest Mbest Merged (Middle school online)

MegaMD

MegaBooks

MegaNext

Megastudy Forever Joint Stock Company

On Off Captive market

Adult & College

MegaMD (Merged with MegaUT)IvyKimyoung

MegaNext SEGlobal

x

High SchoolMegastudy-on Megastudy-off

HyungsulEdu MegaBooksMegaF&S

Middle School Mbest X

Elementary School Mjunior X x

Kindergarten x X x

Overseas

Megastudy China Ltd

(China)

Megastudy Forever Joint Stock Company

Plus Edu Co., LTD(Vietnam)

x

IvyKimyoung

MegaFood&Service

Horizontal Expanding

MegaUT

Hyungsul Edu

Vertical Expanding

ILDeung Law school

MegaInvestment

Plus Edu Co., LTD

SEGlobal

2000 2001 20032002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Merged with MagaMD(Jun 1st. 2013)

www.megastudy.net

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Education System

■ Education System

- Elementary ……. 6yrs (Age. 8 ~ 13)

- Middle School…. 3yrs (Age.14 ~ 16)

- High School……. 3yrs (Age.16 ~ 19)

- Undergraduate School

- Graduate School

Re-takers

UniversityHigh School Applying for University

▪ Re-takers : students who wish to take KSAT exam once more

2 WAYS

■ University Entrance Exam

KSAT- National standardize examination- Once a year (3rd week of Nov.)

GPA - Academic performance records in high school

UniversitySpecific Require-

ment

- Essay writing style- Interview- Knowledge based test

▪ Early Application : GPA + KSAT + University Specific Requirement (Essay writing / Interview / Language, Math, Science expertise, etc)

▪ Regular Application : GPA + KSAT + University Specific Requirement (Essay writing / Interview)

www.megastudy.net

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Business Model

■ Megastudy Offline ■ Megastudy Online

- Single subject class - 2~3 months (1,000 min.) - 10 ~ 15 Chapters - VOD type service

FilmingEditing

Uploading

■ Lecturers

▪ No. of lecturers in high school offline & online

■ Virtuous Cycle

Increase traffic

Tighten up on keen competition

Outcome of superb contents

Tighten upon keen com-

petition

On : 23%Off : 50%

\ 190,000 \ 65,000

- Single subject class - 2 months (8weeks)- 2~3hrs / week- 16 ~20 hrs

▪ Contract with lecturers on the commission basisOutcome of superb con-

tents

1/3

Offline(510)

Popular lecturesExpert lecturers

Online(110)

www.megastudy.net

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Membership & Sales in Online■ Penetration (2012) ■ High School Online Sales Trend

■ Middle School Online Sales Trend

Hig

h Sc

hool

Mid

dle

Scho

ol

■ Penetration (2012)

(unit: thousand) Registered Members

Paid Subscribers

Grade No. No. % No. %

Gr. 10 644 82 13% 33 5%

Gr.11 644 148 23% 53 8%

Gr.12 632 220 32% 90 14%

Re-takers 200 193 97% 96 48%

Total 2,120 643 30% 272 13%

(unit: thousand) Registered Members

Paid Subscribers

Grade No. No. % No. %

Gr. 7 596 58 10% 25 4%

Gr.8 613 85 14% 29 5%

Gr.9 640 106 17% 28 4%

Others (945) (39)

Total 1,849 249 13% 82 4%

‘07 ‘08 ‘09 ‘10 ‘11 ‘12

Online Sales (billion won) 23.8 34.6 44.6 52.9 53.1 43.8

Subscribers (thou-sand) 354 582 766 954 1,116 1,240

Paid Subscribers (thousand) 77 102 132 149 147 121

Sales per paid sub-scribers(thousand won)

310 338 338 356 361 361

Weight of No. ofTerm-Based Course 28% 33% 33% 35% 37% 39%

Weight of Sales ofTerm-Based Course 62% 68% 69% 72% 74% 74%

‘07 ‘08 ‘09 ‘10 ‘11 ‘12

Online Sales (bil-lion won) 73.8 91.2 109.2 103.5 99.7 68.7

Subscribers (thou-sand) 1,799 2,123 2,498 2,799 3,065 3,264

Paid Subscribers (thousand) 310 351 396 375 345 272

No. of lectures bought (thousand)

1,242 1,414 1,631 1,466 1,291 940

Sales per paid sub-scriber (thousand won)

238 260 276 276 289 252

www.megastudy.net

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Offline Infrastructure

Seoul

Yangji boarding school

Seocho Megastudy

Shinchon Megastudy

Kangbook Megastudy Norayngjin Megastudy

Gwangju boarding school

Namyangju boarding school

Kangnam Megastudy

▪ Launched in 2003▪ High school & Re-takers▪ Single Subject Class : 7,000▪ Re-takers Class : 1,050

