KOSDAQ : A Window into the Korean Capital Market 9th XBRL International Conference (Auckland, New Zealand) K O S D A Q S t o c k M a r k e t I n c. M A

KOSDAQ : A Window into the Korean Capital Market9th XBRL International Conference (Auckland, New Zealand)

K O S D A Q S t o c k M a r k e t I n c . M A Y 10 ~ 14. 2 0 0 4

A Window intothe KoreanCapital Market9th XBRL International Conference

K O S D A Q

I : About KOSDAQ01. KOREA & IT Industrial Development02. KOSDAQ is …03. Key Statistics

III : Star Index Project (Expansion Project)01. Introduction 02. Enhanced Features compared with the Pilot Project03. Approach04. Benefits

Ⅳ : Global Investor Relations Management Project 01. Introduction02. Approach03. Benefits04. Issues to be Considered

II : Review of XBRL Pilot Project01. Introduction02. Approach03. XBRL Pilot Service at KOSDAQ

Ⅴ : Next Steps01. KOSDAQ’s Efforts02. Next Steps03. Vision of KOSDAQ

Mission of KOSDAQ XBRL Project

Summary of KOSDAQ XBRL Project

01. KOREA & IT Industrial Development ( World Competitiveness)

I : About KOSDAQ

5th1st 2nd

TFT-LCD Internet User(2003)Mobile Phone User

(2003)

1st

Semiconductor

2nd12th 5th

Trade Scale(2003) Automobile Shipbuilding

12th

GDP(2002)

02. KOSDAQ is …

I : About KOSDAQ

BT3%

CT6%

IT42%

Finance3%

Others3%

Transportation1%

Logistics5%

Construction2%

Manufacturing35%

KOSDAQ has achieved unprecedented growth along with that of Korea's flourishing IT industry.

Entrepreneurial pioneers in the IT, BT, and CT industries are making their dreams come true through KOSDAQ and they form a vital resource for Korea's future economic growth.

02. Key Statistic - Among Asia New Markets

I : About KOSDAQ

JASDAQ(Japan)

Gre Tai(Taiwan)

KOSDAQ(Korea)

359

‘99‘97 ‘01 ‘02 ‘03

395

702

843874

(Unit: Co’s)(Unit: Co’s)

‘99‘97 ‘01 ‘02 ‘03

4

429

1,728

1,2051,078

(Unit: bil.KRW)(Unit: bil.KRW)

500

1000

1,078

#listed co’s Trading ValueDaily Avg. Trading Value

(DEC,2003)

03. Key Statistic - Global Status

I : About KOSDAQ

(US$ bil.)

* WFE Dec. 2003

Rank

No. of ListedCompanies

Rank

AccumulatedTrading Value

Rank

Market Cap.

1 Mumbai(5,644) 1 NYSE (9,692) 1 NYSE (11,328)

2 TSX Group(3,616) 2 Nasdaq (7,068) 2 Tokyo (2,953)

3 Nasdaq(3,294) 3 London (3,624) 3 Nasdaq (2,844)

4Spanish Exchange (BME)(3,223)

4 Tokyo (2,130) 4 London (2,425)

14 KOSDAQ(874) 13 KSE (459) 16 KSE (298)

17 KSE(684) 19KOSDAQ(223)

41 KOSDAQ(31)

Mission of KOSDAQ XBRL Project

Active support of companies seeking growth

(Increase brand value)

Protect investorsthru increased transparency (Build investor confidence)

Make effortsto set global standards for

a sound capital market(Enhance market integrity)

Mission of KOSDAQ

Phase1Phase1

PilotProject

Star IndexProject

Global IRManagement

Project

Phase2Phase2

Phase3Phase3

Project Evolution

01. Introduction - Project Goal

II : Review of XBRL Pilot Project

InvestorTrust

Investment

SimplerProcess

KOSDAQ-PwC

-UB Matrix

COMPANIES INVESTORS

StandardizedFinancial Statements

Faster Update of F/S & Enhanced Analytical Tools

- Approval from XBRL International- XBRL adoption among participating Korean Companies

Establish K-GAAP Taxonomy

- Provide standardized Financial Statements through XBRL - Empower investors by providing enhanced analytical tools

Increasing Market Transparency

- KOSDAQ is the first organization in Korea to deploy XBRLFrontier in XBRL Technology in Korea

Pilot Star IRM

02. Approach - Tasks & Steps

K-GAAP Taxonomy Definition/ Establishment based on Korean Companies Accounting Principles

