table of contents table of contents 04_financial highlights 06_ceo message 08_board of directors...
TRANSCRIPT
TABLE OF CONTENTS
04_FINANCIAL HIGHLIGHTS 06_CEO MESSAGE 08_BOARD OF DIRECTORS
10_TIME LINE IN 2006 12_AT A GLANCE 14_REVIEW OF OPERATION 16_POWER CABLE
18_TELECOMMUNICATION 20_COPPER ROD & WIRE 22_SOCIAL CONTRIBUTION 24_FINANCIAL SECTION
26_MANAGEMENT DISCUSSION AND ANALYSIS 33_BALANCE SHEETS 35_STATEMENTS OF INCOME
36_STATEMENTS OF APPROPRIATIONS OF RETAINED EARNINGS 37_STATEMENTS OF CASH FLOWS
40_CORPORATE HISTORY 41_ORGANIZATION CHART 42_DOMESTIC AFFILIATES
44_GLOBAL AFFILIATES 46_TAIHAN AROUND THE WORLD
47_OFFICES & PLANTS / CORPORATE DATA
�
�
Linking the World, Linking the FutureTaihan connects the world for much happier life. With its differentiated technology, Taihan
provides the optimum solution for power transmission and telecommunication networks. By
upgrading the core competence of Taihan, it will be realizing the vision of a global leading
company in the 21st century. The technology linking the world,linking the future,Taihan
Electric Wire.
�
>�
(In m
illion
s o
f KR
W)
’04 ’05 ’06
76,224
70,304
Sales
Operating Income
2006 Sales
2006 Operating Incom
(In m
illion
s o
f KR
W)
2,238,057
70,303
’04 ’05 ’06
1,611,135
1,587,320
2,238,057
21,109
FINACIAL HIGHLIGHTS
For the years ended 2005 2006 2005 2006 Changes
Sales \ 1,587,320 \ 2,238,057 US$ 1,566,950 US$ 2,410,141 41.00%
Gross Profits 66,710 120,289 71,839 129,538 80.30%
Operating Income 21,109 70,304 20,838 75,709 233.00%
EBITDA 37,138 87,784 36,661 94,534 100.00%
Ordinary Income 202,750 138,437 218,339 149,081 -31.70%
Net Income 145,493 104,400 143,493 112,427 -28.20%
(In millions of KRW) (In thousands of USD)*
*The figures of FY 2006 and FY 2005 are translated the KRW in to U.S dollars based on the prevailing rate of 928.6 KRW to US$ 1.0 at Dec. 31, 2006 for the convenient comparison
Net Debts
Total Assets
(In m
illion
s o
f KR
W)
’04 ’05 ’06
733,169
443,272
(In m
illion
s o
f KR
W)
’04 ’05 ’06
1,602,5611,680,320
1,885,739
501,023
As of the years ended 2005 2006 2005 2006 Changes
Current Assets \ 711,772 \ 976,393 US$ 766,500 US$ 1,051,467 37.20%
Tangible Assets 488,438 434,082 525,994 467,458 -11.10%
Total Assets 1,680,320 1,885,739 1,658,756 2,030,734 12.20%
Interest-bearing Debts 627,646 630,698 675,906 679,192 0.50%
Net Debts 501,023 443,272 494,593 477,356 -12.90%
Total Liabilities 771,257 838,256 761,359 902,710 8.70%
Capitals in Common Stocks 110,039 119,465 108,627 128,650 8.60%
Capital Surplus 504,717 561,917 543,525 605,123 11.30%
Retained Earnings 294,723 377,442 317,384 406,464 28.10%
Total Shareholders’Equity 909,062 1,047,483 897,396 1,128,024 15.20%
(In millions of KRW) (In thousands of USD)*
CO
NN
EC
TIN
G T
HE
WO
RL
D0
4 I 0
5
2006 Total Assets
1,885,739
2006 Net Debts
443,272
Faithful to basics and principles, Creating new value with an indomitable spirit of challenge,
TAIHAN is evolving to be a global leading enterprise.
CEO MESSAGE
CUSTOMERS AND SHAREHOLDERS,
First,let me express my gratitude for your concerns and
support.
In 2006, the Korean economy experienced many difficulties in
the wake of precarious international exchange and interest
rates and market instability. Moreover, as the global market
prices of oil and other essential raw materials continued to
soar in the midst of sharply rising exchange rate to US dollar,
unstable business environment in domestic market continued
last year.
I Our company experienced those difficulties along with
everyone else. The skyrocketing dollar/won rate not only
raised the cost of procuring materials, but also impacted
profits of overseas sales. To adapt to these externalities,
TAIHAN has concentrated its efforts on strengthening our
production and sales competitiveness and risk management
to help tide the company over such unfavorable conditions as
excessive change in raw materials price and exchange rates.
As a result of those efforts, we could achieve good
performance in 2006.
I Total sales for 2006 amounted to KRW 2 trillion and 238.1
billion. Breaking it down, the cable business, including copper
rod, accounted for 1 trillion and 843.8 billion. The stainless
steel business accounted for 383.5 billion won; and others,
10.8 billion won. Owing to increased ordinary profits from the
cable and stainless steel business, total ordinary profits rose
to 70.3 billion won and net profits reached 104.4 billion won.
I We have high hopes for an economic recovery in 2007, if
external uncertainties clear up in the near future. However, it
looks like economic realities will continue to impede business
conditions:the economy is expected to record a low growth
rate as in the past several years, while major economic
factors such as the price of raw materials and exchange rates
will remain unstable. To adapt to such changes in the
business environment, the company is undertaking
fundamental changes. Earlier this year, Taihan formed a
strategic partnership with POSCO and spun off the stainless
steel business to form a separate corporation, Taihan ST. By
such changes, Taihan ST is expected to stabilize business
performances and increase competitiveness in stainless steel
business.
I Our company will be striving for strengthening the
international competitiveness in the fields of human
resources and management systems to lay the foundation for
sustainable growth. We have expanded overseas investment
projects to some emerging markets like Vietnam, Cambodia,
and Congo, following the investment business in South Africa
and Mongolia.
I Our activities for global business operations will be further
expanded to the markets with large growth potential, as part
of our vision to become a global leading company. In order for
accomplishing such goal, stronger internal competence is a
vital prerequisite. As part of that goal, we are developing the
management systems and organizational culture that
encourage global talents to actively participate in their job. At
the same time, we will continue to promote customer and
market-oriented innovations in every part of our business
operations.
I In ever changing business environment, Taihan has
achieved steady growth over the last half-century. Today,
however, we are confronted with entirely different
environment-unlimited global competition. This new
environment will challenge not only our growth, but the
survival itself. We will be pursuing our goal for a leading
company in a global competition environment through
maximizing our competences and sharing a corporate vision
upon our passion and pioneer spirits.
I As a global leading enterprise,Taihan will be striving to
become a trust-worthy company to all its stakeholders
abiding by the management principles for transparency and
business ethics. I wish you good health and good luck in 2007.
Thank you.
Lim Chong-Wook
Representative Director&CEO
CO
NN
EC
TIN
G T
HE
WO
RL
D0
6 I 0
7
BOARD OF DIRECTORS
KANG JUNG-IL Outside Director
HAHN KWANG-HYUN CTO
LIM CHONG-WOOK Representative Diector&CEO
KWON JI-HYUK Head of Corporate Strategy Division
PARK HA-YOUNG Head of Global Business Division
LEE GWANG-SEOK Head of HR Division
KIM YOUNG-CHEOL CFO
Over the past half century, we have been implementing more advanced corporate governance structure and
transparent management to lay a firm basis for the growth in future and ultimately become a globally-
competitive company. Enterprise satisfying customers with value creation, Enterprise bringing happiness to
shareholders with the increase of corporate value and Enterprise fulfilling its social responsibility, those are the
goals we pursue.
CO
NN
EC
TIN
G T
HE
WO
RL
D0
8 I 0
9
KANG HEE-JEON Vice President
YU JUNG-YEOUL Outside Director
KIM YOUNG-MIN Head of Energy Cable Business Division
SONG KYUNG-JIN Head of Industrial Cable Business Division
KIM HONG-KIL Head of Business Support Division
HA SUNG-IM CEO of TSC
HAH JUNE-YOUNG CEO of M-TEC
ⅠDirectors of Overseas Subsidiaries
Winning large-scale, extra high voltage power
projects in U.S.A
In early February 2007, TAIHAN won the bid for two extra
high voltage power projects worth 60 million US dollars
from two power companies in the eastern US. At the end
of March, it also secured a 275kV O.F. Optical Fiber
Ground Wire (OPGW) cable turnkey project covering a 30 km section in Kuala
Lumpur for Tenaga Nasional BHD (TNB), Malaysia. Construction is planned for
the next two years.
Renovation of SCR Plant
In February 2006, TAIHAN completed renovations of its
SCR plant, a production line of copper rod &wire.
Upgrades in the overall production line will not only reduce
raw materials costs and save energy, but will also increase
quality, boosting the competitiveness of TAIHAN's SCR
products.
Developing holey fiber for FTTH for the first time in
Korea
Optomagic, TAIHAN's subsidiary specialized in optical
fiber succeeded in developing holey fiber for the first time
in Korea. Holey fiber is a technology-intensive product
that remarkably increases the flexibility of existing optical
fiber due to periodic placement of fine-holes in the optical fiber. This success
secured an advantageous position for Taihan in the FTTH (fiber to the
home)business, which is fostering as a strategic business.
