Ex - 99.1
Annual Report
(For the period from January 1, 2006 through December 31, 2006)
To: The Financial Supervisory Commission of Korea
Pursuant to Article 186-2 of the Securities and Exchange Act of Korea, hanarotelecom incorporated (“the Company” or “hanarotelecom”) is submitting this report.
March 30, 2007
Representative Director & CEO : | Mr. Byung-Moo Park | |
Head Office : | Asia One Building, 17-7 Yeouido-dong, | |
Youngdeungpo-gu, Seoul, Korea 150-874 | ||
(Tel.) 82-2-6266-5500 | ||
Person in Charge : | Ms. Janice Lee, Chief Financial Officer | |
(Tel.) 82-2-6266-2300 |
![(HANAROTELECOM LOGO)](https://capedge.com/proxy/6-K/0001145549-07-000528/h01140h0114000.gif)
1
On March 30, 2007, hanarotelecom incorporated (“the Company” or “hanarotelecom”) filed an annual report (the “Report”) with the Financial Supervisory Commission of the Republic of Korea (“Korea”) pursuant to the Securities and Exchange Act of Korea. This is an English summary of the Report. Non-material or previously disclosed information may have been omitted or abridged.
The audited annual financial statements included in the Report were prepared in accordance with generally accepted accounting principles in Korea, or Korean GAAP, on a non-consolidated basis. The accounts of the financial statements or figures in the Report are expressed in Korean won (“KRW” or “Won”).
Cautionary Statement Concerning Forward-Looking Statements
The Report contains ‘‘forward-looking statements’’ that are based on the Company’s current expectations, assumptions, estimates and projections about the Company and its industry. The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves. The Company relies on this safe harbor in making forward-looking statements.
In many cases, but not all cases, forward-looking statements can be identified by the use of forward-looking terminology such as ‘‘anticipate,’’ ‘‘believe,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘project,’’ ‘‘should,’’ and similar expressions. Those statements include, among other things, a the discussions of the Company’s business strategies, expectations concerning its market position and growth opportunities, future operations, margins, profitability, liquidity and capital resources, as well as statements concerning expansion of its network coverage, increases in the number of subscribers to its services, the consummation and the regulatory environment in which the Company operates.
Forward-looking statements are subject to various risks and uncertainties. The Company cautions you that reliance on any forward-looking statement involves risks and uncertainties, and that although the Company believes that the assumptions on which its forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could be incorrect. Important factors that could cause actual results to differ materially from estimates or forecasts contained in forward-looking statements include, among others, the ability to implement the Company’s business and growth strategies, the ability to integrate businesses and products lines, that the Company recently acquired or intends to acquire, in a manner that achieves the expected results, requirements imposed by regulatory authorities, competitive factors in the Korean telecommunications industry, risks associated with debt service requirements, degree of financial leverage and other risks identified from time to time in the Company’s filings with the SEC.
In light of these and other uncertainties, you should not conclude that the Company will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. The Company does not intend to update these forward-looking statements. The Company is under no obligation, and disclaims any obligation, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
2
Table of Contents
I. | Company Information | |
II. | Business | |
III. | Financial Information | |
IV. | Opinion of Independent Auditors and Audit Committee | |
V. | Governance Structure and Status of Affiliates | |
VI. | Information Regarding Shareholders | |
VII. | Information on Directors, Officers & Employees | |
VIII. | Transactions with Related Parties | |
IX. | Attachments | |
X. | Other Matters |
List of Exhibits
3
I. | Company Information |
1. | Company Objectives |
A) | Scope of business |
– | Provide services related to the internet including broadband internet access services | ||
– | Provide local telephony, long distance telephony and international telephony services | ||
– | Lease telecommunications lines and facilities related thereto | ||
– | Establish, own and operate telecommunication networks | ||
– | Manufacture, sell and supply equipment and/or machines incidental or conducive to telecommunication business | ||
– | Research and develop technologies related to telecommunications | ||
– | Initiate the future communication industries, new media businesses including the broadcasting business and other broadcasting-related businesses | ||
– | Undertake any overseas activities, for any of the objectives set forth in the foregoing items | ||
– | Lease real estates, and facilities thereof | ||
– | Perform any activities/or business mandated by laws and regulations applicable to telecommunication activities | ||
– | Conduct any and all activities directly or indirectly related to or incidental to any of the foregoing objectives |
B) | Proposed future business |
l | TV-Portal business |
In order to grow into a comprehensive media company, hanarotelecom incorporated acquired 65% of shares (780,000 shares at KRW 5.5 billion) of CelrunTV, a provider of TV portal/IP TV service platform and IP STB technology, as of March 13, 2006. CelrunTV changed its corporate name to hanaromedia Inc. and became affiliated to hanarotelecom as of May 2, 2006. hanarotelecom further acquired newly issued shares of hanaromedia totaling KRW 13 billion, KRW 6.5 billion each on March 31 and June 30, 2006. An aggregate amount of KRW 18.5 billion has been invested in acquiring hanaromedia’s shares in 2006. | |||
In addition, to strengthen its convergence services including TV-Portal, hanarotelecom newly established the Convergence Headquarters in April 2006 (the Convergence Headquarters was reorganized into the hanaTV Business Division in January 2007). The Company expects to offer various value-added services over its own network and improve subscriber retention. The commercial hanaTV service was launched on July 24, 2006 and acquired about 310,000 subscribers as of the end of February 2007. | |||
– | Expected revenue and subscriber target of TV-Portal service |
Year | Expected revenue (KRW billion) | Subscriber target (1,000 subscribers) | ||||||
2007 | 70 ~ 80 | 1,000 | ||||||
2008 | 200 | 1,500 |
* | Figures for 2008 are estimated on the assumption that regulations on the IP-TV business will be eased and that a full-fledged IP-TV service will be provided. |
– | Basis for the estimates of expected revenue and subscribers |
4
Expected revenue of TV-Portal service was calculated based on expected monthly fees and the subscriber target that hanarotelecom will likely achieve if the Company undertakes marketing activities mainly targeting its broadband subscribers. The revenue may change depending on the actual number of TV-Portal subscribers. |
2. | History of the Company |
A) | Major changes since its inception |
– | Date of establishment: September 26, 1997 | ||
– | Address of head office: 17-7 Yeouido-dong, Youngdeungpo-gu, Seoul, Korea, 150-874 | ||
l | Changes in the largest shareholder |
Date | Largest shareholder | Remark | ||
Dec. 9, 1999 | Samsung Electronics Co., Ltd. and its affiliated company | Became the largest shareholder after Dacom Corporation, the former largest shareholder, sold part of its stake in the Company | ||
Jan. 3, 2000 | Dacom Corporation and its affiliated companies (LG Group) | Became the largest shareholder after Dacom Corporation was designated as a member company of the LG Group | ||
Nov. 18, 2003 | AIF II NT, Ltd. and SSB-AOF NT, Ltd. | Became the largest shareholder after acquiring 39.6% of the stake |
l | Other major changes |
Date | Changes | |
Oct. 1, 1998 | Launched high speed Internet access services through CATV | |
Apr. 1, 1999 | Launched local telephony services and high-speed Internet access services in four major cities | |
Mar. 29, 2000 | Listed 24 million ADRs on NASDAQ | |
Jul. 1, 2004 | Launched commercial long distance/international telephony services | |
Jan. 1, 2006 | Merged with Korea Thrunet Co., Ltd. | |
Mar. 24, 2006 | Mr. Byung-moo Park was newly appointed as Representative Director | |
May 3, 2006 | Completed a reverse stock split (2:1) without payment to shareholders (paid-in capital after capital reduction: KRW 1,158.4 billion) | |
Jul. 24, 2006 | Launched the commercial hanaTV service |
B) | M&A, transfer of business |
l | M&A |
Date | Company | Description | Acquisition Amount | |||
Jan. 1, 2006 | Korea Thrunet Co., Ltd. | Merger with Korea Thrunet Co., Ltd. (1,217,832 shares were issued as part of the merger.) | KRW 471.4 billion |
5
l | Transfer of business |
Date | Company | Description | Amount | |||
Feb. 28, 2002 | DreamX.net Co. (HanaroDream Inc.) | Transfer of Hananet business (portal, e-commerce, cyber education, etc.) to DreamX.net | Decrease in assets (KRW 320 million), revenues (KRW 27.8 billion) and costs (KRW 49.9 billion) | |||
