19th Jun 2007 07:00
Hanatour Service Inc.19 June 2007 Annual Report I. OUTLINE OF COMPANY 1. Purpose of Company Purpose Remark 1) General travel business 2) Airline and ship ticket sales business 3) Computer programming and supply 4) Internet (contents and supply, marketing) 5) E-commerce and information processing 6) Advertisement (Internet advertisement) 7) Information and communication 8) Homepage and web-hosting 9) All other incidental businesses 2. History of Company A. Changes after the establishment Oct. 25, 1993 Established Kookjin Travel Co., Ltd. (Capital: 350 million won) 55-4 Seosomun-dong, Jung-gu, Seoul Dec. 01, 1995 Set the company policy in 'comprehensive wholesales' and launched 'Hana Tour', independent package brand, and commenced the agency sales Nov. 28, 2000 Listed on KOSDAQ (commenced trading) Nov. 10, 2006 Listed on LSE(London Stock Exchange) B. Change of trade nameMar. 6, 1996 Changed the name from Kookjin Travel Co., Ltd. to Hana Tour Co., Ltd. * Purpose is to unify the brand name and company image C. Change of location for head officeOct. 25, 1992 55-4 Seosomun-dong, Jung-gu, Seoul Mar. 22, 1996 10F Inju Building, Tour cost fees-1 Seorin-dong, Jongro-gu, Seoul Oct. 01, 1997 11F Hanmi Building, 1 Gonpyeong-dong, Jongro-gu, Seoul Jun. 15, 2005 1 Gonpyeong-dong, Jongro-gu, Seoul D. Merger, spin off (merger), comprehensive stock swap, transfer, importantbusiness assignment and others The company has no fact of merger or business assignment since the companyestablishment to this date of submitting this report. 3. Total Number of Stocks, Etc. A. Total number of stocks(As of December 31, 2006) (Unit: share) Classification Types of stocks Remark Common stock Total I. Total number of stocks to 20,000,000 20,000,000 be issued II. Total number of stocks 11,616,185 11,616,185 issued to this point III. Total number of stocks - - reduced to this point 1. Capital - deduction 2. Retirement - - of earning 3. Repayment of - - redeemed stocks 4. Others - IV. Total number of stocks 11,616,185 11,616,185 issued (II-III) V. Equity stocks 391,184 391,184 VI. Number of shares 11,225,001 11,225,001 distributed (IV-V) B. Change of capital (1) Status of capital increase (Unit: share, won) Date of Type of issuance Contents of issued stocks stock Types Quantity Par Issuance Remark issuance value amount per stock Oct. 25, - Common 35,000 10,000 10,000 Capital for 1993 stock incorporation Jun. 12, Capital increase Common 21.500 10,000 10,000 - 1996 with stock consideration (shareholder allotment) Jul. 25, Capital increase Common 35,840 10,000 10,000 - 1997 with stock consideration (shareholder allotment) Oct.01, - Common 184,680 5,000 - Face amount 1997 stock division Dec. 02, Capital increase Common 115,320 5,000 5,000 - 1999 with stock consideration (shareholder allotment) Dec. 23, Capital increase Common 60,000 5,000 10,000 - 1999 with stock consideration (shareholder allotment) May, 05, - Common 3,600,000 500 - Face amount 2000 stock division Nov. 16, Capital increase Common 900,000 500 2,850 - 2000 without stock consideration (general subscription) Aug. 26, Capital increase Common 3,764,034 500 - - 2003 without stock consideration Oct. Capital increase Common 76,322 500 11,850 - 27,2004 with stock consideration (shareholder allotment) Oct. Capital increase Common 1,977,029 500 - - 27,2004 without stock consideration Jan. 25, Exercise stock Common 137,200 500 6,171 - 2006 options stock (2) Status of capital decrease (Unit: share, won) Date of Type Purpose Contents of reduced stocks capital Types Quantity Face value Amount of Remark reduction per stock acquisition per stock (for capital decrease for consideration) - - - - - - - - C. Contents of scheduled change for capital(No applicable change) 4. Matters on Dividends A. Matters on dividend for three recent fiscal year Classification 14th Term 13th Term 12th Term Face amount per stock (won) 500 500 500 Current net income (million won) 23,303 16,641 10,616 Net income per share (won) 2,215 1,632 1,092 Profit for dividend (million won) - 35,707 18,672Total amount of cash dividend (million 8,122 6,138 3,517 won) Total amount of stock dividend (million - - - won) Tendency of stock dividend (%) 34.9 36.9 33.13 Yield rate of cash Common stock 1.1 1.3 2.4 dividend (%) Preferred stock - - - Yield rate of