Investor Relations

Mar, 2014

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Disclaimer

This presentation is for the convenience of investors and future prospects of the company and has been prepared as an informative guide that might assist interested parties in gaining an insight into the financial status of the company. In this context, any opinions expressed within this document, regarding the company's potential future performance, should be viewed as being accurate at the time of preparation. However, cognizance should be taken of the fact that uncertainty may dictate that actual performance differs substantially from any views articulated herein.

Discla

imer

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Business Overview

Busin

ess P

ortfo

lio

Domestic Business

Mobile Payment

ARS Payment

Gift Cards

User Authentication Services

Global Business

U.S Mobile Payment

U.K Mobile Payment

China Mobile Payment

Taiwan Mobile Payment

International Payment Network

Barcode Payment

Direct Mobile Billing Coverage

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Changes in the Domestic Mobile Payment Market

Dom

estic B

usin

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Danal’s Transaction Amount Breakdown

• Danal has increased transaction amount every year since having first launched in 2000 • With Danal’s technological reliability and simplicity of use, Danal has expanded its services into the tangible goods market • Danal has/is expanding into the Smartphone, Tablet PC, Social Commerce, Smart TV and various other markets • Danal was achieved 1.625 Billion USD in Transaction amount for the year 2013

Summary

(Units : USD Million, 1USD=1100 KRW)

(Units : USD Million, 1USD=1100 KRW)

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Domestic Mobile Payment Market Share

Danal’s Monthly Transaction Amount Danal's Transaction Amount per transaction (ARPU)

Dom

estic B

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(Units : USD Million, 1USD=1100 KRW)

(Units : USD, 1USD=1100 KRW)

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Dom

estic B

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BarTong

□ Security/Reliability

- Financial and personal information are kept safe and unexposed, with an additional security measure to implement time-

limited, one-time use barcodes

- 3 Passwords required for setup/usage (Smartphone default screen lock, Application password, PIN number)

- Direct Store payment system, Partnered with a verified financial institution (KFTC)

□ Convenience

- Quick and easy setup (Requires user to register with a one-time PIN sent to the user’s handset)

- Provides coverage to 22 domestic banks, 17 financial firms, etc.

- Provides consumers with a eWallet service without having to carry cash

- Doesn’t require Merchants to install expensive equipment but still provides better alternative payment systems

□ Efficiency

- Established with all domestic financial institutes to allow maximum coverage

- Competitive transaction fees (1% initially, Credit cards: 2~3%), No additional fees

- Low tax deduction rates compared to other payment methods (Income tax rate 30%, Credit card rates 15%)

<Market Share by Payment Type>

* Domestic corporate communications services market and sector-specific market outlook (KRG, 2012)

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Dom

estic B

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bioMe

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1

2

3

Push notification

1. Customer enters phone number (Customer registration for bioMe required).

2. Click “Pay Now” and request for a push payment.

3. After confirming the payment details, click the “Pay” button.

4. Finalize the payment by scanning your fingerprint using the bioMe application.

[Fingerprint authentication]

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Dom

estic B

usin

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bioMe

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1. Start Application 2. Select Payment 3. Fingerprint Authentication 4. Payment Result

1

2

3

[Scan Fingerprint]

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*** Select “Payment method: bioME: after choosing goods at the Web, enter customer’s phone number and request payment.

1. The bioMe application will launch automatically through a push notification.

2. Confirm the payment details and select bioMe as the preferred payment method. Then Click “Pay”.

3. Authenticate the payment request by scanning your fingerprint.

4. After authentication, the payment process is completed.

Danal’s US Subsidiary (BilltoMobile)

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Top US Wireless Carrier Metrics Q2 2013

US Market Size

* US B2C Online Paid Content by FORRESTER

Danal’s US Subsidiary Structure

Carriers

Wholesale & Retail

Reseller

Merchant

(Unit: USD Billion)

Dec 2006

DANAL Inc

established

May 2009

Verizon launches

with BilltoMobile Oct 2010

AT&T launches

with BilltoMobile

Feb. 2011

Sprint launches with

BilltoMobile

Aug 2011

T-Mobile signs with

BilltoMobile

(Unit: Million)

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Expansion Strategy

Danal’s US Subsidiary Transaction Amount

(Unit : USD)

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(Unit : USD)

Prefer quick & easy:

• No registration

• No membership

• No username/

password

• No sharing sensitive

information

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Reseller & End Merchant Regular Merchant

