consolidated financial statements as of … inc. and its subsidiaries consolidated financial...
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IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDEDDECEMBER 31, 2015 AND 2014
ATTACHMENT: INDEPENDENT AUDITORS’ REPORT
IMARKETKOREA INC.
(Table of Contents)
Independent Auditors’ Report
Consolidated Financial Statements as of and for the Years Ended December 31, 2015 and 2014
Notes to Consolidated Financial Statements
Independent Auditors’ Report English Translation of Independent Auditors’ Report Originally Issued in Korean on March 21, 2016
To the Shareholders and the Board of Directors of
iMarketKorea Inc.:
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statement of iMarketKorea Inc. (the
“Company”) and its subsidiaries (the “Group”), which comprise the consolidated statement of financial
position as of December 31, 2015 and 2014, and the related consolidated statement of comprehensive
income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash
flows, all expressed in Korean won, for the years ended December 31, 2015 and 2014, and a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) and for
such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an audit opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with Korean Standards on Auditing (“KSAs”). Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor consider internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Deloitte Anjin LLC 9Fl., One IFC, 10, Gukjegeumyung-ro, Youngdeungpo-gu, Seoul 07326, Korea
Tel: +82 (2) 6676 1000 Fax: +82 (2) 6674 2114 www.deloitteanjin.co.kr
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/kr/about for a more detailed description of DTTL and its member firms. Member of Deloitte Touche Tohmatsu Limited
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Group as of December 31, 2015 and 2014, and its financial performance and its cash
flows for the years ended December 31, 2015 and 2014, in accordance with K-IFRS.
March 21, 2016
Notice to Readers
This report is effective as of March 21, 2016, the auditors’ report date. Certain subsequent events or circumstances
may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or
circumstances could significantly affect the consolidated financial statements and may result in modifications to the
auditors’ report.
IMARKETKOREA INC. (the “Company”) AND ITS SUBSIDIARIES (the “Group”) CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
The accompanying consolidated financial statements, including all footnote disclosures, were
prepared by, and are the responsibility of, the Company.
Lee, Ki Hyung
Chief Executive Officer
IMARKETKOREA INC.
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2015 AND 2014
Notes December 31, 2015 December 31, 2014
(In Korean won)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 5 and 32 ₩ 49,461,553,014 ₩ 135,380,305,761
Trade receivables 7, 30 and 32 844,329,407,580 652,321,786,770
Other receivables 7, 30 and 32 1,566,121,741 2,821,339,490
Other financial assets 6, 8 and 32 11,208,781,209 22,434,645,997
Current income tax assets 275,339,396 25,535,390
Inventories 9 104,394,147,103 48,154,276,428
Other current assets 10 14,093,289,116 5,099,062,481
Total current assets 1,025,328,639,159 866,236,952,317
NON-CURRENT ASSETS:
Long-term trade receivables 7 and 32 25,103,550 45,175,366
Long-term other receivables 7 and 32 7,026,993,685 5,304,527,923
Other long-term financial assets 6, 8 and 32 9,129,772,484 8,792,525,681
Property, plant and equipment 11 and 30 11,378,497,710 11,216,239,185
Intangible assets 12 and 34 211,489,441,758 192,295,064,737
Investments in associates 14 and 30 - 225,777,424
Investments in joint venture 15 and 30 - 5,099,855,704
Deferred income tax assets 28 1,927,168,099 1,270,088,647
Total non-current assets 240,976,977,286 224,249,254,667
Total assets ₩ 1,266,305,616,445 ₩ 1,090,486,206,984
LIABILITIES
CURRENT LIABILITIES:
Trade payables 16, 30 and 32 ₩ 724,149,155,871 ₩ 581,453,198,744
Other payables 16, 30 and 32 12,041,988,603 11,339,718,088
Other financial liabilities 17 and 32 337,264,260 266,043,691
Current income tax liabilities 11,137,622,331 8,241,338,989
Short-term borrowings 18, 31 and 32 14,153,677,980 8,487,638,579
Current convertible bonds 20 and 32 1,090,200,000 1,090,200,000
Current redeemable preferred
share liabilities 20 and 32 1,895,110,000 -
Other current liabilities 21 12,790,130,157 7,123,469,547
Total current liabilities 777,595,149,202 618,001,607,638
NON-CURRENT LIABILITIES:
Long-term borrowings 18, 31 and 32 - 9,008,748
Bonds 19 and 32 10,000,000 -
Redeemable preferred share liabilities 20 and 32 - 1,873,101,162
Non-current other financial liabilities 17 and 32 853,934,781 -
Defined benefit obligations 22 4,574,291,729 3,910,508,536
Deferred income tax liabilities 28 34,067,208,591 33,421,897,884
Other non-current liabilities 21 156,599,269 163,665,480
Total non-current liabilities 39,662,034,370 39,378,181,810
Total liabilities 817,257,183,572 657,379,789,448
(Continued)
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS OF DECEMBER 31, 2015 AND 2014
Notes December 31, 2015 December 31, 2014
SHAREHOLDERS’ EQUITY (In Korean won) Equity attributable to owners of the parent
company
Capital stock 23 ₩ 18,166,670,000 ₩ 18,166,670,000
Other contributed capital 23 114,707,403,975 125,339,585,275
Components of other capital 23 117,413,450 334,435,935
Retained earnings 23 250,071,568,586 226,188,417,441
Total equity attributable from the
parent company
383,063,056,011 370,029,108,651
Non-controlling interests 65,985,376,862 63,077,308,885
Total shareholders' equity 449,048,432,873 433,106,417,536
Total liabilities and shareholders'
equity ₩ 1,266,305,616,445 ₩ 1,090,486,206,984
(Concluded)
See accompanying notes to consolidated financial statements.
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Notes 2015 2014
(In Korean won)
SALES 4 and 30 ₩ 3,143,908,414,690 ₩ 2,733,773,271,320
COST OF SALES 24 and 30 2,960,413,627,460 2,578,986,645,576
GROSS PROFIT 183,494,787,230 154,786,625,744
SELLING AND ADMINISTRATIVE
EXPENSES
24, 25, 30 and
31 119,804,374,758 97,943,142,780
OPERATING INCOME 63,690,412,472 56,843,482,964
NON-OPERATING INCOME AND
EXPENSES:
Other non-operating income 26 and 30 15,370,901,489 9,500,522,357
Other non-operating expenses 26 15,244,990,778 10,597,983,723
Finance income 27 2,314,626,531 2,564,814,495
Finance expenses 27 682,298,494 603,244,604
Loss on equity method investments 4, 14 and 15 144,102,781 488,962,874
Gain on disposal of investments in subsidiaries 4 77,790,822 -
Gain on disposal of investments in joint
venture 4 517,289,178 -
Impairment loss on investments in
associates 4 and 14 221,951,220 -
1,987,264,747 375,145,651
INCOME BEFORE INCOME TAX EXPENSE 65,677,677,219 57,218,628,615
INCOME TAX EXPENSE 28 16,112,035,152 13,078,506,238
NET INCOME 49,565,642,067 44,140,122,377
OTHER COMPREHENSIVE INCOME (LOSS):
Items that will not be reclassified
subsequently to profit or loss
Remeasurement of defined benefit plan 22 105,163,656 739,461,715
Income tax relating to items that will
not be reclassified subsequently, net 22 (24,730,742) (172,856,147)
Items that may be reclassified subsequently
to profit or loss
Gain on foreign operations translation, net 23 152,492,079 137,161,714
Capital change in equity method 14, 15 and 23 (369,543,916) 370,347,880
(136,618,923) 1,074,115,162
TOTAL COMPREHENSIVE INCOME ₩ 49,429,023,144 ₩ 45,214,237,539
NET INCOME ATTRIBUTABLE TO:
Owners of the parent company ₩ 41,590,130,572 ₩ 40,452,095,267
Non-controlling interests 7,975,511,495 3,688,027,110
TOTAL COMPREHENSIVE INCOME:
Owners of the parent company ₩ 41,474,140,660 ₩ 41,543,033,178
Non-controlling interests 7,954,882,484 3,671,204,361
(Continued)
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Notes 2015 2014
(In Korean won)
EARNINGS PER SHARE:
Basic earnings per share 29 ₩ 1,170 ₩ 1,126
Diluted earnings per share 29 ₩ 1,170 ₩ 1,126
(Concluded)
See accompanying notes to consolidated financial statements.
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.