stock Common stock - - - dividend (%) Preferred stock - - -Cash dividend per share Common stock 750 600 400 (won) Preferred stock - - - Stock dividend per Common stock - - - share Preferred stock - - - 5. Status of Employees (As of December 31, 2006) (Unit: persons) Classification No. of employees Remark Office Operation Total Men 129 578 585 Women 154 443 515 Total 283 1,021 1,100 6. Organization chart Paste the following link into your web browser to download the Organization Chart in PDF format: http://www.rns-pdf.londonstockexchange.com/rns/5932y_-2007-6-19.pdf II. CONTENTS OF BUSINESS 1. Summary of Business At the end of 1995, 'Hana Tour' was launched to commence the business. It hadvarious products with the energetic business activities to have the workingrelationship with 4,500 travel agencies nationwide. In addition, the company hasbeen attempting to diversity the business by having affiliation with major cardcompanies, Internet shopping mall and general sales agency contract (GSA) withother companies. In June 2004, the company transferred the corporate recognition and brandrecognition formed on off-line to newly open Hanatour.com to structure the newdistribution channel. Through the sales network from Internet, it is expected toexpand the business territory through Internet for Hana Tour. Therefore, thecompany has established its foundation of market share expansion with the offline sales network to integrate with the online. In 2006, the company invested in local companies in USA and CZECH and FRANCE toexpand the product development and global management. Hana Tour set the overseas local direct operation in 1999 for the first time inthe industry, and it has a total of 15 local corporation including Thailandcorporation, followed with the Southeast Asia, Oceania, America, Europe andothers. The local direct operation system has the quick response with directcontrol that brings great competitiveness. Hana Tour plans to set 50 directlyoperated corporations by 2010, covering every corner of the globe. This wouldgive a basis to compete with any world class travel agencies like, JTB orAmerican Express. Hana Tour plans to expand into the world market with theglobal management with the third country-type travel and trading. 2. Market Share Rate The market share rate of the travel business is classified based on persons andthe market share rate is calculated by a number of departures. (Crews areexcluded from the total departing persons) This is based on the data announced monthly by Korea Tourism Organization (KNTO)and the passengers reported to Korea Association of Travel Agents (KATA). < Market share rate based on the number of persons > Year 2006 2005 2004 Persons Total Total Total Total Total Total departed department departed department departed department persons persons from persons persons from persons persons Hana Tour Hana Tour from Hana Tour 10,832,426 1,301,833 9,278,860 946,081 8,008,904 721,845 Share 12.02% 10.20% 9.01% rate 3. Characteristics of the market The travel business registered in Korea is about 9,000 that takes about 80% ofentire tourist companies that employees about 50,000 persons that has taken avery important role as the main vein of tourism industry. However, 80% of entirebusinesses are small companies with 500 million won or less of capital. In 1982,the travel business was converted into the registration system and completelyliberated in 1989, brining explosive increase of small travel companies. WTOexpects the world travel industry to grow 4.1% of annual average up to 2020. InKorea, with the 5-working day system and dispersed vacation system, it opens upthe advanced country-type vacation time. 4. Contents and prospect of new business and others The company has no detailed investment plan on new business as of the date ofsubmitting this quarterly report, but it plans to strive for qualitativeimprovement of overseas business and services through the steady expansion ofoverseas local corporations. III. FINANCIAL DATA Notice to Readers This report is effective as of February 9, 2007, the auditors' report date.Certain subsequent events or circumstances may have occurred between theauditors' report date and the time the auditors' report is read. Such events orcircumstances could significantly affect the accompanying financial