Apr. 1, 2004 | GS Digital Broadcasting Co., Ltd. | Acquisition of broadband Internet business | KRW 4.2 billion | |||
Jun. 1, 2004 | Damul Telecom Co., Ltd. | Acquisition of broadband Internet business and outsourcing of customer services | ||||
Jul. 1, 2004 | Joongang Cable TV | Acquisition of broadband Internet business | KRW 893 million | |||
Jul. 1, 2004 | Kyungsan Cable TV | Acquisition of broadband Internet business | KRW 972 million | |||
Jul. 1, 2004 | Youngcheon Cable TV | Acquisition of broadband Internet business | KRW 231 million | |||
Dec. 1, 2004 | DBS Daekyung Broadcasting Co., Ltd. | Acquisition of broadband Internet business | KRW 1.61 billion | |||
Feb. 1, 2005 | CM TEL Co., Ltd. | Acquisition of broadband Internet business | KRW 900 million | |||
May 1, 2005 | Damyang Cable TV | Acquisition of broadband Internet business | KRW 120 million | |||
Jul. 1, 2005 | Pohang Broadcasting | Acquisition of broadband Internet business | KRW 2.4 billion | |||
Sep. 1, 2005 | Dreamline Corp. | Acquisition of broadband Internet business | KRW 2.78 billion | |||
Nov. 1, 2005 | Chungcheong Media Telecom | Acquisition of broadband Internet business | KRW 654 million | |||
Nov. 1, 2005 | Tongyoung Cable TV | Acquisition of broadband Internet business | KRW 317 million | |||
Jul. 1, 2006 | Gochang Cable TV | Acquisition of broadband Internet business | KRW 280 million | |||
Jul. 1, 2006 | Buan Cable TV | Acquisition of broadband Internet business | KRW 200 million | |||
Jun. 1, 2006 | Keumsa Cable TV | Acquisition of broadband Internet business | KRW 250 million | |||
Jul. 1, 2006 | Wasoo Cable TV | Acquisition of broadband Internet business | KRW 60 million | |||
Jul. 1, 2006 | Sangmoo Internet | Acquisition of broadband Internet business | KRW 60 million | |||
Aug. 1, 2006 | OK-NET Co., Ltd. | Acquisition of broadband Internet business | KRW 12 million | |||
Oct.1, 2006 | Techro Billtec Co., Ltd. | Acquisition of broadband Internet business | KRW 540 million |
6
Date | Company | Description | Amount | |||
Jul. 1, 2006 | Pohang Broadcasting | Acquisition of broadband Internet business | KRW 580 million | |||
Aug. 1, 2006 | Hangaram Networks Co., Ltd. | Acquisition of broadband Internet business | KRW 560 million | |||
Aug. 1, 2006 | Tera Power Co., Ltd. | Acquisition of broadband Internet business | KRW 450 million | |||
Sep. 1, 2006 | Youngnam Network Co., Ltd. | Acquisition of broadband Internet business | KRW 340 million | |||
Aug. 1, 2006 | Chungcheong Cable Netcom Co., Ltd. | Acquisition of broadband Internet business | KRW 206 million | |||
Aug. 1, 2006 | Chungcheong Hananet Co., Ltd. | Acquisition of broadband Internet business | KRW 124 million | |||
Sep. 1, 2006 | HINET Co., Ltd. | Acquisition of broadband Internet business | KRW 100 million | |||
Oct. 1, 2006 | Techro Villiage Co., Ltd. | Acquisition of broadband Internet business | KRW 440 million | |||
Oct. 1, 2006 | Daelim I&S Co., Ltd. | Acquisition of broadband Internet business | KRW 9.55 billion | |||
Dec. 1, 2006 | Youji Telecom, etc. | Acquisition of broadband Internet business | KRW 4.15 billion | |||
– | Onse Telecom Co., Ltd. | Submitted an application on Feb. 12, 2007 for the approval to acquire broadband Internet business under the Telecommunications Business Act | — |
Note) The transfers of businesses stated above have not been subjected to the resolution of the general shareholders meeting as they are not the transfer of the entire business or part of an material business. |
C) | Major events |
Date | Changes | |
Jan. 1, 2006 | Completed merger with Thrunet | |
May 3, 2006 | Completed a reverse stock split (2:1) without payment to shareholders |
D) | hanarotelecom business group | ||
As of the end of December 2006, companies included in hanarotelecom business group are as follows; |
1. | hanarotelecom incorporated (Listed) | ||
2. | Hanaro Realty Development & Management Co., Ltd. (Not listed) | ||
3. | HanaroDream, Inc. (Not listed) | ||
4. | hanaromedia, Inc. (Not listed) | ||
5. | Hanaro Seoul Customer Service Inc. (Not listed) | ||
6. | Hanaro Metro Customer Service Inc. (Not listed) | ||
7. | Hanaro Gwangju Customer Service Inc. (Not listed) | ||
8. | Hanaro Pusan Customer Service Inc. (Not listed) | ||
9. | Hanaro TeleSales Inc. (Not listed) | ||
10. | Hanaro CS Inc. (Not listed) |
7
3. Changes in Paid-in Capital
A) Capital increase in the last 3 years
(Unit: KRW, share)
Offering price per | ||||||||
Date | Type | Number | Par value per share | share | ||||
Mar. 22, 2002 | Exercise of warrants | 4,226,094 | 5,000 | 5,000 | ||||
Mar. 27, 2002 | Exercise of warrants | 2,718,540 | 5,000 | 5,000 | ||||
Mar. 28, 2002 | Exercise of warrants | 3,286,962 | 5,000 | 5,000 | ||||
Mar. 29, 2002 | Exercise of warrants | 2,100,690 | 5,000 | 5,000 | ||||
Nov. 18, 2003 | Right issue | 182,812,500 | 5,000 | 3,200 | ||||
Jan. 9, 2006 | — | 1,217,832 | 5,000 | 3,826 | ||||
Sep. 6, 2006 | Exercise of warrants | 502,399 | 5,000 | 5,917 | ||||
Sep. 15, 2006 | Exercise of warrants | 66,986 | 5,000 | 5,917 | ||||
Jan. 3, 2007 | Exercise of warrants | 229,987 | 5,000 | 5,917 | ||||
Jan. 8, 2007 | Exercise of warrants | 260,131 | 5,000 | 5,917 | ||||
Jan. 16, 2007 | Exercise of warrants | 451,042 | 5,000 | 5,917 | ||||
Jan. 18, 2007 | Exercise of warrants | 286,926 | 5,000 | 5,917 | ||||
Jan. 19, 2007 | Exercise of warrants | 1,535,110 | 5,000 | 5,917 |
Note) 1,217,832 shares were issued with regard to the merger with Thrunet on January 9, 2006.
B) Bonds with warrants (As of March 30, 2007)
(Unit: million KRW, share)
Issue date | February 26, 2002 | |
Expiration date | February 26, 2007 | |
Total face value | KRW 132,120 million (USD 100 million) | |
Exercise period | May 26, 2002 ~ Jan. 26, 2007 | |
Exercise price | KRW 5,917 | |
Number of shares issued upon exercise | 3,332,581 | |
Number of shares to be issued upon exercise | — | |
Remark | After capital reduction, the exercise price and the number of shares to be issued were adjusted to KRW 10,000 per share and 1,981,800 shares, and readjusted to KRW 5,917 per share and 3,349,332 shares through refixing. |
Note 1) The bonds were fully repaid on September 2, 2003, with the remaining warrants to subscribe for 3,349,332 common shares of the Company. The exercise price was adjusted from KRW 5,000 per share to KRW 10,000 per share on May 3, 2006, and adjusted again to KRW 5,917 per share through refixing on May 26, 2006, in accordance with the Subscription Agreement.
Note 2) The number of exercisable shares was 2,779,945 as of the end of December 2006 and 16,746 as of January 26, 2006. Due to the expiration of the exercise period, there are no exercisable shares as of the end of January 2007.
8
4. Number of Shares Issued (As of March 30, 2007)
A) Total number of shares issued
(Unit: share)
Authorized shares | Shares issued | Treasury stock | Shares trading | Par value | ||||||||||||
700,000,000 | 235,009,087 | — | 235,009,087 | KRW 5,000 |
Note) The number of issued shares was 232,245,891 shares as of Dec. 31, 2006. As new shares were issued (2,763,196 registered common shares) upon the exercise of warrants in January 2007, the number of shares trading is 235,009,087 shares as of March 30, 2007.
B) Acquisition and disposal of treasury stock
Acquisition | Disposal | |||||||||||||||||||||||
Class | Beginning | (+) | (-) | Ending | Remark | |||||||||||||||||||
Direct acquisition in accordance with Paragraph 1, Article 189-2 of the Securities and Exchange Act of Korea | Registered common share | — | — | — | — | |||||||||||||||||||
Direct acquisition for reasons other than Paragraph 1, Article 189-2 of the Securities and Exchange Act of Korea | // | — | 15,023 | 15,023 | — | |||||||||||||||||||
Subtotal | // | — | 15,023 | 15,023 | — | |||||||||||||||||||
Indirect acquisition through trust agreement, etc. | // | — | — | — | — | |||||||||||||||||||
Total | // | — | 15,023 | 15,023 | — |
Note1) With regard to the merger with Thrunet, 44 shares were acquired through the exercise of appraisal right, while 4,524 shares were as odd lots.
Note2) 10,455 shares were acquired as odd lots after capital reduction on May 3, 2006.
C) Employee share scheme (Employee Stock Ownership Association)
l Transactions with the Employee Stock Ownership Association:
[Loans to the employees]
[Loans to the employees]
(Unit: KRW million)
Interest | ||||||||||
Rate | Ending | Details of | ||||||||
Series No. | Lender | Period | (p.a.) | Balance | Collateral | |||||
1st | hanarotelecom | Jan. 14, 2005 ~ Jan. 13, 2007 | 2.00% | 1,677 | ||||||
2nd | hanarotelecom | Sep. 2, 2006 ~ Mar. 1, 2007 | — | 1,525 |
9
Interest | ||||||||||
Rate | Ending | Details of | ||||||||
Series No. | Lender | Period | (p.a.) | Balance | Collateral | |||||
Korea Exchange Bank | Sep. 2, 2006 ~ Mar. 1, 2007 | 5.13% | 924 | Guaranteed by the Company | ||||||
3rd | hanarotelecom | Jul. 23, 2006 ~ Jul. 22, 2007 | — | 6,225 | ||||||
Hana Bank | Jul. 23, 2006 ~ Jul. 22, 2007 | 4.98% | 4,221 | Guaranteed by the Company | ||||||
4th | Hana Bank | Sep. 1, 2006 ~ Aug. 31, 2007 | 4.88% | 10,020 | Guaranteed by the Company | |||||
SC First Bank | Sep. 1, 2006 ~ Aug. 31, 2007 | 4.88% | 1,529 | Guaranteed by the Company | ||||||
Total | 26,111 |
Note) The interest rate of SC First Bank’s loan(4th) to executives is 7.62%(p.a.).
l Exercising voting rights with respect to shares owned by the Association.