TIME LINE IN 2006
Launching Telecom Operation Business in Congo by Acquiring
CKT(Congo-Korea Telecom), a joint-venture
TAIHAN has launched a telecom operation business in cooperation with
local telecom authority by acquiring 51% of total shares of CKT(Congo-
Korea Telecom) in December 2006. The company, recently changed the
name to Standard Telecom, provides fixed-line
telecom service with its new optical fiber network
from May 2007. Standard Telecom as the sole
fixed-linetelecom operat or, will be expanding its
service area by building up backbone network to
all major cities of Congo.
Establishing TGH (Taihan Global Holdings LTD.) in Hong Kong
On September 25, TAIHAN established an investment corporation in
Hong Kong. TGH (Taihan Global Holdings Ltd.) will
serve as the hub for overseas investment
business of Taihan in financing, purchasing and
management as well. TGH will take a role as a
global holding company to the investment
business units worldwide.
Plant Relocation to Dangjin
In 2006, TAIHAN made plans to construct a new cable plant on a 330, 566
square-meter site at Janghang-ri, Dangjin, Chungcheongnam-do. As per
the long-term plan, the major production facilities at Anyang Plant
started in mid-70s will be moved to the newly built plant at Dangjin up to
2010. Besides this cable plant, Taihan will complete the construction of
new factory for the electric accessory and
appliances, the commencement of which is
scheduled in the first half of 2007. Dangjin having
state-of-the-art port facilities is known as an ideal
location for Industrial complex in terms of
distribution logistics and infrastructure.
TSC plants in Vietnam Starting Operations
Following the groundbreaking ceremony in
March 2006, TAIHAN's joint venture company in
Vietnam, TSC, began to construct at DongNai
Longthan, near Ho Chi Minh City, Vietnam. A part
of facilities, including the telecommunication
cable, are already in operation. Construction of other plants will be
completed by mid 2007. TSC will produce various cable products
including high voltage XLPE cable, ACSR, and OPGW, as well as
telecommunication cable for sales to local market and near South East
Asian market.
Spinning off the stainless steel business and establishing
Taihan ST
On January 2, 2007, TAIHAN established Taihan ST by spinning off
its stainless steel division. Taihan ST will focus on manufacturing
and selling precision-made ultra-thin cold
steel for electronic parts, in which TAIHAN
holds a competitive edge. As per the
agreement for strategic cooperation with
POSCO, Taihan ST became a joint venture with
POSCO, which owns 19% of the shares.
Establishing the third VCV tower
In step with the growth of market demand home
and abroad, TAIHAN increased its production
capacity in the extra high voltage power sector by
equipping with the third VCV tower, a core facility
for extra high voltage XLPE cables.
CO
NN
EC
TIN
G T
HE
WO
RL
D1
0 I 1
1
AT A GLANCE
44.9%Sales growth rate
54.8%
CO
NN
EC
TIN
G T
HE
WO
RL
D1
2 I 1
3
Sales growth rate
29.1%Sales growth rate
I POWER CABLE I TELECOMMUNICATION I COPPER ROD & WIRE I
REVIEW OF OPERATION
ENTERPRISE LEADING POWER & TELECOM CABLE INDUSTRYIn 2006, TAIHAN has achieved comparatively good performance from its business operation and investment sector as well.
In the midst of volatile international material price, sales to overseas market passed 1 billion US dollar mainly owing to the
increase of power cable sales to Middle East and Asian market and new entry to Australia and USA etc. Together with
outstanding performance of M-TEC and Skytel, TAIHAN newly launched overseas investment business for cable production,
telecom service and leisure. These global business units will be the platform for sustainable growth in the future.
I SOCIAL CONTRIBUTION I CO
NN
EC
TIN
G T
HE
WO
RL
D1
4 I 1
5
Best quality and most reliable products, Power Cables made by TAIHAN
TAIHAN has provided high quality power cables and related products for power
transmission networks from power plants to end-users. In order to improve the
competitiveness in this sector, we have been striving to change and innovation in
technology development and marketing activity on customer-oriented strategies.
In 2006, domestic power cable market was sluggish as the low growth trends of
national economy has been continued under unfavorably changing raw material
prices and supply competition in the market. To cope with these situations, we
have concentrated on increase of export of extra high voltage power cable to such
targeted markets as Middle East, Asia and other new area like USA, Australia. The
export of EHV power cable has been largely increased to over 10%, while domestic
sales was rather contracted in 2006.
In EHV power cable sector, TAIHAN has achieved sound performance in overall
aspects including marketing, R&D and facility investment. Following the
successful inroad to the US market in 2005, we won large scale EHV power cable
project totaling 60million US Dollars from the two power utilities, Progress Energy
and Keyspan in early 2007. 330kV XLPE turn key project, the 1st order from
Australia is under construction.
POWER CABLE
In order to meet gradually increasing market demand of EHV power cable, TAIHAN largely expanded
its production capacity by installing 3rd VCV line newly. As the forerunner of high voltage power cable
in Korea started in 1969 by commercialization of 33kV XPLE cable, TAIHAN's technology has been ever
improved in EHV power cables and various quality accessories. Anyang based most advanced EHV
power cable plant has an integrated production line and test facilities to ensure the reliability of
products up to 500kV XLPE cable.
There are also some outstanding achievements in accessories for underground high voltage power
transmission line. We have succeeded in commercialization of 400kV PMJ(Pre-molded joint) with its
advantages of fast and easy to assemble on site. Through our concentrated efforts and investment on
technology to lead the competitiveness, TAIHAN is taking a leap forward a global leading company in
power cable sector.
Sales
(In m
illion
s o
f KR
W)
44.9%Sales growth rate
’04 ’05 ’06
334,384
446,633
647,382
CO
NN
EC
TIN
G T
HE
WO
RL
D1
6 I 1
7
For going ahead to create better technology in IT sector, TAIHAN focuses on advanced R&D and facility improvement.
In a rapidly changing market demand of telecommunication cable into optical fiber,
TAIHAN has concentrated its efforts on strengthening competitiveness of optical
fiber division as the demand of broadband telecommunication network has been
largely expanded home and some advanced countries. To stay abreast of recent
developments in the telecommunication market, the company has transformed
itself into a total-solution provider.
Today, the telecommunication market is being replaced by optical LAN and FTTH
(fiber to the home), which uses mainly optical fiber cable. In the ubiquitous
environment, various IT services such as broadcasting, mobile and the Internet are
in the process of convergence. In order to maintain a position as a technology
leader and lead the market trends in ever changing environment, TAIHAN is
committed to innovation of its current products and creation of new businesses.
In 2006, the telecommunication division recorded a high growth of 29.1% in sales
compared with that of the previous year. As high-speed broadband network
demand is increased, the sales of such new telecommunication cables as optical
fiber cable, OPGW, high capacity UTP and coaxial cable was largely grown.
TELECOMMUNICATION
As for existing products,TAIHAN is sharpening its global IT competitiveness by developing new optical
fiber cables and data cables. Optomagic, a subsidiary specializing in optical fiber, has remarkably
expanded the use of optical fibers by recently developing holey fibers, an innovation that came on the
heels of another development:zero water peak fibers. As a result, TAIHAN obtained a US-based
Telcordia certification as a resident supplier in 2006. These achievements will pave the way to
expanding our market through various methods of promotion.
Since 2005, TAIHAN has led implementation of FTTH for major telecommunication operators including
Korea Telecom and mobile telecom service providers. For the increase of export of these strategic
businesses, we are sharpening our sales expertise to target and open new markets in the Middle East,
the US and Europe. With construction of premium apartments, the FTTH market is expected to grow
further. Reportedly early 2007 by KT, it will carry out the long-term plan for completion of FTTH
network nationwide to 2010. In view of these challenges, TAIHAN will strengthen its competitiveness
for providing an optimum solution for next generation network. TAIHAN is also strengthening its
competitiveness thanks to development of the nation's first Cat. 7 with a transmission speed 10 times
faster than the existing UTP Cat. 6. The company plans to expand efforts to lead the digital era through
technological development in PLC, FTTH equipment, RFID and wireless network businesses.
Sales
(In m
illion
s o
f KR
W)
29.1%Sales growth rate
’04 ’05 ’06
78,076
79,300
102,338
CO
NN
EC
TIN
G T
HE
WO
RL
D1
8 I 1
9
COPPER ROD & WIRE
Internationally recognized quality productsTAIHAN holds a competitive edge in Copper Wire and Rod
As per the development of industry, copper rod mainly used for winding wire and
cables, is now used for more diverse purposes. Accordingly, expectations for
quality of copper Rod & wire products are higher. In line with the changes in
market demand,TAIHAN built a production system that could produce 250,000 tons
of 99.97% copper rod annually in 1998 following the expansion of the annual
capacity of 190,000 tons in 1991, thanks to consistent facility investment.
On the basis of it’s continuous technology development and ample experience in
facility operations, TAIHAN has produced not only copper rod for general cables
but also high quality copper wire needed for winding wire for electronics. We have
further raised the standards of quality and cost management through digitalization
of production line and system upgrade. In particular, we have minimized
environmental effects as well as strengthened our competitiveness by reducing
energy consumption through reconstruction of furnace. Despite volatile
international prices of raw materials, TAIHAN has a stable purchasing system of
raw materials. Keeping in mind that everything must be customer-oriented, we will
continue our efforts for change and innovation in all process from purchase of raw
materials, production to sales.
