Investor Relations - hanatourcompany.comInvestor Relations 1 Investor Relations ... •5 days school-week - twice a month since 2006 ... Pro-Forma Income Statement (W bn) ...hanatour]ir... ·

Investor Relations

1

Investor Relations

Jun. 2009.(English)

www.hanatour.com

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Contents

Introduction

Market Environment

Competitiveness

Appendix

Strategy

http://www.art-com.co.kr/online/ppt_gallery_1.htm

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Introduction


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Market

share

Online

Business

No.1 market leader in Travel industry

The biggest wholesale travel company

working with 5,000 retailers.

Sales &

Revenue

Brand

Awareness

Hanatour Overview


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The biggest economies of scale in the market

Stable positioning in leisure and business market

(focusing on leisure market // secure biz portfolio for business market as well)

Providing premium products

Hanatour Position

High-end

Low-end

Business Leisure

LOTTE

TOUR

FREEDOM

SEJOONG

REDCAP

OnlineTour

HANATOUR

TOUR2000

OKTour

NEXTour

800

900

500

<reference>

•Vertical axis: price per customer

(unit: 1,000KRW)

•Horizontal axis: package sales portion

•Size of a circle : total revenue

•Colored: listed on KOSDAQ, KOSPI

•Source: KATA ,2008

50%

MODETOUR

0% 100%


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Relationship

Ads

Group >15Same Date

Same DateGroup >15

Proceed

Proceed

Proceed

5,000

Small

Retail Agencies

27

Big

Retail Agencies

•Consolidating

•Economy of Scale

3

Wholesalers

NO

NO

YES

YES

CUSTOMER

( X )

( Y )

< Reference >

♤ X market : Relatives, families, friends of the agents

♤ Y market : New market without any relationship

Retail Market

Hanatour Biz Model


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(2,024,563)

( 1,315,966 )

HANA 14.8%

MODE 7.2 %

ONLINE 5.0%

INTERPARK 3.2%

SEJOONG 3.1%

CLUB RICH 2.6%

BT & I 2.6%

LOTTE 2.5%

Yellow Balloon 2.4%

FREEDOM 2.3%

TOP10 M/S

TOP10 TTL 45.8%

TOP30 TTL 63.9%

M/S (out of TOP30) M/S (TTL DEP.)

Korean

Departures

Leisure

Traffic (E)

Top 30

package agency

(709,952)

[source : 2009. KNTO,KATA ]

[unit: person]

[Tour purpose assumed by Hanatour]

3 Wholesalers323,862 ( M/S 45.6%)

HANA 210,629 ( 29.7% )

MODE 96,452 ( 13.6% )

OKTOUR 16,781 ( 2.4% )

27 Big retailers386,090 ( M/S 54.3%)

LOTTE 37,656 ( 5.3% )

FREEDOM 39,882 ( 5.6% )

SEJOONG 21,785 ( 3.1% )

Mom & pop

5,000 Retail agencies

These leisure travelers

will

shift to wholesalers

HANATOUR MS (09 1q)


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HANATOUR MS (yearly)

2003 2004 2005 2006 2007 2008 2009 1q

Top 30 Players 100% 100% 100% 100% 100% 100% 100%

3 Wholesalers 34.1% 35.0% 38.3% 39.5% 44.3% 45.1% 45.6%

Hanatour 20.3% 21.9% 23.9% 25.0% 27.9% 27.1% 29.7%

Modetour 10.1% 10.4% 10.7% 11.4% 13.8% 13.7% 13.6%

OKtour 3.7% 2.7% 3.6% 3.1% 2.6% 4.2% 2.4%

27 BigRetailers 65.9% 65.0% 61.7% 60.5% 55.7% 54.9% 54.3%

Lottetour 9.5% 9.8% 9.3% 7.8% 7.1% 6.6% 5.3%

Freedom 10.2% 8.7% 7.6% 6.2% 5.7% 5.4% 5.6%

[Base: No. of Pax]


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HANATOUR Growth (yearly)

