Conversion to Meritz Financial Holding Company
Transcription
Conversion to Meritz Financial Holding Company
Conversion to Meritz Financial Holding Company June 2010 Agenda 1 I. Why do we need to convert Ⅱ. Conversion Method Ⅲ. Conversion Effect Ⅳ. Scheduled Date The need to create synergy to secure revenuerevenue-based business and maintain stable market position 2 under the current group business line group, up, the creation plan In order to overcome weaknesses of subsidiaries under Meritz gro raise e the necessary of recapitalization and synergy consolidation is in need to rais conditions Domestic NonNon-life insurance, securities, asset management positioning matrix 35.0% KB Asset Management Mirae asset Management Meritz F&M 25.0% Dongbu F&M Meritz Top 5 Avg LIG Hyundai Marine 15.0% Korea Daewoo Investment Samsung Securites Secuties ROE Comparison with other industries GAP Samsung F&M 5.0% Meritz Securities -0.1% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% -5.0% Meritz Top 5 Avg GAP Meritz Asset management -15.0% M/S (Source: Financial Statistic Information, FY09 3Q Public data) Meritz Top 5 Avg GAP NonNon-life Insurance Share’ Share’s M/S equity 8.2% 612.9 18.1% 1,822.2 Assets 5,800.8 13,999.6 -9.9% -1,209.3 Securities Share’ Share’s M/S equity 1.3% 529.5 7.8% 2,450.2 1,991.8 13,147.8 -6.4% -11,156.0 -1,920.6 Asset Management Share’ Share’s M/S equity 0.2% 7.8 8.6% 207.0 -8.3% -199.1 -8,198.8 Assets Assets 8.1 247.8 -239.7 (Source: Financial Statistic Information, FY09 3Q Public data, Unit-bn KRW) ※ Based on 12 non-life insurance (Including Kyobo direct) Need of diversification of financial business to provide comprehensive comprehensive financial service 3 Enhance customer’ customer’s loyalty through oneone-stop comprehensive financial service, and in order to secure new engines for sustainable growth of the group, diversification of financial business is needed. Function of financial service and business line Operating business Function of Financial service Financial Investment Non-life Payment Financial Derivative Deposit Credit Information Loan Trust Security Foreign Exchange Asset Management Operating Assets Insurance Research Asset Management bank Savings bank Life insurance Sales professional Credit information Loan NonNon-operating business Variable Insurance Consulting saless of financial products 4 Need of proactive measure for division of manufacturing and sale - In order to proactively respond to introduction of exclusive sales sales company for the sales of comprehensive financial products and development of IntegratedIntegrated-type channel, It needs to strengthen the competiveness of the group’ group’s sales company. - Financial holding company which can share customer DB will benefit benefit to take off the sales company. < Exclusive sales company of financial product will be introduced in in 2010> ☞ Sales of any kind of financial products are possible ☞ Maintain independent status segregated from manufacturer ☞ Provide comprehensive financial service through visiting solicitor (=financial product sales plaza) Purpose of new • Measure to segregation of manufacture and sales • Sales of any kind of financial products are possible • Comparison among financial products • Reformation of Financial consumer protection system bank card Individual customer NonNonlife loan Corporate customer Life insurance . . . Asset Financial ManageManageinvestment ment Sales subsidiary . . . VIP Limit of diversification of business line 5 There is limit to provide comprehensive financial service as the amounts of investment affordability under the current corporate