Regulations of the Employee Stock Ownership Association | |||
– | The voting rights of shares held in the member’s individual account are to be exercised in accordance with the related laws (Directive 17 of the Basic Law on Employee Welfare), and those held by the Association are to be exercised in accordance with the decision made at a general meeting held by the Association. |
l Shares owned by the Association
(Unit: share)
Account held by | Type | Beginning of 2006 | End of 2006 | |||||||||
Association | — | — | — | |||||||||
Members | Common Share | 1,097,433 | 2,193,486 |
5. Voting Rights (As of December 31, 2006)
Description | Number of common shares | |||||||
1. | Shares with voting right (one vote for each share) | 232,245,891 | ||||||
2. | Shares with no voting right | — | ||||||
3. | Shares with restricted voting right | — | ||||||
4. | Shares with reinstated voting right | — | ||||||
5. | Shares with unrestricted voting right | 232,245,891 |
6. Dividend payout
– None due to accumulated deficit.
10
II. Business
1. | Introduction |
A) | Industry Overview |
l | Characteristics of the industry |
The telecommunications industry is witnessing a substitution of fixed line by the wireless, convergence of wireline and wireless services and a dramatic increase in the demand for wired and wireless data communication. The fixed-line market has seen a slowdown in the growth due to low profitability and a substantial decrease in voice traffic, mainly resulted from a downward price adjustment amid fierce competition and encroachment of the fixed-line market by mobile phone services. As opposed to the fixed line, broadband Internet access services market had experienced rapid growth by early 2003. However, as the market reached its maturity, the growth has slowed down, and 100 Mbps services including optical LAN are now driving growth of the broadband market. | |||
o The general characteristics and trends of Korea’s telecommunications industry are as follows: |
– | Internet and mobile phones are leading the transformation of telecommunications industry |
n | With the proliferation of Internet access and broadband Internet services becoming widespread, the demand for the data service has increased significantly. | ||
n | The era of personal mobile communication has stabilized after the explosive growth in the mobile telephony market. |
– | Convergence of telecommunication and broadcasting |
n | The industry is shifting from telephony oriented networks to the advanced networks that enable the real-time transmission of visual contents. | ||
n | Distinction between telecommunications and broadcasting is blurring and these services are expected to be provided over the same network simultaneously. |
– | Wireline-wireless integration |
n | The new era for the wireline-wireless integration is dawning on the back of new technologies such as WiBro, HSDPA, etc. |
– | Adoption of new technologies and cost savings |
n | Ensuing competition is speeding up the development of new technologies and services. | ||
n | A shift in the consumer demand and the rapid growth of the data transmission services led to cost reduction. |
l | Growth of the industry |
The telecommunications industry grew sharply until the early 2000s on the back of a rapid increase in mobile and broadband subscribers. However, with the subscriber growth reaching saturation, market growth has slowed down, which in turn has affected revenue growth. Statistics on revenues and subscribers of the telecommunications industry are as follows: |
11
[Telecom Industry Revenues]
(Unit: KRW million) | ||||||||||||||||||||
As of Nov. | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
Facility-based Services | 27,408,683 | 30,918,918 | 30,176,025 | 28,644,060 | 28,858,400 | |||||||||||||||
Specific Telecommunications Services | 1,489,738 | 1,914,293 | 1,026,452 | 1,330,583 | 1,179,500 | |||||||||||||||
Value-added Services | 6,160,304 | 5,975,814 | 4,648,212 | 4,358,596 | 3,763,900 | |||||||||||||||
Broadcasting | 8,189,181 | 7,852,678 | 7,069,292 | 8,507,210 | 9,174,600 | |||||||||||||||
Total | 43,247,906 | 46,661,703 | 42,919,981 | 42,840,449 | 42,976,400 |
Note 1) Source: The Korea Association of Information and Telecommunication
[Revenues of Facility-based Service]
(Unit: KRW million) | ||||||||||||||||||||
As of Nov. | ||||||||||||||||||||
Description | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
Fixed Line | 12,023,254 | 12,780,927 | 13,484,132 | 13,289,072 | 13,630,358 | |||||||||||||||
Wireless | 15,385,429 | 18,137,991 | 16,691,893 | 15,354,988 | 15,228,067 | |||||||||||||||
Total | 27,408,683 | 30,918,918 | 30,176,025 | 28,644,060 | 28,858,425 |
Note 1) Source: The Korea Association of Information and Telecommunication
[Telecommunications Subscribers]
(Unit: persons) | ||||||||||||||||||||
Description | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
Broadband Internet | 14,042,698 | 12,190,711 | 11,921,439 | 11,178,499 | 10,405,486 | |||||||||||||||
Local Telephony | 23,119,170 | 22,920,151 | 22,870,615 | 22,877,019 | 23,490,130 | |||||||||||||||
Mobile | 40,197,115 | 38,342,423 | 36,586,052 | 33,591,758 | 32,342,493 | |||||||||||||||
Total | 77,358,983 | 73,453,285 | 71,378,106 | 67,647,276 | 66,238,109 |
Note 1) Source: Ministry of Information and Communication
l | Features of changes in economic conditions |
The broadband Internet and local telephony markets have hardly affected by changes in economic conditions because broadband Internet and local telephony have become necessities of everyday life. |
l | Competitors |
Business | Competitor | Entry Barrier | ||
License from the MIC | ||||
Local telephony service | KT, LG Dacom | (Telecommunications Business Act) | ||
License from the MIC | ||||
Broadband Internet service | KT, LG Powercom and others | (Telecommunications Business Act) | ||
12
l | Relevant laws and regulations |
The Framework Act on Telecommunications and the Telecommunications Business Act are the laws governing the industry. | ||
B) | Current Status of the Company |
l | Business environment and portfolio |
– | Current Business Outlook |
• | Overview |
The Korean economy was faced with difficulties such as soaring oil prices, rising international prices of raw materials, a continued weak dollar, lackluster domestic consumption and sluggish corporate investment. | |||
As for the information and communication sector, with the industry suffering the saturation of broadband Internet market, CATV SOs are rushing into the Internet business. Meanwhile, competition has heated up excessively in the telephony sector due to stagnant growth of the wired and wireless voice markets and introduction of number portability. In addition, changes in the government’s policy towards deregulation and innovation and structural changes in the telecommunications and broadcasting market caused by development of digital technology enabled telecommunication companies to enter the media market | |||
hanarotelecom is providing services in a total of 83 cities and 59 counties as of the end of December 2006. It has a total of 5.36 million customers, including 3.61 million broadband subscribers and 1.75 million voice subscriber lines. To respond to rapidly changing market conditions represented by convergence of telecommunication and broadcasting, the Company completed the acquisition of hanaromedia Inc., a company with a competitive edge in TV-Portal platform and IP VOD contents, as of March 13, 2006 and launched the commercial hanaTV service on July 24, 2006. The Company has laid the foundation for the strategic business by acquiring 200,000 subscribers as of the end of 2006, in just 5 months after the launch of hanaTV. |
• | Expansion of Network |
In order to develop the Company into an integrated telecommunication business equipped with the capacity to provide broadband multimedia services, hanaro has deployed its network since 1998, starting from four major cities including Seoul. As of the end of December 2006, the total length of fiber optic cable is 28,717km (including leased network) in 83 cities, which enabled provision of Internet services to 13.05 million households and voice services to 12.90 million households (excluding those in the overlapped areas). |
• | Operational results |
Despite intensifying competition in the broadband market, hanarotelecom achieved revenue of KRW 1,723.3 billion, EBITDA of KRW 535.5 billion and operating profit of KRW 30.8 billion for the year 2006. The Company has a total of 5.36 million subscribers as of the end of December 2006, maintaining a stable subscriber growth in broadband, voice and hanaTV. |
• | Financing |
The Company issued senior unsecured notes worth KRW 100 billion on February 17, 2006. The Company also made a drawdown of USD 27.5 million and KRW 22.5 billion from syndicated loans to pay off KRW 190 billion of non-guaranteed corporate bonds maturing on February 24, 2006. In addition, the Company raised KRW 19.5 billion of Information Promotion Fund loan through the Korea Development Bank on August 23, 2006 in order to participate in the government’s project to establish the broadband public network in 2006. |
13
• | Business Plan for 2007 |
Ø | Dramatic revenue growth |
hanarotelecom would significantly increase revenues and lay the foundation for sustained growth by fostering new growth engines. To do so, the Company would forge strategic alliances in various ways and, if necessary, pursue mergers and acquisitions in new businesses..
Ø | Provision of proactive customer service |
hanarotelecom would make aggressive efforts to acquire subscribers by providing high-quality customer services and strengthen subscriber retention by focusing on customer satisfaction.
Ø | Strengthening of innovative brand power |
hanarotelecom would enhance its brand image by positioning its products such as hanafos, hanafone and hanaTV as power brands that offer best services and satisfy customers with competitive price.