In actual industry accounting practices over 2,500 accounts were used, FSS Element Extension

Naming and defining down to the level of Individual Company’s User defined Accounts (excluded in FSS Accounts Schema)

Phase 1. K-GAAP Taxonomy (Korean Standards)

Phase 2. Extended FSS Taxonomy (Commercial & Industrial)

Phase 3.Company Extension

* FSS : Financial Supervisory Service

*

II : Review of XBRL Pilot Project Pilot Star IRM

03. XBRL Pilot Service in KOSDAQ


FSS Taxonomy (2,541 detail

accounts)

GAAP Taxonomy (815 representative

accounts)

Mapping Table

Expansion

XBRL Instance Document

On-line Viewers(Web)

Off-line Viewers(Excel)

View/ Analyze

Converter

Auditor’s Reportin Annual Report

(SGML)

03. XBRL Pilot Service at KOSDAQ

II : Review of XBRL Pilot Project

KOSDAQ Web-based Financial Analytical Site

Excel-based Financial Analytical Tool

Pilot Star IRM

-Effects on Foreign Investor Market Cap. Movement

7 Jan 200426 Dec 2003

XBRL Service Advertisemen

t toForeign

Investors

XBRLServi

ceLaunc

h22 Apr 2004

03. XBRL Pilot Service at KOSDAQ


StarIndex

Selection

01. Introduction – Why Star index project?

III : Star Index Project

Success of XBRL Pilot Service & Recognition

of Value of XBRL

Increased Demandfor XBRL Services

by Listed companies

Maximizing Value of XBRL thru Selection of

High Quality Companies

STARINDEX

PROJECT

Improve &Expand Scopesof Pilot Project

Platform Leading into

Global IRProject

Increase Visibility of

BlueChip Index

ImproveCorporate Image

& BrandRecognition

Expansion ofInvestment

Pool

Pilot Star IRM

01. Introduction – Why Star index project?


Corporate governanceFinancial soundness

Earnings performance

“BLUECHIP” Index of KOSDAQ

NASDAQ Nasdaq100KOSDAQ Star30

Star Index – Companies chosen based on SUPERIOR earnings performance, financial soundness, corporate governance, liquidity and market cap.(37.5%)

BT3%

CT6%

IT42%

Manufacturing35%

Construction2% Logistics

5%

Others3%Finance

3%

Pilot Star IRM

02. Enhanced Features of Star Index Project


[ Phase1 ] Pilot Project [ Phase 2 ] Star Index Project

30 Star index Companies

Company Level Taxonomy

Additional Non-Financial Information

Taxonomy Versioning

15 sample companies

FSS Taxonomy

FSS Code

Financial Information only

KOSDAQ Code

(5)Advanced ApplicationPilot Application

(1)

(2)

(3)

(4)

(6)

Pilot Star IRM

02. Enhanced Features of Star Index Project


STAR Index ProjectPilot Project

GAAP Taxonomy

FSSTaxonomy

GAAP Taxonomy

B CompanyTaxonomy

A CompanyTaxonomy

C CompanyTaxonomy

A’s Auditor’s

Report

Element NameElement Name

KOSDAQ CodeFSS Code(SGML)

B’s Auditor’s

Report

C’s Auditor’s

Report

A’s Annual Report

B’s Annual Report

C’s Annual Report

Financial Information Financial + Non-Financial Information

Architecture Inheritance Data Flow

Pilot Star IRM


Pilot Project

Samil(PwC), UBmatrixContractor

Star Index Project

15 Companies 30 Star Index Companies

Samples

15 Weeks(28 Jul 03~10 Nov 03)

12 Weeks(29 Mar 04~17 Jun 04)

Duration

Universal StudioWeb AnalyzerOracle, JSP, Excel

UB AutomatorWeb AnalyzerOracle, JSP, Excel

Software

Deliverables Korean GAAPTaxonomyWeb/Excel Analyzer

K-GAAP + 30Companies TaxonomyWeb/Excel Analyzer

Pilot Star IRM

03. Approach – (1) 30 Star Index Companies

[ PHASE 1 ] [ PHASE 2 ]


1. Analysis of Financial Statements for 30 Listed Companies

2. Create Taxonomy Elements inherited from Korean GAAP Taxonomy

3. Mapping FSS Code-KOSDAQ Code to Elements

Taxonomy can be detailed into Each Individual Company Level Inherited from Korean GAAP Taxonomy Presentation and Calculation Separated