▪ Launched in 2006▪ Re-takers▪ Capacity : 200

▪ Launched in 2004▪ High school & Re-takers▪ Single Subject Class : 12,000▪ Re-takers Class : 900


▪ Launched in 2008▪ High school & Re-takers▪ Single Subject Class : 1,000▪ Re-takers Class : 700

▪ Launched in 2005▪ High school & Re-takers▪ Single Subject Class : 14,000 ▪ Re-takers Class : 700

▪ Launched in 2004▪ High school & Re-takers▪ Single Subject Class : 4,000▪ Re-takers Class : 1,000


▪ Launched in 2011▪ High school & Re-takers▪ Capacity : 940

Pyungchon school

www.megastudy.net

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High Loyalty & Entry Barrier

■ Target marketing- 5 ~ 6 times per year- College admission convention- generated educational culture- giving out the useful information about the University admission (eg. Scoring service, College application service, etc.)

■ High Entry Barrier

Membership

Offline insti-tution

Contents(Lectures)

- Tighten up on the keen competition among offline lecturers produce outcome of superb contents - Offline institution is the place where the high quality of contents can be produced

www.megastudy.net

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Educational expenditure■ Education expenditure of householder■ Education expenditure of OECD countries

▪ Spending by households on total education and private education rose by 7.1% and 12.0% p.a respectively for past 10 years.

< % of GDP >

Korea US Canada Australia Portugal Spain New Zea-land

Japan0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2.9 2.4

1.7 1.6

0.4 0.5

1.3 1.7

4.5 5.0

4.8

4.1

5.1

4.2

5.0

3.3

Public Private

'82

'83

'84

'85

'86

'87

'88

'89

'90

'91

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0 % of Education

Public Education

Private Education

(%)(million won)

www.megastudy.net

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2009 2010 2011 20120 5

10 15 20 25 30 35 40 45 50

8.7bn

21.7bn

33.3bn

47.0bn

Growth & Market Size

■ Special graduate school entrance exam market

■ University transfer entrance exam market

< Sales Trend of MegaMD>

▪ MegaMD is recording notable achievement and generated 47.0bn KRW sales based on the successful performances in four different business profit centers.

- Megastudy invested 4.3bn in 2010 to acquire “High Top” company to expand business into University transfer entrance exam market and re-named that company to MegaUT.

- In addition, Megastudy completed IvyKimyoung’s acquisition in June of 2011 to be attained the dominant player within a short period of time in UT market.

- IvyKimyoung company was known as no.1 education company in Uni-versity transfer exam education market.

- Total acquisition price was 18.7 bn won.- Total equity holding of IvyKimyoung is approximately 78%. ▪ Megastudy 46 % ▪ MegaMD 12 % ▪ Mgmt. of MegaMD & Megastudy 20 %

PEET 40.0 bn

MEET/DEET30.0 bn

LEET5.5 bn

MegaMD’sM/S : 65%

MegaMD’sM/S : 75%

< 2011 total number of student recruiting >

(billion won)

Ordinary Bachelor's degree Total

Regular 8,825 5,575 14,400

Fine Arts 498 280 778

Medical/DentalOriental/Veterinary 148 - 148

Total 9,471 5,855 15,326

MegaMD’sM/S : 50%

▪ Total size of special graduate entrance exam market is estimated by 75.5 bn KRW

www.megastudy.net

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9.8%90.2%

14.9%85.1%

25.4%

74.6%

33.3%

66.7%

2009 2010 2011 2012 2013(E)

Unit : Billion Won

2009 2010 2011 2012 2013(E)

Megastudy 238.3 245.0 263.1 226.7 210.0

Hi(On)Mi(On)Hi(Off)Etc.

129.948.0 56.7 3.7

122.656.9

62.2 3.3

122.356.5

81.2 3.1

86.246.490.7

3.4

74.437.195.03.5

Subsidiaries 25.8 42.9 89.6 113.0 129.0

MegaMDIvyKimyoungMegaFood&ServiceMegaBooksMegaUTHyungsulEduMegaNextILDeung LawschoolM.F.J.S.C(Vietnam)

8.7 - - 11.0 - 5.5 0.6 - -

21.4 - 0.1 12.7 - 4.2 2.6 1.8 0.1

33.3 21.2 12.3

12.0 3.9 3.2 1.1 2.4 0.2

47.029.416.311.63.92.5

-2.00.3

55.029.018.116.35.02.7

-2.30.6

Internal Transaction - (4.4) (9.0) (11.7) (12.0)