Ø | Achievement of continuous profit-making |
hanarotelecom would continue to generate profits by managing costs efficiently while increasing revenues. In an effort to reduce costs and efficiently manage assets, the Company would rationalize organizational structure and concentrate its capabilities.
Ø | Fostering of dynamic professionals |
Recognizing that the source of hanarotelecom’s competitiveness is the strength of each employee, the Company would provide various education and training programs to produce creative and dynamic professionals who can proactively respond to rapid changes in the era of convergence. The company would also promote professionalism among employees.
l | Market Share |
• | Broadband Internet Subscribers & Market Share |
As of the end of 2006 | ||||
Service Provider | No. of Subscribers | Market Share | ||
hanarotelecom | 3,612,749 | 25.7% | ||
KT Corp. | 6,352,542 | 45.2% | ||
Others | 4,077,407 | 29.0% | ||
Total | 14,042,698 | 100% |
Note 1) Source: Ministry of Information and Communication
Note 2) ‘Others’ include Onse Telecom, Dreamline Corporation, LG Dacom Corporation and other value-added telecommunications business operators and network service operators.
• | Local Telephony Service Subscriber Lines & Market Share |
14
As of the end of 2006 | ||||
Service Provider | No. of Subscriber Lines | Market Share | ||
hanarotelecom | 1,745,266 | 7.5% | ||
KT Corp. | 21,288,733 | 92.1% | ||
Dacom | 85,171 | 0.4% | ||
Total | 23,119,170 | 100% |
Note) Source: Ministry of Information and Communication
2. Major Services
A) Prices of Major Services
(Unit: KRW) | ||||||
Classification | 2006 | |||||
hanafos Fiber LAN | Installation fee | 30,000 | ||||
Monthly flat fee | 27,390~33,000 | |||||
hanafos Free (fixed-line + wireless service) | Installation fee | 30,000 | ||||
Monthly flat fee | 30,000~40,000 | |||||
Modem rental fee / month | 3,000~8,000 | |||||
Telephony charge / 3 minutes | 39 | |||||
hanafos Premium | Installation fee | 30,000 | ||||
Monthly flat fee | 34,000~38,000 | |||||
Modem rental fee / month | 8,000 | |||||
Telephony charge / 3 minutes | 39 | |||||
hanafos Speed | Installation fee | 30,000 | ||||
Monthly flat fee | 25,200~28,000 | |||||
Modem rental fee / month | 3,000~8,000 | |||||
Telephony charge / 3 minutes | 39 | |||||
hanafos wing pack (fixed-line + wireless service) | Installation fee | 30,000 | ||||
Monthly flat fee | 33,000~43,000 | |||||
hanafone (local telephony service) | Installation fee | 30,000 | ||||
Monthly flat fee | 4,500 | |||||
Telephony charge / 3 minutes | 39 | |||||
hanaTV | Installation fee | 20,000 | ||||
Monthly flat fee | 7,000~10,600 | |||||
STB rental fee / month | 0~7,000 |
Note 1) | Installation fee or monthly flat fee can be changed depending on contract period, etc. | |
Note 2) | hanaSet (bundled service) was launched in January 2007. |
- | broadband + voice + hanaTV (TPS) : up to 20% discount | ||
- | broadband + voice / broadband + hanaTV (DPS) : up to 10% discount |
- | Discount for term contract |
• | Modem rental fees |
15
No-term | ||||||||
contract | 1-year contract | 2-year contract | 3-year contract | |||||
Modem rental fees (KRW) | 8,000 | 6,000 | 4,000 | 3,000 |
Note 1) Modem rental fees are free for optical LAN services and KRW 5,000 for BWILL services (free for contract of 1 year or more).
Note 2) For hanaTV service, installation fees are KRW 20,000 with STB rental fees of KRW 7,000 for no-term contract, KRW 5,000 for 1-year contract, KRW 3,000 for 2-year contract, and exempted for contract of 3 years or more.
• | Monthly flat fees |
Discount rate | ||||||||||
40-month | ||||||||||
1-year contract | 2-year contract | 3-year contract | contract | 4-year contract | ||||||
Fiber LAN, wing pack | 3% | 5% | 10% | 15% | 17% | |||||
Premium, Speed, Multi-line | 3% | 5%~6% | 10%~11% | — | — | |||||
Family | 3% | 5%~6% | 10%~11% | — | — | |||||
hanaTV | 5% | 10% | 15% | — | 24%~26% |
Note 1) For service bundles of broadband and telephony, KRW 2,000 is discounted from monthly flat fees of telephony service.
Note 2) For service bundles of broadband, telephony and hanaTV, 10%~40% discounts of monthly flat fees are applied.
3. Major Facilities
A) Status on major facilities
(Unit: KRW million) | ||||||||
Beginning book value | Ending book value | |||||||
Description | (As of Dec. 31, 2005) | (As of Dec. 31, 2006) | ||||||
Land | 176,264 | 176,307 | ||||||
Buildings | 288,871 | 283,045 | ||||||
Structures | 167 | 163 | ||||||
Machinery | 1,838,469 | 1,644,658 | ||||||
Others | 10,405 | 18,019 |
Note) The beginning book value includes that of Thrunet.
16
B) | Capital Expenditure (“CAPEX”) plan |
l | CAPEX |
(Unit: KRW billion)
Item | 2006 | 2007 (E) | ||||||
Backbone | 69.9 | 78.8~81.2 | ||||||
Last-mile | 193.5 | 197.0~203.0 | ||||||
Others | 52.0 | 54.2~55.9 | ||||||
Total | 315.3 | 330.0~340.0 |
Note) | 2007 CAPEX may be subject to change due to changes in business operation. |
4. | Derivative Contracts in Foreign Currency (As of December 31, 2006) |
Valuation | ||||||||||
Derivatives | Date of | Gains/Losses | ||||||||
Contact | Amount | Payment Method | Counterparty | Contract | (in KRW) | |||||
Cross currency and interest rate swaps | USD 53,605,655 | Receive the principal and interest in USD and make payments in KRW based on the FX rate and the swap rates at the time of the contract | Korea Development Bank | Dec. 19, 2003 | -13,904,986,314 | |||||
Cross currency and interest rate swaps | USD 117,932,437 | Receive the principal and interest in USD and make payments in KRW based on the FX rate and the swap rates at the time of the contract | Korea Development Bank, etc. | Feb. 10, 2004 | -27,619,111,237 | |||||
Cross currency swaps | USD 500,000,000 | Receive the principal in USD and make payments in KRW based on the FX rate at the time of the contract | Korea Development Bank, etc. | Feb. 1, 2005 | -51,217,227,696 | |||||
Cross currency swaps | USD 27,507,105 | Receive the principal in USD and make payments in KRW based on the FX rate at the time of the contract | Calyon, etc. | Feb. 27, 2006 | -1,231,724,812 |
5. | Material Agreements | |
[Leased line contract] |
Agreement | Counterpart | |
CATV access network lease agreements | LG Powercom | |
Interconnection agreements among basic telecommunications carriers | Major carriers | |
Telecommunications network interconnection agreement | KEPCO |
17
Agreement | Counterpart | |
Telecommunications conduit lease agreement | Seoul Metropolitan Rapid Transit Corporation | |
Telecommunications conduit lease agreement | Seoul Metropolitan Subway Corporation | |
Telecommunications conduit lease agreement | Daegu Metropolitan Subway Corporation | |
Telecommunications conduit lease agreement | Busan Transportation Corporation |
6. | Research and Development Activities |
A) | Summary of R&D activities |
l | R&D Expenses |
(Unit: KRW million)
Items | 2006 | 2005 | 2004 | |||||||||
R&D Expenses | 5,389 | 7,707 | 5,335 | |||||||||
R&D Expenses to Revenues | 0.31 | % | 0.53 | % | 0.37 | % |
7. | Other Matters Affecting Investment Decisions |
A) | Summary of financing activities |
l | Domestic |
(Unit: KRW million)
Beginning | Ending | |||||||||||||||
(as of Dec. 31, | (as of Dec. 31, | |||||||||||||||
Source | 2005) | Net change | 2006) | |||||||||||||
Commercial banks | 79,847 | 41,996 | 121,843 | |||||||||||||
Insurance companies | — | — | — | |||||||||||||
Merchant banks | — | — | — | |||||||||||||
Lease companies | 6,663 | -5,237 | 1,426 | |||||||||||||
Mutual savings & finance companies | — | — | — | |||||||||||||
Other financial institutions | 32,761 | -21,483 | 11,278 | |||||||||||||
Sub-total (financial institutions) | 119,271 | 15,276 | 134,547 | |||||||||||||
Corporate bonds | Public offering | 190,000 | -90,000 | 100,000 | ||||||||||||
Private placement | — | — | — | |||||||||||||
Right Issuance Note 1) | Public offering | 1,692,600 | — | 1,692,600 | ||||||||||||
Private placement | 585,000 | — | 585,000 | |||||||||||||
Asset Backed Securities | Public offering | — | — | — | ||||||||||||
Private placement | — | — | — | |||||||||||||
Others | — | 3,369 | 3,369 | |||||||||||||
Sub-total (capital market) | 2,467,600 | -86,631 | 2,380,969 | |||||||||||||
Borrowings from shareholders, directors, affiliated companies | — | — | — | |||||||||||||
Others | — | — | — | |||||||||||||
Total | 2,586,871 | -71,355 | 2,515,516 |
Note 1) Outstanding balance of right issuance marked here refers to the accumulated amount. |
18
l | Overseas |
(Unit: KRW million)
2006 Balance | ||||||||||||
Source | Beginning | Net change | Ending | |||||||||
Financial institutions | 202,718 | -2,569 | 185,032 | |||||||||
Corporate bonds | 502,250 | — | 464,800 | |||||||||
Equity (including right issuance) note 1) | 361,620 | — | 340,272 | |||||||||
Asset Backed Securities | — | — | — | |||||||||
Others | — | — | — | |||||||||
Total | 1,066,588 | -2,569 | 990,104 |
Note 1) Refers to the amount of capital raised from the initial public offering on the NASDAQ Market in April, 2000. | |
Note 2) Beginning balances are based on the end of year 2005 exchange rate of KRW/USD = 1,004.5 while ending balances are based on the end of year 2006 exchange rate of KRW/USD = 929.6. |
B) | Credit Ratings in the last 3 years |
Subject of credit | ||||||