In 2006, the sales of copper rod division has largely increased to 1,101 billion Won, 54.8% growth
compared with that of 2005 as per the soar of raw materials price, while the sales in quantity base
rather decreased. Out of total sales, export to overseas market exceeded 100,000 tons in 2006 as the
strong demand of China and South East Asia continued.
TAIHAN has introduced the latest SCR system to control all production lines, including automatically
analyzing and managing the data collected from each process through a central computer system,
thereby producing top quality, zero-defect copper rod. The copper rod has excellent property for high
speed drawing and no breaking in process. As the general-use copper rod market comes to maturity,
our efforts will be focused on new segment on high-quality product for electronic and auto industries
as the demands in this area to be grown continuously.
Magnet wire, which is wound as a coil around a core inside electrical instruments, functions to convert
mechanical energy into electric energy and vice versa without direct involvement in the delivery of
electricity. Magnet wire is a requisite in most of electrical equipment, including those used in heavy
electric industry, car components and electronic appliances. TAIHAN has invested a great deal of effort
to produce various types of magnet wire to meet customers' needs.
Sales
(In m
illion
s o
f KR
W)
54.8%Sales growth rate
’04 ’05 ’06
729,623 711,448
1,101,222
CO
NN
EC
TIN
G T
HE
WO
RL
D2
0 I 2
1
Every members of TAIHAN are volunteering at the social welfare facilities for the disabled or
needy neighborhood. The executives and staffs volunteered at Habitat movement for building
houses at Cheonan on September 1, 2006. The company performs the social contribution
program for every member to join at volunteering activities once a year in addition to making
financial contributions to unfortunate or needy peoples.
SOCIAL CONTRIBUTION
EVEN SMALL, BUT HEARTED HELP BRINGS
SMILE OVER THE WORLD
CO
NN
EC
TIN
G T
HE
WO
RL
D2
2 I 2
3
Support for the Habitat movement
TAIHAN has supported the Habitat movement for homeless people since 2001. Along with financial
support, our employees volunteer to help build houses, transforming caring thoughts into action. We
will continue our support and volunteering activities to ensure marginalized people a better and more
pleasant living environment.
Support for couples trying to have children
Low birth rates are now major social issue that will impact the future of our nation. There are many
couples trying unsuccessfully to conceive. To support these couples and raise awareness on the issue,
TAIHAN is supporting a project in cooperation with Trybrands and the Population Health and Welfare
Federation of Korea.
Support for marginalized people
Every TAIHAN peoples join at the volunteering activities as per the social contribution program once a
year. The executives and staffs volunteer to such needy peoples and facility as Eunpyung Angel’s
Heaven started from 1972 and 'Bapper', which provides hungry and malnourished people with meals.
We have also donated warm underwear and winter necessities to social welfare facilities.
Insong Culture Foundation
Insong Culture Foundation is a non-profit scholarship foundation established in 1970 by the founder
and the 1st chairman of TAIHAN, Insong Sull Gyeong-Dong through private fund donations. For the
past 35 years, the Foundation has carried out various social contribution program including general
scholarship projects, a project to support adolescent heads-of-household who are breadwinners for
their families, and an overseas IT scholarship project in Mongolia.
Sull Won-Ryang Culture Foundation
The Sull Won-Ryang Culture Foundation is a public foundation for culture and arts established in 2005
to commemorate the management philosophy of the late 2nd chairman, Mr.Sull Won-Ryang. The
Foundation sponsors various civic events such as an art contest on the theme of "family love”. It also
held a charity concert so that marginalized citizens who have little access to arts and culture could
enjoy the famous Broadway musical 'Mamma Mia' and various art exhibitions.
MANAGEMENT DISCUSSION AND ANALYSIS I BALANCE SHEETS I STATEMENTS OF INCOME I STATEMENTS OF APPROPRIATIONS OF RETAINED EARNINGS I
FINANCIAL SECTION
In 2006 Total sales amounted to KRW 2 trillion and 238 billion. Breaking it down, the cable business accounted for 1 trillion
and 843 billion Won. The stainless steel and others accounted for 395 billion Won. Total ordinary profits rose to 70.3 billion
Won and net profits reached 104.4 billion Won through the change and innovation in the operation of the company.
I STATEMENTS OF CASH FLOWS I
ACHIEVEMENTS THROUGH GHANGE AND INNOVATION
CO
NN
EC
TIN
G T
HE
WO
RL
D2
4 I 2
5
MANAGEMENT DISCUSSION AND ANALYSIS
FINACIAL SUMMARY
\ 1,611,120
113,493
76,224
96,093
47,533
64,481
19,640
44,841
\ 1,168
\ 548,257
555,110
1,602,561
808,337
739,960
928,955
100,000
435,858
168,427
-30,678
673,606
343,309
\ 886,908
7.0%
6.0%
4.7%
2.8%
2.8%
6.8%
5.4%
87.4%
137.9%
50.4%
109.9%
\ 500
42.8%
6.2%
(in millions of KRW)
2004 2005For the years ended
Sales
Gross Profits
Operating Income
EBITDA
NOPLAT
Ordinary Income
Income tax expenses
Net Income
Basic EPS(In KRW)
As of the years ended
Current Assets
Tangible Assets
Total Assets
Interest-bearing Debts
Net Debts
Total Liabilities
Capitals in Common Stocks
Capital Surplus
Retained Earnings
Capital Adjustment
Total Shareholders’ Equity
Working capital
Invested capital
RATIO ANALYSIS
Gross Profit Margin
EBITDA Margin
Operating income Margin
Net Income Margin
ROA
ROE
ROIC
Current ratio
Liability ratio
Interest-bearing debts to Asset
Net Debts to Equity
Dividends per share(In KRW)
Pay-out ratio
Dividend yield
\ 1,587,320
66,710
21,109
37,138
32,223
202,750
57,257
145,493
\ 3,638
\ 711,772
488,438
1,680,320
627,646
509,095
771,257
110,039
504,717
294,723
-417
909,062
438,457
\ 926,536
4.2%
2.3%
1.3%
9.2%
8.9%
18.4%
3.5%
193.9%
84.8%
37.4%
56.0%
\ 500
14.9%
1.9%
\ 2,238,057
120,289
70,304
87,784
52,735
138,437
34,037
104,400
\ 2,248
\ 976,393
434,082
1,885,739
630,698
443,272
838,256
119,465
561,917
377,443
-11,342
1,047,483
483,835
\ 893,875
(% / In KRW)
5.4%
3.9%
3.1%
4.7%
5.9%
10.7%
5.8%
181.3%
80.0%
33.4%
42.3%
\ 500
22.2%
2.2%
2006
OVERVIEWS
Taihan Electric Wire Corp.(“the Company”)’s business sectors are categorized into Cable & Wire business unit including
copper rods and power cables, Stainless Steel business unit and Others. The Company’s achievements toward overseas
marketing resulted in out- performance with 42.6% increase compared with the previous year due to our effort to propel the
diverging of geographical area to South Asia, Europe, Australia and USA. During FY 2006, annual growths in Cable & Wire
and Stainless Steel business units were reached to 50.0% and 11.1%, respectively. Sales and operating income during FY
2006 totaled KRW 2,238.1 billions and KRW 70.3 billions, equivalent to YoY of 41.0%p and 233.0%p as compared to FY 2005,
respectively. This remarkable record of over-double of operating income of FY 2005 is mainly thanks to the increase of export
of EHV power cable and profit generation of stainless steel. Meanwhile, net income in FY 2006 decreased 28.2% to KRW
104.4 billions compared to KRW 145.5 billions in FY 2005, primarily due to significantly reduced gains on collection of Jinro’s
bonds, which is less than half of its gains of the previous year. Total asset in FY 2006 stood KRW 1,885.7 billions with increase
of 12.2%p as compared to FY 2005. Net debts ratio in FY 2006 was consecutively reduced into 42.3% for three years. Financial
status secured solidly its soundness as well as its liquidity.
RESULT OF OPERATIONS
Sales and Operating Income
During FY 2006, revenues, operating income, EBITDA by business units totaled KRW 1,587.3 billions and KRW 21.1 billions
and its breakdowns with YoY & mix of revenues as the follows;
Sales in FY 2006 increased 41.0% to KRW 2,238.1 billions primarily as the results of raised ASP, which is linked to 74.4%p
normalized raising of LME cost, with prosperous performances on mass-export of cables & wires and stainless steel as well
as stable growth of volumes in domestic market. Sales of Cable & Wire Business sector increased 50.0%p to KRW 1,843.8
billions with its operating margin of 2.3%, slightly increased by 0.4p%, mainly due to significantly raised ASP of 50.1%p. Cable
& Wire business unit consists of copper rods, power & industrial cable and communication cable. These performances on
production during FY 2006 are represented by KRW 1,046.8 billions, KRW 256.0 billions and KRW 70.2 billions, showing
increases in 61.7%p, 57.4%p and 4.5%p, compared to FY 2005, respectively. Meanwhile, sales in stainless steel business unit
during FY 2006 also increased 11.1%p compared to FY 2005 under the burden of its cost highly raised over 80% but its
operating income margin in 2006 turned around to positive 6.2% from negative 2.3% for previous year through restructuring
of managements and aggressive overseas marketing activities. According the foregoing effects, operating income during FY
2006 incredibly increased 233.0%p to KRW 70.3 billions compared to FY 2005 due to massive-effects under the almost same
gross profits margin. EBITDA during 2006 are also double of FY 2005 to KRW 87.8 billions.