Total 264.1 283.5 343.7 327.9 327.0

38.1%

61.9%

Sales Breakdown

MegastudySubsidiaries

Megastudy

www.megastudy.net

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2011 FY 2012 FY Growth

Sales OP OPM Sales OP OPM Sales OP

Consolidate 343.7 81.6 23.8% 327.9 58.2 17.8% -4.6% -28.6%

Megastudy 263.1 75.9 28.9% 226.7 50.5 22.3% -13.8% -33.4%

Hi(On)Mi(On)Hi(Off)

Other

122.3

56.5

81.2

3.1

54.5

14.3

6.4

0.7

44.6%

25.2%

7.9%

23.9%

86.2

46.4

90.7

3.4

33.6

8.8

6.8

1.3

39.0%

19.0%

7.5%

38.3%

-29.5%

-17.8%

11.7%

8.4%

-38.3%

-38.0%

5.4%

73.4%

Subsidiaries 89.6 6.0 6.7% 113.0 8.1 7.2% 26.2% 36.1%

MegaMD 33.3 5.7 17.0% 47.0 10.1 21.5% 40.9% 78.1%

IvyKimyoung 21.2 3.0 14.2% 29.4 -1.1 -3.6% 38.7% Deficit

MegaFood&Service 12.3 0.5 4.3% 16.3 1.6 9.6% 32.8% 200.6%

MegaBooks 12.0 -0.3 -2.2% 11.6 -1.0 -8.3% -3.2% Deficit

MegaUT 3.9 -2.1 -55.0% 3.9 -0.3 -7.6% 0.9% Deficit

HyungsulEdu 3.2 0 -0.6% 2.5 -0.1 -5.4% -20.0% Deficit

MegaNext 1.1 -0.6 -49.2% 　

IldeungLawschool 2.4 0.1 4.6% 2.0 -0.2 -8.4% -18.5% Deficit

SEGlobal 　 -0.0 　　

M.F.J.S.C(Vietnam1) 0.2 -0.4 -189.2% 0.3 -0.3 -77.0% 65.5% Deficit

Plus Edu(Vietnam2) 　 0.0 -0.0 -660.6% 　　

MegaInvestment 　 -0.7 　　　

Internal Transaction -9.0 -0.2 　 -11.7 -0.4 　　　

2012 FY PerformanceUnit : billion won

www.megastudy.net

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Guidance for 2013 consolidated performance

12FY 13FY(E) YOY

Sales OP OPM Sales OP OPM Sales(G) OP(G)