Date | rating | Credit | Credit rating company | |||
Jun. 11, 2004 | Corporate bond | BBB | Korea Management Consulting & Credit Rating Corporation | |||
Jun. 14, 2004 | Corporate bond | BBB | Korea Investors Service, Inc. | |||
Jan. 13, 2005 | Corporate bond | BB | Standard & Poor’s | |||
Jan. 17, 2005 | Corporate bond | BBB+ | National Information and Credit Evaluation (NICE) | |||
Jan. 13, 2005 | Corporate bond | Ba2 | Moody’s | |||
Aug. 2, 2005 | Corporate bond | BBB | Korea Investors Service, Inc. | |||
Aug. 3, 2005 | Corporate bond | BBB | Korea Management Consulting & Credit Rating Corporation | |||
Aug. 18, 2005 | Commercial paper | A3+ | National Information and Credit Evaluation (NICE) | |||
Feb. 2, 2006 | Corporate bond | BBB | Korea Investors Service, Inc. | |||
Feb. 3, 2006 | Corporate bond | BBB | Korea Management Consulting & Credit Rating Corporation | |||
Feb. 3, 2006 | Corporate bond | BBB+ | National Information and Credit Evaluation (NICE) | |||
Jul. 26, 2006 | Corporate bond | BBB | Korea Investors Service, Inc. | |||
Oct. 13, 2006 | Commercial paper | A3+ | Korea Investors Service, Inc. | |||
Oct. 13, 2006 | Corporate bond | BBB+ | Korea Investors Service, Inc. | |||
Oct. 17, 2006 | Commercial paper | A3+ | Korea Management Consulting & Credit Rating Corporation | |||
Oct. 17, 2006 | Corporate bond | BBB+ | Korea Management Consulting & Credit Rating Corporation |
19
III. Financial Information
1. | Summarized Financial Statements |
(Unit: KRW million)
�� | ||||||||||||||||||||
Description | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
[Current Asset] | 462,537 | 343,770 | 611,134 | 672,571 | 676,104 | |||||||||||||||
Quick assets | 460,724 | 343,654 | 609,293 | 671,302 | 665,242 | |||||||||||||||
Inventories | 1,813 | 116 | 1,841 | 1,269 | 10,862 | |||||||||||||||
[Non-current Asset] | 2,391,908 | 2,636,331 | 2,561,300 | 2,709,351 | 2,925,467 | |||||||||||||||
Investment Securities | 117,226 | 384,881 | 144,348 | 117,922 | 188,425 | |||||||||||||||
Property and Equipment | 2,140,448 | 2,188,804 | 2,362,686 | 2,542,994 | 2,695,529 | |||||||||||||||
Intangible Asset | 134,235 | 62,645 | 54,266 | 48,435 | 41,513 | |||||||||||||||
Total Assets | 2,854,445 | 2,980,101 | 3,172,434 | 3,381,922 | 3,601,570 | |||||||||||||||
[Current Liabilities] | 535,745 | 595,691 | 737,081 | 821,987 | 1,355,344 | |||||||||||||||
[Long-term Liabilities] | 825,534 | 816,823 | 687,140 | 828,763 | 898,739 | |||||||||||||||
Total Liabilities | 1,361,279 | 1,412,514 | 1,424,220 | 1,650,750 | 2,254,083 | |||||||||||||||
[Capital Stock] | 1,161,229 | 2,310,676 | 2,310,676 | 2,310,676 | 1,396,613 | |||||||||||||||
[Capital Surplus] | 1,502,480 | 344,642 | 344,642 | 344,642 | 692,815 | |||||||||||||||
[Accumulated Deficit] | -1,186,156 | -1,100,104 | -891,264 | -901,756 | -736,420 | |||||||||||||||
[Capital Adjustment] | 15,613 | 12,373 | -15,841 | -22,390 | -5,521 | |||||||||||||||
Total Shareholders’ Equity | 1,493,166 | 1,567,587 | 1,748,213 | 1,731,172 | 1,347,487 | |||||||||||||||
Revenue | 1,723,346 | 1,444,411 | 1,436,485 | 1,375,335 | 1,253,859 | |||||||||||||||
Operating Profit | 30,843 | 53,228 | 114,021 | 75,207 | 1,426 | |||||||||||||||
Ordinary Profit | -86,047 | -202,692 | 10,493 | -165,336 | -127,794 | |||||||||||||||
Net Income | -86,047 | -208,839 | 10,493 | -165,336 | -127,794 |
- | As accounting policy for some operating expenses including sales commissions was changed from cash basis accounting to accrual basis accounting, financial statements for 2003, 2004 and 2005 reflect an increase of KRW 27.2 billion in current liabilities and accumulated deficit without any change in net income. For the year 2002, net loss increases KRW 4.6 billion due to the change. |
2. | Accounting Standards | |
More information regarding the Company’s financial statements is posted on our website (http://www.hanaro.com/eng/download/ir/state/2007_Audit_Report.pdf). |
20
3. Accounting Information
A) Fiscal years recorded net loss in the last 5 years
(Unit : KRW billion)
Year | Net loss amount | Reason | ||||||
2006 | 86.0 | Increase in marketing expenses due to intensifying competition | ||||||
2005 | 208.8 | Increase in marketing expenses due to intensifying competition and expenses for Thrunet merger | ||||||
2003 | 165.3 | Large investments in early business stage and write-off of idle equipments | ||||||
2002 | 127.8 | Large investments in early business stage | ||||||
2001 | 251.0 | Large investments in early business stage |
B) Fiscal years recorded net income in the last 5 years
(Unit : KRW billion)
Year | Net income amount | Reason | ||||||
2004 | 10.5 | Sales increase due to a rise in voice subscribers after the nationwide implementation of FNP and a decrease in financial costs due to the improvement of financial structure after overseas financing |
4. | Financial Statements | |
More information regarding the Company’s financial statements is posted on our website (http://www.hanaro.com/eng/download/ir/state/2007_Audit_Report.pdf). |
5. | Financial Statements Before and After Merger |
A) | Merger summary |
l | Merger parties and method of merger |
hanarotelecom incorporated | Korea Thrunet Co., Ltd. | |||
(surviving) | (dissolved) | |||
Date of establishment | September 26, 1997 | July 30, 1996 | ||
Representative Director | Soon-Yub Kwon | Soon-Yub Kwon | ||
Listed market | Kosdaq | — |
B) | Financial Statements after merger |
l | Balance Sheet Summary (As of December 31, 2005) |
21
(Unit : KRW)
hanarotelecom | ||||||||||||
Description | incorporated | Korea Thrunet Co., Ltd. | After merger | |||||||||
[Current Asset] | (343,770,295 | ) | (102,291,618 | ) | (437,098,114 | ) | ||||||
Quick assets | 343,653,800 | 102,291,618 | 436,981,619 | |||||||||
Inventories | 116,495 | — | 116,495 | |||||||||
[Non-current Asset] | (2,636,330,524 | ) | (167,149,586 | ) | (2,586,875,807 | ) | ||||||
Investment Securities | 384,880,927 | 12,848,945 | 148,126,101 | |||||||||
Property and Equipment | 2,188,804,470 | 141,807,084 | 2,331,281,969 | |||||||||
Intangible Asset | 62,645,127 | 12,493,557 | 107,467,737 | |||||||||
Total Assets | 2,980,100,819 | 269,441,204 | 3,023,973,921 | |||||||||
[Current Liabilities] | (595,690,914 | ) | (47,734,527 | ) | (634,622,660 | ) | ||||||
[Long-term Liabilities] | (816,823,049 | ) | (145,353,768 | ) | (818,886,818 | ) | ||||||
Total Liabilities | 1,412,513,963 | 193,088,295 | 1,453,509,478 | |||||||||
[Capital Stock] | (2,310,675,900 | ) | (257,836,065 | ) | (2,316,765,060 | ) | ||||||
[Capital Surplus] | (344,641,870 | ) | (397,145,627 | ) | (340,764,293 | ) | ||||||
[Accumulated Deficit] | (-)(1,100,103,644 | ) | (-)(579,325,353 | ) | (-)(1,100,109,194 | ) | ||||||
[Capital Adjustment] | (12,372,730 | ) | (696,570 | ) | (13,044,284 | ) | ||||||
Total Shareholders’ Equity | 1,567,586,856 | 76,352,909 | 1,570,464,443 | |||||||||
Total liabilities and shareholders’ equity | 2,980,100,819 | 269,441,204 | 3,023,973,921 | |||||||||
l | Statements of operations (From January 1, 2005 to December 31, 2005) |
(Unit: KRW)
Description | hanarotelecom incorporated | Korea Thrunet Co., Ltd. | ||||||
Operating revenue | 1,444,411,001 | 298,410,752 | ||||||
Operating expenses | 1,391,182,529 | 315,305,229 | ||||||
Operating income (loss) | 53,228,472 | (-)16,894,477 | ||||||
Non-operating income | 92,455,819 | 22,146,395 | ||||||
Non-operating expenses | 348,376,667 | 82,234,793 | ||||||
Ordinary loss | (-)202,692,376 | (-)76,982,875 | ||||||
Extraordinary loss | (-)6,147,574 | (-)12,870,439 | ||||||
Loss before tax | (-)208,839,950 | (-)89,853,314 | ||||||
Income tax expense | — | — | ||||||
Net loss | -208,839,950 | (-)89,853,314 |
22
IV. | Opinion of Independent Auditors and Audit Committee |
1. | Opinion of Independent Auditors |
A) | Auditors |
2006 | 2005 | 2004 | ||||||
Deloitte Anjin LLC | ||||||||
(formerly known as Deloitte | ||||||||
Deloitte Anjin LLC | Deloitte Anjin LLC | HanaAnjin LLC) |
B) | Opinion |
Year | Summary of auditor’s opinion | |
2006 | In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of hanarotelecom incorporated as of December 31, 2006 and 2005, and the results of its operations, changes in its deficit and its cash flows for the years then ended in accordance with accounting principles generally accepted in the Republic of Korea. | |
2005 | In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of hanarotelecom incorporated as of December 31, 2005 and 2004, and the results of its operations, changes in its deficit and its cash flows for the years then ended in accordance with accounting principles generally accepted in the Republic of Korea. | |
2004 | In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of hanarotelecom incorporated as of December 31, 2004 and 2003, and the results of its operations, changes in its deficit and its cash flows for the years then ended in conformity with financial accounting standards in the Republic of Korea. |
C) | Summary of particular situations |
Year | Particular situations | |
2006 | — | |
2005 | The Company corrected its accounting treatment on the recognition of some operating expenses from cash basis to accrual basis in 2005. As a result of this error correction, | |
2004 | — | |
23
2. | Opinion of Audit Committee |
A) | Summary of Audit Procedure |