Pilot Star IRM

03. Approach – (2) Company Level Taxonomy

03. Approach – (3) KOSDAQ Code


Create KOSDAQ Code and Mapping in accordance with FSS Code Mapping Individual Company Level Taxonomy Elements

Financial Reports(FSS Code)

Converting FSS code to KOSDAQ code

• FSS code - 14 digits - approx. 3,000 accounts

• Limit of FSS code - meaningless user defined code(approx8%) - lack of F/S hierarchy

• F/S code + Hierarchy code + FSS code

- 21 digits

• Designed system environment to accept company level taxonomy - Meaningful user defined code

B/SK11

I/S K12Quick Assets 1010

Inventories 1020

F/SCode

(3digit)

HierarchyCode

(4digit)

FSSCode

(14digit)

Marketable Securities 11114000010000

Trade Receivables 11115000010000

Trade Receivables K11101011115000010000

Allowance for Doubtful Accounts for Trade Receivables K11101011115900020001

Pilot Star IRM

03. Approach – (4) Non-Financial Information


Label_Korean Label_English Name Parent Name Order

직원현황 Employee Information

EmployeeInformation

Key Performance Indicator of Annual Report

1

연구개발비용Research and Development Cost Information

ResearchandDevelopmen-tCostInformation

Key Performance Indicator of Annual Report

2

신용평가등급 Credit Evaluation Grade Information

CreditEvaluationGrade-information

Key Performance Indicator of

Annual Report

.

...

.

.4

Non-financial Indices from Annual Report is Taxonomy-Structured Key Indices from Annual Report

Research andDevelopmentCost Amount

Accounting policyfor Research and Development cost

Research and Development Cost per Sales

Pilot Star IRM

03. Approach – (5) Advanced Application


Taxonomy Building / Instance Creation

UBMatrix Automator

Taxonomy was made with excel & imported into Automator to generate XSD file.

Microsoft Excel

Pilot Star IRM



Develop Web AnalyzerEnhanced graphic display to compare annual information from multiple companies

Enhanced graph

Pilot Star IRM



Develop Excel AnalyzerVisual financial data. Simplified user interface for easier navigation.

Visualization of financial data

Pilot Star IRM

The Labels of elements in individual taxonomy could be changed in annual financial reports.

Taxonomy Version Management through differentiation of Label in Years.

The custom roles of label is defined for label versioning.

Instance document

KGAAP(XML Schema)

Individual taxonomy(XML Schema)

Label LinkbasePresentation LinkbaseCalculation LinkbaseReference LinkbaseDefinition Linkbase

Label LinkbasePresentation LinkbaseCalculation LinkbaseDefinition Linkbase

Standard label rolehttp://www.xbrl.org/2003/role/label

Custom label roleshttp://www.kosdaq.com/2004/role/label1999http://www.kosdaq.com/2004/role/label2000http://www.kosdaq.com/2004/role/label2001

…

Pilot Star IRMIII : Star Index Project

03. Approach – (6) Taxonomy Versioning

04. Benefits


Individual CompaniesCan Manage

Taxonomy Elements

Non-FinancialInformation

Can be Standardized

Structured Taxonomy Elements will be Mapped to Each Company’s Accounting System

XBRL formatted Financial Information will be Saved in Repository as Data Base

KOSDAQ Code acts as a Buffer Adjusting to Changes in Company’s New Transaction & Accounting Terms

Key Performance Indicators from Annual Reportwill be provided to Investors in XBRL

Platform Leading into Global IR Project & Expanding the number of Applied Companies

Linking Financial Statements to Non-Financial Info. will Enhance Corporate Performance Analysis

Pilot Star IRM

01. Introduction – Why Global IRM Projcet?

IV : Global IR Management Project

The traditional financial reporting model is no longer adequate– Declining relevance of historical data as an

indicator of future performance

– The market wants more information about non-financial factors

Under-value

True Value

FinancialInformation

AdditionalNon-FinancialInformation

XBRL PilotProject

Star IndexProject

Future Business Reporting Model

Global IRManagement

Project

01. Introduction – Why Global IRM Project?


To Provide “Value Embedded Corporate Management Contents" to the market more efficiently

2000 Time

Typical Financial Information

Reporting to Financial Supervisor

Analyst CorporateReports & Forecasts

“Information Gap”

NOWNOWNOWNOW

? Time

“Information Gap”

Added ValueReporting

After Global IRM ProjectAfter Global IRM ProjectAfter Global IRM ProjectAfter Global IRM Project

Typical Financial Information

Reporting to Financial Supervisor

Analyst CorporateReports & Forecasts

Information needs Information needs

Pilot Star GIRM

01. Introduction – Why Global IRM Project?


Question 1.