International Payment Network

Nationality Operator Subscribers (in Million)

U.S Verizon Wireless 118.19

U.S AT&T Mobility 107.88

U.S Sprint Nextel 53.26

U.S T-Mobile USA 44.02

U.K Everything Everywhere 27.6

U.K O2 UK 22.2

Germany Telekom Deutschland 39.1

Germany O2 Germany 16.6

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Appendix

Appendix

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Appendix

Service Process

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Online Payment System Flow

Input mobile phone # and Social Security ID #

Send authentication code via SMS

Input code

Validate user credentials

Charge the amount to the user’s phone bill

Appendix

Service Process

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Step 1 : Input payment credentials Step 2 : Confirm payment Step 3 : Payment result

Social Security Number / Zip code

OTP Code

Appendix

Service Process

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$

$

$

$

$

$

$

Product

Consumer

Carrier

Danal

Merchant (CP)

Pay

Mobile Payment

Service

Charge

Collection

Settlement

Settlement

Delivery

Data Transaction

1

2

3

4

5

6

7

Pay

Mobile Payment

Service

Charge

Collection

Settlement

Settlement

Delivery

Data Transaction

1

2

5

6

7

3

4

Pay

Mobile Payment

Service

Charge

Collection

Settlement

Settlement

Delivery

Data Transaction

1

2

5

6

7

3

4

[Cash on Delivery] [Express Payment] [SPC Express Payment]

M-Pay (SPC)

Settlement 8

Fees

6~8% of transaction amount from Digital Contents

6~8% of transaction amount from Digital Contents

+ additional Cost (Interest + bad debt risk)

6~8% of transaction amount from Digital Contents

+ additional Cost (Interest + bad debt risk)

~3% of transaction amount from Tangible goods

~3% of transaction amount from Tangible goods

+ additional Cost (Interest + bad debt risk)

~3% of transaction amount from Tangible goods

+ additional Cost (Interest + bad debt risk)

Process Settlement from Danal to Merchant

after Settlement from Carrier to Danal

Settlement from Danal to Merchant before

Settlement from Carrier to Danal

Settlement from M-Pay (SPC) to Merchant before

Settlement from Carrier to Danal.

Bad debt risk Merchant bears all risks Danal bears partial or all risks. Danal bears partial or all risks.

Appendix

Settlement Process

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PayPal Here

•Card Reader + PayPal Here App

•Select product, swipe card and sign

•Card, Cash, Check, PayPal Payments

available

•2.7% Transaction fee / PayPal account

required

Square Card Reader

•Card Reader + Square Card Reader App

•Select amount, swipe card and sign.

Mobile receipt available.

•Credit card service only / Launched in 2010

•2.75% Transaction fee / Account required

•More than $4 Billion USD within an year

Square Register

•Card Reader + Square register App

•Selecting product, scanning your card

or pay through Pay with Square App

• Usage report, transaction history,

receipts all available

•POS System: Connected to iPad

Apple Passbook

•Movie ticket · Plane ticket · Coupon · Disco

unt cards

•Use of location services to provide

convenient purchases, usage of coupons

and the use of other electronic ticketing

systems

Pay with Square

•Mobile application with location services

•Link your account to Square Register

services

•Use a preregistered payment method

•Know which stores support Pay with

Square

Danal’s BarTong

•A barcode payment system linked

to your mobile account

•Scan barcode with POS scanner

•Launched in 2011, pay through your

mobile phone bill and other

methods

Appendix

Merchant Store’s Mobile Payment Systems

Merchant’s Store E-Payment

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Ownership Structure – Danal Co., Ltd Ownership Structure – Danal Inc.

Amount Issued Exercisable

Option Amount Option Price

Num. of Exercisable Option Stocks

Exercise Rights Period

3BW 15,000,000,000 KRW 8,250,000,000 KRW 6,602 KRW 1,249,627 2012.08.26 ~ 2015.07.26

[Other notes]

▷ Largest share holder & others Warrant : 3,750,000,000 KRW [528,008 shares (2.73%)]

Exercisable Option Stocks

* Based on 2013-7-11 information * Based on 2012-12-31 information

Appendix

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Appendix

Revenue (*2011FY-2013FY : K-IFRS)

Payment Revenue (*2011FY-2013FY : K-IFRS) Revenue & Profit (*2011FY-2013FY : K-IFRS)

* As of 2011-12-31, the content division has been spun-off * As of 2011-12-31, the content division has been spun-off