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
2015 2014
(In Korean won)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ₩ 49,565,642,067 ₩ 44,140,122,377
Income tax expense 16,112,035,152 13,078,506,238
Interest income (2,314,626,531) (2,564,814,495)
Interest expense 682,298,494 603,244,604
Depreciation 2,487,928,705 2,540,634,004
Amortization 14,004,662,233 12,079,119,870
Loss on disposal of property, plant and equipment 20,761,831 7,276,867
Severance benefits 3,914,417,864 3,804,027,214
Bad debts expense (92,778,511) 203,058,157
Other bad debts expense 456,526 531,186,000
Impairment loss on investments in associates 221,951,220 -
Loss on disposal of other investments 36,075,379 -
Loss on foreign currency translation 627,140,232 319,137,862
Loss on valuation of forward exchange contracts 139,971,395 266,043,691
Provision expenses - 40,000,000
Impairment loss on intangible assets 550,043,265 1,089,913,907
Compensation expenses associated with stock option 3,744,961 9,815,054
Loss on equity method investments 144,102,781 488,962,874
Gain on foreign currency translation (671,089,931) (338,050,283)
Reversal of allowance for other bad debts (93,550,902) (806,573)
Gain on valuation of forward exchange contracts (223,660,578) (214,645,997)
Gain on disposal of available-for-sale (“AFS”) financial
assets (16,567) -
Gain on disposal of property, plant and equipment (100,823,952) (3,059,636)
Gain on exemption of debts (40,000,000) (5,000,000)
Gain on disposal of investments in subsidiaries (77,790,822) -
Gain on disposal of investments in joint venture (517,289,178) -
Movement in operating assets and liabilities:
Increase in trade receivables (176,913,551,825) (14,830,228,744)
Decrease (increase) in other financial assets 1,876,753,347 (618,554,784)
Increase in inventories (52,570,537,632) (12,585,053,911)
Decrease (increase) in other current assets (6,761,284,801) 3,821,758,296
Increase in trade payables 120,751,611,524 174,060,045,228
Increase in other payables 2,602,950,001 1,897,867,264
Decrease in other financial liabilities (266,043,691) (196,921,849)
Increase in other current liabilities 3,942,780,738 3,878,364,154
Payment of defined benefit obligations (2,894,447,834) (1,087,468,907)
Decrease in employees’ plan assets (2,030,042,184) (1,205,305,208)
Cash generated from operations (27,882,207,224) 229,209,173,274
Interest received 2,189,769,657 2,389,830,443
Interest paid (594,639,341) (384,937,214)
Income tax paid (15,931,045,863) (13,350,526,545)
(42,218,122,771) 217,863,539,958
(Continued)
IMARKETKOREA INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (CONTINUED)
2015 2014
(In Korean won)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in other long-term financial assets ₩ 21,594,636,369 ₩ 713,072,796
Decrease in long-term other receivables 1,548,675,657 438,223,098
Disposition of property, plant and equipment 125,166,621 1,114,918,703
Disposition of intangible assets 268,131,244 -
Increase in other financial assets (3,089,173,440) (25,618,758,287)
Increase in long-term other receivables (1,277,909,963) (1,365,038,543)
Acquisition of property, plant and equipment (1,924,013,454) (1,914,351,482)
Acquisition of intangible assets (512,684,885) (959,245,322)
Acquisition of investments in subsidiaries (28,270,802,397) (74,932,374,232)
Acquisition of investments in joint venture - (5,104,500,000)
Net cash outflow due to loss of control of a subsidiary (1,752,710) -
(11,539,726,958) (107,628,053,269)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 38,118,675,069 28,989,113,346
Proceeds from long-term borrowings 10,000,000 9,008,748
Dividends paid to shareholders (22,855,012,000) (8,983,335,000)
Repayment from short-term borrowings (36,775,265,793) (35,898,068,440)
Repayment from current portion of long-term borrowings (2,190,465) -
Acquisition of treasury stock (10,632,181,300) (9,296,168,750)
(32,135,974,489) (25,179,450,096)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (85,893,824,218) 85,056,036,593
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF YEAR 135,380,305,761 50,332,013,887
EFFECT OF EXCHANGE RATE ON CASH AND CASH
EQUIVALENTS (24,928,529) (7,744,719)
CASH AND CASH EQUIVALENTS AT THE
END OF YEAR ₩ 49,461,553,014 ₩ 135,380,305,761
(Concluded)
See accompanying notes to consolidated financial statements.
IMARKETKOREA INC. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
1. GENERAL:
The parent company, according to Korean International Financial Reporting Standards (“K-IFRSs”) 1110,
Consolidated Financial Statements, of, iMarketKorea Inc. (the “Company”), was incorporated on December 8,
2000, under the Commercial Code of the Republic of Korea to operate in the Internet-logistic, auction,
advertisement, Internet development consulting and other business area, which are related to e-business. The
Company’s headquarters is located at Samseong-dong, Gangnam-gu in Seoul, South Korea.
On July 30, 2010, the Company listed its shares on the Korea Exchange Securities market. The Company’s paid
capital is ₩18,167 million as of December 31, 2015, and shareholders’ respective percentage of those stocks are
Interpark Corporation 40.01%, Samsung Electronics Co., Ltd. and its subsidiary 9.34% and other shareholders
50.65%.
2. SIGNIFICANT ACCOUNTING POLICIES:
(1) Basis of Preparation
The Company and its subsidiaries (the “Group”) have prepared the consolidated financial statements in accordance
with the K-IFRS.
The accompanying consolidated financial statements have been prepared on the historical cost basis, except for
certain non-current assets and financial instruments that are measured at fair values, as explained in the accounting
policies below. Historical cost is based on the fair values of the consideration given.
The principal accounting policies are set out below. Except for the effect of the amendments to K-IFRSs and new
interpretations set out below, the principal accounting policies used to prepare the consolidated financial statements
as of and for the year ended December 31, 2015, are consistent with the accounting policies used to prepare the
consolidated financial statements as of and for the year ended December 31, 2014.
1) Amendments to K-IFRSs and new interpretations that are mandatorily effective for the current year
In the current year, the Group has applied number of amendments to K-IFRSs and new interpretations issued that
are mandatorily effective accounting periods beginning on or after January 1, 2015.
Amendments to K-IFRS 1019 – Employee Benefits
The amendments permit the Group to recognize the amount of contributions as a reduction in the service cost in
which the related service is rendered, if the amount of the contributions are independent of the number of years of
service. The application of these amendments has no significant impact on the disclosure in the Group’s
consolidated financial statements.
Annual Improvements to K-IFRS 2010-2012 Cycle
The amendments to K-IFRS 1002 (i) change the definitions of ‘vesting condition’ and ‘market condition’; and (ii)
add definitions for ‘performance condition’ and ‘service condition’, which were previously included within the
definition of ‘vesting condition’.
- 2 -
The amendments to K-IFRS 1103 Business Combinations clarify the classification and measurement of the
contingent consideration in business combination. The amendments to K-IFRS 1108 clarify that a reconciliation of
the total of the reportable segments’ assets should only be provided if the segment assets are regularly provided to
the chief operating decision maker. The application of these amendments has no significant impact on the
disclosure in the Group’s consolidated financial statements.
Annual Improvements to K-IFRS 2011-2013 Cycle
The amendments to K-IFRS 1103 clarify that it excludes the accounting for the formation of a joint arrangement in
the financial statement of the joint arrangement itself from the scope of K-IFRS 1103 ‘Business Combination’. The
amendments to K-IFRS 1113 ‘Fair Value Measurements’ and K-IFRS 1040 ‘Investment Properties’ exist. The
application of these amendments has no significant impact on the disclosure in the Group’s consolidated financial
statements.
2) New and revised K-IFRSs in issue, but not yet effective
The Group has not applied the following new and revised K-IFRSs that have been issued, but are not yet effective:
Amendments to K-IFRS 1001 – Presentation of Financial Statements
The amendments to K-IFRS 1001 clarify the concept of applying materiality in practice and restrict an entity
reducing the understandability of its financial statements by obscuring material information with immaterial
information or by aggregating material items that have different natures or functions. The amendments to K-IFRS
1001 are effective for annual periods beginning on or after January 1, 2016.
Amendments to K-IFRS 1016 – Property, Plant and Equipment
The amendments to K-IFRS 1016 prohibit the Group from using a revenue-based depreciation method for items of
property, plant and equipment. The amendments are effective for the annual periods beginning on or after January 1,
2016.
Amendments to K-IFRS 1038 – Intangible Assets
The amendments to K-IFRS 1038 do not allow presumption that revenue is an appropriate basis for the
amortization of intangible assets, which the presumption can only be limited when the intangible asset expressed as
a measure of revenue or when it can be demonstrated that revenue and consumption of the economic benefits of the
intangible asset are highly correlated. The amendments apply prospectively for annual periods beginning on or after
January 1, 2016.
Amendments to K-IFRS 1016 – Property, plant and equipment and K-IFRS 1041 – Agriculture: Bearer Plants
The amendments to K-IFRS 1016 ‘Property, Plant and Equipment’ and K-IFRS 1041 ‘Agriculture’ define a bearer
plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant
and equipment in accordance with K-IFRS 1016, instead of K-IFRS 1041. The amendments to K-IFRS 1016 and
K-IFRS 1041 are effective for annual periods beginning on or after January 1, 2016.
Amendments to K-IFRS 1110 – Consolidated Financial Statements, K-IFRS 1112 – Disclosure of interests in other
entities and K-IFRS – 1028 Investment in associates
The amendments clarify that in applying the equity method of accounting to an associate or a joint venture that is an
investment entity, an investor may retain the fair value measurements that the associate or joint venture used for its
subsidiaries. The amendments are effective for annual periods beginning on or after January 1, 2016.
Amendments to K-IFRS 1111 – Accounting for Acquisitions of Interests in Joint Operations
The amendments to K-IFRS 1111 provide guidance on how to account for the acquisition of a joint operation that
constitutes a business as defined in K-IFRS 1103 Business Combinations. A joint operator is also required to
disclose the relevant information required by K-IFRS 1103 and other standards for business combinations. The
amendments to K-IFRS 1111 are effective for the annual periods beginning on or after January 1, 2016.