l | Audit committee members (As of December 31, 2006) | |||||||
– | Chairman: Park Sung-kyou (Non-standing) | |||||||
– | Members: Kim Sun-woo, Peter Whang (Non-standing) |
B) | Opinion |
l | Balance Sheet & Statements of Operations | |||
The balance sheet and statements of operations present fairly, pursuant to the applicable laws of Korea and the Articles of Incorporation, the financial position and operation of the Company. | ||||
l | Business Report | |||
The business report represents fairly, pursuant to the applicable laws of Korea and the Articles of Incorporation, the sate of the Company. | ||||
l | Statement of Disposition of Deficit | |||
The statement of disposition of deficit was prepared pursuant to the applicable laws of Korea and the Articles of Incorporation, and appropriately states and reflects the financial position and other matters of the Company. |
24
3. | Fees Paid to Independent Auditors for the Past 3 Years |
A) | Auditing fees to independent auditors for the past 3 years |
(Unit : KRW million) | ||||||||||
Total Hours of | ||||||||||
Year | Auditor | Auditing Fees | Service | |||||||
2006 | Deloitte Anjin LLC | 806 | 5,000 | |||||||
2005 | Deloitte Anjin LLC | 410 | 3,200 | |||||||
2004 | Deloitte HanaAnjin LLC | 370 | 2,800 |
B) Contracts with independent auditors for services other than auditing
(Unit : KRW million) | ||||||
Date of Contract | Description | Term | Fees | |||
Dec. 30, 2005 | Improvement of customer center commission system | 5 weeks | 50 | |||
Apr. 4, 2005 | Advisory service rendered in relation to the global bond offering | 8 weeks | 40 | |||
Dec. 23, 2004 | Issuance of comfort letter in relation to the global bond offering | 4 weeks | 85 |
25
V. Governance Structure and Status of Affiliates
1. Governance Structure
A) Board of Directors (“BOD”) (As of March 30, 2007)
l | Status of BOD |
Name | Position | Nominated by | Date of appointment | |||
Park Byung-moo | Representative Director | BOD | Mar. 24, 2006 | |||
Wilfried Kaffenberger | Non-standing Director | BOD | Nov. 18, 2006 (re-elected) | |||
David Yeung | Non-standing Director | BOD | Nov. 18, 2006 (re-elected) | |||
Paul Chen | Outside Director | Outside director nominating committee | Nov. 18, 2006 (re-elected) | |||
Varun Bery | Outside Director | Outside director nominating committee | Mar. 23, 2007 (re-elected) | |||
Park Sung-kyou | Outside Director | Outside director nominating committee | Nov. 18, 2006 (re-elected) | |||
Kim Sun-woo | Outside Director | Outside director nominating committee | Nov. 18, 2006 (re-elected) | |||
Peter Whang | Non-standing Director | BOD | Mar. 24, 2006 | |||
Steven J. Schneider | Outside Director | Outside director nominating committee | Mar. 24, 2006 | |||
Afshin Mohebbi | Outside Director | Outside director nominating committee | Mar. 24, 2006 |
Note) | On March 24, 2006, Mr. Park Byung-moo resigned from the position of Audit Committee member and was appointed as Representative Director. |
l | Audit Committee (As of December 31, 2006) |
Name | Position | Experience | ||
Park Sung-kyou | Chairman of Audit Committee (Outside Director) | Member of the Korean Institute of Communication Sciences | ||
Kim Sun-woo | Member of Audit Committee (Outside Director) | Standing Director, Okedongmu Children in Korea | ||
Peter Whang | Member of Audit Committee (Non-standing Director) | Managing Director, AIGGIC Korea LTD. |
Note) | Former Audit Committee member Park Byung-moo was appointed as Representative Director and Mr. Peter Whang was newly appointed as Audit Committee member at the BOD meeting held on March 24, 2006. |
26
l | Outside Director Nominating Committee (As of December 31, 2006) |
Name | Position | Remark | ||
Kim Sun-woo | Outside Director | Chairman of the Outside Director Nominating Committee | ||
Paul Chen | Outside Director | — | ||
Wilfried Kaffenberger | Non-standing Director | — |
l | President/Officers Compensation Committee (As of December 31, 2006) |
– | President Compensation Committee |
Name | Position | Remark | ||
David Yeung | Non-standing Director | Chairman of the President Compensation Committee | ||
Wilfried Kaffenberger | Non-standing Director | — | ||
Varun Bery | Outside Director | — | ||
Paul Chen | Outside Director | — |
– | Officers Compensation Committee |
Name | Position | Remark | ||
Park Byung-moo | Representative Director | Chairman of the Officers Compensation Committee | ||
David Yeung | Non-standing Director | — | ||
Wilfried Kaffenberger | Non-standing Director | — | ||
Varun Bery | Outside Director | — | ||
Paul Chen | Outside Director | — |
l | Executive Committee (As of December 31, 2006) |
Name | Position | Remark | ||
Park Byung-moo | Representative Director | Chairman of the Executive Committee | ||
Wilfried Kaffenberger | Non-standing Director | — | ||
Peter Whang | Non-standing Director | — | ||
Varun Bery | Outside Director | — | ||
Afshin Mohebbi | Outside Director | — | ||
Steven Schneider | Outside Director | — |
27
B) | Executive compensation |
l | Compensation for directors (including outside directors) and Audit Committee members |
(Unit: KRW) | ||||||||||||
Ceiling amount of | Average amount per | |||||||||||
Total amount paid | compensation | person | ||||||||||
3 directors | 861,986,561 | 2,000,000,000 | 287,328,854 | |||||||||
4 outside directors | 146,486,005 | 36,621,501 | ||||||||||
3 members of Audit Committee | 99,466,667 | 33,155,556 |
Note 1) Total amount paid and average amount per person include allowances for retirement payment for the fiscal year 2006. The amount paid to retired directors is included in the total amount paid, but not included in the average amount per person. The amount of KRW 2,000,000,000 is the ceiling amount of compensation for directors for the fiscal year 2006, which was approved at the Company’s Annual General Meeting of Shareholders on March 24, 2006. |
l | Granting of the stock option rights (As of December 31, 2006) |
– | The cumulative number of stock option rights that have been granted: 29,874,585 | ||
– | The cumulative number of stock option rights that have been cancelled: 18,804,357 | ||
– | The cumulative number and type of stock option rights to be exercised: 11,070,228 common shares |
C) | Directors and Officers Insurance (As of December 31, 2006) |
(Unit: KRW billion) | ||||||||||||
Premiums paid | ||||||||||||
Accumulated | ||||||||||||
(including premiums | ||||||||||||
2006 | paid in 2006) | Coverage limit | ||||||||||
Directors and Officers Insurance | 1.5 | 5.33 | 50.0 |
28
2. Affiliated Companies (As of December 31, 2006)
![(CHART)](https://capedge.com/proxy/6-K/0001145549-07-000528/h01140h0114001.gif)
29
VI. Information Regarding Shareholders
1. Ownership Structure
A) | Largest Shareholder(s) |
(As of December 31, 2006) | ||||||||||
Description | Type of Stock | Number of Shares | Ownership | |||||||
AIF II NT, Ltd. | Common share | 19,228,125 | 8.28 | % | ||||||
SSB-AOF NT, Ltd. | Common share | 12,360,937 | 5.32 | % | ||||||
Total | 31,589,062 | 13.60 | % |
B) | Major shareholders with 5% or more shareholding |
(As of December 31, 2006) | ||||||||||
Number of Common | ||||||||||
Description | Type of Stock | Shares | Ownership | |||||||
Newbridge Asia HT, L.P. | Common share | 24,767,899 | 10.66 | % | ||||||
AIF II NT, Ltd. | Common share | 19,228,125 | 8.28 | % | ||||||
Mirae Asset Investment Management Co, Ltd | Common share | 16,458,425 | 7.09 | % | ||||||
SSB-AOF NT, Ltd. | Common share | 12,360,937 | 5.32 | % | ||||||
Total | Common share | 72,815,386 | 31.35 | % |
C) | Distribution of shareholders |
(As of December 31, 2006) | ||||||||||||||||
Type of | % of Total | No. of Shares | ||||||||||||||
Shareholder | No. of Shareholders | Shareholder Number | Owned | Ownership | ||||||||||||
Minor | 88,344 | 99.98 | 104,559,585 | 45.02 | % | |||||||||||
Largest | 2 | 0.00 | 31,589,062 | 13.60 | % | |||||||||||
Others | 16 | 0.02 | 96,097,244 | 41.38 | % | |||||||||||
Total | 88,362 | 100.0 | 232,245,891 | 100.0 | % |
Note 1) The above figures are based on the status of shareholder distribution compiled by Korea Securities Depository (‘KSD’). | ||
Note 2) ‘Others’ include shareholders who have not been listed on shareholders’ register. |
2. Information on shares and share certificates
l | Articles of Incorporation (dated March 24, 2006) |
Article 4.Public Notices
30
Public notices of the Company shall be made by publishing them in“The Seoul Shinmun”(or its successor in case of merger or change of name. hereinafter, the same), a daily newspaper published in Seoul, Korea. <Amended on October 1, 1999, March 24, 2006>
Article 8.Class of Shares and Denomination of Share Certificates
The shares issued by the Company shall be registered common shares, registered preferred shares, registered convertible shares, and registered redeemable shares, which shall be represented by share certificates in eight (8) denominations: One (1), Five (5), Ten (10), Fifty (50), One Hundred (100), Five Hundred (500), One Thousand (1,000) and Ten Thousand (10,000) share(s). <Amended on March 23, 2001, March 24, 2006>
Article 9.Preemptive Rights
Each shareholder of the Company shall have a preemptive right to subscribe for any new shares to be issued by the Company in proportion to its shareholding ratio.