Consolidated 327.9 58.2 17.8% 327.0 56.5 17.3% -0.3% -3.0%

Megastudy 226.7 50.5 22.3% 210.0 41.5 19.8% -7.4% -17.9%

Hi(On)Mi(On)Hi(Off)Other

86.2 46.4 90.7

3.4

33.6 8.8 6.8 1.3

39.0%19.0%7.5%

38.3%

74.4 37.1 95.0

3.5

23.6 4.3

12.3 1.3

31.7%11.6%12.9%37.1%

-13.7%-20.1%

4.7%4.3%

-29.9%-51.3%81.7%

1.2%

Subsidiaries 113.0 8.1 7.2% 129.0 15.4 11.9% 14.2% 89.9%

MegaMD 47.0 10.1 21.5% 55.0 14.0 25.5% 17.1% 38.7%

IvyKimyoung 29.4 -1.1 -3.6% 29.0 1.8 6.2% -1.3% Surplus

MegaFood&Service 16.3 1.6 9.6% 18.1 1.3 7.2% 11.0% -17.2%

MegaBooks 11.6 -1.0 -8.3% 16.3 -0.6 -3.7% 40.4% Deficit

MegaUT 3.9 -0.3 -7.6% 5.0 0.2 4.0% 28.7% Surplus

HyungsulEdu 2.5 -0.1 -5.4% 2.7 0.0 0.0% 6.1% Surplus

ILDeung Lawschool 2.0 -0.2 -8.4% 2.3 0.0 0.0% 16.9% Surplus

M.F.J.S.C (Vietnam) 0.3 -0.3 -77.0% 0.6 -0.2 -33.3% 80.4% Deficit


Unit : billion won

www.megastudy.net

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12 3Q 13 3Q Growth


Consolidate 93.1 24.2 25.9% 90.3 21.2 23.5% -3.0% -12.3%

Megastudy 66.7 20.3 30.5% 59.6 16.0 26.9% -10.7% -21.1%

Hi(On) 24.8 11.1 44.8% 20.5 7.5 36.4% -17.4% -32.9%

Mi(On) 12.1 2.9 24.1% 8.3 1.0 12.6% -31.4% -64.3%

Hi(Off) 28.6 5.8 20.2% 30.5 7.3 23.8% 6.5% 26.1%

Other 1.1 0.5 44.3% 0.2 0.2 100.0% -77.8% -49.9%

Subsidiaries 29.6 4.0 13.4% 34.1 5.3 15.4% 15.2% 33.3%

MegaMD 10.8 2.3 21.7% 14.5 3.0 21.1% 33.9% 30.0%

IvyKimyoung 9.3 1.4 14.7% 7.7 1.4 18.0% -17.2% 1.8%


MegaBooks 2.4 0.0 1.2% 5.0 0.3 5.9% 109.4% 965.6%

MegaUT 1.2 0.0 3.0% 　　　　

HyungsulEdu 0.6 -0.0 -2.7% 0.2 -0.1 -53.7% -75.6% Deficit

IldeungLawschool 0.4 -0.1 -14.7% 0.9 0.3 30.3% 100.2% Surplus

SEGlobal 　　　 0.3 -0.4 -121.5% 　　


Plus Edu(Vietnam2) 　　　 0.0 -0.0 -107.4% 　　

MegaInvestment 　 -0.2 　 0.1 -0.1 　　


2013 3Q PerformanceUnit : billion won

www.megastudy.net

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12 3Q Acc. 13 3Q Acc. Growth


Consolidate 266.2 59.0 22.2% 258.2 54.2 21.0% -3.0% -8.2%

Megastudy 184.8 46.8 25.3% 167.6 39.8 23.7% -9.3% -15.0%

Hi(On) 68.2 27.6 40.4% 57.8 20.2 34.9% -15.3% -26.8%

Mi(On) 35.9 7.8 21.6% 26.7 3.1 11.6% -25.5% -60.1%

Hi(Off) 77.8 10.3 13.2% 82.3 15.9 19.3% 5.8% 54.5%

Other 2.8 1.2 42.0% 0.8 0.6 80.4% -72.5% -47.3%

Subsidiaries 91.1 12.5 13.7% 101.2 14.7 14.5% 11.0% 17.7%

MegaMD 40.3 12.5 31.1% 50.2 14.3 28.5% 24.4% 14.2%

IvyKimyoung 21.0 -1.1 -5.3% 16.9 -0.9 -5.2% -19.7% Deficit


MegaBooks 9.3 0.5 5.1% 12.7 0.6 5.0% 36.6% 33.3%

MegaUT 2.7 -0.3 -12.7% 1.3 -0.3 -22.5% -52.8% Deficit

HyungsulEdu 2.1 0.0 0.4% 1.3 -0.1 -8.1% -37.7% Deficit

IldeungLawschool 1.8 0.1 4.0% 2.4 0.6 24.0% 31.3% 688.7%

SEGlobal 　　　 0.6 -1.3 -227.9% 　　


Plus Edu(Vietnam2) 　　　 0.0 -0.0 -117.4% 　　

MegaInvestment 　 -0.4 　 0.1 -0.6 　　


2013 3Q Accumulated PerformanceUnit : billion won

www.megastudy.net

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Consolidated I/S & B/S Summary

Unit : billion won

3Q

12 3Q 13 3Q YOY

Sales 93.1 90.3 -3.0%

COGS 34.8 34.0 -2.2%

S&A expense 34.1 35.1 2.8%

Operating Profit 24.2 21.2 -12.3%

OPm (%) 25.9% 23.5% 　

Financial Income 2.3 1.8 -23.5%

Financial Exp. 0.0 0.1 　

G/L on Investment of Sub-sidiaries 0.3 -0.2 　

Other Operating Income 0.8 0.1 -87.8%

Other Operating Exp. 0.0 0.2 744.3%

Profit before tax 27.5 22.6 -17.8%

Income tax expense 6.3 5.0 -20.4%

Net Profit 21.2 17.6 -17.1%

NPm (%) 22.8% 19.5% 　

Profit, attributable to owners of parent 19.7 15.9 -18.9%

Margin (%) 21.1% 17.6% 　

Unit : billion won

12 FY 13 3Q

Total Assets 465.3 479.8

Current assets 209.9 196.4

Non-Current assets 255.4 283.4

Total Liabilities 95.1 81.2

Current Liabilities 82.1 69.2

Non-Current Liabilities 13.0 12.0

Total Shareholder's Equity 370.1 398.6

Paid-in capital 3.2 3.2

Capital Surplus 8.3 8.1

Capital Adjustment 0.4 -0.2

Retained Earnings 346.7 370.2

Non-Controlling S/H 11.5 17.3

Total Liabilities & Share-holder’s Equity 465.3 479.8

▪ Consolidated B/S▪ Consolidated I/S

investor relations 2013

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