Do you believe your share price accurately reflects the true underlying value of your company? Over 80% companies believe they’re “undervalued”

Question 2.

Does the market fully reflect a company’s true valuation? What more could KOSDAQ do for the companies to be evaluated correctly in the market? - More IR & Promotion to domestic/overseas 81.4%

18.5%

63.0%

13.0%1.9% 3.7%

0.0%

20.0%

40.0%

60.0%

80.0%

StronglyDisagree

Tend toDisagree

Neither Tend toAgree

StronglyAgree

KOSDAQ CEO

Survey (’03.11.18)

Pilot Star GIRM

Correct Evaluation of companies with New Global IR Model

Correct Evaluation of companies with New Global IR Model

Integrity of Informationusing XBRL

Integrity of Informationusing XBRL

Do the Right Thing Do Things Right

Global IR Best practices

Establishing Benchmarks

Capital Market EfficiencyCapital Market Efficiency

01. Introduction – Project Goal

IV : Global IR Management Project Pilot Star GIRM

“Quality Market Place forShareholders & Venture Firms”

“Quality Market Place forShareholders & Venture Firms”

Analytical Review of Disclosure, Corporate Information

CEO, CFO Interview/Survey

Analytical Review of Disclosure, Corporate Information

CEO, CFO Interview/Survey

Industry KPI to meet Global IR StandardsIndustry Standardized Investor Briefing Model

Industry KPI to meet Global IR StandardsIndustry Standardized Investor Briefing Model

Web Design & Application supportProvide Information on the Web

Web Design & Application supportProvide Information on the Web

Review of Analyst, Fund Manager reportsCapital Market Stakeholders’ Interview/Survey

Review of Analyst, Fund Manager reportsCapital Market Stakeholders’ Interview/Survey

Industry Standardized IB & KPI TaxonomyReference check for KPI validation

Industry Standardized IB & KPI TaxonomyReference check for KPI validation

Analyze Current Status of Sample Companies

Review & VerifyMarket Information

Establishment ofStandardized IB Model

Industry StandardizedTaxonomy

Web Designing& Mapping

(5)

(1)

(2)

(3)

(4)

02. Approach

IV : Global IR Management Project Pilot Star GIRM

02. Approach – Project Diagram


View/Analyze

Taxonomy Builder

Build Data Elements

Taxonomy Builder

Build Data Elements

VR F/S

On-lineViewers(applet)

Off-lineViewers

(eNumerate, Excel, etc.)

ListedCompanies

ListedCompanies MarketMarket

Apply inDomestic/

Overseas IR &Fair

Disclosure

Apply inDomestic/

Overseas IR &Fair

Disclosure

Achieve Correct

Corporate Evaluation

&Efficient Capital Market

Achieve Correct

Corporate Evaluation

&Efficient Capital Market

Value Reporting Data

F/S, Disclosure Data

Marketing Data

Investor Briefing Standardized

Report

Pilot Star GIRM

03. Benefits


BENEFITSBENEFITS

More FinancialResources

More FinancialResources

Market ParticipantsMarket Participants GOALGOAL

Improved

Market

Quality & Integrity

Transparent Information Builds InvestorConfidence

Upgrades Service for

Star Index Companies

Attractive &Efficient

Capital market

Attractive &Efficient

Capital market

Your MarketOf Choice in N-E ASIA

Visibility(Greater Brand Value)

Visibility(Greater Brand Value)

Correct evaluationCorrect evaluation

Increase the MarketStability

Increase the MarketStability

New Biz ModelNew Biz Model

Promotion of IR ModelPromotion of IR Model

EnhancedApplication Tool

EnhancedApplication Tool

BetterInvestment Decisions

BetterInvestment Decisions

Pilot Star GIRM

03. Benefits


Kosdaq listed companies are IT start-ups Active co-operation is required for project success

Lack of IR capability in smaller listed companies The critical role that Non financial data plays in evaluating Corporate

value in certain industries (i.e. IT : speed to Market of new services)

Provide relevant material & information about KPI of each company

Detailed Feedback from each company to generate Industry KPI data by Kosdaq

Assume Intermediary role of Providing New Form of Data in XBRL format Between consulting firms & listed companies

Establish New Biz Model : Industry IR Tools (IB Template) Providing Financial Information services

Assume Intermediary role of Providing New Form of Data in XBRL format Between consulting firms & listed companies

Establish New Biz Model : Industry IR Tools (IB Template) Providing Financial Information services