governance are KRW110 bn ~ 160 bn. bn. Corporate governance and investment affordability Major shareholder 21.4% Meritz Fire 30.5% Securities 100% Investment 100% Financial Information serv • Investment affordability - KRW100 bn ~ 150 bn No affordability to invest • Total Investment affordability : KRW155.7 bn • Amount invested : KRW143.1 bn (invested to subsidiaries) • Remaining amount to invest : KRW 12.6 bn 100% Ritz Partners Need to establish the independent management system 6 As Meritz Fire govern the subsidiaries directly, there is a possibility possibility that the risks of subsidiary can spread into F&M’ F&M’s business. Therefore change of the structure of governance is in need for the independent management of subsidiaries. Structure of group governance Fire 30.5% Security 100% Investment 100% IT 100% Shin dong bang Ritz 51% Hanjin Korindo unlisted (Indonesia) unlisted (Hong kong) kong) 90% Hwagi invest 100% unlisted (China) Control Tower’ Tower’s management is in need to improve efficiency7 In order to improve group’ group’s efficiency, Control Tower’ Tower’s strategic role: role: restructuring, expansion of new business, the managing role: role: prevent risk, trimming down overlapping resources, the operating role: role: strengthening business through customers, channels, products is in need Control Tower Management role Strategic role Operating role F&M Securities Asset management Ritz Partners Financial Information Improvement of efficiency through focusing on core competence 8 oles to relevant subsidiaries Improvement of management efficiency by integrating the common rroles while each company focusing on core competence Core function Fire • business plan • HRㆍ HRㆍITㆍ ITㆍCS plan Securities • Marketingㆍ MarketingㆍSupporting • Investment/Loan Investment • Product • Risk management • Actuary Ritz Partners • Compliance • Audit IT Service • IR • Finance management Outsourcing • Accounting Common function • Advertising • System operation • IT maintenance • Purchasing • Rent • Call center • HR • Salary • Legal service • Accounting • Real estate • Recovery Holdings - Brand managing Shared Service Center - Call center Outsourcing company -Maintenance, Maintenance, Rent, Purchasing, Education Agenda 9 Ⅰ. Why do we need to convert Ⅱ. Conversion Method Ⅲ. Conversion Effect Ⅳ. Scheduled Date Meritz Financial Group as of March 31st 2010 (KRW :Bn :Bn) Bn) Meritz F&M Meritz Securities Meritz Asset Management 10 Meritz Financial Information Ritz Partners Asset 6,035.0 3,635.2 12.7 7.8 9.5 Liability 5,355.0 2,956.8 0.5 5.2 0.2 Capital 680.0 678.4 12.2 2.6 0.9 61.9 308.9 15.0 1.0 10.0 140.4 24.1 -1.0 0.3 -0.5 Capital Stocks Net Income * 종금증권: 종금증권: 종금, 종금, 증권 합산 수치 (e) Meritz Financial Company’ Company’s Share Structure (2010. 4. 1) Major Shareholder 21.4% Meritz F&M •Capital Stocks: KRW61.9 bn • Market Cap : KRW 953.3 bn •Treasury: 13.9% 30.71% Meritz Securities 100% Meritz Asset Management 100% Meritz Financial Information 100% Ritz Partners •Financial Co • Financial Co • Non-Financial Co •Financial Co • Capital : 308.9 •Capital: 15.0 • Capital: 1.0 • Capital : 10.0 • Market Cap : 307.3 * Meritz Securities stake : includes special account (767,430 shares, 0.2%) * Meritz F&M Treasury : Includes Treasury fund(1,110,550 shares, 0.9%) * Market Cap: Based on 2010.5.24 11 Meritz Financial Company’ Company’s Share Structure (2010. 4. 