‚ If any shareholder waives or forfeits its preemptive rights, or if any fractional number of shares(“odd shares”) is created in the course of allotting of such new shares, then such shares waived or forfeited or the odd shares shall be disposed in accordance with by resolution of the Board of Directors of Company. <Amended on August 28, 1999>
ƒ Notwithstanding the provisions of the foregoing Paragraph, the Company may, by resolution of the Board of Directors, allocate such new shares to any persons, including persons other than existing shareholders <Amended on August 28, 1998>;
1. | If new shares are subscribed by the public pursuant to the Securities and Exchange Act; | |
2. | If new shares are offered to the public in the form of an increase of paid-in capital by means of a general public offer pursuant to a resolution of the Board of Directors, in accordance with the Securities and Exchange Act; | |
3. | If new shares are allotted to members of employee shareholders association in accordance with the relevant provisions of the Securities and Exchange Act; <Amended on April 28, 1998> | |
4. | If new shares are issued in the form of depositary receipts (DR) in accordance with the Securities and Exchange Act; | |
5. | <Deleted March 30, 1998>; | |
6. | If new shares are issued to any person exercising stock option rights conferred pursuant to Article 189-4 of the Securities and Exchange Act <Inserted on February 26, 1999.>; | |
7. | If new shares are issued to a foreign telecommunications company or a foreign financial/investment institution that has completed the foreign investment procedures for the purpose of strategic alliance in relation to the business. <Inserted on October 1, 1999.> |
31
8. | If new shares are issued to domestic/overseas investors or the employees or officers of the Company up to an amount not exceeding 50% of the then current total issued and outstanding shares of the Company for the purpose of realizing the Company’s business objectives, including, but not limited to, improving its financial structure and entering into new business areas. <Inserted on Mar. 26, 2004, amended on Mar. 26, 2004> |
„ <Deleted on October 21, 2003>
… In case the Company issues new shares through right issues, bonus issues and stock dividends, the new shares shall be deemed to have been issued at the end of the fiscal year immediately prior to the fiscal year during which the new shares are issued for purposes of distribution of dividends for such new shares.
Article 13.Closure of Shareholders Register and Setting of Record Date
The Company shall suspend alteration of entries in the register of shareholders, registration of pledges, creation and cancellation of trust property for one month, commencing from the day following the last day closing of each accounting period.
‚ The Company shall entitle every shareholder on its shareholders list as of the last day of each fiscal year to vote at the meeting of the annual ordinary general shareholders meeting held for such fiscal year.
ƒ The Company may suspend alteration of entries in the register of shareholders for a period not exceeding three (3) months or set a record date when necessary for convening an extraordinary general meeting of shareholders or for other reasons, in accordance with a resolution of the board of directors. The Company may suspend the alteration of entries in the registry of shareholders and at the same time set a record date, when considered necessary by the board of directors.
„ The Company shall give public notice of the period and dates referred to in preceding Paragraph (3) at least two weeks in advance of the commencement of the period and of the occurrence of such date.
Article 17.Types and Time for Convening Shareholders Meetings
The general meeting of shareholders of the Company shall consist of ordinary general meetings and extraordinary general meetings.
‚ The general meeting shall be held within three (3) months after the closing of each fiscal year. An extraordinary general meeting shall be held whenever it is considered necessary.
32
Article 43.Fiscal Year
The fiscal year of the Company shall begin on the first (1) day, of each year and end on the thirty-first (31st) day of December of the same year.
l | Transfer agent of the Company : Korea Securities Depository (Tel : +822 3774-3000) |
33
VII. Information on Directors, Officers & Employees
1. Directors and Officers (as of March 30, 2007)
No. shares | ||||||
Name | Position | owned | ||||
Park Byung-moo | Representative Director and CEO | 65,000 | ||||
David Yeung | Non-standing Director | — | ||||
Wilfried Kaffenberger | Non-standing Director | — | ||||
Paul Chen | Non-standing Director | — | ||||
Varun Bery | Non-standing Director | — | ||||
Steven J. Schneider | Non-standing Director | — | ||||
Afshin Mohebbi | Non-standing Director | — | ||||
Peter Whang | Member of Audit Committee | — | ||||
Park Sung-Kyou | Member of Audit Committee | — | ||||
Kim Sun-woo | Member of Audit Committee | — | ||||
Kim Tae-hyun | Chairman | — | ||||
Dominic A. Gomez | Senior Executive Vice President & Chief Operating Officer | — | ||||
Janice Lee | Senior Executive Vice President & Chief Financial Officer | — | ||||
Kim Jin-ha | Senior Executive Vice President & Head of hanaTV Biz. Div. | 14,647 | ||||
Eric Choi | Senior Executive Vice President & Head of Sales/Channel Div. | — | ||||
Hong Soon-man | Senior Executive Vice President & Head of New Corporate Biz. TF | 4,200 | ||||
Mark D. Pitchford | Senior Executive Vice President & Head of Marketing Div. | — | ||||
Shin Kyu-shik | Senior Executive Vice President & Head of Corporate Business Div. | 9,000 | ||||
Chang Young-bo | Executive Vice President & Head of Finance HQ | — | ||||
Matt Ki Lee | Executive Vice President & HR HQ | — | ||||
Park Chong-hoon | Executive Vice President & Head of External Collaboration HQ | — | ||||
Marshall J. Cochrane | Executive Vice President & Head of SCM HQ | — | ||||
Jeun Sang-jin | Executive Vice President & Head of Communications HQ | 649 | ||||
Oh Sang-hwan | Senior Vice President & Head of Business Alliance Unit | — | ||||
Choi Myung-hun | Senior Vice President & Head of Chungcheong Br. | — |
34
No. shares | ||||||
Name | Position | owned | ||||
Kim Yeon-ho | Senior Vice President & Head of Subuk Br. | — | ||||
Ko Myung-joo | Senior Vice President & Head of HR HQ | — | ||||
Rhee Baeky | Senior Vice President & Representative Director of Hanaro TeleSales Inc. | — | ||||
Cho Young-wan | Senior Vice President & Representative Director of Hanaro CS Inc. | 5,934 | ||||
Lee Seung-seog | Senior Vice President & Head of Technology Plan Unit | 1,055 | ||||
Jun Byung-hoon | Senior Vice President & Head of Kangnam Br. | 1,500 | ||||
Park Chan-woong | Senior Vice President & Head of Network Technology Unit | 2,650 | ||||
Park Gab-jae | Senior Vice President & Head of Corporate Sales Unit 2 | — | ||||
Chae Chung-sik | Senior Vice President & Head of Ops Support Unit | — | ||||
Park Min-hyok | Senior Vice President & Head of Busan Br. | — | ||||
Youn Taek-hyun | Senior Vice President & Head of Ops Support HQ of hanaromedia Inc. | — | ||||
Kim Sung-yong | Senior Vice President & HR HQ | — | ||||
Lee Tae-gyu | Senior Vice President & Channel Transformation Unit | — | ||||
Kang Ki-sun | Vice President & Senior Vice President of Hanaro RD&M Co., Ltd. | 6,488 | ||||
Chung Hyung-jae | Vice President & Head of Sunam Br. | — | ||||
Nam Gye-in | Vice President & Head of Kangbuk Br. | — | ||||
Lee In-gyu | Vice President & Head of Channel Planning Team | 15,000 | ||||
Sohn Yi-hang | Vice President & Representative Director of Hanaro Seoul Customer Service Inc. | — | ||||
Park Young-kun | Vice President & Head of Corporate Sales Unit 1 | — | ||||
Lee Sang-heon | Vice President & Head of GR Unit | — | ||||
Park Tae-young | Vice President & Head of Policy Plan Unit | 2,221 | ||||
Jeon Joong-in | Vice President & Head of Corporate Business Unit | 2,300 | ||||
Yang Seung-cheon | Vice President & Head of Kyungbuk Br. | — | ||||
Kim Ki-tae | Vice President & Head of Internal Audit Unit | — | ||||
Lee Byeong-min | Vice President & Head of Honam Br. | — | ||||
Han In-kun | Vice President & Head of Corporate Mgmt Unit | — | ||||
Jung Yong-ho | Vice President & Head of Solution Business Unit | — |
Note) The number of shares owned is as of December 2006.