(In millions of KRW)
Cables & Wires
Stainless steel
Others
55,225
28,547
4,012
87,784
YoY EBIDTA
50.0%
11.1%
-17.1%
41.0%
Mix
82.4%
17.1%
0.5%
100.0%
1,843,774
383,516
10,767
2,238,057
Operating Income
42,659
24,457
3,187
70,303
Revenues
CO
NN
EC
TIN
G T
HE
WO
RL
D2
6 I 2
7
NET NON-OPERATING INCOMES (LOSSES) & ORDINARY INCOME
Net non-operating income during FY 2006 stood KRW 68.1 billions which is 65.2% decrease during FY 2005 primarily due to
reduced gains from collection of bonds. Net gains on disposal of tangible assets increased to KRW 35.8 billions due to gains
on disposal of Nambu terminals. Meanwhile, net interest expense during FY 2005 decreased KRW 1.7 billions to KRW 18.9
billions. These decreases were primarily due to lower average interest-bearing debts balances. On the other hands, the
average rate of interest on borrowings during FY 2006 and FY 2005 was 5.8% and 5.6%, respectively. Major changes of net
operating incomes or losses during FY 2004, FY 2005 and FY 2006 are as the bellows:
As the result of foregoing non-operating gains (losses), ordinary income during FY 2006 significantly decreased 31.7%p to
KRW 138.4 billions compared to FY 2005.
INCOME TAX AND NET INCOMES
Statuary income tax rate in FY 2006 and FY 2005 was about 27.5%. However effective income taxes in FY 2006 and FY 2005
were 24.6% and 28.2% according to the below tax reconciliation;
RETURNS ON INVESTED CAPITAL
The following table shows the calculation of ROIC during FY 2004, FY 2005 and FY 2006. We refer to Net Operating Profits
Less Adjusted Taxes (NOPLAT) divided by average operating invested capital as “Returns on Invested Capital (ROIC)”.
NOPLAT presented as adjusted operating income after deducting of tax applicable effects from operation income.
(In millions of KRW)
Net interest expense
Gain on the collection of bonds
Incentives
Net gain(loss) on available-for-sale securities
Net gain on valuation of equity method
Net gain(loss) on foreign currencies
Net gain(loss) on future transactions
Net gain(loss) on the derivatives
Net gain on disposal of tangible assets
Net gain(loss) on investment securities
Dividends income
Other net gains
-18,890
6,132
-687
1,330
34,354
3,709
-1,233
1,243
35,857
665
68,134
2006
-11,840
-14,877
6,770
15,050
-6,216
-2,659
608
-33
458
-11,743
2005
-20,639
181,366
-11,799
-1,201
29,294
-5,338
5,304
3,159
8,723
-15,250
511
181,640
2004
(In millions of KRW)
Current income taxes
Net change of deferred tax and other adjustments
Income tax expense
Effective tax rate
34,510
-473
34,037
24.60%
2006
24,971
-5,331
19,640
30.50%
2005
44,556
12,701
57,257
28.20%
2004
NOPLAT during FY 2006 increased KRW 20.5 billions to KRW 52.7 billions as compared to FY 2005 due to higher operating
incomes. The operating invested capital in FY 2006 decreased KRW 32.7 billions to KRW 893.9 billions, as compared to FY
2005. This decrease was primarily due to double turnover to inventories as compared to FY 2005 and huge-scaled disposal of
land and buildings of Nambu terminal during FY 2006. As the foregoing calculations, ROIC in FY 2006 was increased to 5.8%
from 3.6% in FY 2005 primarily due to the higher profitability of operating and slightly decrease in operating invested capitals
as compared to FY 2005.
CAPITAL RESOURCES AND LIQUIDATION
The following table shows the sources of cash flow from operating activities and the use of cash in our operations in FY 2004,
FY 2005 and FY 2006. We refer to the net amount of cash generated from operating activities less capital expenditures and
dividends as “free cash flows”
(In millions of KRW / %)
EBIT
Taxes on EBIT
Changes in deferred taxes
NOLPLAT(A)
Working capital
Cash and cash equivalent
Trade receivables
Inventories
Other operating current assets
Trade payables
Other operating current liabilities
Net property, plant and equipment
Other operating non-current assets
Other liabilities
Provisions of severance for retirement
Operating invested capital
Averaged operating invested capital(B)
Total invested capitals
ROIC(A/B)
70,303
17,285
-283
52,735
483,835
67,142
351,089
182,700
61,520
62,910
115,705
424,294
7,585
20,558
1,281
893,875
910,205
1,685,285
5.8%
2006
76,224
23,217
-5,474
47,533
345,386
48.334
217,929
162,311
36,411
-71,793
-47,806
555,110
15,643
13,402
1,020
886,388
866,995
1,481,942
5.4%
2005
21,109
5,961
17,075
32,223
443,948
47,620
247,377
237,792
46,164
-53,517
-81,487
488,438
7,683
3,040
8,607
923,290
906,722
1,536,708
3.5%
2004
CO
NN
EC
TIN
G T
HE
WO
RL
D2
8 I 2
9
Operating income
Depreciation and amortizations
Net increase in deferred income taxes
Less : Net increase working capitals
Interest expenses, net
Others, net
Cash flows from operating activities
Less : Capital expenditures, net
Dividend Paid
FCF
70,303
11,215
-283
-45,378
-18,890
23,697
40,665
105,309
-21,680
124,024
76,224
19,869
-5,474
-72,680
-11,840
-17,737
-13,149
856
-19,197
-31,489
21,109
16,029
17,075
-98,562
-20,639
107,949
46,375
46,442
-19,197
73,621
2004 2005
(In millions of KRW)
2006
The free cash inflows during FY 2006 increased KRW 50.4 billions to KRW 124.0 billions as compared to FY 2005. Cash
outflows on capital expenditure and inflows from disposal of its related assets during FY 2006 were KRW 19.8 billions and
KRW 128.8 billions, respectively. The Company continues to fund capital expenditures for restructuring of cost
managements, to invest in new working process and technology, to maintain our competitiveness on costs. The deferred
income tax liabilities in FY 2006 decreased KRW 0.3 billions to KRW 7.1 billions as compared to FY 2006. Net change in
working capitals in FY 2006 was an increase of KRW 49.8. The increase in working capital accounts during FY 2006 is
attributable to the higher level of operating activities as reflected the highest volume of sales over prior year. The following
table shows the amounts of our cash in and out flows from each activity in FY 2004, FY 2005 and FY 2006.
Net cash inflows from operating activities during FY 2006 totaled KRW 40.7 billions. Net cash outflows from investing
activities during FY 2006 were KRW 41.7 billions. This outflow of cash was primarily due to acquisition of short-term financial
institutes and equity method investments, payment of short-term loan receivables. Meanwhile, net cash flows from property,
plant and equipment show inflows of KRW 87.8 billions primarily as the result of disposal of Nambu terminal. Net cash
inflows from financing activities during FY 2006 were KRW 25.0 billions. Major net cash inflows on accounts from financing
activities were mainly from new long-term borrowings of KRW 120.0 billions. The total assets in FY 2006 increased 12.2%p to
KRW 1,885.7 billions compared to previous year due primarily to increase in trade receivables, cashable assets and loan
receivables. On the other hand, non-current assets in FY 2006 decreased 6.1%p primarily due to disposal of property, plant
and equipments and termination of matured date on held-to-maturity securities as compared to FY 2005. Total liabilities in
FY 2006 increased 8.7%p to KRW 838.2 billions over prior year mainly due to increase in interest-bearing debts from KRW
627.6 to KRW 630.7 millions, compared to previous year. However, net debts in FY 2006 consecutively increased to KRW 443.3
billions for three years, equivalent to 42.3% of net debt ratio as compared to FY 2005. Total shareholders’ equity in FY 2006
was KRW 1,047.5 billions, equivalents to 15.2%p increase compared to previous year. The increase in shareholders’ equity
was due primarily to net income of KRW 104.4 billions and new issuance of 3,770,147 common shares valued at
approximately KRW 69.6 billions according to exercising of the conversion right of convertible bonds.
ORDER BACKLOGS
At December 31, 2006, the Company had a backlog of unfilled orders of approximately KRW 115.9 billions, almost same
amounts of FY 2005 and breakdown of backlogs in FY 2004, FY 2005 and 2006 are as follows;
Wire & cables Business Sector
Other sectors
total
115,880
-
115,880
76,884
772
77,656
115,168
-
115,168
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
Net increase in cash & cash equivalent
40,665
-41,706
24,983
23,942
-13,149
134,964
-87,454
34,361
46,375
106,095
-114,049
38,421
(In millions of KRW)
(In millions of KRW)
200620052004
200620052004
RISK MANAGEMENTS
The Company is subject to risks associated with changes on foreign currency exchange rates, interest rates and raw
material prices. In order to manage these volatilities, the Company entered into future contracts, interest swap contracts and
currency swap contacts of utilizing risk managements procedures and controls in executing derivative financial instruments
transactions. At the same time, no transactions were executed nor financial instruments held for trading purpose.