1)12 (Unit : Shares, %) Meritz F&M Shares Meritz Asset Management Meritz Securities % Shares % Shares Major Shareholder 26,500,725 21.4% 5,013,910 1.6% Meritz F&M - - 94,851,481 30.7% Related Companies 5,400,808 4.4% 17,955,144 5.8% ESOP 6,181,311 5.0% 14,135,077 4.6% 17,232,157 13.9% 3,952,101 1.3% Treasury 16,121,607 13.0% 3,952,101 1.3% Treasury Fund 1,110,550 0.9% - - Favorable Share 55,315,001 44.7% 135,907,713 44.0% Others 68,484,999 55.3% 172,959,664 56.0% Total 123,800,000 100% 308,867,377 500 - 1,000 Total Treasury Face Value (unit: won) Meritz Financial Information % Shares % Ritz Partners Shares % 3,000,000 100.0% 200,000 100.0% 2,000,000 100.0% 100% 3,000,000 100.0% 200,000 100.0% 2,000,000 100.0% - 5,000 - 5,000 - 5,000 - Transformation and Shareholder’ Shareholder’s structure 13 Splitting part of Meritz F&M subsidiary’ subsidiary’s stocks and Treasury, cash assets to establish Holding Company, and after IPO, Holding Company will buy Meritz F&M’ F&M’s shares through tender offer to meet non--listed 50%) shareholders requirements for holding companies (listed 30%, non 1st step : Meritz F&M Investment Division Split ※ Exception 51% Hanjin Korindo 30.5 % Securities 100% Asset Management 21.4% 2nd step : Tender offer for Meritz F&M Major Shareholder F&M 21.4% + Investment in kind’ kind’s exchange shares Major Shareholder 21.4% 100% 100% Financial Information Ritz Partners Holding Co 100% 34.4%+α 34.4%+α 30.5%+β 30.5%+β MBS ※ Treasury(13.0%), part of cash asset Division Holding Company ※ Spin offs : After the split, distributing holding company’ company’s shares proportionally to existing shareholders. After -ex) Existing 10 shares (1%), Supposedly using 7:3 split method, = Split to Meritz F&M 7(1%): Holding 3(1%) 100% F&M Securities 51% Hanjin Korindo Asset Management 100% Financial Information Investment in kind (Tender offer method) 100% Ritz Partners 100% MBS 100% Shin dong bang Ltd 90% Investment Advisory α : Participation of regular shareholder’ shareholder’s in tender offer β : Acquisition of Meritz Securities’ Securities’ transferred cash assets transferred Asset Changes 14 (Unit: KRW Bn) Bn) STEP 1 : Division (expected date: 2010.11.12) Meritz F&M New Corporate Existing Corporate Cash and Deposits Securities 181.2 3,203.8 Cash Securities Meritz Securities Loans 790.2 Meritz Asset Management Tangible Assets 724.7 Meritz Financial Information Other Assets Special Accounts Assets Total STEP 2 : Investment in Kind (expected date: 2011.5.18) 1,380.9 314.8 6,595.6 Ritz Partners MBS Meritz F&M (Existing Co) Intangible Assets 33.2 261.3 171.2 11.8 3.4 8.3 6 months of time 1.0 Required. 65.6 6.8 Financial Holdings Cash Securities Meritz Securities Meritz Asset Management Meritz Financial Information Ritz Partners MBS Meritz F&M (Existing Co) Tangible Assets Intangible Assets 30.8 409.7 178.1 11.5 4.4 7.8 1.0 206.9 0.1 6.2 301.3 Total Total Investment In Kind Meritz F&M’ F&M’s Shares 134.5 446.8 (*) Fluctuation in Subsidiary’s shares are due to Business Guidance’s change in 6 months After divisiondivision- Capital Adequacy & ROE 15 ■ Capital Adequacy - Splitting part of Equity shares of Meritz F&M (its Subsidiaries), Treasury, Cash assets to establish the holding company, Meritz F&M’s Asset and Capital will reduce, and therefore RBC and solvency ratio will drop down. However, RBC will surpass its target goal of 170% and maintain 200% within two years. Nov.2010 At Division Point March 2011 Before After K-GAAP K-IFRS March 2012 (K(K-IFRS) March 2013 (K(K-IFRS) Solvency Ratio 232.8% 155.2% 159.0% 148.5% - - RBC 264.8% 183.4% 184.0% 173.1% 183.5% 200.0% * From April 1st 2011, IFRS regulation will be applied: Then only the RBC is used ■ ROE - First year after the division, ROE will drop to a certain degree, but after two years Holding company will manifest higher ROE After Division (FY2010) FY2011 FY2012 Meritz F&M plan (FY2010) Meritz F&M Holding Co F&M+ Holding Co Meritz F&M Holding Co F&M+ Holding Co Meritz F&M Holding Co F&M+ Holding Co 22.5% 25.1% 4.7% 18.7% 33.4% 29.3% 32.0% 30.2% 23.5% 27.6% * Meritz F&M ROE : Adjusted ROE Dividends and BPS 16 ■ Dividends - Rise in dividends per share as a result of decrease in shares and increase in payout ratio (No dividends from Holding company at first year because of limited profit available for dividend) After (FY2010) FY2011 (Unit: KRW) FY2012 Meritz F&M (FY2010) F&M Holding Co F&M+ Holding F&M Holding Co F&M+ Holding F&M Holding Co F&M+ Holding 479.6 455.4 - 455.4 621.1 212.5 833.6 703.9 239.1 943.0 Dividends per share 450 550 0 550 750 400 1,100 850 450 1,300 Adjusted Dividends 450 385 0 385 525 120 645 595 135 730 Total Dividends (unit:KRW bn) * Meritz F&M payout ratio : 30.0% / Holding Co : 20% * Dividends : Meritz F&M: : 0.7 / Holding Co : 0.3 * Meritz F&M(FY2010) original dividends : 30% of payout ratio estimated to figures of FY2010 guidance ■ BPS - BPS will continue to rise. Stock Price moves proportionally with BPS, therefore there are enough capacity for F&M and Holding’s stock price to rise (Unit: KRW) Meritz F&M original plan (FY2010) 7,445 After (FY2010) FY2011 FY2012 Meritz F&M Holdings F&M + Holdings Meritz F&M Holdings F&M + Holdings Meritz F&M Holdings F&M + Holdings 8,270 7,408 7,989 10,402 9,225 9,918 12,703 11,015 12,009 [Reference] Meritz F&M Financial Statement (After) 17 ■ Estimated P/L (Unit : KRW Bn) FY2010 FY2011 FY2012 3,249.8 3,921.0 4,655.1 3,711.5 4,315.9 5,112.1 273.2 299.7 331.0 3,438.3 4,016.2 4,781.1 188.5 95.2 126.0 1,051.5 1,215.9 1,361.1 Refund of long-term insurance policies 755.9 914.1 1,125.5 Net operation Expenses Increase in premium reserve for longterm savings-type Net increase in policyholder’s dividend reserve Increase in catastrophe reserve 865.6 1,033.8 1,235.7 588.6 725.6 913.3 7.2 8.2 9.4 15.7 18.9 23.3 Underwriting Profit (34.7) 4.5 (13.2) Net investment income 237.2 261.7 312.4 Total operating profit 202.4 266.1 299.1 Net-operating income (4.0) (4.0) (4.0) 198.4 262.1 295.1 48.0 57.7 64.9 150.4 204.5 230.2 Earned Premium Premium Income Premium paid Net premium written Unearned premium carried forward Incurred loss Net income before income tax Income Tax Net profit [Appendix] Meritz F&M Financial Statement (After) 18 ■ Estimated B/S (Unit : KRW Bn) Operating Assets FY2010 FY2011 , FY2012 5,084.4 6,057.5 7,179.2 739.3 732.9 726.8 4,345.2 5324.5 6,452.4 1,467.9 1,744.0 2,009.8 Accrued bonds 183.5 183.5 183.5 Security deposit 102.4 107.2 112.3 1,043.6 1,281.5 1,575.4 138.4 171.8 138.6 364.8 354.8 364.8 6,917.1 8,166.2 9,553.8 5,505.8 6,415.5 7,552.4 Catastrophe Reserve 135.1 154.0 177.3 Other liabilities 356.9 518.0 576.5 363.5 363.5 363.5 6,361.2 7,451.0 8,669.7 42.7 42.7 42.7 Retained Earnings 406.3 565.7 734.5 Other Capital 106.8 106.8 106.8 555.9 715.2 884.1 Real estate Others NonNon-operating Assets Deferred Acquisition Cost Others Separate Account Assets Total Assets Policy Reserve Separate Account Liabilities Total Liabilities Capital stock Total shareholder’ shareholder’s equity [Appendix] Meritz Financial Holding Co Financial Statement ■ Estimated P/L (unit: KRW mn) 19 ■ Estimated B/S FY2010 FY2011 FY2012 (unit: KRW mn) FY2011 FY2012 3,196.9 1,000.0 1,000.0 27,675.3 58,235.6 67,870.1 4.6 5.5 6.4 623.3 487.3 351.3 31,500.2 59,728.5 69,227.9 Loan - 3,971.8 3,037.6 1,011.4 Corporate tax payable - 75.3 114.7 102.0 - Deferred tax liabilities 1,091.7 1,091.7 1,091.7 Total liability 1,091.7 5,138.8 4,244.0 - 109.8 193.8 Capital stocks 1,915.6 2,768.2 2,768.2 314.3 785.1 817.6 Capital surplus 