2003 2004 2005 2006 2007 2008 2009 1q

TTL Departures -0.5% 26.3% 15.0% 15.9% 15.2% -10.8% -36.4%

Tour Purpose -0.7% 36.9% 18.0% 20.0% (E) 19.0% (E) -9.4% (E) -58.6%(E)

Top 30 Players 9.8% 47.3% 30.0% 49.7% 27.6% -9.1% -30.5%

3 Wholesalers 8.4% 51.1% 42.3% 54.2% 43.3% -7.6% -39.0%

Hanatour 6.6% 58.8% 42.0% 56.1% 42.8% -11.8% -33.7%

Modetour 12.0% 52.0% 34.0% 59.3% 53.5% -9.6% -39.7%

OKtour 9.0% 5.8% 76.9% 26.4% 9.1% 47.7% -63.9%

27 BigRetailers 10.6% 45.4% 23.5% 46.9% 25.1% -10.3% -19.9%

Lottetour 3.1% 51.8% 24.5% 24.8% 17.1% -14.9% -51.5%

Freedom 14.6% 24.7% 14.5% 22.0% 17.3% -14.1% -41.9%

[Base: No. of Pax]


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MARGIN MODEL(2008)

Package sale(88.3%)

Sales(100) – Air fare & Land service fee(75)

= Sales revenue(25)

*agent commission(9)

Air-ticket sale(9.8%)

Sales(100) – Air fare(91)

= Sales revenue(9)

*agent commission(6)

Additional revenue(1.9%)

Earnings from domestic tour

Option tour

Shopping commission

PACKAGE

SALE

(88.3%)

AIR-TICKET

SALE (9.8%)

Additional

revenue(1.9%)


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Market Environment


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Insufficient

Domestic

attraction

OPPORTUNITIES

Growing

Market

Strong potentials to grow

► Young industry (overseas travel liberalization in 1989)

► Increasing household income- GNI per capita expecting to surpass $20,000 in 2007

- Japan met an overseas travel boom in 1987 surpassing $20,000 GNI per capita

► OPEN SKY (Increasing seat supplies)

2005 2006 2007 2008

Japan sufficient domestic attractions 13.6 13.7 13.5 12.5

Taiwan Insufficient domestic attractions 35.9 37.8 39.0 36.7

Korea Insufficient domestic attractions 19.5 22.0 25.4 22.6

The No. of Departure / Total population (%)

[Source: National statistical office]

► Expecting to increase overseas travelers in Korea like Taiwan


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Weekend

Market

• 5 days work-week - All companies must comply by July of 2008

• 5 days school-week - twice a month since 2006

► Expecting to increase the demand of short haul destination

Bipolar

phenomenon

• Big travel companies getting bigger

• Airliners prefer wholesalers for their cost saving

• Small agencies depend more on big travel company

Increasing

Online

sales

• online travel market growing<Online travel sales volume>

370 (‘02)- 524(‘03)- 751(‘04)- 1,604(‘05)- 2,018 (‘06)- 2,416 (‘07) bn\

• Big travel companies take advantage of high entry barrier

of online market

OPPORTUNITIES


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Competitiveness


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COMPETITIVENESS

Economy of

Scale

• Bargaining power (hard block & charter flight biz )

• Various product (by HTL Grade & Departure Date )

• Mass customization - PACKAGE (Golf, Honeymoon, Cruise etc)

- FREETIME PKG, DYNAMIC PKG

Service

Quality

High quality service

1 ranked in the KS - SQI 2007 (travel agency section ) , by Korea Standards Association (KSA)

Outsourcing partners → Hanatour Global networks (24 networks, 2009)

Brand

Awareness

• Hanatourist (70% share owned by 1,209 retailers and 30% by Hanatour)

• Hanatour brand sales agency (856 as of Dec 08)

• Brand Power award– by Korea Management Association (KMA)

„Korea-brand power index [K-BPI] in the year 2007‟ (travel agency section)


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Various

Distribution

Channel

<Off-line>

-Hanatour brand sales agency : franchisee (856 as of Dec 08)

-Hanatourist : B2C (70% share owned by 1,209 retailers and 30% by Hanatour)

-Partner agency : financial institution, online shopping mall, discount store, etc.