statementsand may result in modifications to the auditors' report. HANATOUR SERVICE INC. NON-CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005 Korean Won 2006 2005 (In thousands)ASSETS CURRENT ASSETS: Cash and cash equivalents W 72,025,858 W 11,925,638Short-term financial instruments 31,278,000 13,203,000Trade receivables, net of allowance for 15,992,334 10,425,511doubtful accounts of W259,123 thousand in 2006 and W201,855 thousand in 2005 Short-term loans 561,000 55,000Accounts receivable-other, net of allowance 969,802 424,329for doubtful accounts of W2,337 thousand in 2006 and W1,197 thousand in 2005 Accrued income 915,444 252,996Advanced payments, net of allowance for 12,461,611 8,584,125 doubtful accounts of W289,810 thousand in 2006 and W394,742 thousand in 2005 Prepaid expenses 1,178,227 685,415Deferred income tax assets 852,019 193,183Total current assets 136,234,295 45,749,197 NON-CURRENT ASSETS: Long-term financial instruments 2,500 2,500Investment securities accounted for using 12,970,859 8,278,745 the equity method Guarantee deposits 2,866,166 1,733,368Membership 471,711 471,711Property and equipment, net of accumulated 31,014,317 30,283,544 depreciation of W4,372,414 thousand in 2006 and W3,385,224 thousand in 2005 Intangible assets, net of amortization 304,007 79,602 Total non-current assets 47,629,560 40,849,470 Total assets W 183,863,855 W 86,598,667 (Continued) HANATOUR SERVICE INC. NON-CONSOLIDATED BALANCE SHEETS (CONTINUED) AS OF DECEMBER 31, 2006 AND 2005 Korean Won 2006 2005 (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable-other W 41,281,904 W 11,706,544Advanced receipts 1,899,582 1,371,282Withholdings 4,827,831 619,427Accrued expenses 5,951,403 328,189Income tax payable 4,239,999 4,912,601VAT withholdings 2,491,828 1,479,474Deposits received for overseas traveling 24,490,396 17,633,505Rental deposits received 5,325,835 5,521,140Operating deposits received from agents 203,890 216,900Total current liabilities 90,712,668 43,789,062 LONG-TERM LIABILITIES: Deferred income tax liabilities 524,777 552,435Total long-term liabilities 524,777 552,435Total liabilities 91,237,445 44,341,497 SHAREHOLDERS' EQUITY Capital stock 5,808,093 5,158,693Capital surplus 60,688,560 261,363Retained earnings (Net income of W23,302,911 thousand in 2006 55,667,166 39,555,792and W16,641,099 thousand in 2005) Capital adjustments (29,537,409) (2,718,678)Total shareholders' equity 92,626,410 42,257,170Total liabilities and shareholders' equity W 183,863,855 W 86,598,667 HANATOUR SERVICE INC. NON-CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 Korean Won 2006 2005 (In thousands, except per share amounts) SALES Overseas traveling intermediation income W 111,914,213 W 68,447,133Air tickets intermediation income 42,822,789 35,038,394Other income 11,562,985 7,543,989 166,299,987 111,029,516 OPERATING EXPENSES 136,075,164 93,265,050 OPERATING INCOME 30,224,823 17,764,466 NON-OPERATING INCOME (EXPENSES): Interest income 1,655,753 1,090,646Foreign currency exchange gain, net 422,165 24,608Foreign currency translation loss, net (120,181) (4,978)Gain (loss) on disposal of investments, net (7) 2,344,361Gain on disposal of investment securities 1,100,614 -accounted for using the equity method, net Gain (loss) on valuation of investment (16,684) 995,157securities accounted for using the equity method, net Gain on disposal of property and equipment, 4,948 845net Others, net 638,201 991,375 3,684,809 5,442,014 ORDINARY INCOME 33,909,632 23,206,480 EXTRAORDINARY ITEM - - INCOME BEFORE INCOME TAX 33,909,632 23,206,480 INCOME TAX EXPENSE 10,606,721 6,565,381 NET INCOME W 23,302,911 W 16,641,099 BASIC ORDINARY/NET INCOME PER SHARE W 2,215 W 1,632DILUTED ORDINARY/NET INCOME PER SHARE W 2,215 W 1,632 HANATOUR SERVICE INC. NON-CONSOLIDATED STATEMENTS OF APPROPRIATIONS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 Korean Won 2006 2005 (In thousands) RETAINED EARNING BEFORE APPROPRIATIONS: Unapproprited retained earnings carried W 34,495,585 W 23,472,319over from prior years Interim cash dividends (3,632,951) (2,579,346)Legal reserve for interim cash dividends (363,295) (257,935)Net income 23,302,911 16,641,099 53,802,250 37,276,137 TRANSFER FROM RESERVES: Reserve for loss on disposal of treasury - 1,133,891stock APPROPRIATIONS: Legal reserve for