- 3 -
Amendments to K-IFRS 1109 – Financial Instruments
The amendments to K-IFRS 1109 contain the requirements for the classification and measurement of financial
assets and financial liabilities based on a business model, whose objective is achieved both by collecting contractual
cash flows and selling financial assets and based on the contractual terms that give rise on specified dates to cash
flows, impairment methodology based on the expected credit losses, and broadened types of instruments that
qualify as hedging instruments and the types of risk components of non-financial items that are eligible for hedge
accounting and the change of the hedge effectiveness test. The amendments are effective for annual periods
beginning on or after January 1, 2018.
Amendments to K-IFRS 1115 – Revenue from Contracts with Customers
The core principle under K-IFRS 1115 is that an entity should recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. The amendments introduce a five-step approach to revenue recognition and
measurement: 1) identify the contract with a customer, 2) identify the performance obligations in the contract, 3)
determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and
5) recognize revenue when (or as) the entity satisfies a performance obligation. This standard will supersede K-
IFRS 1011 - Construction Contracts, K-IFRS 1018- Revenue, K-IFRS 2113 - Customer Loyalty Programmes, K-
IFRS 2115 - Agreements for the Construction of Real Estate, K-IFRS 2118 - Transfers of Assets from Customers
and K-IFRS 2031 - Revenue-Barter Transactions Involving Advertising Services. The amendments are effective for
annual periods beginning on or after January 1, 2018.
Annual Improvements to K-IFRS 2012-2014 Cycle
The Annual Improvements include amendments to a number of K-IFRSs. The amendments introduce specific
guidance in K-IFRS 1105 Non-Current Assets Held for Sale and Discontinued Operations for when an entity
reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice versa), such a
change is considered as a continuation of the original plan of disposal not as a change to a plan of sale. Other
amendments in the Annual Improvements include K-IFRS 1107 Financial Instruments: Disclosures, K-IFRS 1019
Employee Benefits and K-IFRS 1034 Interim Financial Reporting.
The application of these amendments has no significant impact on the disclosure in the Group’s consolidated
financial statements.
(2) Basis of Consolidation
The consolidated financial statements incorporate the financial statement of the Company and entities controlled by
the Company (and its subsidiaries). Control is achieved where the Company 1) has the power over the investee; 2)
is exposed, or has rights, to variable returns from its involvement with the investee; and 3) has the ability to use its
power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when
the voting rights are sufficient to give it the practical ability to direct the activities of the investee unilaterally. The
Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in
an investee are sufficient to give it power, including:
• the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
• potential voting rights held by the Company, other vote holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability
to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous
shareholders' meetings.
- 4 -
Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated
statement of comprehensive income from the date the Company gains control until the date when the Company
ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to
the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is
attributed to the owners of the Company and to the non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statement of subsidiaries to bring their accounting policies
into line with the Group’s accounting policies.
All intragroup transactions and related assets and liabilities, income and expenses are eliminated in full on
consolidation.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the
non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognized directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss on disposal is calculated as the difference between (i)
the aggregate of the fair value of the consideration received and the fair value of any retained interest; and (ii) the
previous carrying amount of the assets (including goodwill) and liabilities of the subsidiary and any non-controlling
interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative
gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously
recognized in other comprehensive income and accumulated in equity are accounted for as if the Company had
directly disposed of the relevant assets (i.e., reclassified to profit or loss or transferred directly to retained earnings).
The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as
the fair value on initial recognition for subsequent accounting under K-IFRS 1039 Financial Instruments:
Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate
or a joint venture.
(3) Business Combination
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the fair values of the assets
transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity
interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally
recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value
at the acquisition date, except that:
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized
and measured in accordance with K-IFRS 1012, Income Taxes, and K-IFRS 1019 Employee Benefits,
respectively;
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree
are measured in accordance with K-IFRS 1102 Share-based Payment, at the acquisition date; and
assets (or disposal groups) that are classified as held for sale in accordance with K-IFRS 1105 Non-current
Assets Held for Sale and Discontinued Operations, are measured in accordance with that standard.
Goodwill is measured as the excess of the sum of a) the consideration transferred, b) the amount of any
non-controlling interests in the acquiree and c) the fair value of the acquirer's previously held equity interest in the
acquiree (if any); over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities
assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and
liabilities assumed exceeds the sum of a) the consideration transferred, b) the amount of any non-controlling
interests in the acquiree and c) the fair value of the acquirer's previously held interest in the acquiree (if any); the
excess is recognized immediately in profit or loss as a bargain purchase gain.
- 5 -
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the
entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling
interests' proportionate share of the recognized amounts of the acquiree's identifiable net assets. The choice of
measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are
measured at fair value or, when applicable, on the basis specified in another K-IFRS.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair
value and included as part of the consideration transferred in a business combination. Changes in the fair value of
the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with
corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from
additional information obtained during the ‘measurement period’ (which cannot exceed one year from the
acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is
remeasured at subsequent reporting dates in accordance with K-IFRS 1039 Financial Instruments: Recognition and
Measurement or K-IFRS 1037 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the
corresponding gain or loss being recognized in profit or loss.
When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date and the resulting gain or loss, if any, is recognized in profit or loss.
Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in
other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that
interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or
liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the
acquisition date that, if known, would have affected the amounts recognized at that date.
(4) Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but is not control or joint control over
those policies.
A joint venture is a joint arrangement, whereby the parties that have joint control of the arrangement have rights to
the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require unanimous consent of the parties sharing
control.
The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial
statements using the equity method of accounting, except when the investment is classified as held for sale, in
which case, it is accounted for in accordance with K-IFRS 1105 Non-current Assets Held for Sale and Discontinued
Operations. Under the equity method, an investment in an associate or a joint venture is initially recognized in the
consolidated statement of financial position at cost and adjusted thereafter to recognize the Group's share of the
profit or loss and other comprehensive income of the associate or joint venture. When the Group's share of losses of
an associate or a joint venture exceeds the Group's interest in that associate or joint venture (which includes any
long-term interests that, in substance, form part of the Group's net investment in the associate or joint venture), the
Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that
the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint
venture.
- 6 -
Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities
and contingent liabilities of an associate or a joint venture recognized at the date of acquisition is recognized as
goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the
net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after
reassessment, is recognized immediately in profit or loss.
Upon disposal of an associate or a joint venture that results in the Group losing significant influence over that
associate or joint venture, any retained investment is measured at fair value at that date and the fair value is
regarded as its fair value on initial recognition, as a financial asset, in accordance with K-IFRS 1039 Financial
Instruments: Recognition and Measurement. The difference between the previous carrying amount of the associate
or joint venture attributable to the retained interest and its fair value is included in the determination of the gain or
loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously
recognized in other comprehensive income in relation to that associate or joint venture on the same basis it would
be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a
gain or loss previously recognized in other comprehensive income by that associate or joint venture would be
reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss
from equity to profit or loss (as reclassification adjustment) when it loses significant influence over that associate or
joint venture.
When the Group reduces its ownership interest in an associate or a joint venture, but the Group continues to use the
equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been
recognized in other comprehensive income relating to that reduction in ownership interest if that gain or loss would
be reclassified to profit or loss on the disposal of the related assets or liabilities. In addition, the Group applies K-
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations to a portion of investment in an associate or
a joint venture that meets the criteria to be classified as held for sale.
The requirements of K-IFRS 1039 Financial Instruments: Recognition and Measurement are applied to determine
whether it is necessary to recognize any impairment loss with respect to the Group’s investment in an associate or a
joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for
impairment in accordance with K-IFRS 1036 Impairment of Assets by comparing its recoverable amount (higher of
value in use or fair value, less costs to sell) with its carrying amount, and any impairment loss recognized forms
part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance
with K-IFRS 1036 Impairment of Assets to the extent that the recoverable amount of the investment subsequently
increases.
The Group continues to use the equity method when an investment in an associate becomes an investment in a joint
venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to
fair value upon such changes in ownership interests.
When a Group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from
the transactions with the associate or joint venture are recognized in the Group's consolidated financial statements
only to the extent of interests in the associate or joint venture that are not related to the Group.
(5) Goodwill
Goodwill resulting from an acquisition of a business is carried at cost, as established at the date of acquisition of the
business, less accumulated impairment losses, if any.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (“CGUs”)
(or groups of CGUs) that is expected to benefit from the synergies of the combination.
A CGU to which goodwill has been allocated is tested for impairment annually or more frequently when there is
indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the
other assets of the unit on a pro rata basis, based on the carrying amount of each asset in the unit. Any impairment
loss of goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed
in subsequent periods.
- 7 -
On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit
or loss on disposal.
The Group’s policy for goodwill resulting from the acquisition of an associate is described in Note 2 (4).
(6) Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction, rather than through continuing use. This condition is regarded as met only
when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its
present condition. Management must be committed to the sale, which should be expected to qualify for recognition
as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities
of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the
Group will retain a non-controlling interest in its former subsidiary after the sale.
When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in
an associate or joint venture, the investment, or the portion of the investment, that will be disposed of is classified
as held for sale when the criteria described above are met, and the Group discontinues the use of the equity method
in relation to the portion that is classified a held for sale. Any retained portion of an investment in an associate or a
joint venture that has not been classified as held for sale continues to be accounted for using the equity method. The
Group discontinues the use of the equity method at the time of disposal when the disposal results in the Group
losing significant influence over the associate or joint venture.