Counterparts for these transactions are accredited financial institutes holding same or higher AA credit rate. The table
provides information about the Company’s financial instruments that are sensitive to changes in commodity prices.
KOSPI *High(KRW)
Low(KRW)
1,434.46
25,950
21,000
4th Q
1,295.15
22,800
16,400
3rd Q
1,371.41
22,500
16,800
1st Q
1,359.60
25,700
16.500
2nd Q
(In KRW)
CO
NN
EC
TIN
G T
HE
WO
RL
D3
0 I 3
1
The table provides information about the Company’s financial instruments that are sensitive to interest rate and foreign
currency exchange rates.
DIVIDENS
The Company declared in 2006 cash dividends of KRW 500 per share of common stocks at the same amount in FY 2005. Total
dividends are KRW 21.7 billions, equivalents to 22.2% of net income during FY 2006. Meanwhile dividend yield rate in FY 2006
was 2.2%.
STOCK PRICE
The following table set forth the highest and lowest stock price per share with KOSPI by each quarter.
INTEREST RATE SWAP
Fixed rate(Pay)
Variable rate(Receive)
Fixed rate(Pay)
Variable rate(Receive)
Fixed rate(Pay)
Variable rate(Receive)
Fixed rate(Pay)
Variable rate(Receive)
Fixed rate(Pay)
Variable rate(Receive)
Fixed rate(Pay)
Variable rate(Receive)
CURRENCY SWAP
Receive KRW/Pay USD
Receive KRW/Pay USD
Receive KRW/Pay USD
Receive KRW/Pay USD
Receive KRW/Pay USD
Receive KRW/Pay USD
US$20,644
US$29,644
US$20,975
US$31,381
US$20,975
US$21,000
US$20,644
US$29,644
US$20,975
US$31,381
US$20,975
US$21,000
Amounts(In thousands)
6.19%
Libor+1.20%
5.52%
Libor+0.89%
5.30%
Libor+0.9%
1.01
0.95
0.96
5.57%
Libor+0.94%
5.30%
Libor+0.82%
0.95
0.95
5.40%
Libor+0.7%
0.97
20082007 2009
FORWARD
Cooper
Cooper
Aluminum
Lead
14,475
13,475
100
500
Quantity(ton)
- FY 2009
FY 2007
FY 2007
FY 2007
Price(USD/ton)
4,077.0 ~ 7,385.0
2,719.0 ~ 7,850.0
2,431.0
2,577.0 ~ 2,804.0
PositionPeriod
FY 2007 Buying
Selling
Buying
Selling
To the Board of Directors and Shareholders of Taihan Electric Wire Co., Ltd.
We have audited the accompanying non-consolidated balance sheets of Taihan Electric Wire Co.,Ltd.(the “Company
”)as of December 31,2006 and 2005,and the related non-consolidated statements of income, appropriations of retained
earnings,and cash flows for the years then ended,expressed in Korean Won.These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opini on on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of Korea.Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,on a test basis,evidence supporting the
amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used
and significant estimates made by management,as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion,the non-consolidated financial statements referred to above present fairly,in all material respects,the
financial position of Taihan Electric Wire Co.,Ltd.as of December 31,2006 and 2005,and the results of its operations,the
changes in its retained earnings and its cash flows for the years then ended in conformity with accounting principles
generally accepted in the Republic of Korea.
This report is effective as of March 7, 2007, the audit report date. Certain subsequent events or circumstances, which may occur between
the audit report date and the time of reading this report, could have a material impact on the accompanying non-consolidated financial
statements and notes thereto. Accordingly, the readers of the audit report should understand that there is a possibility that the above audit
report may have to be revised to reflect the impact of such subsequent events or circumstances, if any.
Samil PricewaterhouseCoopers is the Korean member firm of PricewaterhouseCoopers. PricewaterhouseCoopers refers to the network of member firms of
PricewaterhouseCoopers IIinternational Limited,each of which is a separate and independent legal entity.
Samil PricewaterhousecoopersKukje Center Building191 Hankangro 2ga, YongsankuSeoul 140-702, KOREA(Yongsan P.O. Box 266, 140-600)
Seoul, KoreaMarch 7, 2007
REPORT OF INDEPENDENT AUDITORS
(in millions of KRW)
NON-CONSOLIDATED BALANCE SHEETSDecember 31, 2006 and 2005
Assets
Current assets
Cash and cash equivalents
Short-term financial instruments
Held-to-maturity securities
Trade accounts and notes receivable, net
Other accounts receivable
Short-term loans receivable, net
Accrued income, net
Advance payments
Prepaid expenses
Inventories, net
Deposits paid for guarantees, net
Prepaid value added tax
Financial derivative assets
Total current assets
Long-term financial instruments
Available-for-sale securities
Held-to-maturity securities
Equity method investments
Long-term loans receivable, net
Property, plant and equipment,
net Intangible assets, net
Others
Total assets
\ 99,885
87,540
86,968
351,089
24,486
95,893
2,947
8,766
820
182,700
10,334
10,797
14,168
976,393
24
76,796
14,513
361,717
14,443
434,081
582
7,190
\ 1,885,739
\ 75,943
42,607
-
247,377
12,673
61,889
2,631
3,877
1,103
237,792
10,301
8,531
7,048
711,772
1,024
59,786
101,481
296,137
13,820
488,438
688
7,174
\ 1,680,320
2005 2006
(in thousands of USD)
US$ 107,565
94,271
93,655
378,084
26,369
103,266
3,174
9,440
883
196,748
11,129
11,627
15,257
1,051,468
26
82,701
15,629
389,529
15,554
467,457
627
7,743
US$ 2,030,733
US$ 81,782
45,883
-
266,398
13,647
66,648
2,833
4,175
1,188
256,076
11,093
9,187
7,590
766,500
1,103
64,383
109,284
318,907
14,883
525,994
741
7,726
US$ 1,809,520
2005 2006
The translation of Korean won amounts to US dollar amounts are made only for the convenience of readers
outside of Korea and have been made at the rate of KRW 928.6 to US$ 1.0, at December 31, 2006.
CO
NN
EC
TIN
G T
HE
WO
RL
D3
2 I 3
3
(in millions of KRW)
2005 2006
NON-CONSOLIDATED BALANCE SHEETSDecember 31, 2006 and 2005
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts and notes payable
Short-term borrowings
Other accounts payable
Advances received
Deposits received
Financial derivative liabilities
Accrued expenses
Income taxes payable
Current maturities of long-term debts, net
Current maturities of capital lease liabilities
Current portion of deferred tax liabilities
Other current liabilities
Total current liabilities
Long-term debts, net of current maturities
Debentures, net
Convertible bonds, net
Capital lease liabilities
Deferred tax liabilities
Accrued severance benefits, net
Total liabilities
Shareholders' equity
Common stock
Capital surplus
Paid-in capital in excess of par value
Asset revaluation surplus (Note 14)
Other capital surplus
Retained earnings
Legal reserve
Other reserves
Unappropriated retained earnings
Capital adjustments
Treasury stock
Gain on valuation of available-for-sale securities
Gain on valuation of equity method investments
Loss on valuation of equity method investments
Stock options
Loss on valuation of financial derivatives
Total shareholders' equity
Total liabilities and shareholders' equity
\ 62,910
150,621
20,264
61,494
6,838
13,511
5,705
20,558
183,102
4,871
868
7,893
538,635
145,833
119,772
22,674
3,825
6,236
1,281
\ 838,256
119,465
200,038
353,418
8,461
561,917
11,526
261,155
104,761
377,442
-21,826
9,112
31,579
-35,263
5,064
-7
-11,341
1,047,483
\ 1,885,739
\ 53,517
168,147
7,332
58,460
6,191
108
5,157
3,040
60,501
-
3,351
1,200
367,004
34,102
279,449
85,446
-
4,036
1,220
\ 771,257
110,039
139,879
353,418
11,420
504,717
9,358
139,643
145,722
294,723
-5,641
5,486
30,805
-32,106
1,118
-78
-416
909,063
\ 1,680,320
(in thousands of USD)
US$ 67,747
162,202
21,822
66,222
7,364
14,550
6,144
22,139
197,181
5,246
935
8,500
580,051
157,046
128,981
24,417
4,119
6,715
1,379
US$ 902,709
128,651
215,419
380,592
9,112
605,123
12,412
281,235
112,816
406,463
-23,504
9,813
34,007
-37,974
5,453
-8
-12,213
1,128,024
US$ 2,030,733
US$ 57,632
181,076
7,896
62,955
6,667
116
5,554
3,274
65,153
-
3,609
1,292
395,223
36,724
300,936
92,016
4,346
1,314
US$ 830,559
118,500
150,634
380,592
12,298
543,525
10,078
150,380
156,927
317,384
-6,075
5,908
33,174
-34,575
1,204
-84
-448
978,961
US$ 1,809,520
2005 2006
(in millions of KRW)
2005 2006
NON-CONSOLIDATED STATEMENTS OF INCOMEYears ended December 31, 2006 and 2005
Sales
Cost of sales
Gross profit
Selling and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Gain on valuation of available-for-sale securities
Gain on disposal of available-for-sale securities
Recovery of impairment losses on available-for-sale securities
Gain on valuation of equity method investments
Gain on disposal of equity method investments
Foreign exchange gains
Gain on foreign currency translation
Gain on disposal of investments
Gain on disposal of property, plant and equipment
Gain on futures transaction
Reversal of allowance for doubtful accounts
Income tax refunds
Gain on disposal of long-term loan receivables
Gain on prior period adjustments
Others
Non-operating expenses
Interest expenses
Other bad debt expenses
Loss on disposal of available-for-sale securities
Impairment losses of available-for-sale securities
Loss on valuation of equity method investments
Foreign exchange losses
Loss on foreign currency translation
Impairment losses on investments
Loss on disposal of property, plant and equipment
Loss on futures transactions
Additional payment of prior year income taxes
Loss on redemption of debentures
Other incentives
Others
\ 2,238,057
2,117,768
120,289
49,985
70,304
159,401
17,500
665
621
1,559
17
39,517
-
13,065
7,575
-
35,857
15,635
123
80
6,132
-
21,055
91,268
36,390
-
850
-
5,163
15,641
1,290
-
-
16,868
440
-
687
\ 13,939
\ 1,587,320
1,520,610
66,710
45,601
21,109
296,839
19,212
511
340
2,473
-
34,219
1,127
15,664
1,666
437
8,767
14,332
162
44
181,366
4,885
11,634
115,198
39,850
4,904
-
4,015
4,925
19,867
2,801
15,687
44
9,028
158
62
11,799
\ 2,058
(in thousands of USD)
US$ 2,410,1
41
2,280,603
129,538
53,828
75,710
171,657
18,846
716
669
1,679
18
42,555
-
14,070
8,157
-
38,614
16,837
132 86
6,603
-
22,674
98,286
39,188
-
915
-
5,560
16,844
1,389
-
-
18,165
474
-
740
US$ 15,011
US$ 1,709,3
69
1,637,530
71,839
49,107
22,732
319,663
20,689
550
366
2,663
36,850
1,214
16,868
1,794
471
9,441
15,434
174
47
195,311
5,261
12,529
124,056
42,914
5,281
-
4,324
5,304
21,395
3,016
16,893
47
9,722
170
67
12,706
US$ 2,216
2005 2006
The translation of Korean won amounts to US dollar amounts are made only for the convenience of readers
outside of Korea and have been made at the rate of KRW 928.6 to US$ 1.0, at December 31, 2006.
