2001. 9. 5

1,000... 4,000 (300)... (1,200) (300)... (1,200) (100)... (400) 300... 1,200 20... 80 (60)... (240) 260... 1,040 (78)... (312) 182... 728 (91)... (364) 91... 364 100... 400 200... 800 500... 2,000 1,000... 4,000 200... 800 2,000... 8,000 100... 400 300... 1,200 600... 2,400 600... 2,400 400... 1,600 + 2,000... 8,000

A B 6*EBIT( A) 600 7*EBIT( B) 700 (AEV) 1,300 100 200 10* 100 400 (AFV) 1,700 ( ) 500 1,200 300 4

EV EBIT/WACC 1 EV/EBIT = WACC ( ) 6.05% 5.0% 11.05% 9.05 5.91% 5.0% 10.91% 9.17 2.75% 5.0% 7.75% 12.90 17.03% 5.0% 22.03% 4.54 2.85% 5.0% 7.85% 12.74 3.58% 5.0% 8.58% 11.66 9.59% 5.0% 14.59% 6.85 3.30% 5.0% 8.30% 12.05 7.96% 5.0% 12.96% 7.72 2.88% 5.0% 7.88% 12.69 (OECD) 4.91% 5.0% 9.91% 10.09 1.34% 5.0% 6.34% 15.77 4.91% 5.0% 9.91% 10.09 4.86% 5.0% 9.86% 10.14 5.24% 5.0% 10.24% 9.77 4.98% 5.0% 9.98% 10.02

FCF 1 EV= EBIT 1 *(1-I) EV= 1-I EV/ EBIT 1 = K e

K e Company A EBIT 1,000 1,050 1,103 1,158 CAPEX 500 525 551 579 Cash flow 500 525 552 579 Company B EBIT 1,000 1,050 1,103 1,158 CAPEX 300 315 331 347 Cash flow 700 735 772 811

Company A EBIT 1,000 1,080 1,166 1,260 CAPEX 800 864 933 1,008 Cash flow 200 216 233 252 Company B EBIT 1,000 1,080 1,166 1,260 CAPEX 480 518 560 605 Cash flow 520 562 607 655 EV = EBIT * (1- ) WACC

( ) 30.8% 692 100 6.92 69.2 10.0 16.0% 840 100 8.40 84.0 10.0 30.0% 700 100 7.00 70.0 10.0 30.0% 700 100 7.00 70.0 10.0 28.0% 720 100 7.20 72.0 10.0 25.5% 745 100 7.45 74.5 10.0 32.0% 680 100 6.80 68.0 10.0 25.0% 750 100 7.50 75.0 10.0 38.9% 611 100 6.11 61.1 10.0 33.0% 670 100 6.70 67.0 10.0 (OECD) 40.0% 600 100 6.00 60.0 10.0 42.0% 580 100 5.80 58.0 10.0 30.0% 700 100 7.00 70.0 10.0 39.4% 606 100 6.06 60.6 10.0 40.3% 598 100 5.98 59.8 10.0 35.3% 647 100 6.47 64.7 10.0 FCF EV= 1 = EV/EBIT 1 = (1-t)*(1-I) EBIT 1 *(1-t)*(1-I)

11.00% 6.56 6.67 6.81 7.00 7.29 7.78 11.25% 6.36 6.44 6.53 6.67 6.86 7.18 11.50% 6.18 6.22 6.28 6.36 6.48 6.67 11.75% 6.00 6.02 6.05 6.09 6.14 6.22 WACC 12.00% 5.83 5.83 5.83 5.83 5.83 5.83 12.25% 5.68 5.66 5.63 5.60 5.56 5.49 12.50% 5.53 5.49 5.44 5.38 5.30 5.19 12.75% 5.38 5.33 5.27 5.19 5.07 4.91 13.00% 5.25 5.19 5.10 5.00 4.86 4.67

1,000 1,000 100 200 500 500 400 300 EBITDA 500 500 CAPEX( ) 200 200 OPFCF( ) 300 300 < > 1,000 1,000 1,000 1,000 100 200 500 400 400 400 EBITDA 500 600 CAPEX( ) 100 200 OPFCF( ) 400 400 < > 1,000 1,000 FCF= EBIT*(1-t)*(1-I) EV= EBIT*(1-t)*(1-I)

