Business Context and Reporting Period
Company: Woori Finance Holdings Co., Ltd. (Woori Financial Group)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Nine months ended September 30, 2005 (3Q 2005)
Business Overview: The registrant is a financial holding company established under the Financial Holding Company Act. Its primary business is the acquisition and ownership of shares in financial service companies and the governance of such subsidiaries. The group includes major subsidiaries such as Woori Bank, Kwangju Bank, Kyongnam Bank, Woori Investment & Securities, and Woori Asset Management. The company's main income source consists of dividends and equity method earnings from these subsidiaries.
Key Financial Metrics (Non-Consolidated)
| Metric | 9 Months Ended Sep 30, 2005 | 9 Months Ended Sep 30, 2004 | Year Ended Dec 31, 2004 |
|---|---|---|---|
| Operating Income | Won 1,637,665 million | Won 1,051,400 million | Won 1,922,849 million |
| Net Profit | Won 1,500,034 million | Won 440,157 million | Won 1,261,925 million |
| Net Profit (Consolidated) | Not provided for 9M 2005 | Not provided for 9M 2004 | Won 1,292,493 million |
| Total Assets | Won 11,592,897 million | Won 9,748,044 million | Won 9,748,044 million |
| Total Liabilities | Won 2,606,085 million | Won 2,299,992 million | Won 2,299,992 million |
| Shareholders' Equity | Won 8,986,812 million | Won 7,448,053 million | Won 7,448,053 million |
| Debt Ratio (Liabilities/Equity) | 29.0% | 30.9% | 30.9% |
| Won-denominated Current Ratio | 135.0% | 503.7% | 503.7% |
| Cash and Bank Deposits | Won 418,179 million | Won 56,099 million | Won 56,099 million |
| Earnings Per Share (Basic) | Won 1,866 | Won 565 | Won 1,616 (Full Year) |
Material Changes vs. Prior Period
- Significant Profit Growth: Net profit for the nine months ended September 30, 2005, increased to Won 1.5 trillion, a substantial rise from Won 440 billion in the same period of 2004. This is largely driven by gains on valuation using the equity method of accounting (Won 1.6 trillion).
- Corporate Restructuring:
- Merger: Woori Securities merged with LG Investment & Securities on March 31, 2005, forming Woori Investment & Securities. The company's ownership increased to 34.4%.
- Acquisition & Merger: The company acquired 90% of LG Investment Trust Management (May 2005) and merged it with Woori Investment Trust Management to form Woori Asset Management (May 2005), which became a wholly-owned subsidiary by September 2005.
- Dissolution: Woori Second Asset Securitization Specialty Co., Ltd. was dissolved in August 2005.
- Capital Structure: All outstanding convertible bonds were converted into common shares during the first nine months of 2005, increasing total capital to Won 4.03 trillion.
- Liquidity: Cash and bank deposits surged from Won 56 billion in 2004 to Won 418 billion in 3Q 2005, primarily due to proceeds from debentures and dividends received from subsidiaries.
Guidance, Outlook, Risks, and Contingencies
- Management Commentary: The company continues to focus on the integration of subsidiaries and the implementation of management improvement plans agreed upon with the Korea Deposit Insurance Corporation (KDIC). These plans involve selling non-performing loans, closing branches, and improving financial ratios.
- Risks and Contingencies:
- KDIC Agreements: The company and its three major bank subsidiaries are subject to management improvement agreements with the KDIC. Failure to meet targets could result in KDIC mandates to increase/decrease capital, pursue mergers, or close business units.
- Accounting Standards: The company adopted new Korean accounting standards (SKAS No. 16 and 17) in 2005 regarding income taxes and provisions, though the impact on net assets and income was deemed immaterial.
- Tax Loss Carry-forwards: The company has significant tax loss carry-forwards (Won 190 billion) expiring between 2006 and 2010. No deferred tax assets are recognized as the company anticipates no tax expense unless it liquidates or disposes of investment securities.
- Unusual Items: The financial statements reflect significant non-cash adjustments due to the equity method of accounting for subsidiaries. The 2004 comparative figures were restated due to changes in accounting standards regarding private beneficiary certificates.
Key Facts for Investor Verification
- Major Shareholder: The Korea Deposit Insurance Corporation (KDIC) holds 77.97% of the company's common stock (628,458,609 shares).
- Subsidiary Performance: Woori Bank contributed 83.7% of the company's net income via the equity method in the first nine months of 2005.
- Convertible Bonds: Verify that all foreign currency convertible bonds have been fully converted to equity as of the reporting date.
- Non-Performing Loans (NPLs): While the filing mentions NPL ratios as a performance target, specific consolidated NPL figures for the group are not detailed in this summary; investors should refer to the annual report for BIS capital ratios and NPL details of subsidiaries.
- Stock Options: The company has an active stock option program for directors and employees, with 1,197,000 shares exercisable as of September 30, 2005.