30,875.8 43,346.4 43,346.4 Total operating Profit 1,371.5 10,933.3 12,680.5 Capital adj (5,064.1) (5,064.1) (5,064.1) Profit before tax 1,371.5 10,933.3 12,680.5 1,309.7 1,309.7 1,309.7 1,371.5 12,229.5 22,623.7 - 75.3 114.7 30,408.5 54,589.7 64,983.9 1,371.5 10,858.0 12,565.7 3.6% 9.4% 6.5% 64.4% 97.5% 98.0% Operating income 1,756.7 11,930.3 13,691.9 Equity-method income 1,617.6 11,268.6 12,955.0 272 42.0 20.0 Earnings in Brandusage 111.9 619.7 716.8 Operating expense 385.2 996.9 Equity-method loss 70.9 Interest income Interest expense Management cost Income tax (*) Net income (*) Tax may not occur as dividends income may not be included in taxable income Cash and deposit FY2010 Securities Tangible assets Intangible assets Total assets other comprehensive income accumulated Retained earnings Total shareholder’ shareholder’s equity Liability portion Holdings portion Other similar cases 20 6 other companies market cap increased using same conversion method method - Our method : Spin offs and both holding and - 6 companies : Hanjin Marine, Kolon, Young-won Trade, KISCO Holdings, Humax, KC Green Holdings ■ Changes in market cap after division Before Hanjin Marine 15,243 After 9,988 2,326.3 Hanjin Marine Holdings 200.0 218.5 247.8 1,778.0 1,966.9 2,574.1 16.6% 29.0% 68.9% 167.2 160.2 165.1 4.6% 0.2% 3.3% Kolon 172.7 193.8 187.0 Kolon Industry 771.0 720.9 911.5 Total 943.7 914.7 1,098.5 -5.5% -8.4% 10.0% 160.6 161.5 165.1 -4.7% -4.2% -2.0% G/R G/R KOSPI KOSPI 1,685.59 After 6 months 1,748.4 KOSPI Kolon After 1 month 1,578.0 G/R 1,599.52 After Hanjin Marine Total KOSPI (unit : bn, bn, p) G/R * Paid-in capital increase due from kind contribution is not reflected 21 ■ Changes in Market Capital after division (unit : bn, bn, p) Before Young won Trade KOSPI KISCO Holdings KOSPI 5,866 1,390.07 5,544 1,493.92 After After After 1 month After 6 months Young-won Trade Holdings 213.7 227.0 346.9 Young-won Trade 340.0 317.5 400.6 Total 553.7 544.5 747.7 G/R -5.6% -7.2% 27.4% KOSPI 153.5 159.2 160.2 G/R 10.4% 14.5% 15.3% KISCO Holdings 150.9 52.2 140.1 Korea Iron and stell 468.8 160.2 442.5 계 619.7 212.4 582.6 G/R 11.8% -61.7% 5.1% KOSPI 144.9 96.9 123.7 G/R -9.4% -39.4% -22.6% * Paid-in capital increase due from kind contribution is not reflected Agenda 22 Ⅰ. Why do we need to convert Ⅱ. Conversion Method Ⅲ. Conversion Effect Ⅳ. Scheduled Date Advantage in entering new biz in aspect of capital raising and investment affordability 23 Investment affordability of KRW350bn by reinstatement of Meritz Fire’ Fire’s investment affordability and raising capital of holding company. Advantage in aspect of capital raising in the case of entering into new business through joint venture. - opportunity costs : KRW8.45bn (capital raising by issuing subordinated subordinated bonds : KRW130bn ) Direct Investment and J. Venture Group investment affordability Holdings 150 130 Fire Securities Domestic Credit Domestic Credit J/V J/V 10 Before Annuity OnOn-line ins. Saving Bank Domestic Credit Fire 150 Securities KRW160bn 70 Holding s 219% Entering into New Biz KRW 350bn After ※ interest for issuing subordinated bonds : 6.5% - New biz J/V Opportunity to expand new biz according to the ease regulation for for Ins. Holdings24 24 As Ins. Holdings allowed to have nonnon-financial company , there are opportunities to enter into nonnonnon--financial company for providing customer financial business for new business or to establish non services in Group Insurance Holdings (O) (O) 30%(50%) Subsidiary Insurance Company (O) (O) 20%(40%) 30%(50%) Financial company (X) (O) Non financial company (O) (X) (O) 30%(50%) 30%(50%) 