EV/EBIT = EBIT/EV = (1-t)*(1-I) (1-t)*(1-I) (EBIT+Dep)/EV=EBITDA/EV= (1-t)*(1-I) + Dep/EV EV/EBITDA= (1-t)*(1-I) 1 + Dep/EV

( ) 312,200 312,200 312,200 312,200 312,200 EBITDA 44,102 49,404 53,711 57,055 60,948-19,398-24,199-31,297-38,258-52,533 0 0 0 0 0 1) 8.00% Mid-year adj. 1.06 E-month Sep.01 D-factor 2) 0.9815 0.9088 0.8415 0.7791 0.7214 3) 65,489 2.5X 40,760 42,997 44,627 45,145 47,348 2.0X 33,827 35,806 37,388 38,025 40,306 3.5X 54,624 57,378 59,103 59,383 61,432 4.0X 61,557 64,568 66,341 66,503 68,474 4.5X 68,489 71,759 73,579 73,622 75,516 5.0X 75,421 78,949 80,818 80,742 82,558 5.5X 82,354 86,140 88,056 87,861 89,599

K e

1,000 1,060 1,124 1,191 1,262 1,338 300 318 337 357 379 401 103 109 116 123 130 138 391 421 446 473 501 531 794 848 899 953 1,010 1,071 206 218 231 245 260 276 41 44 46 49 52 55 165 175 185 196 208 221 49 52 56 59 62 66 115 122 130 137 146 154 54 57 60 64 68 72 62 66 69 74 78 83

( ) 800 848 899 953 1,010 1,071 1,135 1,000 1,060 1,124 1,191 1,262 1,338 1,419 1,800 1,908 2,022 2,144 2,272 2,409 2,553 ( ) 400 424 449 476 505 535 567 400 424 449 476 505 535 567 800 848 899 953 1,010 1,071 1,135 600 600 600 600 600 600 600 * 400 460 524 591 662 738 819 1,000 1,060 1,124 1,191 1,262 1,338 1,419 1,800 1,908 2,022 2,144 2,272 2,409 2,553 ( ) 1,400 1,484 1,573 1,667 1,767 1,874 1,986 ROE 11.20% 11.20% 11.20% 11.20% 11.20% 11.20% ROIC 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% NOPLAT 144 153 162 172 182 193 Ke 11.20% 46.43% Kd( ) 10.00% ( ) 53.57% Kd( ) 7.00% (NOPLAT ) 60.00% 71.43% 30.00% 28.57% ( ) 6.00% WACC 10.00% (NOPLAT) 6.00% 10.00% 10.00% (Valuation) PER 8.93 EV/EBIT 7.00 (2001) 122 EBIT(2001) 218 1,528.5 (Average) 436.7 ( ) 1,091.8 ( ) 1,091.8

1991 610.92 1,000 1,000 1,000 1,000 1992 431 2.7 73.6 21.4 11.0 62.6 36.2 678.44 11.1 1,736 1,110 1,362 1,111 1993 430 3.4 67.2 25.3 26.1 41.1 39.6 866.18 27.7 2,903 1,400 1,901 1,418 1994 442 4.6 52.2 26.1 30.5 21.6 38.0 1,027.37 18.6 4,417 1,827 2,624 1,682 1995 460 5.0 2.3 29.5-30.7 33.0-19.9 882.94-14.1 4,521 1,266 2,102 1,445 1996 466 4.2 13.0 28.5 11.5 1.5 4.1 651.22-26.2 5,109 1,412 2,187 1,066 1997 448 3.7-18.7 30.1-48.9 30.1-39.6 376.31-42.2 4,152 722 1,322 616 1998 407 2.0 89.8 29.8 17.5 72.3 33.3 562.46 49.5 7,882 849 1,761 921 1999 428 2.2 88.2 29.5 17.7 70.5 61.4 1,028.07 82.8 14,834 999 2,842 1,683 2000 430 1.7-12.9 24.8-32.3 19.4-29.3 504.62-50.9 12,924 676 2,010 826 CAGR 32.9 (4.3) 8.1 (2.1)