After the disposal takes place, the Group accounts for any retained interest in the associate or joint venture in
accordance with K-IFRS 1039 Financial Instruments: Recognition and Measurement, unless the retained interest
continues to be an associate or a joint venture, in which case, the Group uses the equity method.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous
carrying amount or fair value, less costs to sell.
(7) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated
customer returns, rebates and other similar allowances. The Group recognizes revenue when the amount of revenue
can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when
specific criteria have been met for each of the Group’s activities, as described below.
1) Sale of goods
Revenue from the sale of goods is recognized when the Group has transferred to the buyer the significant risks and
rewards of ownership of the goods.
2) Rendering of services
Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract.
Depending on the nature of the transaction, the Group determines the stage of completion by reference to surveys of
work performed; services performed to date as a percentage of total services to be performed; or the proportion that
costs incurred to date bear to the estimated total costs of the transaction, as applicable.
3) Royalties
Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement
(provided it is probable that the economic benefits will flow to the Group and the amount of revenue can be
measured reliably).
- 8 -
4) Dividend and interest income
Dividend income from investments is recognized when the shareholders’ right to receive payment has been
established (provided it is probable that the economic benefits will flow to the Group and the amount of income can
be measured reliably).
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the
Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference
to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on
initial recognition.
5) Rental income
The Group’s policy for recognition of revenue from operating leases is described in Note 2 (8).
(8) Lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
1) The Group as lessor
Amounts due from lessees under finance leases are recognized as receivables at the amount of the Group’s net
investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic
rate of return on the Group’s net investment outstanding in respect of the leases.
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial
direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognized on a straight-line basis over the lease term.
2) The Group as lessee
Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of
the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor
is included in the consolidated statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in
profit or loss, unless they are directly attributable to qualifying assets, in which case, they are capitalized in
accordance with the Group’s general policy on borrowing costs (see Note 2 (10)). Contingent rentals are recognized
as expenses in the periods in which they are incurred.
Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset
are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which
they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a
liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis,
except where another systematic basis is more representative of the time pattern in which economic benefits from
the leased asset are consumed.
(9) Foreign currencies
The individual financial statement of each Group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency). For the purpose of the consolidated financial
statements, the financial performance and financial position of each Group entity are expressed in Korean won,
which is the functional currency of the entity and the presentation currency for the consolidated financial statements.
- 9 -
In preparing the financial statement of the individual entities, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the
transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated
at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognized in profit or loss in the period in which they arise, except for:
• exchange differences on foreign currency borrowings relating to assets under construction for future productive
use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on
those foreign currency borrowings;
• exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
• exchange differences on monetary items receivable from, or payable to, a foreign operation for which settlement
is neither planned nor likely to occur (therefore, forming part of the net investment in the foreign operation),
which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on
disposal or partial disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s foreign
operations are expressed in Korean won using exchange rates prevailing at the end of the reporting period. Income
and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated
significantly during that period, in which case, the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity
(attributed to non-controlling interests as appropriate). On the disposal of a foreign operation (i.e., a disposal of the
Group’s entire interest in a foreign operation, a disposal involving loss of control over a subsidiary that includes a
foreign operation or partial disposal of an interest in a joint arrangement or an associate that includes a foreign
operation whose retained interest becomes a financial asset), all of the accumulated exchange differences in respect
of that operation attributable to the owners of the Company are reclassified to profit or loss. Any exchange
differences that have previously been attributed to non-controlling interests are derecognized, but they are not
reclassified to profit or loss.
In the case of a partial disposal (i.e., no loss of control) of a subsidiary that includes a foreign operation, the
proportionate share of accumulated exchange differences are reattributed to non-controlling interests in equity and
are not recognized in profit or loss. For all other partial disposals (i.e., partial disposals of associates or joint
arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of
the accumulated exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the closing rate. Exchange differences arising are recognized in
other comprehensive income.
(10) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings, pending their expenditure on
qualifying assets, is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
(11) Government grants
Government grants are not recognized until there is reasonable assurance that the Group will comply with the
conditions attached to them and that the grants will be received.
- 10 -
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as
the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
Government grants related to assets are presented in the consolidated statement of financial position by deducting
the grant from the carrying amount of the asset. The related grant is recognized in profit or loss over the life of a
depreciable asset as a reduced depreciation expense.
Government grants related to income are recognized in profit or loss on a systematic basis over the periods in which
the Group recognizes, as expenses, the related costs for which the grants are intended to compensate. Government
grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in
which they become receivable.
(12) Retirement benefit costs and termination benefits
Contributions to defined contribution retirement benefit plans are recognized as an expense when employees have
rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit
credit method, with actuarial valuations being carried out at the end of each reporting period. Remeasurement,
comprising actuarial gains and losses, the effect of the changes in the asset ceiling (if applicable) and the return on
plan assets (excluding interest), is reflected immediately in the consolidated statement of financial position, with a
charge or credit recognized in other comprehensive income in the period in which it occurs. Remeasurement
recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified
to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is
calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are composed of service cost (including current service cost and past service cost, as well as
gains and losses on curtailments and settlements), net interest expense (income) and remeasurement.
The Group presents the service cost and net interest expense (income) components in profit or loss and the
remeasurement component in other comprehensive income. Curtailment gains and losses are accounted for as past
service costs.
The retirement benefit obligation recognized in the consolidated statement of financial position represents the actual
deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the
present value of any economic benefits available in the form of refunds from the plans or reductions in future
contributions to the plans.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer
of the termination benefit or when the entity recognizes any related restructuring costs.
Discretionary contributions made by employees or third parties reduce service cost upon payment of these
contributions to the plan. When the formal terms of the plans specify that there will be contributions from
employees or third parties, the accounting depends on whether the contributions are linked to service as follows:
If the contributions are not linked to services (e.g., contributions are required to reduce a deficit arising from losses
on plan assets or from actuarial losses), they are reflected in the remeasurement of the net defined benefit liability
(asset).
If contributions are linked to services, they reduce service costs. For the amount of contribution that is dependent on
the number of years of service, the entity reduces service cost by attributing the contributions to periods of service
using the attribution method required by K-IFRS 1019 paragraph 70 for the gross benefits. For the amount of
contribution that is independent of the number of years of service, the entity reduces service cost by attributing
contributions to the employees’ periods of service in accordance with K-IFRS 1019 paragraph 70.
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(13) Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured at the fair
value of the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest. At the
end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest.
The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative
expense reflects the revised estimate, with a corresponding adjustment in other component of equity as the equity-
settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of
the goods or services received, except where that fair value cannot be estimated reliably, in which case they are
measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the
counterparty renders the service.
For cash-settled share-based payments, a liability is recognized for the goods or services acquired, measured
initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the
date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognized in profit or
loss for the year.
(14) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
1) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because of items of income or expense that are taxable or
deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
2) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are
generally recognized for all deductible temporary differences to the extent it is probable that taxable profits will be
available against which those deductible temporary differences can be utilized. Such deferred tax assets and
liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit
nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries
and associates and interests in joint ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and interests are
only recognized to the extent it is probable that there will be sufficient taxable profits against which the benefits of
the temporary differences can be utilized and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and liabilities.
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Deferred tax assets and liabilities are offset if, and only if, the Group has a legally enforceable right to set off
current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities that intend either
to settle current tax liabilities and assets on a net basis or realize the assets and settle the liabilities simultaneously in
each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or
recovered.
For the purpose of measuring deferred tax liabilities and deferred tax assets for investment properties that are
measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely
through sale, unless the presumption is rebutted when the investment property is depreciable and is held within a
business model whose objective is to consume substantially all of the economic benefits embodied in the
investment properties over time, rather than through sale.
3) Current tax and deferred tax for the year
Current tax and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in
other comprehensive income or directly in equity, in which case the current tax and deferred tax are also recognized
in other comprehensive income or directly in equity. Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is included in the accounting for the business combination.
(15) Property, plant and equipment
Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and accumulated
impairment losses. The cost of an item of property, plant and equipment is directly attributable to their purchase or
construction, which includes any costs directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management. It also includes the initial
estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are recognized in the carrying amount of an asset or as a separate asset if it is probable that future
economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured
reliably. Routine maintenance and repairs are expensed as incurred.
The Group does not depreciate land. Depreciation expense is computed using the straight-line method based on the
estimated useful lives of the assets as follows:
Accounts Estimated useful lives (years)
Buildings 40–50
Structures 20
Machinery 10–20
Vehicles 5
Other tangible assets 3–8
If each part of an item of property, plant and equipment has a cost that is significant in relation to the total cost of
the item, it is depreciated separately.
The Group reviews the depreciation method, the estimated useful lives and residual values of property, plant and
equipment at the end of each annual reporting period. If expectations differ from previous estimates, the changes
are accounted for as a change in an accounting estimate.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the property
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in
profit or loss in the period in which the property is derecognized.
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(16) Intangible assets
1) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost, less accumulated
amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their
estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting
period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with
indefinite useful lives that are acquired separately are carried at cost, less accumulated impairment losses.
2) Internally generated intangible assets - research and development expenditure
Expenditure on research activities is recognized as an expense in the period in which it is incurred.
Expenditure arising from development (or from the development phase of an internal project) is recognized as an
intangible asset if, and only if, the development project is designed to produce new or substantially improved
products and the Group can demonstrate the technical and economic feasibility and measure reliably the resources
attributable to the intangible asset during its development.