20%(40%) 20%(40%) Exc. Bank, ins. Financial C. savings, Investment N.Financial C. Financial C. N.Financial C. Financial C. N.Financial C. Granddaughter Incl. relevant com., securities Exc. Bank, other ins. Exc. approved company company with (X) by insurance Act. (O) (X) (X) (O) (O) (O) financing business (O) 100% Great Grand Financial C. N.Financial C. daughter Exc. Bank, other ins. 100% 100% 100% Financial C. N.Financial C. Financial C. N.Financial C. Exc. Bank, ins. savings, Investment com., securities ※ %-listed company, (%)(%)-unlisted company minimum requirement for retention shares Incl. relevant company with financing business 100% Financial C. N.Financial C. Incl. relevant company with financing business (particular rules for ins. Holdings’ Holdings’ dominance on subsidiary comapny (the regulation for Financial holding company §25)) Synergy effect - customer information share 25 Allowed to share customer information for the purpose of business business with holding company according to the law of financial holding company. Creation of various values values by combined customer information and strategic development on customer segmentation. Improvement of profit synergy through making use of the customer information among subsidiaries for various sales operation and enhancement of brand values by group group joint marketing (Unit : KRW bn) FY2010 FY2011 FY2012 Effect of Customer information share Assumption Fire - Customer DB : 81,000 persons (Customer DB of Securities) 0.2 0.3 0.3 0.8 • Sales ratio by TM with auto ins. DB: 2.79%(By Securities DB) • Package sales ratio with auto and long term : 7.8% • Ratio having over 2 insurance : 30.93% • Prem. per person : KRW1.1M, cross sales profit: 15.4% Securities - Customer DB : 2,675,920 persons (Fire Customer DB) 0.4 1 1.1 2.5 • Account open ratio : 1% (Bain&Company’s consulting :0.6%) • Profit per account KRW41,197, depositary asset KRW26.2M Fire Effect of joint Marketing Total Profit by cross sales Trust fees 1.5 0.5 4.2 1.5 5.0 1.7 10.7 3.7 • Securities having Holdings recorded 2.47% higher results than market in trust fees during FY01~FY04 • Weighted average ratio in contributed profit during FY04~FY08 : 78.7% • Securities having Holdings recorded 10.7% higher results than market during FY01~FY04 • Weighted average ratio in contributed profit during FY04~FY08 : 78.7% Securities Broking fees Total • Shinhan life recorded 9.1% higher growth rate than market average during FY04~FY08 after having holdings → applied 2% point increase given the branch nos. • Incremental profit ratio : 8% 0.5 1.8 2.3 4.6 3.1 8.8 10.4 22.3 Nb) cross sales profit = incremental u/w profit ratio 9.8%+ incremental investment profit ratio 5.6%(FY2009), incremental u/w profit ratio = 1-(incurred loss ratio 75.5%+ sales costs ratio 14.7%) Growth opportunity of integrated distribution channel 26 Synergy effect by the growth of integrated distribution channel and the influx of external customer will be improved dramatically according to C.D. Channel’ Channel’ frenetic pace of development I.D Channel’ Channel’s customer nos. by year Internal External Customer Customers FY2010 2,958 11,831 Synergy effect by the influx of external customer FY2011 Total Incr. Sales / Prem. / custome Account Deposito nos. r nos. ry assets 14,789 FY2011 8,366 33,465 56,620 FY2012 18,592 74,366 149,577 FY2013 26,338 105,352 281,268 FY2014 31,718 126,873 439,859 Fire FY2012 profit Prem. / Incr. Sales / customer Account Depositor nos. y assets nos. Profit note 1) 11,831 364 1.9 0.3 33,465 1,029 5.5 1.21 Securities 11,831 118 31 0.04 33,465 335 88 0.15 482 32.9 0.34 33,465 