CO
NN
EC
TIN
G T
HE
WO
RL
D3
4 I 3
5
(in millions of KRW)
2005 2006Retained earnings before appropriations
Unappropriated retained earnings carried over from prior year
Net income
Appropriation of retained earnings
Transfer to legal reserve
Transfer to other reserves
Cash dividends (dividend ratio of 20% in 2006 and 2005)
Unappropriated retained earnings carried forward to
subsequent year
\ 104,761
361
104,400
104,520
2,320
79,000
23,200
\ 241
\ 145,722
229
145,493
145,361
2,169
121,512
21,680
\ 361
(in thousands of USD)
US$ 112,816
389
112,427
112,557
2,498
85,074
24,984
US$ 260
US$ 156,927
247
156,680
156,538
2,336
130,855
23,347
US$ 389
2005 2006
NON-CONSOLIDATED STATEMENTS OF APPROPRIATIONS OF RETAINED EARNINGSYears ended December 31, 2006 and 2005
(Dates of appropriations : March 15, 2007 and March 16, 2006 for the years ended December 31, 2006 and 2005, respectively)
NON-CONSOLIDATED STATEMENTS OF INCOMEYears ended December 31, 2006 and 2005
(in millions of KRW)
2005 2006Income before income taxes
Income tax expense
Net income
Per share data (In won / In US dollar)
Basic ordinary income per share
Basic earnings per share
Diluted ordinary income per share
Diluted earnings per share
\ 138,437
34,037
104,400
2,248
2,248
2,229
\ 2,229
\ 202,750
57,257
145,493
3,638
3,638
3,550
\ 3,550
(in thousands of USD)
US$ 149,081
36,654
112,427
2.42
2.42
2.40
US$ 2.40
US$ 218,339
61,659
156,680
3.92
3.92
3.82
US$ 3.82
2005 2006
The translation of Korean won amounts to US dollar amounts are made only for the convenience of readers
outside of Korea and have been made at the rate of KRW 1013.0 to US$ 1.0, at December 31, 2006.
(in millions of KRW)
2005 2006
NON-CONSOLIDATED STATEMENTS OF CASH FLOWSYears ended December 31, 2006 and 2005
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation
Amortization of intangible assets
Provision for doubtful accounts
Provision for severance benefits
Compensation expenses associated with stock options
Amortization of discount on debentures
Amortization of conversion rights adjustment
Gain on valuation of available-for-sale securities
Gain on disposal of available-for-sale securities, net
Impairment losses of available-for-sale securities
Recovery of impairment losses on available-for-sale securities
Gain on valuation of equity method investments, net
Gain on disposal of equity method investments, net
Gain on disposal of investments, net
Impairment losses on investments
Gain on disposal of property, plant and equipment, net
Loss (gain) on foreign currency translation, net
Reversal of bad debt allowance
Loss on redemption of debentures
Gain on prior period adjustments
Others
Changes in operating assets and liabilities
Increase in trade accounts and notes receivable
Increase in other accounts receivable
Increase in accrued income
Increase in advance payments
Decrease in prepaid expenses
Decrease (increase) in inventories
Proceeds from cash dividends of equity method investments
Decrease (increase) in other current assets
Decrease in deferred tax assets
Increase (decrease) in trade accounts and notes payable
\ 104,400
-56,167
11,051
164
3,635
2,631
3,947
757
2,258
-621
-709
4,015
-
-29,294
-1,127
-437
15,687
-8,723
1,005
-162
62
-4,885
-3,075
-7,568
-108,092
-11,813
-315
-4,889
283
56,495
10,854
2,551
-
\ 9,398
\ 145,493
1,099
15,540
489
9,295
2,370
1,118
718
1,316
-340
-2,473
-
-17
-34,354
-
-
-
-35,857
-6,281
-123
-
-
-2,648
-100,218
-39,747
-3,192
-1,641
-536
195
-75,480
5,491
-4,959
9,689
\ -18,144
(in thousands of USD)
US$ 112,427
-60,486
11,901
177
3,914
2,833
4,250
815
2,432
-669
-764
-18
-36,995
-38,614
-6,764
-132
-2,852
-8,150
-116,403
-12,721
-339
-5,265
305
60,839
11,689
2,747
-
US$ 10,121
US$ 156,680
1,184
16,735
527
10,010
2,552
1,204
773
1,417
-366
-2,663
4,324
-31,546
-1,214
-471
16,893
-9,394
1,082
-174
67
-5,261
-3,311
-107,924
-42,803
-3,437
-1,767
-577
210
-81,284
5,913
-5,340
10,434
US$ -19,539
2005 2006
The translation of Korean won amounts to US dollar amounts are made only for the convenience of readers
outside of Korea and have been made at the rate of KRW 928.6 to US$ 1.0, at December 31, 2006.
CO
NN
EC
TIN
G T
HE
WO
RL
D3
6 I 3
7
(in millions of KRW)
2005 2006
NON-CONSOLIDATED STATEMENTS OF CASH FLOWSYears ended December 31, 2006 and 2005
Increase (decrease) in other accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in income taxes payable
Increase in other current liabilities
Decrease (increase) in current portions of deferred tax liabilities
Payment of severance benefits
Decrease in contribution to National Pension Fund
Increase in plan assets
Increase in deferred tax liabilities
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from long-term financial instruments
Proceeds from short-term loan receivables
Proceeds from disposal of available-for-sale securities
Proceeds from disposal of equity method investments
Proceeds from long-term loan receivables
Proceeds from deposits for severance benefits
Proceeds from disposal of property, plant and equipment
Acquisition of short-term financial instruments
Payment of short-term loan receivables
Acquisition of long-term financial instruments
Acquisition of available-for-sale securities
Acquisition of held-to-maturity securities
Acquisition of equity method investments
Payment of long-term loan receivables
Acquisition of property, plant and equipment
Acquisition of intangible assets Increase in government subsidy
Others, net
Net cash provided by (used in) investing activities
\ 12,932
548
16,182
13,150
-2,483
-1,596
14
-4,133
3,346
40,665
1,000
45,940
23,988
- 3,653
3,145
124,845
-45,089
-79,945
-
-34,740
-
-44,463
-4,289
-37,055
-58
1,376
-14
\ -41,706
\ -177
-860
-11,480
45,081
3,351
-8,927
368
-
750
46,374
- 91,872
9,546
1,127
162,273
6,389
55,664
-11,753
-94,176
-2
-40,661
-11,245
-49,605
-
-8,564
-658
-
-4,112
\ 106,095
(in thousands of USD)
US$ 13,926
590
17,426
14,161
-2,674
-1,719
15
-4,451
3,603
43,792
1,077
49,472
25,832
3,934
3,387
134,444
-48,556
-86,092
-
-37,411
-47,882
-4,619
-39,904
-62
1,482
-15
US$ -44,913
US$ -191
-926
-12,363
48,547
3,609
-9,613
396
-
808
49,940
-98,936
10,280
1,214
174,750
6,880
59,944
-12,657
-101,417
-2
-43,787
-12,110
-53,419
-
-9,222
-709
-4,428
US$ 114,253
2005 2006
(in millions of KRW)
2005
NON-CONSOLIDATED STATEMENTS OF CASH FLOWSYears ended December 31, 2006 and 2005
Cash flows from financing activities
Proceeds from long-term debt
Issuance of debentures
Issuance of convertible bonds
Proceeds from disposal of treasury stock
Repayment of short-term borrowings
Repayment of current maturities of long-term debt
Repayment of long-term debt
Repayment of debentures
Acquisition of treasury stock
Payment of cash dividends
Repayment of Capital Lease Liabilities
Net cash provided by (used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents
Beginning of year
End of year
\ 120,000
70,000
-
-
-15,245
-50,597
-
-60,000
-16,186
-21,680
-1,309
24,983
23,942
75,943
\ 99,885
\ 120,007
80,000
161,307
10,920
-168,134
-170,665
-116,582
-10,000
-1,705
-19,197
-
-114,049
38,420
37,523
\ 75,943
(in thousands of USD)
US$ 129,227
75,382
-
-
-16,417
-54,487
-
-64,613
-17,431
-23,347
-1,410
26,904
25,783
81,782
US$ 107,565
US$ 129,234
86,151
173,710
11,760
-181,062
-183,787
-125,546
-10,769
-1,836
-20,673
-
-122,818
41,374
40,408
US$ 81,782
2005 20062006
CO
NN
EC
TIN
G T
HE
WO
RL
D3
8 I 3
9
Founded Taihan Electric Wire Co., Ltd.