-Oktour : low-end pkg products (39% share by Hanatour)

<On-line>

-“www.hanatour.com” : B2B2C

-Webtour : online market place (B2C)

COMPETITIVENESS

Qualified

H / R

• The best & most human resources

• No labor union (staff committee)

• Advanced incentive scheme, stock option

► Offering 20~30% of Excess of Operating Profit Target

after they achieve 85% of the target.

► Target ( every year 30% GRTH )


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Strategy


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STRATEGY (Core Biz)

CORE

BIZ

( I )

[Strengthening Package tour]

Bargaining Power of Buyer

► Cost reduction

Strategy

- Expanding Market Share(40% by 2013)

- Enlarging Distribution Channel(strategic alliance, M&A)

Bargaining Power of Supplier

► High price policy

Strategy

- Strong Brand Power

- Various Product (Mass-customization)

- High Quality Service


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CORE

BIZ

( II )

[Penetrating FIT market]

Fortifying “FREETIME PACKAGE”

► using our scale benefit

► seats, hotels - group

Developing “MAIDAS” system

► Dynamic Package

► real-time booking system (hotel, air ticket, pass, restaurant, etc.)

Local Reservation Center

► using our global networks

► local travel info & reservation center overseas

STRATEGY (Core Biz)


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Global

Business

(I)

[Expanding Global networks]

• 50 Global Networks by 2010 (24 networks, 2009)

- Providing high quality service

- Launching outbound business

- Sourcing various products

• Integrating global management by GNIS system

* GNIS : Global Networks Integration System developed by Hanatour

●

2006

●

2010

STRATEGY (Global Biz)


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Global

Business

(ll)


[Global Inbound Business]

Sales between Networks

Sales between Networks

Korea

HanatourChina

HanatourJapan

Other GlobalNetworks

Economy of Scale

Economy of Scale

Bargaining power Bargaining powerSales between Networks

- Increasing our networks’ bargaining power with more volume- Expanding our networks’ business scale & realm


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Global

Business

(lll)


KoreaThe otherCountry

24 Global Networks

To Korea

To the other country

To the other country via Korea

[Global Outbound Business]

- Multilateral, intermediary business can be possible- Starting from Korean community with Hanatour Brand- Penetrating into local market ultimately

72,607 people („08)

used Global Networks‟ outbound products


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PAST PRESENT

OrdinaryAgency

MANAGER 1.0

HANATOUR

CUSTOMER

Travel Agency

OFFLINE OFFLINE ONLINE

HANATOUR

SpecializedAgency

AlliedPartner

OrdinaryAgency

MANAGER 3.0

CUSTOMERCUSTOMER

Travel Agency

HANATOUR.COMdot.comAgency

HANATOUR

Offline Service

STRATEGY (Online Biz)


www.hanatour.com

Selling travel products online

Joining 1183 online travel agencies(as of Jan 09)

Training Center for agents in 2010

(Standardizing service quality of online call center)

Reducing agent commission (9%⇒7%→5%)

Launching CRM system in 2007

B2B2C Business model —“www.HANATOUR.com”

Enhance

online

platform

Supporting agencies’ online biz for their cost-saving

Providing online system (incl. homepage master)

Enhancing loyalty by providing travel info. & ERP system

(5,000 agencies are using “Tour Manager”—as of JAN 08)

B2B Business model —“Tour Manager”

STRATEGY (Online Biz)

24


www.hanatour.comSTRATEGY (Online Biz)

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Provide customized marketing approach to meet customers‟ specific needs

Achieve greater loyalty from an increasing repeat customer base

Hanatour CRM

System

Retail network Online

Customers

customized

marketing

approach

proprietary

customer information

Online

Strategy

Online portion 14% (‘08) ▶▶ 20% (‟10) ▶ 30% (‟13)