cash dividends 449,000 355,858Loss on disposal of treasury stock 10,064,737 -Cash dividends 4,490,000 3,558,585 15,003,737 3,914,443 UNAPPROPRIATED RETAINED EARNINGS TO BE W 38,798,513 W 34,495,585CARRIED FORWARD TO SUBSEQUENT YEAR IV. MANAGEMENT The directors are elected at a shareholder's meeting by a majority vote of theshareholders present or represented, so long as such number represents at leastone quarter of all issued and outstanding shares with voting rights. Name Position Date elected as a director or executive officer SangHwan Park President, Chief Executive October 25, 1993(Officer Officer and Director and Director) HeeSeok Kweon Executive Vice President, January 1, 2005(Officer) Chief Financial Officer and December 23, 1995 Director (Director) HuynSyuk Choi Chief Operating Officer, January 1, 2005(Officer) Senior Vice President and October 25, 1993 Director (Director) JangSuk Han Statutory Auditor March 25, 2005 JeongWoo Hyun Outside Director March 23, 2006 V. List of major shareholders (having more than 5% holding) Shareholder Number of shares Percentage Sanghwan Park 950,000 8,18%HeeSeok Kweon 717,500 6,18%HuynSyuk Choi 580,000 4,99% VI. Status of Affiliated Companies and Others +-------------------+ | HanaTour Co., Ltd.| +----------+--------+ | | | +-------------------+---------------------+ | | | | | |+-----------------------------+------------------+-----------------------------+|Namgang Travel Co., Ltd. | |Saipan Hana Tour (50%) ||(100%) | | |+-----------------------------+------------------+-----------------------------+|Tour Total.Com Co., Ltd. | |Hana Tour Hawaii Inc. (50%) ||(99.00%) | | |+-----------------------------+------------------+-----------------------------+|Hana Travel Academy Co., Ltd.| |Hana Korea Tour Inc.(50%) ||(100%) | | |+-----------------------------+------------------+-----------------------------+|Hana TourList Co., Ltd. (30%)| |Hana Tour America Inc. (50%) |+-----------------------------+------------------+-----------------------------+|Jeju Hana Tour Co., Ltd. | |Hana Tour Europe SRL (50%) ||(77.35%) | | |+-----------------------------+------------------+-----------------------------+|Hana Youth Co., Ltd. (85%) | | |+-----------------------------+------------------+-----------------------------+|Hana Kangsan Co., Ltd. (80%) | |Hana Tour USA Inc. (50%) |+-----------------------------+------------------+-----------------------------+|Hana Tour International Co., | |Hana Tour Europe Limited ||Ltd. (100%) | |(30%) || | | || | | |+-----------------------------+------------------+-----------------------------+|Korea Cruise Line Co., Ltd. | |Hana Tour PTE Ltd. (100%) ||(70%) | | |+-----------------------------+------------------+-----------------------------+|Tour Marketing Korea Co., | |Hana Tour Japan Co., Ltd. ||Ltd. (70%) | |(70%) |+-----------------------------+------------------+-----------------------------+|OK Tour Co., Ltd. (50%) | |Hanatour Czech S.R.O.(100%) |+-----------------------------+------------------+-----------------------------+|Webtour.Co,.Ltd.(80%) | |Hanatour France(100%) |+-----------------------------+------------------+-----------------------------+|Hangyerae Tour Co., Ltd. | | ||(60%) | | |+-----------------------------+------------------+-----------------------------+| | | |+-----------------------------+------------------+-----------------------------+ VII. Investment stocks Ownership Currency Capital Investment ratio(%) Namkang Travel Service Inc. 100 KWN 150,000,000 150,000,000TourTotal.com Inc. 99 KWN 1,600,000,000 2,517,700,000Hanatourist Service Inc. 30 KWN 1,500,000,000 450,000,000Hanatour USA Inc. 50 USD 250,000 250,000Hana Travel Academy Service 100 KWN 100,000,000 100,000,000Inc. Hanatour Hawaii Inc. 50 USD 40,000 20,000Hanatour America 50 USD 20,000 10,000Hanatour Europe S.R.L 50 USD 10,000 5,000Hana Korea Tour Inc. 50 USD 40,000 20,000Cheju Hanatour Service Inc. 77 KWN 170,000,000 131,500,000Hanayouth Service Inc. 85 KWN 150,000,000 127,500,000Hanakangsan Service Inc. 80 KWN 150,000,000 120,000,000Hanatour International 100 KWN 350,000,000 350,000,000Service Inc. OK Tour Service Inc. 50 KWN 5,640,000,000 2,820,000,000Korea Cruise Line Service 70 KWN 50,000,000 35,000,000Inc. Tour Marketing Korea 70 KWN 100,000,000 70,000,000Service Inc. Web tour 80 KWN 625,000,000 