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Title: |
Interim Report |
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Entities: |
Hanaro Telecom, Inc.; Korea Thrunet Co., Ltd.; KT Corp.; SK Telecom Co., Ltd. |
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Date: |
2006 |
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Preview shows 16KB of 63KB total |
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$44 |
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ID: |
#2433729 |
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INTERIM REPORT
(For the period from January 1, 2006 through June 30, 2006)
To: The Financial Supervisory Commission of Korea
Pursuant to Article 186-3 of the Securities and Exchange Act of Korea,
hanarotelecom incorporated ("the Company" or "hanarotelecom") is submitting this
report.
AUGUST 14, 2006
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, Senior Executive Vice President
& Chief Financial Officer
(Tel.) 82-2-6266-2300
(HANAROTELECOM LOGO)
1
{PAGE}
On August 14, 2006, hanarotelecom incorporated ("the Company" or
"hanarotelecom") filed an interim 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 unaudited interim 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
{PAGE}
TABLE OF CONTENTS
{TABLE}
{S} {C}
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 ON DIRECTORS, OFFICERS & EMPLOYEES
VII. TRANSACTIONS WITH RELATED PARTIES
VIII. ATTACHMENTS
IX. OTHER MATTERS
{/TABLE}
LIST OF EXHIBITS
3
{PAGE}
I. COMPANY INFORMATION
1. COMPANY OBJECTIVES
A) Proposed future business
- 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.
In addition, to strengthen its convergence services
including TV-Portal, hanarotelecom newly established the
Convergence Headquarters in April 2006. 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 about 30,000
subscribers signed up for hanaTV as of August 10, 2006.
(a) Expected revenue and subscriber target of TV-Portal
service
{TABLE}
{CAPTION}
Year Expected revenue (KRW billion) Subscriber target (1,000 subscribers)
---- ------------------------------ -------------------------------------
{S} {C} {C}
2006 5 250
2007 70 - 80 1,000
2008 200 1,500
{/TABLE}
- 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.
(b) Basis for the estimates of expected revenue and
subscribers
- 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
4
{PAGE}
- Other major changes
{TABLE}
{CAPTION}
Date Changes
---- -------
{S} {C}
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 capital reduction without payment to shareholders at
the equal ratio of 2:1 (paid-in capital after capital reduction:
KRW 1,158.4 billion)
July 24, 2006 Launched the commercial hanaTV service (TV-Portal)
{/TABLE}
3. CHANGES IN PAID-IN CAPITAL
A) Bonds with warrants (As of June 30, 2006)
(Unit: share)
{TABLE}
{CAPTION}
18th overseas bond with warrants (non-registered,
non-guaranteed)
-------------------------------------------------
{S} {C}
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
Outstanding balance of bond --
Number of shares to be issued upon exercise 3,349,332
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.
{/TABLE}
Note) 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 2, 2006, and adjusted again to KRW 5,917
per share through refixing on May 26, 2006, in accordance with the
Subscription Agreement.
4. NUMBER OF SHARES ISSUED (AS OF JUNE 30, 2006)
A) Total number of shares issued
(Unit: share)
{TABLE}
{CAPTION}
Authorized shares Shares issued Treasury stock Shares trading Par value
----------------- ------------- -------------- -------------- ---------
{S} {C} {C} {C} {C}
700,000,000 231,676,506 10,455 231,666,051 KRW 5,000
{/TABLE}
Note) After a capital reduction at the equal ratio of 2:1 on May 2,
2006, the number of issued shares was changed to 231,676,506 shares as
of August 14, 2006.
5
{PAGE}
B) Acquisition and disposal of treasury stock
{TABLE}
{CAPTION}
Ending
Beginning (As of
(As of Dec. Acquisition Disposal June 30,
Class 31, 2005) (+) (-) 2006) Remark
---------- ----------- ----------- -------- -------- ------
{S} {C} {C} {C} {C} {C} {C}
Direct acquisition in Registered -- -- -- --
accordance with common
Paragraph 1, Article share
189-2 of the
Securities and
Exchange Act of
Korea
Direct acquisition " -- 15,023 4,568 10,455
for reasons other
than Paragraph 1,
Article 189-2 of the
Securities and
Exchange Act of
Korea
Subtotal " -- 15,023 4,568 10,455
Indirect acquisition " -- -- -- --
through trust
agreement, etc.
Total " -- 15,023 4,568 10,455
{/TABLE}
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 2,
2006.
C) Employee share scheme (Employee Stock Ownership Association)
- Transactions with the Employee Stock Ownership Association:
[Loans to the employees]
(Unit: KRW million)
{TABLE}
{CAPTION}
Interest Ending Details of
Series No. Lender Period Rate Balance Collateral
---------- ------------------- ------------------- -------- ------- -----------------
{S} {C} {C} {C} {C} {C}
1st hanarotelecom January 14, 2005 - 2.00% 1,677
January 13, 2007
2nd hanarotelecom September 1, 2005 - -- 1,531
September 1, 2006
Korea Exchange Bank September 1, 2005 - 4.98% 929 Guaranteed by the
September 1, 2006 Company
3rd hanarotelecom July 23, 2004 - -- 6,276
July 22, 2006
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