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Value Management


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High profitability

High future value

Value Management

GreatestProfit

Sharing

35% Payout Ratio

Transparency


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Appendix


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Overview

Date of

establishmentNovember, 1993

CEO Sang Hwan, Park

Total number of

employees

1,448

(mar 2009)

Paid-in capitalW 5,8 bn

(mar 2009)

Outstanding

Shares

11,616,185

(mar 2009)

Networks

Domestic : 12

Overseas : 24

COMPANY PROFILE SHAREHOLDERS BREAKDOWN

Based on

Dec 31, 2008

22.18%Foreign Investor

18.97%CEO, Directors

27.34%free floats

15.03%Domestic

9.96%employees

6.52%Treasury stocks


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Business Performance

Description FY03 FY04 FY05 FY06 FY07 FY08 `09 1Q

Growth

Sales 58 80 111 166 199 173 31

Growth(%) 12 37 39 50 20 -13 -47

Profitability

Operating income 8.4 11.8 17.7 30.2 36.1 9.8 0.06

Ordinary Income 10.2 15.6 23.2 33.9 39.9 8.2 -1.3

Net income 7.0 10.6 16.6 23.3 26.9 5.0 -1.8

ROE(%) 39.7 44.1 47.3 34.6 28.0 5.3 -2.1

Stability

Current ratio(%) 153.4 150.0 104.5 150.2 151.7 142.3 144.0

Debt ratio(%) 0 0 0 0 0 0 0

(W bn, %)


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Pro-Forma Income Statement

(W bn)

Description FY04 FY05 FY06 FY07 FY08 `09 1Q

Gross sales

(Package) 364.0 515.2 802.9 1,133.4 1,022.2 162.2

(Air-ticket) 187.4 221.2 233.1 272.9 196.5 48.2

Gross Operating Revenue 79.8 111.0 166.3 199.3 172.8 30.6

Operating Expense 68.0 93.3 136.1 163.2 163.0 30.6

Net Operating Income 11.8 17.7 30.2 36.1 9.8 0.06

Non Operating Income 4.2 7.3 7.4 11.7 12.6 1.8

Non Operating Expense 0.4 1.9 3.7 7.9 14.2 3.2

Pre-tax Income 15.6 23.2 33.9 39.9 8.2 -1.3

Income Tax 5.0 3.3 10.6 13.0 3.1 0.56

Net Income 10.6 16.6 23.3 26.9 5.0 -1.8


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Pro-Forma Balance Statement

(W bn)


Current Assets 43.8 45.8 136.2 127.2 90.8 83.6

Other Assets 14.0 40.8 47.6 57.1 63.4 61.7

Total Assets 57.8 86.6 183.9 184.3 154.2 145.4

Current Liabilities 29.2 43.8 90.7 83.9 63.8 58.1

Other Liabilities 0.4 0.5 0.5 1.0 1.0 0.9

Total Liabilities 29.6 44.3 91.2 84.9 64.8 59.0

Capital Stock 5.2 5.2 5.8 5.8 5.8 5.8

Additional Paid-in and Other Capital 3.7 0.2 60.7 60.7 60.7 60.7

Retained Earnings 27.4 39.6 55.7 63.4 44.9 26.2

Capital adjustment -8.1 -2.7 -29.5 -30.4 -23.9 -8.6

Total Stockholder’s Equity 28.2 42.3 92.6 99.4 89.4 86.4

Total Liabilities & Stockholder’s Equity 57.8 86.6 183.9 184.3 154.2 145.4


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Pro-Forma Cash Flow


1. Cash Flows from operating

activities16.1 18.8 67.5 38.0 8.6 -3.0

2. Cash Flows from investing

activities- 10.5 -15.7 -26.0 -29.5 -6.3 4.1

3. Cash Flows from financing

activities- 3.2 1.1 18.7 -33.5 -30.7 0.2

4. Increase ( Decrease ) in cash

(1+2+3)2.4 4.2 60.1 -25.0 -28.4 1.2

5. Cash at the beginning of the

fiscal period5.3 7.7 11.9 72.0 47.1 18.7

6. Cash at the end of the fiscal

period7.7 11.9 72.0 47.1 18.7 19.9

(W bn)