The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the recognition criteria. Where no internally generated intangible
asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally generated intangible assets are reported at cost, less accumulated
amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
3) Intangible assets acquired in a business combination
Intangible assets that are acquired in a business combination are recognized separately from goodwill and are
initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial
recognition, intangible assets acquired in a business combination are reported at cost, less accumulated amortization
and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
4) Derecognition of intangible assets
An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use.
Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net
disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is
derecognized.
(17) Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if
any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the CGU to which the asset belongs. Where a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to individual CGUs, or otherwise, they are allocated to the
smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment
at least annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the
higher of fair value, less costs to sell, or value in use. If the recoverable amount of an asset (or a CGU) is estimated
to be less than its carrying amount, the carrying amount of the asset (or the CGU) is reduced to its recoverable
amount and the reduced amount is recognized in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or a CGU) is increased to the
revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognized for the asset (or the CGU) in
prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
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(18) Inventories
Inventories are stated at the lower of cost or net realizable value. Cost of inventories, except for those in transit, is
measured under the average method and consists of the purchase price, cost of conversion and other costs incurred
in bringing the inventories to their present location and condition. Net realizable value represents the estimated
selling price for inventories, less all estimated costs of completion and costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognized as an expense (cost of sales) in
the period in which the related revenue is recognized. The amount of any write-down of inventories to net
realizable value and all losses of inventories is recognized as an expense in the period the write-down or loss occurs.
The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is
recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal
occurs.
(19) Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that the Group will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (where the effect of the time value of money is material). The
discount rate used is a pretax rate that reflects current market assessments of the time value of money and the risks
specific to the liability. Where discounting is used, the increase in the provision due to the passage is recognized in
profit or loss as borrowing cost.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
At the end of each reporting period, the remaining provision balance is reviewed and assessed to determine if the
current best estimate is being recognized. If the existence of an obligation to transfer economic benefit is no longer
probable, the related provision is reversed during the period.
(20) Financial Instruments
Financial assets and financial liabilities are recognized when a Group entity becomes a party to the contractual
provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities
are added to, or deducted from, the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss (“FVTPL”) are recognized immediately in profit or loss.
All regular-way purchases or sales of financial assets are recognized and derecognized on a trade-date basis.
Regular-way purchases or sales are purchases or sales of financial assets that require delivery of assets within the
time frame established by regulation or convention in the marketplace.
Financial assets are classified into the following specified categories: ‘financial assets at FVTPL’, ‘held-to-maturity
investments’, ‘AFS financial assets’ and ‘loans and receivables’. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition.
1) Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the debt instrument, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition.
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Income is recognized on an effective interest basis for debt instruments other than those financial assets classified
as at FVTPL.
2) Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is a contingent consideration that may be paid
by an acquirer as part of business combination to which K-IFRS 1103 applies.
A financial asset is classified as held for trading if:
• it has been acquired principally for the purpose of selling in the near term;
• on initial recognition, it is part of a portfolio of identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit taking; or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading or contingent consideration that may be paid by an
acquirer as part of a business combination may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise;
• the financial asset forms part of a group of financial assets or financial liabilities, or both, which is managed,
and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk
management or investment strategy, and information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and K-IFRS 1039 Financial
Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be
designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in
profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the
financial asset and is included in the ‘other non-operating income and expenses’ line item in the consolidated
statement of comprehensive income.
3) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group has the
positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity
investments are measured at amortized cost using the effective interest method, less any impairment, with revenue
recognized on an effective yield basis.
4) AFS financial assets
AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and
receivables, (b) held-to-maturity investments or (c) financial assets at FVTPL.
They are subsequently measured at fair value at the end of each reporting period. Changes in the carrying amount of
AFS monetary financial assets relating to changes in foreign currency rates (see below), interest income calculated
using the effective interest method and dividends on AFS equity investments are recognized in profit or loss. Other
changes in the carrying amount of AFS financial assets are recognized in other comprehensive income (as
investments revaluation reserve). When the investment is disposed of or is determined to be impaired, the
cumulative gain or loss previously accumulated in other comprehensive income is reclassified to profit or loss.
Dividends on AFS equity instruments are recognized in profit or loss when the Group’s right to receive the
dividends is established.
The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and
losses that are recognized in profit or loss are determined based on the amortized cost of the monetary asset. Other
foreign exchange gains and losses are recognized in other comprehensive income.
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AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be
reliably measured and derivatives that are linked to, and must be settled by, delivery of such unquoted equity
investments are measured at cost, less any identified impairment losses, at the end of each reporting period.
5) Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments and are not quoted in an
active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortized cost using
the effective interest method, less any impairment. Interest income is recognized by applying the effective interest
rate, except for short-term receivables when the effect of discounting is immaterial.
6) Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired when there is objective evidence that more events have
occurred after the initial recognition of the financial asset and the estimated future cash flows of the investment
have been affected.
For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is
considered to be objective evidence of impairment.
For all other financial assets, objective evidence of impairment includes:
• significant financial difficulty of the issuer or counterparty,
• default or delinquency in interest or principal payments,
• it becoming probable that the borrower will enter bankruptcy or financial reorganization or
• the disappearance of an active market for that financial asset because of financial difficulties.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a
portfolio of receivables could include the Group’s past experience of collecting payments and an increase in the
number of delayed payments, as well as observable changes in national or local economic conditions that correlate
with default on receivables.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the
financial asset’s original effective interest rate.
For financial assets that are carried at cost, the amount of the impairment loss recognized is the difference between
the asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market
rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets, with
the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.
When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognized in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in
other comprehensive income are reclassified to profit or loss in the period.
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the
previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of
the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had
the impairment not been recognized.
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In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other
comprehensive income. In respect of AFS debt securities, impairment losses are subsequently reversed through
profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after
the recognition of the impairment loss.
7) Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for
amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognize the financial asset and also recognize a collateralized borrowing
for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum
of the consideration received and receivable and the cumulated gain or loss that had been recognized in other
comprehensive income and accumulated in equity is recognized in profit or loss.
On derecognition of a financial assets other than in its entirety (e.g., when the Group retains an option to repurchase
part of a transferred asset or it retains a residual interest and such a retained interest indicates that the transferor has
neither transferred nor retained substantially all the risks and rewards of ownership and has retained control of the
transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it
continues to recognize under continuing involvement and the part it no longer recognizes on the basis of the relative
fair value of those parts on the date of the transfer. The difference between the carrying amount allocated to the part
that is no longer recognized and the sum of the consideration received for the part that is no longer recognized and
any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in
profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated
between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative
fair value of those parts.
(21) Financial liabilities and equity instruments
1) Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangement and the definitions of financial liability and an equity instrument.
2) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Group are recognized as the proceeds are received, net of direct issue
costs.
Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss
is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
3) Compound instruments
The component parts of compound instruments (convertible bonds) issued by the Group are classified separately as
financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions
of a financial liability and equity instrument. Conversion option that will be settled by the exchange of a fixed
amount of cash or another financial asset for a fixed number of the Company’s own equity instruments is an equity
instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate
for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis using the
effective interest method, until extinguished upon conversion or at the instrument’s maturity date.
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The conversion option classified as equity is determined by deducting the amount of the liability component from
the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax
effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in
equity until the conversion option is exercised, in which case the balance recognized in equity will be transferred to
share premium. No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion
option.
Transaction costs that relate to the issue of the convertible notes are allocated to liability and equity components in
proportion to the allocation of the gross proceeds. Transaction costs relating to equity component are recognized
directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the
liability component and are amortized over the lives of the convertible notes using the effective interest method.
4) Financial liabilities
Financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instruments.
Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the issue of
financial liabilities are deducted from the fair value of the financial liabilities on initial recognition. Transaction
costs directly attributable to acquisition of financial liabilities at FVTPL are recognized immediately in profit or
loss.
Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.
5) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is a contingent consideration that may be
paid by an acquirer as part of a business combination to which K-IFRS 1103 applies, it is held for trading or it is
designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been acquired principally for the purpose of repurchasing in the near term;
• on initial recognition, it is part of a portfolio of identified financial instruments that the Group manages
together and has a recent actual pattern of short-term profit taking; or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration that may be paid by
an acquirer as part of a business combination may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise;
• the financial liability forms part of a group of financial assets or financial liabilities, or both, which is
managed, and its performance is evaluated on a fair value basis, in accordance with the Group's documented
risk management or investment strategy, and information about the grouping is provided internally on that
basis; or
• it forms part of a contract containing one or more embedded derivatives, and K-IFRS 1039 Financial
Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be
designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized
in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial
liability and is included in the ‘Other non-operating income and expenses’ line item in the consolidated statement of
comprehensive income.
6) Other financial liabilities
Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with
interest expense recognized on an effective yield basis.
- 19 -
The effective interest method is a method of calculating the amortized cost of a financial liability and allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments (including all fees and points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability,
or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
7) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms
of a debt instrument.
Financial guarantee contract liabilities are initially measured at their fair values and, if not designated as at FVTPL,
are subsequently measured at the higher of:
• the amount of the obligation under the contract, as determined in accordance with K-IFRS 1037 Provisions,
Contingent Liabilities and Contingent Assets, or
• the amount initially recognized, less cumulative amortization recognized in accordance with the K-IFRS 1018
Revenue
8) Derecognition of financial liabilities
The Group derecognize financial liabilities when the Group’s obligation are discharged, canceled or expired. The
difference between the carrying amount of the financial liability derecognized and the consideration paid and
payable is recognized in profit or loss.