Produced plastic insulated power cable
Produced PVC jacket cable
Installed the copper smelting and rolling mill first time in Korea
Produced the lead sheathed communication cable
Acquired KS mark for wire and cable
Started export of cable to Vietnam and Taiwan
Produced 1.2/4.4mm fine conductor coaxial cable
Started production of ACSR first time in Korea
Listed the company stock on the Korean Stock Exchange
Started production of stalpeth cable
Produced 33kV XLPE insulated power cable first time in Korea
Started production of the watt hour meter
Produced 345kV ACSR first time in Korea aluminum rod
Produced communication cables & by Properzi method
Produced aluminum compressed conductor power cable
Acquired UL and CSA Certificate first time in Korea
Completed the construction of Anyang cable plant
Produced standard coaxial cable and 154kV OF cable
Developed optical fiber cable
Marked the production record of 1 million watt hour meters
Won the grand prize of First Securities Award
Completed extra high voltage OF power cable plant
Contracted for US$ 30 million communication cable to Saudi Arabia
Installed the optical cable network in Seoul
Developed and produced screen cable
Completed underground power transmission line in Korea
Completed Anyang SCR(Southwire Continuous Rod) Plant
Started production of Flame Retardant Plastic Cable for Nuclear Power Plant
Completed 154kV POF power line replacement first time in the world
Completed the VCV extra high voltage power cable plant in Anyang
Produced foam skin communication cable first time in Korea
Exported OF power cable turnkey project (Malaysia)
Completed optical fiber cable plant in Anyang
Produced multiple and single mode optical fiber cable
Developed and produced 154kV XLPE power cable
Developed 345kV OF power cable
Supplied the optical fiber cable for Seoul Olympic communication networks
Developed the 154kV single core lead sheathed OF cable
Exported 132kV XLPE power cable first time in Korea
Acquired the KS Mark for vinyl insulated cable, high frequency coaxial cable
Won the Prime Minister Award meritorious service in National backbone
Communication Network
Manufactured Optical Fiber Ground Wire (OPGW)
Developed high foamed coaxial cable for CATV
Succeeded in localization of extra high voltage OF cable accessories
Developed submarine optical fiber cable and leakage coaxial cable
Developed Kraft insulated 345kV OF cable first time in Korea
Developed optical fiber cable for emergency and 154kV OF cable accessories
Developed PPLP insulated 345kV OF cable first time in Korea
Expanded SCR production facilities, the largest capacity in Korea
Supplied 565Mb/s Optical Transmission System to KT
1955195719581959
19611964
196519661968
1969
1970
19721974197519761977
1978
1979
1980
198119821983
1984
1985
1986
1987
1988
1989
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
20032004
2005
2006
Established a joint venture in Qingdao, China
Commercialized 345kV OF cable
Succeeded localization of Class 1E power cable for the unclear power
Acquired ISO 9001 Certificate on cable and Watt Hour Meter
Developed Electronic Watt Hour Meter
Launched stainless steel business
Developed 345kV OPGW
Developed 345kV and 765kV AWS for overhead ground wire
Developed 765kV ACSR/AW 480SQMM (Cardinal)
Developed STACIR
Acquired ISO 9002 certificate on stainless steel
Completed new VCV TOWER and extra high voltage power cable plant
Developed optical distribution board, optical terminal box, mechanical
connector Developed high intensity TACSR/AW and 765kV OPGW
Acquired ISO 9001 Certificate on power cable accessories
Awarded the Presidential Prize for achieving US$ 500 million export
Developed ribbon type optical fiber cable
Developed Aerial Bundle Cable with Waterproof (ABC-W)
Commercialized the multiple mechanical optical connector
Recorded 2 million tons of copper rod
Developed Non-Zero Dispersion Shifted optical fiber
Established Skytel in Mongolia
Separated the aluminum business (founded ‘Novelis Korea’)
Developed epoxy bushing for high voltage transmission line terminal
Acquired JIS certificate on stainless steel coil and sheet
Established Malesela Taihan Electric Cable (Pty.) Ltd., in South Africa
Acquired ISO 9001 certificate on extra high voltage underground power
cable and OPGW
Acquired ISO 14001 certificate for environmental management system
Developed 345kV XLPE power cable
Developed polymer insulator
Developed and commercialized 345kV XLPE cable accessories
Optomagic completed optical fiber plant
Acquired Muju Resort Co., Ltd.
Completed 345kV XLPE underground power transmission line
Developed 400kV XLPE cable and accessories (KEMA certificate)
Developed FTTH total solution
Participated in BcN (Broadband convergence Network) business (Ubinet
consortium construction of FTTH)
Acquired Ssangbangwool (SBW) Co., Ltd.(now, TryBrands)
Celebrated the 50 anniversary
Established SkyNetworks in Mongolia
Established Taihan-Wizhome specialized for Home network business
Selected as a model project for the Muju Tourism & Leisure corporate
Issued Overseas Convertible Bonds amounting to US$ 160,000,000
Acquired Korea Rental Co., Ltd.
Established a joint venture TSC Co., Ltd. in Vietnam
Awarded the Presidential Prize for achieving US$ 700 million export
Established TMC for shipbuilding cable and wire
Established Taihan-Techren Co.,Ltd. for solar power generation
Achieved KRW 2 trillion in sales
Acquired Congo Korea Telecom (CKT)and set up Standard Telecom
Established TAIHAN Global Holdings LTD.(in Hong Kong)
Built the third VCV extra high voltage power cable
1950
1960
1970
1980
1990
2000
CORPORATE HISTORY
CO
NN
EC
TIN
G T
HE
WO
RL
D4
0 I 4
1
ORGANIZATION CHART
CableBusiness
Headquarters
TechnologyInnovation
Headquarters
CEO Quality Control Office
Cable Planning Team
R&D Center
I T Team
PR Team
Global Business Division
HR Division
Finance Division
Corporate Strategy Division
Copper Rod & Wire Business
Division
Energy Cable Business
Division
Industrial Cable Business
Division
Communication Cable
Business Division
Business Support Division
OPTOMAGIC www.optomagic.co.kr
Optomagic which leads the digital 21st century is a company specialized in high quality optical
fiber with the manufacturing facilities upto 5 million f.km per year. With the VAD production
method, the company has an advanced production system with the world best technology and
cost competitiveness, and has recently developed and commercialized the zero water peak fiber
& holey fiber.
TAIHAN ST www.taihanst.co.kr
Taihan ST is a subsidiary specialized in stainless steel business, which newly launched
early 2007 by spinning off from Taihan Electric Wire Co., Ltd. Taihan ST will be a leading
player in this field by producing thin & precise cold rolling products with an advanced
technology.
TAIHAN BULK TERMINAL www.tbt.co.kr
Taihan Bulk Terminal (TBT) is a logistics service company that loads, unloads, and warehouses
grain. Launching operations at Incheon Port in 1982, TBT specializes in grain-handling logistics.
Satisfied customers are their highest priority, which is one reason TBT has installed the latest
automatic loading system exclusive for grain.
TAIHAN MARINE CABLE www.tmc-cable.com
Taihan Marine Cable (TMC), backed by years of experience, is rapidly developing technology to
manufacture cables for shipbuilding and offshore structures, as well as produce optical cables,
which are used for broadband IT network.
DOMESTIC AFFILIATES
Everywhere - around the world
TAIHAN is creating tomorrow
Building competitiveness through business diversification at home,
Strengthening global competitiveness through joint-ventures abroad,
With fifty years in the cable business,
TAIHAN is going global!
TAIHAN WIZHOME www.tecwizhome.com
Taihan Wizhome specializes in developing and supplying high-tech home network systems. As a
partner for the new, convenient ubiquitous lifestyle, the company is leading the future ubiquitous
environment together with TAIHAN’s FTTH system.