100 80 60 a 40 B A y=0.2316x+3.7924 R 2 =0.5917 20 b D -100-50 0 50 100 150 200 250 30 C -20

1 2,840 80.2 48.0 0.2 12.9 3,978.2 2 27,500 193.5 70.3 0.3 14.1 2,680.2 3 GDS 6,270 15.8-0.3 0.2 9.8 2,633.0 4 1,460 248.1 61.9 1.7 51.1 796.1 5 11,600 24.7-31.0 0.7 5.4 645.8 6 4,495 155.7 79.8 1.4 20.2 523.5 7 2,435-17.8 2.9 1.2 13.4 484.0 8 LG 4,450 148.2 90.1 0.9 4.5 430.7 9 62,900 50.7 14.5 1.3 11.7 416.3 10 25,500 44.4 27.8 1.6 18.5 414.0 11 14,550 45.2 28.3 2.0 25.7 376.0 12 22,900 7.6 4.5 1.4 10.9 365.5 13 LG 5,440 63.6 16.2 1.9 20.3 352.0 14 2,880 5.8 2.0 1.2 6.4 341.2 15 58,000-0.7-15.5 1.2 4.6 322.0 16 2,220 27.8-4.2 1.7 12.3 284.1 17 8,010 48.9 14.7 1.0-1.0 245.9 18 26,850 38.4 23.6 2.0 12.3 230.6 19 9,200 41.0 30.4 3.4 29.2 211.5 20 37,500 59.9 47.8 2.4 15.5 201.2 Average 64.0 25.6 1.4 14.9 796.6

FCF EV = = NOPLAT*(1-I) = = EBIT*(1-t)*(1-I) ROIC*IC*(1-I) ROIC*(1-g/ROIC) EV/IC = = ROIC-g K e

EV/IC A 1.6 8%/5% (ROIC-g)/()

EV FV + - MEV MFV ( ) + ( ) AEV + + + ( ) + + ( ) + (EV) EV - - (Credit) - + EBIT-1 EBIT-2 Adjusted EBIT + (EV) ( + + + + + (EV) EV ) - ( + + + + + + + ) (Credit) - EBITDA EBIT+ NOPLAT EBIT*(1- ) ROIC NOPLAT/ (IC) WACC Ke* /TIC + Kd* /TIC IC(Invested Capital) + + TIC TEBIT TPLAT ROTIC + IC+ + + (EV) TEBIT*(1- ) TPLAT/TIC

1 2,640 (9.0) 15.7 3.4 4.4 65.5 291.9 2 LG 11,600 9.5 22.0 59.5 2.1 14.5 277.1 3 13,650 10.5 17.6 104.0 2.4 18.4 258.1 4 SK 5,850 (4.4) 13.5 12.4 5.8 74.7 222.9 5 3,820 10.9 26.4 17.4 2.3 6.4 183.2 6 8,130 14.3 (2.1) 81.8 3.5 18.7 147.6 7 6,980 4.9 20.5 24.5 4.9 29.6 118.6 8 7,730 (3.4) 2.6 (13.2) 7.9 60.1 105.5 9 KEC 14,800 7.0 18.3 38.1 3.3 7.7 104.5 10 70,500 31.9 78.2 267.6 4.1 15.4 100.4 11 178,500 0.5 30.2 143.7 3.1 4.7 100.2 12 38,100 14.7 36.0 96.3 4.7 21.6 99.2 13 4,670 (9.4) 42.3 78.0 4.3 16.5 95.3 14 LG 9,400 17.4 59.5 91.4 3.4 6.1 94.1 15 LG 16,000 1.1 N/A N/A 7.9 53.7 89.9 16 LG 15,500 2.7 22.9 (17.9) 4.9 21.5 87.3 17 LG 3,020 (0.6) 32.9 18.6 8.6 59.0 85.4 18 4,880 (14.4) 29.3 17.6 5.0 20.4 82.2 19 1,410 (1.5) 3.6 42.3 3.8 7.4 78.0 20 9,600 12.3 37.4 57.2 10.7 71.7 71.1 Average 4.8 26.7 59.1 4.9 29.7 134.6