(22) Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and
foreign exchange rate risk, including foreign exchange forward contracts, interest rate swaps and cross-currency
swaps.
Derivatives are initially recognized at fair value at the date the derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is
recognized in profit or loss immediately, unless the derivative is designated and effective as a hedging instrument,
in which case the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognized as a financial asset; a derivative with a negative fair value is
recognized as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the
remaining maturity of the instrument is more than 12 months and it is not expected to be realized or settled within
12 months. Other derivatives are presented as current assets or current liabilities.
1) Embedded derivatives
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the
definition of a derivative, their risks and characteristics are closely related to those of the host contracts and the
contracts are not measured at FVTPL.
An embedded derivative is presented as a non-current asset or a non-current liability if the remaining maturity of
the hybrid instrument to which the embedded derivative relates is more than 12 months and it is not expected to be
realized or settled within 12 months. Other embedded derivatives are presented as current assets or current
liabilities.
2) Hedge accounting
The Group designates certain hedging instruments, which include derivatives, embedded derivatives and non-
derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges or hedges of net
investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash
flow hedges.
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At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument
and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the
hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.
3) Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit
or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable
to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item
attributable to the hedged risk are recognized in the line of the consolidated statement of comprehensive income
relating to the hedged item.
Hedge accounting is discontinued when the Group revokes the hedging relationship; when the hedging instrument
expires or is sold, terminated or exercised; or when it no longer qualifies for hedge accounting. The fair value
adjustment to the carrying amount of the hedged item arising from the hedged risk is amortized to profit or loss
from that date.
4) Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized
immediately in profit or loss, and is included in the ‘Other non-operating income and expenses’ line item.
Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to profit
or loss in the periods when the hedged item is recognized in profit or loss, in the same line of the consolidated
statement of comprehensive income as the recognized hedged item. However, when the forecast transaction that is
hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously
accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-
financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship; when the hedging instrument
expires or is sold, terminated or exercised; or when it no longer qualifies for hedge accounting. Any gain or loss
accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately
recognized in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss
accumulated in equity is recognized immediately in profit or loss.
5) Hedges of net investments in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss
on the hedging instrument relating to the effective portion of the hedge is recognized in other comprehensive
income and accumulated in the foreign currency translation reserve. The gain or loss relating to the ineffective
portion is recognized immediately in profit or loss, and is included in ‘Other non-operating income and expenses’.
Gains and losses on the hedging instrument relating to the effective portion of the hedge accumulated in the foreign
currency translation reserve are reclassified to profit or loss in the same way as exchange differences relating to the
foreign operation.
(23) Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes
into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined on such a basis, except for share-based payment
transactions that are within the scope of K-IFRS 1102 Share-based payment; leasing transactions that are within the
scope of K-IFRS 1017 Leases; and measurements that have some similarities to fair value, but are not fair value,
such as net realisable value in K-IFRS 1002 Inventories or value in use in K-IFRS 1036 Impairment of Assets.
- 21 -
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3, based on
the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
3. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY:
In the application of the Group accounting policies described in Note 2, management is required to make judgments,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects both current and future periods.
The following are the key assumptions concerning the future and other key sources of estimate uncertainty at the
end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
1) Allowance for doubtful account of loan and receivable
In order to estimate the allowance for doubtful account of loan and receivable, the Group considers the aging of
current receivables, bad debts history and economic and industry environmental factors.
2) Impairment of other non-financial assets
At the end of each reporting period, the Group reviews the carrying amounts of all of its non-financial assets to
determine whether there is any indication that those assets have suffered an impairment loss. The carrying amount
will not be recovered when there is an indication that an impairment test is performed. In order to calculate the
value using the asset or CGU arising from the expected future cash flows to estimate the present value of such
future cash flows, the appropriate discount rate must be selected.
3) Retirement benefit plan
The Group operates defined benefit pension plan, and the service cost of the plan is determined using actuarial
valuations. In order to apply actuarial valuations, it is necessary to assume a discount rate, an expected rate of return
on plan assets, wage increase rate and others. The retirement benefit plan contains significant uncertainties on the
estimation due to its long-term nature.
4) Deferred tax
Recognition of deferred tax assets and liabilities and the measurement will require management’s judgment. In
particular, the recognition of deferred tax assets, the scope and assumptions about future events will be affected by
management’s judgment.
- 22 -
4. SEGMENT INFORMATION:
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment
of segment performance focuses on the types of goods or services delivered or provided. The chief operating
decision maker is responsible for resource allocation and assessment of segment performance.
The Group’s operation segments are composed of E-Commerce of Maintenance, Repair and Operating supplies
(“MRO”); wholesale in medicine; and other segments; main revenue types are follows:
(1) Components of the Group’s segment revenue and income for the years ended December 31, 2015 and 2014,
are as follows:
December 31, 2015
MRO and
E-Commerce
Wholesale in
medicine Other Total
(In thousands of Korean won)
Segment total revenue ₩ 2,790,535,387 ₩ 315,002,179 ₩ 82,883,457 ₩ 3,188,421,023
(-)Intersegment
revenue (21,043,945) (465,862) (23,002,801) (44,512,608)
Customers 2,769,491,442 314,536,317 59,880,656 3,143,908,415
Segment income 52,018,826 15,293,840 (1,864,015) 65,448,651
December 31, 2014
MRO and
E-Commerce
Wholesale in
medicine Other Total
(In thousands of Korean won)
Segment total revenue ₩ 2,486,819,448 ₩ 175,409,561 ₩ 87,960,140 ₩ 2,750,189,149
(-)Intersegment
revenue (4,923,284) - (11,492,594) (16,415,878)
Customers 2,481,896,164 175,409,561 76,467,546 2,733,773,271
Segment income 56,813,763 8,741,952 (7,848,123) 57,707,592
Reportable segment’s accounting policy is consistent with Group’s accounting policy, which is mentioned in Note
2. Segment income derecognized the income from equity method and only expresses the income from business
activity of each segment. Segment income is a regularly reported measurement to chief operating decision maker,
who is operating decision-maker, for evaluating segment’s performance and allocating resource.
Adjusted income before tax from the total of the reportable segment’s income for the years ended December 31,
2015 and 2014, is as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Total of segment income ₩ 65,448,651 ₩ 57,707,592
Loss of equity method (144,103) (488,963)
Gain on disposal of investments in subsidiaries 77,791 -
Gain on disposal of investments in associates 517,289 -
Impairment loss on investments in associates (221,951) -
Income before income tax expense ₩ 65,677,677 ₩ 57,218,629
Description
E-Commerce (industrial MRO) Sharing the distribution network of industrial MRO and mutual trade of
components
Wholesale in medicine Wholesale in medicine and medical device, and also other service relating to
medicine and medical device
Other Manufacturing in security paper, providing total logistic service and others
- 23 -
(2) Segment assets and liabilities
Adjustments of each reportable segment assets into consolidated total assets as of December 31, 2015 and 2014, are
as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
E-Commerce (industrial MRO) ₩ 999,432,403 ₩ 871,401,420
Wholesale in medicines 184,241,804 116,485,203
Other 26,938,714 30,683,981
Total segment assets 1,210,612,921 1,018,570,604
Adjustment and removal 55,692,695 71,915,603
Consolidated total assets ₩ 1,266,305,616 ₩ 1,090,486,207
Adjustments of each reportable segment liabilities into consolidated total liabilities as of December 31, 2015 and
2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
E-Commerce (industrial MRO) ₩ 612,942,256 ₩ 501,203,764
Wholesale in medicines 158,354,989 102,987,499
Other 23,095,684 25,682,124
Total segment liabilities 794,392,929 629,873,387
Adjustment and removal 22,864,255 27,506,402
Consolidated total liabilities ₩ 817,257,184 ₩ 657,379,789
(3) Information about major customer
Operating revenues from major customers who are occupying more than 10% of total operating revenues for the
years ended December 31, 2015 and 2014, are ₩1,093,500 million and ₩865,632 million, respectively.
5. CASH AND CASH EQUIVALENTS:
The Group equally manages cash and cash equivalents in consolidated statement of financial position and cash
flows. Details of cash and cash equivalents as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Cash ₩ 53,589 ₩ 1,400,409
Deposits 49,407,964 133,979,897
₩ 49,461,553 ₩ 135,380,306
6. FINANCIAL INSTRUMENTS RESTRICTED AND PLEDGED AS COLLATERAL:
Details of financial instruments restricted and those pledged as collateral as of December 31, 2015 and 2014, are as
follows:
Category Financial institution
December 31,
2015
December 31,
2014 Description
(In thousands of Korean won)
Short-term financial
instruments Time deposit Citibank Korea and
others ₩ 3,851,500 ₩ 2,220,000 Offer collateral for
Koreit, Inc.’s
borrowing
Short-term financial
instruments Demand deposit Woori Bank - 40,000 Application for
attachment of
receivables
Long-term financial
instruments Demand deposit Woori Bank and others 14,000 11,000 Guarantee deposits for
checking account
₩ 3,865,500 ₩ 2,271,000
- 24 -
7. TRADE AND OTHER RECEIVABLES:
(1) Details of trade and other receivables as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
Current Non-current Current Non-current
(In thousands of Korean won)
Trade receivables ₩ 846,890,723 ₩ 2,297,510 ₩ 653,624,187 ₩ 2,387,820
Less: allowance for doubtful accounts (2,561,315) (2,272,406) (1,302,400) (2,342,645)
Book value ₩ 844,329,408 ₩ 25,104 ₩ 652,321,787 ₩ 45,175
Other receivables:
Other accounts receivable ₩ 1,279,110 ₩ - ₩ 2,656,824 ₩ -
Less: allowance for doubtful accounts (441,186) - (531,186) -
Short-term loans 375,244 - 82,094 -
Less: allowance for doubtful accounts (50,000) - (50,000) -
Accrued income 285,023 - 184,274 -
Guarantee deposit 117,931 7,026,994 479,333 5,275,023
Debt-equity swap receivables - 146,370 - 175,875
Less: allowance for doubtful accounts - (146,370) - (146,370)
Book value ₩ 1,566,122 ₩ 7,026,994 ₩ 2,821,339 ₩ 5,304,528
(2) Credit risk and allowance
Above trade receivables and other receivables are classified as loan and receivables and measured at amortized cost.