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Growth

(%)


Growth

(%)

Gross Revenue 36.5 39.2 49.5 19.8 -13.3 -46.9

Recurring Profit 52.1 48.7 46.1 17.8 -79.5 -110.4

Net Profit 51.1 56.8 40.3 15.3 -81.3 -120.0

Ratio of Ordinary Income to

Sales19.6 21.0 20.4 20.0 4.7 -4.1

ROA 21.5 23.1 17.2 14.6 3.0 -1.3

ROE 44.1 47.3 34.6 28.0 5.3 -2.1

Investment EPS (Won) 1,092 1,632 2,160 2,352 445 -168

BPS(Won) 3,409 3,333 8,009 8,557 9,533 7,434

Pay-out Ratio (%) 33.3 36.9 35.3 38.9 166.7

Net-cash (W bn) 7.7 11.9 72.0 47.0 18.7 19.9


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Corporate NETWORK

* To differentiate & improve the quality of customer service by our tight network

* To exploit & promote Inbound business

* To provide a wide range of specialized

travel products

* To broaden distribution channel

24 Overseas Subsidiaries & Office 12 Subsidiaries


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Awards List

2005, Korea Investor Relations Association

“Korea IR Awards of the year 2005 – KOSDQ Category”'

June 2006, Money Today“The 2nd Investor Value Awards”

July2006, The Korea Economic Daily“ Hankyung Customer Awards 2006 - Travel Company Section

Nov. 2006, The Korea Economic Daily‟Hankyung IR Awards 2006”

Nov. 2006, Ministry of Commerce, Industry and Energy

“Korean Standard-Service Quality Index 1st award)

Nov. 2006, Korea Investor Relations Association“Korea IR Awards of the year 2006 –1st award of KOSDAQ Category”

March 2007, „The 41st tax payer‟s day‟ an outstanding tax paying

corporate award

March 2007, MK economy

CEO Sang-Hwan Park selected by „Korea 100 CEOs‟ June 2007, Awareed „The 3rd investor value awards‟

chosen by Money Today

Sep. 2007, Korean standards association , „Korea standard-service

quality index 1st rank‟ in the travel agency category

Jan.2007, Ministry of Culture and Tourism “The Biggest outbound travel company for 9 consecutive years”

June 2008, Awarded with “Company with Excellent Corporate

Structure‟ hosted by Corporate Structure Improvement Support Center

Sep. 2008, 1st ranked in tourism field in “Korea Standard-Service

Quality Index” by Korean standards association for 2 consecutive years

Mar. 2009, 1st Place for 5 consecutive years in tourism field in

“2009 Brand Power of Korean Industry ” selected by KMAC


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Awards List










corporate award


CEO Sang-Hwan Park selected by „Korea 100 CEOs‟ June 2007, Awareed „The 3rd investor value awards‟












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Awards List










corporate award


CEO Sang-Hwan Park selected by „Korea 100 CEOs‟

June 2007, Awareed „The 3rd investor value awards‟












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Awards List


“Korea IR Awards of the year 2005 – KOSDAQ Category”'

June 2006, Money Today “The 2nd Investor Value Awards”

July2006, The Korea Economic Daily“ Hankyung Customer Awards 2006 - Travel Company Category

Nov. 2006, The Korea Economic Daily ‟Hankyung IR Awards 2006”




June 2007, Awarded „The 3rd investor value awards‟









Apr. 2009, 1st Place for 5 consecutive years in tourism field in

“2009 Korean Brand Star ” selected by KMA Brand Stock


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THANK YOU


Investor Relations - hanatourcompany.comInvestor Relations 1 Investor Relations ... •5 days school-week - twice a month since 2006 ... Pro-Forma Income Statement (W bn) ...hanatour]ir... ·

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