(Units : USD Million, 1USD=1100 KRW)

(Units : USD Million, 1USD=1100 KRW)

(Units : USD Million, 1USD=1100 KRW)

(Units : USD Million, 1USD=1100 KRW)

Profit (*2011FY-2013FY : K-IFRS)

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요약 재무제표(K-GAAP 기준) Financial Statement (K-IFRS Separate)

Separate Financial Statement 2011FY 2012FY 2013.3Q

Assets 83.395 91.757 110.200

Cash & Cashable Assets 22.378 28.715 38.102

Short-term Funds 11.879 16.596 16.957

Other Current Assets 49.137 46.446 55.141

Non-current Assets 49.670 56.803 61.053

Tangible Assets 1.737 0.719 0.576

Intangible Assets 8.491 6.554 6.222

Other Non-current Assets 39.442 49.530 54.255

Total Assets 133.065 148.560 171.253

Current Liabilities 42.136 67.285 66.166

Non-Current Liabilities 12.852 1.373 5.676

Total Liabilities 54.989 68.659 71.843

Capital 7.981 8.350 9.286

Paid-in Capital 41.893 48.883 66.513

Other Capital Components 4.935 3.742 2.149

Accumulated Earnings 23.267 18.926 21.463

Total Ownership Interest 78.076 79.901 99.411

Separate Income Statement 2011FY 2012FY 2013.3Q

Operating Revenue 83.181 77.204 70.076

Operating Costs 76.046 69.598 63.112

Operating Profit 7.134 7.605 6.965

Gain on sale of investments - (0.545) (2.147)

Investment Income 1.622 1.538 0.699

Investment Cost 2.375 - 0.406

Non-operating Revenue 2.857 2.389 1.555

Non-operating Costs 3.162 12.400 2.072

Income before Taxes 6.076 (2.734) 4.595

Income Tax Expense 0.788 1.491 1.717

Net Income 5.288 (4.225) 2.877

Earnings Per Share (1USD) 0.322 (0.245) 0.149

Appendix

(Units : USD Million, 1USD=1100 KRW)

(Units : USD Million, 1USD=1100 KRW)

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요약 재무제표(K-GAAP 기준) Financial Statement (K-IFRS Consolidated)

Consolidated Financial Statement 2011FY 2012FY 2013.3Q

Current Assets 140.979 183.473 205.435

Cash & Cashable Assets 24.829 31.246 39.863

Short-term Funds 11.879 17.065 16.957

Other Current Assets 104.271 135.162 148.615

Non-current Assets 62.180 54.191 62.802

Tangible Assets 2.505 1.796 0.950

Intangible Assets 39.841 33.845 30.311

Other Non-current Assets 19.834 18.550 31.541

Total Assets 203.159 237.664 268.237

Current Liabilities 119.679 169.596 177.450

Noncurrent Liabilities 19.279 6.853 16.258

Total Liabilities 138.958 176.449 193.708

Shared owned by Dominant Firm 65.536 62.814 79.145

Capital 7.981 8.350 9.286

Paid-in Capital 41.893 49.196 66.513

Other Capital Components 5.758 2.732 0.602

Accumulated Earnings 9.905 2.535 2.745

Non-Controlling Interests (1.336) (1.599) (4.616)

Total Shareholders' Equity 64.200 61.215 74.529

Consolidated Income Statement 2011FY 2012FY 2013.3Q

Operating Revenue 84.997 92.493 82.833

Operating Costs 86.757 94.375 79.452

Operating Profit (1.759) (1.881) 3.381

Gain on sale of investments 1.095 - 0.000

Gain on sale of investments (Subsidiary) - 1.303 2.821

Impairment of investments in associates - 1.127 0.000

Loss on valuation of equity method

investments 0.575 1.304 1.105

Investment Income 1.265 1.595 0.813

Investment Cost 5.889 6.025 4.358

Non-operating Income 1.562 1.148 0.459

Non-operating Costs 1.466 4.653 1.427

Income before Taxes (5.767) (10.944) 0.584

Income Tax Expense 0.057 (0.444) 1.814

Net Income (5.825) (10.500) (1.229)

Equity holders of the Parent Company

profit and loss (2.885) (7.398) 0.520

Non-controlling interest in income (2.939) (3.102) (1.750)

Earnings Per Share (1USD) (0.175) (0.428) 0.027

Appendix

(Units : USD Million, 1USD=1100 KRW)

(Units : USD Million, 1USD=1100 KRW)

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