The average credit facilities of the Group's revenue for the period is 90–120 days from the day the bond is issued.
The Group accounted for allowances by using the individual analysis method for receivables that are one year or
older. Receivables within one year represent an impairment loss when they have been incurred by applying
historical loss rates, adjusted based on collection experience and analysis of the collectability of individual
outstanding receivables.
1) Trade receivables and other receivables overdue, but not impaired as of December 31, 2015 and 2014, are as
follows:
December 31, 2015
Less than 6 months 6 months–1 year More than 1 year Total
(In thousands of Korean won)
Trade receivables ₩ 7,437,299 ₩ 53,502 ₩ 170,679 ₩ 7,661,480
Other receivables - 2,000 - 2,000
₩ 7,437,299 ₩ 55,502 ₩ 170,679 ₩ 7,663,480
December 31, 2014
Less than 6 months 6 months–1 year More than 1 year Total
(In thousands of Korean won)
Trade receivables ₩ 1,759,403 ₩ 63,959 ₩ 347,603 ₩ 2,170,965
Other receivables - 81,077 387,801 468,878
₩ 1,759,403 ₩ 145,036 ₩ 735,404 ₩ 2,639,843
2) Aging analysis of trade receivables and other receivables impaired as of December 31, 2015 and 2014, are as
follows:
December 31, 2015
Less than 6 months 6 months–1 year More than 1 year Total
(In thousands of Korean won)
Trade receivables ₩ 944,992 ₩ 1,616,323 ₩ 2,272,406 ₩ 4,833,721
Other accounts receivable - - 441,186 441,186
Short-term loans - - 50,000 50,000
Debt-equity swap receivables - - 146,370 146,370
Less: allowance for doubtful
accounts (944,992) (1,616,323) (2,909,962) (5,471,277)
₩ - ₩ - ₩ - ₩ -
- 25 -
December 31, 2014
Less than 6 months 6 months–1 year More than 1 year Total
(In thousands of Korean won)
Trade receivables ₩ 1,299,640 ₩ 2,760 ₩ 2,342,645 ₩ 3,645,045
Other accounts receivable - - 531,186 531,186
Short-term loans - 50,000 - 50,000
Debt-equity swap receivables - - 146,370 146,370
Less: allowance for doubtful
accounts (1,299,640) (52,760) (3,020,201) (4,372,601)
₩ - ₩ - ₩ - ₩ -
3) The changes in allowance for doubtful accounts for the years ended December 31, 2015 and 2014, are as
follows:
2015
Trade
receivables
Other accounts
receivable
Short-term
loans
Debt-equity swap
receivables
(In thousands of Korean won)
Beginning balance ₩ 3,645,045 ₩ 531,186 ₩ 50,000 ₩ 146,370
Impairment loss - - - -
Impairment reversal (92,779) (90,000) - -
Write-off (411,314) - - -
Business
combination 1,692,769 - - -
Ending balance ₩ 4,833,721 ₩ 441,186 ₩ 50,000 ₩ 146,370
2014
Trade
receivables
Other accounts
receivable
Short-term
loans
Debt-equity swap
receivables
(In thousands of Korean won)
Beginning balance ₩ 3,498,016 ₩ - ₩ 50,000 ₩ 98,181
Impairment loss 154,869 531,186 - 48,189
Impairment reversal - - - -
Write-off (7,840) - - -
Ending balance ₩ 3,645,045 ₩ 531,186 ₩ 50,000 ₩ 146,370
8. OTHER FINANCIAL ASSETS:
(1) Other financial assets as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
Current Non-current Current Non-current
(In thousands of Korean won)
Short-term and long-term
financial instruments ₩ 10,985,120 ₩ 62,598 ₩ 22,220,000 ₩ 21,500
Forward exchange contracts(*) 223,661 - 214,646 -
AFS financial assets - 8,869,645 - 8,633,457
Held-to-maturity financial assets - 197,529 - 137,569
₩ 11,208,781 ₩ 9,129,772 ₩ 22,434,646 ₩ 8,792,526
(*) Forward exchange contracts are classified as financial assets at FVTPL. Changes in fair value are expressed as
other non-operating income and expenses in the consolidated statement of comprehensive income.
(2) As of December 31, 2015 and 2014, none of the other financial assets is either past due or impaired.
- 26 -
(3) Details of AFS financial assets as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Investments in SVIC 25 partnerships ₩ 7,096,000 ₩ 8,500,000
Investments in SVIC 30 partnerships 1,640,000 -
Investments in Specialty Contractor
Financial Cooperative 50,121 50,121
Investments in Information &
Communication Financial Cooperative 15,166 15,166
Investments in Electric Contractors’
Financial Cooperative - 50,000
Deposit of Information and Communication
Corporation License 18,170 18,170
Investments in Plant & Mechanical
Contractors Financial Cooperative of Korea 50,163 -
Others 25 -
₩ 8,869,645 ₩ 8,633,457
(*) Above AFS investment is measured using cost method because AFS investments are not evaluated reliably at
fair value.
(4) Details of held-to-maturity financial assets as of December 31, 2015 and 2014, are as follows:
Annual interest
rates (%) Date of maturity
Book value
December 31,
2015
December 31,
2014
(In thousands of Korean won)
Metro Bond 1.50%–2.50% 2020.01.31–2022.06.30 ₩ 161,199 ₩ 101,239
Korea National Hosing
Bond 2.25% 2018.05.31 36,330 36,330
₩ 197,529 ₩ 137,569
9. INVENTORIES:
(1) Inventories as of December 31, 2015 and 2014, consist of the following:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Merchandise ₩ 101,853,662 ₩ 46,306,935
Finished goods 80,960 335,549
Raw materials 400,365 350,015
Work in progress 49,264 37,872
Materials in transit 2,009,896 ₩ 1,123,905
₩ 104,394,147 ₩ 48,154,276
10. OTHER CURRENT ASSETS:
Other current assets as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Advance payments ₩ 9,432,015 ₩ 3,235,706
Less: allowance for doubtful accounts (635,576) (638,670)
Prepaid expenses 1,430,645 1,253,527
Prepaid value-added tax 3,866,205 1,248,499
₩ 14,093,289 ₩ 5,099,062
- 27 -
11. PROPERTY, PLANT AND EQUIPMENT:
(1) Property, plant and equipment as of December 31, 2015 and 2014, consist of the following:
December 31, 2015 December 31, 2014
Acquisition
cost Accumulated
depreciation Book value
Acquisition
cost Accumulated
depreciation Book value
(In thousands of Korean won)
Land(*) ₩ 1,768,974 ₩ - ₩ 1,768,974 ₩ 1,768,974 ₩ - ₩ 1,768,974
Buildings(*) 2,830,028 (645,317) 2,184,711 2,828,028 (575,035) 2,252,993
Structures 18,500 (1,139) 17,361 18,500 (225) 18,275
Machinery 272,834 (128,137) 144,697 952,834 (767,425) 185,409
Equipment and
furniture 17,199,522 (11,900,010) 5,299,512 11,342,644 (6,212,936) 5,129,708
Vehicles 1,712,355 (730,106) 982,249 1,009,984 (419,683) 590,301
Facility 654,178 (651,493) 2,685 652,378 (634,084) 18,294
Finance lease
assets 1,222,887 (244,578) 978,309 1,254,245 (1,960) 1,252,285
₩ 25,679,278 ₩ (14,300,780) ₩ 11,378,498 ₩ 19,827,587 ₩ (8,611,348) ₩ 11,216,239
(*) Some of the land and buildings are pledged as collateral in connection with Woori Bank borrowings
(see Note 18).
(2) The changes in property, plant and equipment for the years ended December 31, 2015 and 2014, are as
follows:
2015
Beginning of
year Acquisition Disposal Depreciation
Business
combination Other(*) End of year
(In thousands of Korean won)
Land ₩ 1,768,974 ₩ - ₩ - ₩ - ₩ - ₩ - ₩ 1,768,974
Buildings 2,252,993 15,750 (64,426) (90,258) 84,400 (13,748) 2,184,711
Structures 18,275 - - (914) - - 17,361
Machinery 185,409 - - (40,712) - - 144,697
Equipment and
furniture 5,129,708 1,290,974 (3,594) (1,847,090) 711,271 18,243 5,299,512
Vehicles 590,301 615,489 (120,049) (246,969) 336,329 (192,852) 982,249
Facility 18,294 1,800 - (17,409) - - 2,685
Finance lease
assets 1,252,285 - - (244,577) - (29,399) 978,309
₩ 11,216,239 ₩ 1,924,013 ₩ (188,069) ₩ (2,487,929) ₩ 1,132,000 ₩ (217,756) ₩ 11,378,498
(*) Other fluctuations consist of transfer of advances and others, and also include net effects of change in
exchange rate.