1,000,000,000Hanatour Europe Limited 30 GBP 6,000 1,800Hankyoreh Tour Inc. 60 KWN 150,000,000 200,000,000Hanatour Pte Ltd. 100 SGD 200,000 200,000Hanatour Japan Ltd. 70 JPY 100,000,000 70,000,000SAIPAN HANATOUR 50 USD 55,000 27,500HANATOUR CZECH 100 EUR 7,400 50,000HANATOUR FRANCE 100 EUR 100,000 100,000 Independent Accountant's Review Report on Internal Accounting Control System ("IACS") English Translation of a Report Originally Issued in Korean To the Representative Directors of HANATOUR Service Inc.: We have reviewed the accompanying Report on the Management's Assessment of IACS(the "Management's Report") of HANATOUR Service Inc. (the "Company") as ofDecember 31, 2006. The Management's Report, and the design and operation of IACSare the responsibility of the Company's management. Our responsibility is toreview the Management's Report and issue a review report based on ourprocedures. The Company's management stated in the accompanying Management'sReport that "based on the assessment of the IACS as of December 31, 2006, theCompany's IACS has been appropriately designed and is operating effectively asof December 31, 2006, in all material respects, in accordance with the IACSFramework established by the Korea Listed Companies Association." We conducted our review in accordance with the IACS Review Standards establishedby the Korean Institute of Certified Public Accountants. Those standards requirethat we plan and perform a review, objective of which is to obtain a lower levelof assurance than an audit, of the Management's Report in all material respects.A review includes obtaining an understanding of a company's IACS and makinginquiries regarding the Management's Report and, when deemed necessary,performing a limited inspection of underlying documents and other limitedprocedures. A company's IACS represents internal accounting policies and a system to manageand operate such policies to provide reasonable assurance regarding thereliability of financial statements prepared, in accordance with accountingprinciples generally accepted in the Republic of Korea, for the purpose ofpreparing and disclosing reliable accounting information. Because of itsinherent limitations, IACS may not prevent or detect a material misstatement ofthe financial statements. Also, projections of any evaluation of effectivenessof IACS to future periods are subject to the risk that controls may becomeinadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. Based on our review, nothing has come to our attention that causes us to believethat the Management's Report referred to above is not fairly stated, in allmaterial respects, in accordance with the IACS Framework established by theKorea Listed Companies Association. Our review is based on the Company's IACS as of December 31, 2006, and we didnot review its IACS subsequent to December 31, 2006. This report has beenprepared pursuant to the Acts on External Audit for Stock Companies in theRepublic of Korea and may not be appropriate for other purposes or for otherusers. February 9, 2007 Report on the Assessment of Internal Accounting Control System ("IACS") To the Board of Directors and Auditor ofHANATOUR Service Inc.: I, as the Internal Accounting Control Officer ("IACO") of HANATOUR Service Inc.("the Company"), assessed the status of the design and operation of the Company's IACS for the year ended December 31, 2006. The Company's management including IACO is responsible for designing andoperating IACS. I, as the IACO, assessed whether the IACS has been appropriatelydesigned and is effectively operating to prevent and detect any error or fraudwhich may cause any misstatement of the financial statements, for the purpose ofpreparing and disclosing reliable financial statements reporting. I, as theIACO, applied the IACS Framework established by the Korea Listed CompaniesAssociation for the assessment of design and operation of the IACS. Based on the assessment of the IACS, the Company's IACS has been appropriatelydesigned and is operating effectively as of December 31, 2006, in all materialrespects, in accordance with the IACS Framework. January 18, 2007 Kweon, Hee Seok, , Internal Accounting Control Officer Park, Sang Hwan, Chief Executive Officer or President This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Hanatour Regs