2 _√“¬ß“πª√–®”ªï2547_∫√‘…—∑ ∑√Ÿ §Õ√åªÕ‡√™—Ëπ ®”°—¥ (¡À“™π) Financial Highlights................................................................................................................................................................12 Message from the Chairman of the Board...........................................................................................................................14 Message from the President and CEO.........................................................................................................................................16 Products and Services...........................................................................................................................................................18 Community Program..............................................................................................................................................................22 Independent Directors............................................................................................................................................................23 Corporate Governance Report...............................................................................................................................................27 Company Background and Major Developments..................................................................................................................34 Awards...................................................................................................................................................................................36 Revenues Breakdown by Business Group............................................................................................................................37 Corporate Information........................................................................................................................................................... 38 References.............................................................................................................................................................................43 Group of Investment Structure..............................................................................................................................................44 Risk Factors...........................................................................................................................................................................45 Shareholders..........................................................................................................................................................................47 Dividend Policy.......................................................................................................................................................................48 Management..........................................................................................................................................................................49 Connected Transactions........................................................................................................................................................82 Audit Fees..............................................................................................................................................................................83 Report of the Audit Committee for the Year 2004...............................................................................................................84 Report of the Board of Directorsû Responsibilities for Financial Statements 2004 .............................................................85 Managementûs Discussion and Analysis................................................................................................................................86 Financial Statements..............................................................................................................................................................93 √“¬ß“πª√–®”ªï2547_∫√‘…—∑ ∑√Ÿ §Õ√åªÕ‡√™—Ëπ ®”°—¥ (¡À“™π)_ 3 TrueFun Fun doesnût really come from playing with toys, it comes from playing together. TrueSuccess When we have each other, the task is already half done. 12 ANNUAL REPORT 2004 TRUE CORPORATION PUBLIC COMPANY LIMITED (Unit : Million Baht) 2004 2003 2002 Consolidated Financial Results Total revenues 33,010 27,950 25,783 EBITDA (normalized) 1/ 13,164 11,642 9,798 Operating profit 2/ 1,379 491 521 Net profit (loss) 605 (5,674) (5,395) Consolidated Balance Sheets and Cash Flows Total assets 102,625 86,760 92,977 Total liabilities 97,888 85,265 85,779 Total shareholderûs equity 4,738 1,495 7,198 Free cash flow 3/ 3,419 (3,303) (4,298) Free cash flow, excluding TA Orange 3/ 6,231 5,162 4,682 Key Financial and Efficiency Ratios EBITDA margin 39.9% 41.7% 38.0% Operating profit margin 4.2% 1.8% 2.0% Asset Turnover 32.2% 32.2% 27.7% EBITDA / Interest coverage ratio (Times) 3.1 2.6 2.5 Net debt / EBITDA (Times) 6.0 5.9 6.6 EBITDA / Interest coverage ratio, excluding TA Orange (Times) 3.6 3.1 3.2 Net debt / EBITDA, excluding TA Orange (Times) 4.3 4.7 5.1 Per Share Data and Others Loss per share (Baht) 4/ (0.03) (2.13) (2.34) Book value per share (Baht) 1.16 0.40 1.95 Share price at year end (Baht) 8.10 7.30 4.60 No. of outstanding shares at year end (Million shares) 4,092.53 3,694.50 3,694.50 Market capitalization 33,149.47 26,969.83 16,994.70 1/ Excluding one-off transactions which consisted of the followings; 2/ Excluding one-time write-off for PCT subscriber acquisition cost of Baht 215 - out-of-period booking of leased circuit and conduit rental of Baht 286 million in 2002, million in 2003. - one-time compensation of Baht 33 million for workforce reduction in 2002. 3/ Cash flow from operations less capital expenditure. 4/ After accumulated dividend for preferred shares. ANNUAL REPORT 2004 TRUE CORPORATION PUBLIC COMPANY LIMITED 1213 Revenue Diversification High growth businesses contributed 37% of service revenue in FY 2004 compared to 17% in FY 2002. 26.7% Orange 0.7% Data/Broadband/Internet 5.2% WE PCT 4.0% Others Wireline 53.4% Remark : Data/Broadband/Internet group refers to DDN, Multimedia and Internet segments in the audited financial Bt Mn. statements. KeyGrowth Drivers TA Orange surging growth TA Orange contribution* Remark : * Based on a proportionate consolidation up to 3Q04, 1 and changed to full consolidation since 4Q04. 165 No.1 Broadband andInternet player 2004 Revenue (Bt Mn) Subscribers (,000) 1,231 Internet Consumer Broadband 888 4 Revenue (Bt Mn) Users (,000) Revenue (Bt Mn) Subscribers (,000) 14 ANNUAL REPORT 2004 TRUE CORPORATION PUBLIC COMPANY LIMITED Our 2004 results show our transformation has been a success, our strategy is working and most importantly we are delivering what consumers want. In 2005 we will build on what we have achieved and continue producing high quality and innovative communications solutions that enrich our customersû lives. If we can maintain this focus, which I am confident we can, we will be in a good position to prosper further as the Thai telecommunications Mr. Dhanin Chearavanont industry is liberalized. Chairman of the Board ANNUAL REPORT 2004 TRUE CORPORATION PUBLIC COMPANY LIMITED 15 from the Chairman of the Board Telecommunication usage and competition continued to increase in Thailand in 2004, especially in the mobile and Internet sectors. Total Internet penetration jumped from 9 percent to 11 percent, with Broadband use, although still relatively small, surging by more than 13 folds. Mobile phone penetration also continued its steady rise, increasing from 34 percent to 41 percent of the population, and for the first time large numbers of Thai consumers started enjoying the benefits of non-voice mobile services, such as downloadable financial information, games and photo-based communication and community services. And as Thai appetites for high-speed connectivity and convenient lifestyle services grew during the year, I am proud that True has been at the forefront of meeting these needs. In 2003 and 2004 we made major organizational and other changes to ensure we were strategically well placed to drive emerging trends. The biggest change was our decision to establish ourselves under a new brand, as well as strengthen ourselves both technically and financially so that we could become Thailandûs leading customer-focused total communications solutions provider. Subsequent brand campaigns, conducted both externally and internally during the year were designed to leverage on synergies within the True Group and enhance our ability to serve in ways that matter the most to our customers by enhancing their life styles. Our 2004 results show our transformation has been a success, our strategy is working and most importantly we are delivering what consumers want. In 2005 we will build on what we have achieved and continue producing high quality and innovative communications solutions that enrich our customersû lives. If we can maintain this focus, which I am confident we can, we will be in a good position to prosper further as the Thai telecommunications industry is liberalized. 16 ANNUAL REPORT 2004 TRUE CORPORATION PUBLIC COMPANY LIMITED from the President and CEO The True Group ended 2004 stronger than ever before. All aspects of our business were strengthened and foundations were laid for continuing future growth. True has become Thailandûs largest Internet Service Provider, its largest Broadband operator