MUJU RESORT www.mujuresort.com
Muju Resort, a popular Korean leisure destination, is located in Deokyusan Mt. National Park. It
is an all-season leisure complex promoting harmony between nature, humans, art and health.
Muju Resort proudly presents unique beauty and pleasure for everyone. We would invite you to
the hidden wonderland, Muju Resort.
TRYBRANDS www.trybrands.co.kr
TRYBRANDS is a total underwear manufacturer that leads the industry with top brands including
Try, Chaville and IKLIM. In early 2006, we changed the CI to TRYBRANDS, and announced our
corporate vision to create a luxury lifestyle.
TAIHAN TECHREN www.techren.co.kr
Taihan Techren Co., specializing in renewable energy and armed with cutting-edge electronic
optics technology, has successfully developed the first quintuple-concentration solar PV system
using solar cells. The company manufactures and supplies solar PV systems, handles plant
engineering and runs the Independent Power Plant (IPP) business.
KOREA RENTAL www.korearental.co.kr
Korea Rental is the nation’s largest rental service provider since its establishment in 1989. Korea
Rentel’s business is specialized in rentals of information devices, measurement devices and
computer & office equipment.
CO
NN
EC
TIN
G T
HE
WO
RL
D4
2 I 4
3
MALESELA TAIHAN ELECTRIC CABLES. (M-TEC) www.m-tec.co.za
M-TEC was established in 2000 as a joint venture in South Africa with the goal to establish a
bridgehead on the African continent. As a general wire & cable company manufacturing
communications and power cables, the company has evolved into the number-one cable
manufacturer on the African continent. M-TEC’s business has reached to around USD 200
million in sales.
TSC CO., LTD.TSC, a cable plant established near Ho Chi Minh City, J/V with a Vietnamese company SACOM in
November 2005. The groundbreaking ceremony was held in March 2006 and TSC plans to begin
construction of a communications cable plant as well as a power cable plant in the second half of
2006. TSC will supply various products such as OPGW and communications cable, as well as
power cable including high-voltage XLPE cables and ASCR to the Vietnamese market.
TAIHAN ELECTRIC USA LTD.Committed to entering the world’s largest communications and power cable markets, TAIHAN
has focused on marketing efforts since the mid 1990s. We set up a local sales entity in New York
in 2001 and strengthened our sales sector. By expanding our presence in the US power cable
and communications cable markets, we plan to become a global player in the power cable
business
OVERSEAS SUBSIDIARIESTo diversify businesses and make inroad to overseas markets, TAIHAN has made proactive investmentsin some target market. As the forefront for African markets, we set up a cable manufacturer, M-TEC inSouth Africa. We also set up Skytel, a mobile telecommunication company in Mongolia in 1999 andSkyNetworks in 2005 to participate in the next-generation information communication networkbusiness. Following the establishment of Taihan USA in 2001 to expand into the US market, we have setup a cable production base in Vietnam in 2005 to secure local market.
GLOBAL AFFILIATES
SKYTEL CO., LTD. www.skytel.mn
Skytel, which was founded in 1999 as a mobile phone service in Mongolia in collaboration with SK
Telecom, has achieved 30%-plus growth every year. Thanks to continued improvement of
facilities and technology, its services have expande throughout Mongolia. By 2006, the company
had 150,000 subscribers, securing a stable position in the market. Skytel will open new era of IT
industry in Mongolia.
SKYNETWORKS www.skynetworks.mn
TAIHAN established a joint venture corporation, SkyNetworks in Mongolia in April 2005 to launch
a broadband IT network serving Ulaanbaatar. SkyNetworks provides high-speed communication
network rental and Internet Gateway services. Moreover, plans for expansion include VolP, FTTH,
and development of digital contents.
STANDARD TELECOMStandard Telecom (ST) is the major telecom service company in D. R. Congo, which was
launched in 2006 as a joint venture with local government authority in charge of telecom
sector by acquisition of major shareholdings of CKT. Following the construction of fiber
optic backbone network in Kinshasa, the capital, Standard Telecom will gradually expand
its service area over the nation by building up the nation wide telecom network.
TAIHAN GLOBAL HOLDINGS LTD.Taihan Global Holdings Ltd. was established in Hong Kong in 2006 for the efficiently
integrated management of TAIHAN’s overseas investment business. TGH will take a role
as the hub of overseas Investment business of TAIHAN.
CO
NN
EC
TIN
G T
HE
WO
RL
D4
4 I 4
5
Dubai
Shanghai
HongkongPhilippines
Thailand
Kuala Lumpur
Singapore
Riyadh
Congo
Vietnam
New York
Canada
Johannesburg
Mongolia
OVERSEAS CORPOTATION
OVERSEAS BRANCH OFFICE
South Africa M-TEC (Malesela Taihan Electric Cable(Pty)Ltd.)Vereeniging 1930, Steel Road, PeacehavenVereeniging 1939, Gauteng, South AfricaTEL: +27-16-450-8333 FAX:+ 27-16-450-8202Website: www.m-tec.co.za
D.R.Congo STANDARD TELECOM 158, Avenue de la Democratie(Ex- Huilerie)Commune de la Gombe, Kinshasa, D.R.CongoTEL: +070-7426-5750 FAX: [email protected]
VietnamTSC (Taihan Sacom Cable Company.,Ltd)7th Floor, 71-73 Dien Bien Phu, phuong 15,Binh Thanh District , VietnamTEL: +84-8-518-0786 FAX: +84-8-518-0785
Hong KongTGH (Taihan Global Holdings Ltd ) No.1808, 18F,Tower 2,Admiralty Center,18 Harcourt Road, Admiralty, Hong Kong
MongoliaSKYTEL 3rd FL, Skytel Plaza Bldg, Chinggis khaanAvenue-9, Ulaanbaatar-13, MongoliaTEL: +976-9110-1003 FAX: +976-1131-8487E-mail: [email protected] Website: www.skytel.mn
SKYNETWORKS4th FL, Skytel Plaza Bldg, ChinggiskhanAvenue-9, P.O.B 2033 Ulaanbaatar-211213MongoliaTEL: +976-9111-7463 FAX: +976-1131-8841E-mail: [email protected]: www.skynetworks.mn
USA Taihan USA (Taihan Electric USA., Ltd.)LandMark Building, 99 Tulip Avenue, Suite#106,Floral Park, NY 11001, USATEL: +1-516-355-5600 FAX: +1-516-355-5601E-mail: [email protected]
CanadaTaihan Global Canada Investment., Ltd.Unit 610-4538 Kingsway, Burnaby, BC,CanadaV5H 4T9TEL: +604-438-7070 FAX: +604-438-7072E-mail: [email protected]
Dubai Representative OfficeFlat no. 705, Al Safa Tower, Sheikh Zayed Road,P.O.Box117561, Dubai, U.A.ETEL: +971-4-331-7233 FAX: +971-4-331-7322E-mail: [email protected]
Riyadh Branch OfficeRoom No.726, AI Akariyah Shopping Center 2,Olaya Road, P.O.Box 300201,Riyadh11372, Saudi ArabiaTEL: +966-1-419-0027 FAX: +966-1-419-0262E-mail: [email protected]
Kuwait Branch OfficeAl-Adan, Block No. 6, Street No.14, HouseNo.20, State of Kuwait TEL: +965-544-2456 FAX: +965-541-5344 E-mail: [email protected]
Australia Branch OfficeSuite 704, Level 7, 90 Mount Street, NorthSydeny, NSW 2060, AustraliaTEL: +61-2-9460-3600 FAX: +61-4-9954-4354E-mail: [email protected] Lumpur Branch Office 15th Floor, Kenanga International, JL. SultanIsmail, 50250 Kuala Lumpur, MalaysiaTEL: +60-3-2161-8017 FAX: +60-3-2161-3628E-mail: [email protected]
Singapore Branch Office 629 Aljunied Road #05-19 Cititech IndustrialBuilding, Singapore 389838, SingaporeTEL: +65-6842-5069 FAX: +65-6842-5076 E-mail: [email protected]
Thailand Project Branch Office253, Asoke 26th FL, Sukhumvit 21 Road,Klongtoeynua, Wattana, Bangkok 10110,ThailandTEL: +66-2644-1464(Ext.544) FAX: +66-2644-4002
TAIHAN AROUND THE WORLD
OFFICES & PLANTS
CORPORATE DATA
785, Gwanyang-dong, Dongan-gu, Anyang-si, Gyeonggi-do, Korea
TEL : 8231-420-9590
01. HEAD OFFICE
Insong Building, 194-15, Hoehyun-dong 1-ga, Chung-gu, Seoul, Korea
TEL : 822-316-9114
02. ANYANG PLANT
785, Gwanyang-dong, Dongan-gu, Anyang-si, Gyeonggi-do, Korea
TEL : 8231-420-9114
03. R&D Center
2-1 Seulhang-ri, Gadae-myeon, Dangjin-gun, Chungcheongnam-do, Korea
TEL : 8241-359-9114
04. EHV POWER CABLE ACCESSORY PLANT
Date of incorporation : Feb. 21,1955 Date of IPO : Dec. 27,1968
Number of share issued : 44,015,778 Business Area : Cables & Wires
Web site : www.taihan.com
Annual report, presentation materials and news letters are available in PDF at the company’s web site Pro
du
ced
: T
end
om A
ssoc
iate
s In
c.
01 02 03 04