Periodical updates of KPI of each company Utilize of KPI information in domestic/oversea IR

Increased reliability of the KPI information

KOSDAQ Stock Market

Listed Companies’Active Co-operation

During Project

After Project

Pilot Star GIRM

Application toStar Indexcompanies

XBRL

: Global Standard for Corporate Financial Reporting, “Container” of Corporate Disclosure Information,

eXtensible Business Reporting Language eXtensible Business Reporting Language

ContainerContainer

• Create Instance Document thru Corporate Regulatory Reports & Creation of Taxonomies

Key Performance Indicators

Key Performance Indicators

ContentsContents

• XBRL Application to Star Index• Financial Institutions’ Analysis

with KPI of Global IR Mgmt

Strategy

Global IR MgmtFramework

Managing for Value

Value Strategy

MarketOverview

Value Platform

DocumentDatabase

Enhanced Reporting

Analysis Service

Enhanced Reporting

Analysis Service

BusinessBusiness

• On-Line Analytical Processing & Marketing of Financial Institution’s Analysis

Taxonomy( e.g. <deposit>100</deposit>)

Financial Institutions KOSDAQReports

Web Server

Excel Server

Global IR Management Framework

: “Contents” to analyze Corporate Management Key Performance Indicators

KOSDAQ Stock Market

: Increased self-regulatory capability enhances Financial Information Supply Chain

Summary of KOSDAQ XBRL Project

0%0%

5% 5%

10%10%

15%15%

20%20%

‘00

‘00

‘01‘01 ‘02

‘02

‘03

‘03

Mar. ‘04Mar. ‘04

Global IR(NY, HK, London)

Asia New Market Forum(Seoul, Taipei)

MOU with Gretai Securities (Taipei)& Shenzhen Stock Exchange (China)

Pilot Project Launch

Star Index Project Launch

Global IR Mgmt Project Launch

XBRL Project

Star Index Launch

XBRL KOSDAQ Local Seminar

XBRL Education for Star Companies

Meeting with the Press for promotion of XBRL

01. KOSDQ`s Efforts

V : Next Steps

“Foreign investors presently hold

19.3%19.3% of

’s total market cap.”

7.0%

XBRL Int’l ApprovalXBRL Int’l Approvalon K-GAAP Taxonomyon K-GAAP Taxonomy

XBRL Int’l ApprovalXBRL Int’l Approvalon K-GAAP Taxonomyon K-GAAP Taxonomy

StrategicStrategicGlobalGlobal

AlliancesAlliances

StrategicStrategicGlobalGlobal

AlliancesAlliances

After Global IR After Global IR Management ProjectManagement Project

After Global IR After Global IR Management ProjectManagement Project

• Co-operate with FSS, *KSE for Korea Standardization in Working Group

• Announce K-GAAP Taxonomy as Standard Financial Reporting for Korean Companies with the aid of FSS, KSE & ** KASB

• Co-operation with FSS to improve e-disclosure infrastructure from existing SGML to XBRL & XML.

• Stock Exchanges adopting XBRL (Canada, New Zealand, Japan, China etc.) & Global Information Vendors (Bloomberg, Reuters etc.)

• Sharing Knowledge of XBRL Project know-how - XBRL Format Financial Information Exchange- English Disclosure Exchange

• Value Reporting Enhancement• ASP Service using XBRL• Expand participating companies by Market

Consolidation (2004)

02. Next Steps

V : Next Steps

•*KSE : Korea Stock Exchange ** KASB : Korea Accounting Standards Board

03. Vision of KOSDAQ

V : Next Steps

Providing Venture Capital

Providing various investment tools

COMPANIES INVESTORS

Restoring growth balance between SMEs & Con

glomerate

Restoring growth balance between SMEs & Con

glomerate

Facilitating growth in

Knowledge-based industries

Facilitating growth in

Knowledge-based industries

Enhancing competitiveness

of exchange industry

Enhancing competitiveness

of exchange industry

Building Public TrustBuilding Public Trust

through XBRL

Demo – XBRL Website Main

Demo – Single Company

Demo – Multi-Company

Demo – Excel Analyzer Main

Demo – Single Company

Demo – Excel Analyzer Main

Demo – Multi-Company

Thank you!Thank you!MINHEE SHINMINHEE SHIN

[email protected]@kosdaq.com

Documents

KOSDAQ : A Window into the Korean Capital Market 9th XBRL International Conference (Auckland, New Zealand) K O S D A Q S t o c k M a r k e t I n c. M A