35
2. Employees (As of December 31, 2006)
(Unit: Number of employee, KRW thousand) | ||||||||||||||||||||
Average | ||||||||||||||||||||
Description | Management Staff | Others | Total | Total Salaries | Salaries | |||||||||||||||
Male | 1,310 | 45 | 1,355 | 83,292,640 | 61,790 | |||||||||||||||
Female | 77 | 66 | 143 | 4,719,674 | 34,201 | |||||||||||||||
Total | 1,387 | 111 | 1,498 | 88,012,314 | 59,228 |
3. Trade Union (As of December 31, 2006)
Description | Details | |
Eligible for membership | 1,210 | |
Registered members | 1,167 | |
Standing members | 5 | |
Affiliation | Federation of Korean Trade Unions | |
Others | — |
VIII. Transactions with Related Parties
1. Transactions with largest shareholders
A) | Loan | ||
The provision of loan to hanaromedia within the limit of KRW 60 billion was approved by the Company’s Board of Directors on June 22, 2006. A total of KRW 15 billion was extended to hanaromedia in 2006 and the outstanding balance was KRW 15 billion as of the end of 2006. As the loan was fully repaid, hanaromedia has no outstanding balance on the loan as of the end of March 30, 2007. | |||
B) | Provision of collateral | ||
The provision of collateral for loans to hanaromedia was approved by the Company’s Board of Directors on February 28, 2007. The collateral will be provided for the claim secured with the ceiling of 120~130% of the loan balance which amounts to KRW 100 billion. No collateral was provided in 2006. | |||
C) | Debt guarantee | ||
Lessee: hanaromedia Inc. (affiliated company) | |||
Lessor: to be decided | |||
Total amount of debt guarantee: KRW 90 billion | |||
Guarantee period: up to 48 months | |||
Date of BOD resolution: June 22, 2006 | |||
The debt guarantee is related to equipment lease for the business of hanaromedia. No debt guarantee has been provided as of the end 2006. |
36
D) | Disposal of equity investments |
(Unit: KRW billion) | ||||||||||||||||||||
2006 balance | ||||||||||||||||||||
Company | Relation | Type | Beginning | Net change | Ending | Reference | ||||||||||||||
hanaromedia Inc. | Affiliated company | Common shares | — | 18.5 | 18.5 | Ending book value: KRW 5.9 billion | ||||||||||||||
Hanaro RD&M, Co., Ltd. | Affiliated company | Common shares | 2.5 | 1.0 | 3.5 | Ending book value: KRW 4.3 billion | ||||||||||||||
Total | 2.5 | 19.5 | 22.0 |
2. Transactions with other related parties
A) | Provision of Security for Members of the Employee Stock Ownership Association | ||
Security provision for loans for members of the Employee Stock Ownership Association was approved by the Company’s Board of Directors on August 2, 2006, in order to encourage the members to contribute money to the Association, which will be used to purchase the Company’s shares in the market. Of the ceiling amount of KRW 20 billion, a total of KRW 11.2 billion was provided as security for loans to the 1,097 members as of the end of 2006. |
IX. Attachments
Not applicable.
37
X. Other Matters
1. Material developments in disclosed events (as of March 30, 2007)
Date | Title | Details | After Disclosure | |||
February 22, 2006 | Plan for delisting from NASDAQ/ deregistration from the SEC | Through a resolution of the Board of Directors, the Company has decided to pursue deregistration from the SEC and delisting of Depository Receipts on NASDAQ after the relevant law of the United States is enacted. | The delisting/deregistration will be pursued after the enactment of the SEC Rule 12h-6 (expected to take effect in the first half of 2007). The Representative Director shall be delegated to make decisions regarding the schedule and other details of delisting/deregistration. | |||
May 12, 2006 | Business plan for TV-Portal service of hanarotelecom | - The Company expects TV-Portal revenue of KRW 5 billion, KRW 70~80 billion and KRW 200 billion for 2006, 2007 and 2008, respectively, with subscriber target of 250,000, 1 million and 1.5 million subscribers for 2006, 2007 and 2008, respectively (Figures for 2008 are estimated on the assumption that regulations on the IP-TV business and that a full-fledged IP-TV service is provided.) - - Expected revenue of TV-Portal service was calculated based on expected monthly fees and the subscriber target that hanarotelecom will likely achieve if the Company undertakes marketing activities mainly targeting its broadband subscribers. The revenue may change depending on the actual number of TV-Portal subscribers. | The Company launched the commercial hanaTV service on July 24, 2006. As of December 31, 2006, about 200,000 subscribers signed up for the service, and revenues reached about KRW 1.2 billion. As of the end of February 2007, the Company posts about 310,000 activated subscribers. | |||
February 15, 2007 | 2007 Business Plan | - Revenues: a 5~8% increase from KRW 1,723.3 billion for 2006 - - EBITDA: a 5~8% increase from KRW 535.5 billion for 2006 - CAPEX: KRW 330 billion ~ KRW 340 billion | The Company is currently undertaking its business operations for the fiscal year 2007. Any changes or announcements in the future will be disclosed through filing. |
38
2. Summary of Shareholders’ Meeting
Date | Agenda | Resolution | ||
The 9th AGM (March 24, 2006) | Approval of the Financial Statements of hanarotelecom incorporated for the Fiscal Year 2005 | Approved (No dividend) | ||
Approval of the Financial Statements of Korea Thrunet Co., Ltd. for the Fiscal Year 2005 | Approved (No dividend) | |||
Amendment of the Articles of Incorporation | Approved | |||
Appointment of Director | Approved | |||
Appointment of Audit Committee Member (Non-Outside Directors) | Approved | |||
Appointment of Outside Directors | Approved | |||
Approval of the Ceiling Amount of Compensation for Directors for the Fiscal Year 2006 | Approved | |||
Approval of Capital Reduction | Approved | |||
- Record date: May 2, 2006 | ||||
Ratio of capital reduction: 50% | ||||
Number of shares subject to capital reduction: 231,676,506 common shares | ||||
Approval of Grant of Stock Option Rights | Approved | |||
- A total of 4,650,000 shares granted to 17 officers | ||||
EGM (November 16, 2006) | Appointment of Directors and an Outside Director | Approved | ||
- 2 directors and 1 outside director | ||||
Appointment of the Outside Directors to Be Nominated as Audit Committee Members | Approved | |||
- 2 members of the Audit Committee | ||||
Approval of Grant of Stock Option Rights | Approved | |||
- A total of 3,350,000 shares granted to 59 officers and employees | ||||
The 10th AGM (March 23, 2007) | Approval of the Financial Statements for 2006 | Approved (No dividend) | ||
Appointment of an Outside Director | Approved | |||
- 1 outside director | ||||
Approval of the Ceiling Amount of Compensation for Directors for 2007 | Approved | |||
Approval of Grant of Stock Option Rights | Approved | |||
- A total of 2,294,400 shares granted to 369 officers and employees |
3. Contingent liabilities
As of December 31, 2006, the Company is a defendant in 4 lawsuits claiming damages for payments amounting to KRW 1,392,338 and is a plaintiff in 5 lawsuits claiming for payments amounting to KRW 9,212,471. The final outcome of the above lawsuits cannot presently be determined. However, management believes that the ultimate disposition of those litigations will not have a materially adverse impact on the operations or financial position of the Company.
39
The following exhibits were filed as part of the Report submitted to the Financial Service Advisory in Korea.
List of Exhibits
Exhibit A | Auditor’s Report | |
Exhibit B | Articles of Incorporation | |
Exhibit C | Audit Report of Audit Committee | |
Exhibit D | Director’s Opinion on Business Operation | |
Exhibit E | Auditor’s Comments on the Formation of Internal Monitoring System | |
Exhibit F | Independent Auditor’s Comments on the Formation of Internal Monitoring System | |
Exhibit G | Business Report | |
Exhibit H | Internal Accounting Management System |
40