1,364 93.5 1.36 Total 11,831 Note 1) applied sales growth rate for new accounts in FY11 (Fire 25.1%, Securities 7.3% FY11→FY12 Sales growth rate) ※ the influx of external customer will be plus factor in Group joint marketing (internal : external=20%:80%) - Sales ratio by TM with Auto ins. DB : 2.79%, sales by on-line auto ins. - Package sales ratio with auto and long term : 7.8% - Ratio of having over 2 accounts among existing customers : 30.9% - premium per person : KRW71,000 (average premium per person) ※ Customer nos. by year mean new customer Management efficiency through focusing on core competence 27 Synergy effect by strategy share, redundant resource reduction and and enforcement of specialty through changing to the management by customer, products and divisions (horizontal (horizontal structure) from the management by subsidiaries (vertical structure) (Unit : KRW bn) Integrated purchase Cycle Large Repetition Group total FY2010 FY2011 FY2012 5.22 20.67 24.25 Savings - 0.41 0.49 Customer service 7.13 7.48 7.84 Education 4.17 4.44 4.66 HR 0.015 0.016 0.020 Sub-total 11.31 11.93 12.52 Savings - 0.24 0.25 Redundant - 10 person 12 person Savings - 0.75 0.95 - 1.4 1.69 Expendable/propertied Shared Service Resource relocation Size Total Savings ※ Integrated purchase and cost of labor: FY2010-0,FY2011~FY2012 – saving 2%, raise in wage 5.5% , minimal resource relocation Estimated Synergy for FY2010 ~ FY2012 28 Generating synergy by group joint marketing, increase of cross sales sales and customer information share after holding company. Particularly, Fire and Securities are expected expected to achieve synergy in profit and cost savings (Unit : KRW bn) Synergy Profit Aspect Customer information share 0.6 1.3 1.6 Total Synergy by company 3.5 Common (3.1,12.0%) Marketing Cost FY2010 FY2011 FY2012 (Unit : KRW bn) Resource redundancy 소 계 2.5 7.6 9.2 19.3 - 1.4 1.7 3.1 3.1 10.3 12.5 25.9 Fire (11.7, 45.2%) Securities (11.1, 42.8%) Comparison of group financial statement after holding company 29 Expected to achieve 42% growth in Asset and 75% in net profit within within 2 years after changing into holding company by strategic business plan Total asset (KRW Tn) Tn) C a pi t al FY2007 Capital (Unit : KRW bn) bn) Asset Liability Net worth Net income Profit Ratio Synergy Asset Ratio 6,884.8 6,015.8 869.0 95.5 - Net Income (Krw (Krw bn) bn) 42% 75% Liab. Liab. FY2008 7,801.4 6,976.4 825.0 44.4 - FY2009 (before) 10,427.8 9,301.6 1,126.2 186.9 - 주1) Estimated group business plan for FY2010 ~ FY2012 FY2010 FY2011 FY2012 13,562.0 12,222.6 1,339.5 206.6 3,1 1.5% 42.8 0.3% 17,096.2 15,239.6 1,856.6 305.5 10.2 3.3% 122.8 0.72% 19,318.3 16,997.0 2,321.3 361.9 12.4 3.4% 149.2 0.77% Against net income Against total asset Agenda 30 Ⅰ. Why do we need to convert Ⅱ. Conversion Method Ⅲ. Conversion Effect Ⅳ. Scheduled Date Schedule date Main Task 31 ※ Scheduled data can vary depending on application approval time Year/Month Year/Month 2010 1 2 3 4 5 6 7 2011 8 9 10 11 12 1 1. Preparation 1st Step May~Aug 2. Preparation for division 3. Board resolution of financial holding company 4. Financial holding’s preliminary application and approval (2010. 5. 19(Wed)) 5. Board resolution for division 2nd Step 6. Shareholders’ meeting for division Aug~Dec 7. Division 8. Apply and approval of financial holdings 3rd Step 9. Request re-listing of holding company and IPO 10. Preparatory procedures for kind contribution 4th Step Mar~June 11. Board resolution for tender offer and new shares issued 12. Proceed tender offer 13. Follow-up procedures after the completion of tender offer Establish Holding company 2 3 4 5 6