2014
Beginning of
year Acquisition Disposal Depreciation
Business
combination Other(*) End of year
(In thousands of Korean won)
Land ₩ 1,768,974 ₩ - ₩ - ₩ - ₩ - ₩ - ₩ 1,768,974
Buildings 2,323,169 - - (67,401) - (2,775) 2,252,993
Structures - 15,500 - - - 2,775 18,275
Machinery 19,815 180,684 - (15,090) - - 185,409
Equipment and
furniture 6,533,356 1,396,088 (977,028) (2,244,636) 370,095 51,833 5,129,708
Vehicles 483,446 288,130 (1) (181,276) 2 - 590,301
Facility 48,564 - - (30,270) - - 18,294
Finance lease
assets - 33,950 - (1,961) - 1,220,296 1,252,285
₩ 11,177,324 ₩ 1,914,352 ₩ (977,029) ₩ (2,540,634) ₩ 370,097 ₩ 1,272,129 ₩ 11,216,239
(*) Other fluctuations consist of transfer of advances and others, and also include net effects of change in
exchange rate.
- 28 -
12. INTANGIBLE ASSETS:
(1) Intangible assets as of December 31, 2015 and 2014, consist of the following:
(2) The changes in intangible assets for the years ended December 31, 2015 and 2014, are as follows:
(*) Other fluctuations consist of transfer of advances and others, and also include net effects of change in exchange
rate.
2014
Beginning of
year Acquisition
Business
combination Amortization
Impairment
loss Other(*) End of year
(In thousands of Korean won)
Patent rights ₩ 22,844 ₩ 10,675 ₩ - ₩ (9,521) ₩ - ₩ - ₩ 23,998
Trademarks 10,357 - - (2,793) - - 7,564
Development
costs 196,250 15,810 - (74,271) - - 137,789
Membership
rights 4,651,749 - - - (1,089,914) - 3,561,835
Other intangible
assets 19,720,850 932,760 - (6,282,635) - 5,096,843 19,467,818
Goodwill 5,957,247 - 11,255,469 - - - 17,212,716
Customer
relationship - - 157,593,245 (5,709,900) - - 151,883,345
₩ 30,559,297 ₩ 959,245 ₩ 168,848,714 ₩ (12,079,120) ₩ (1,089,914) ₩ 5,096,843 ₩ 192,295,065
(*) Other fluctuations consist of transfer of advances and others, and also include net effects of change in exchange
rate.
December 31, 2015 December 31, 2014
Acquisition
cost
Accumulated
depreciation
Accumulated
impairment loss Book value
Acquisition
cost
Accumulated
depreciation
Accumulated
impairment loss Book value (In thousands of Korean won)
Patent rights ₩ 148,717 ₩ (125,939) ₩ - ₩ 22,778 ₩ 135,231 ₩ (111,233) ₩ - ₩ 23,998
Trademarks 38,691 (24,884) - 13,807 16,295 (8,731) - 7,564 Development
costs 453,899 (321,103) - 132,796 408,892 (271,103) - 137,789
Membership rights 4,842,854 - (1,452,273) 3,390,581 4,651,749 - (1,089,914) 3,561,835
Other intangible
assets 35,185,696 (20,985,219) - 14,200,477 34,010,084 (14,542,266) - 19,467,818 Goodwill 39,666,074 - - 39,666,074 17,212,716 - - 17,212,716
Customer
relationship 167,356,991 (13,294,062) - 154,062,929 157,593,245 (5,709,900) - 151,883,345
₩ 247,692,922 ₩ (34,751,207) ₩ (1,452,273) ₩ 211,489,442 ₩ 214,028,212 ₩ (20,643,233) ₩ (1,089,914) ₩ 192,295,065
2015
Beginning of
year Acquisition Disposal
Business
combination Amortization
Impairment
loss Other(*) End of year (In thousands of Korean won)
Patent rights ₩ 23,998 ₩ 5,063 ₩ - ₩ - ₩ (6,283) ₩ - ₩ - ₩ 22,778
Trademarks 7,564 3,153 - 1,208 (6,987) - 8,869 13,807 Development costs
137,789 71,100 - - (76,093) - - 132,796
Membership
rights 3,561,835
191,106 - - - (362,360) - 3,390,581 Other intangible
assets 19,467,818
242,263 (125,167) 820,483 (6,331,138) - 126,218 14,200,477 Goodwill 17,212,716 - - 22,641,041 - (187,683) - 39,666,074 Customer
relationship 151,883,345 - - 9,763,745 (7,584,161) - - 154,062,929 ₩ 192,295,065 ₩ 512,685 ₩ (125,167) ₩ 33,226,477 ₩ (14,004,662) ₩ (550,043) ₩ 135,087 ₩ 211,489,442
- 29 -
(3) Details of significant individual intangible assets as of December 31, 2015 and 2014, are as follows:
Description
December 31, 2015 December 31, 2014
Book value
Residual
depreciation
period Book value
Residual
depreciation
period
(In thousands of Korean won)
Customer
relationship
The value of customer relationship
related to business combination of
Allen Care Co., Ltd. ₩ 145,031,465 21 years ₩ 151,883,345 22 years
Customer
relationship
The value of customer relationship
related to business combination of
Interpark Qubridge Co., Ltd.
(Formerly Qubridge Co., Ltd.) and
Guardian Co., Ltd. 9,031,464 9 years - -
Goodwill The amount of exceeded acquisition
related to business combination of
Allen Care Co., Ltd. 11,255,468 Indefinite 11,255,469 Indefinite
Goodwill The amount of exceeded acquisition
related to business combination of
Koreit, Inc. 4,080,624 Indefinite 4,080,624 Indefinite
Goodwill The amount of exceeded acquisition
related to business combination of
Interpark Qubridge Co., Ltd. and
Guardian Co., Ltd. 21,148,731 Indefinite - -
(4) Goodwill
Goodwill occurred through business combination, and its balance is allocated to each of the CGUs for impairment
test.
1) Carrying amount of Goodwill allocated to each of the CGUs:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
MRO and E-commerce ₩ 16,494,280 ₩ 1,709,880
Other (manufacturing security document) 4,080,624 4,080,624
Other (total distribution agency service) 166,743 166,743
Wholesale in medicine 18,924,427 11,255,469
₩ 39,666,074 ₩ 17,212,716
2) Principal assumption used for the impairment test:
The Group conducted impairment test of goodwill that it holds as of December 31, 2015, considering change of
CGUs in 2015. The recoverable amount of the CGU is determined according to five years of financial budget that
the management approved. Management assures the recoverable amount, which is estimated with the above
principal assumption, is less than total carrying amount of goodwill from each of the CGUs.
Principal assumption used for estimation of the recoverable amount of the major CGU is as follows:
Discount rate Persistent growth
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
MRO and E-Business 9.67% 13.00% 2.00% 1.00%
Wholesale in medicine 10.00%–11.74% 12.00% 1.00%–2.00% 1.00%
- 30 -
13. INVESTMENTS IN SUBSIDIARIES:
(1) The Group’s investments in subsidiaries as of December 30, 2015 and 2014, consist of the following:
Ownership (%)
Nature of business Location
December
31, 2015
December
31, 2014
Reporting
month
Koreit, Inc. Security paper manufacturing Korea 53.7 53.7 December
Interpark International Co., Ltd. Wholesale and retail in e-business Korea 98.5 98.5 December
Interpark Logistics Co., Ltd. Distribution agent service Korea 100.0 100.0 December
iMarket America, Inc. MRO business America 100.0 100.0 December
iMarket Vietnam Co., Ltd. MRO business Vietnam 100.0 100.0 December
iMarket Europe, s.r.o. (*1) MRO business Slovakia - 100.0 December
iMarket Xian, Inc. MRO business China 100.0 100.0 December
Allen Care Co., Ltd. Wholesale in medicine Korea 51.0 51.0 December
Interpark Qubridge Co., Ltd. (Formerly
Qubridge Co., Ltd.) (*2) MRO business Korea 100.0 - December
Guardian Co., Ltd. (*2) Wholesale in medicine Korea 100.0 - December
iMarketFocus Inc. (*3) MRO business Korea 100.0 50 December
Global M&S Co. Ltd. (*4) Wholesale and retail in e-business Japan 100.0 100.0 December
Interpark international (HK) Ltd. (*4) Wholesale and retail in e-business Hong Kong 100.0 100.0 December
Interpark international (SINGAPORE)
Ltd. (*4) Wholesale and retail in e-business Singapore 100.0 100.0 December
Interpark international (CHINA)
Ltd. (*4) Wholesale and retail in e-business China 100.0 100.0 December
(*1) Disposed of during the current period.
(*2) Newly acquired during the current period. (*3) Reclassified from investments in joint venture as the Group achieved the control due to the additional
acquisition of share.
(*4) Interpark International Co., Ltd. has 100% share.
(2) The Group holds 50% of equity of Enerband China, Co., Ltd., and classified it as investments in associates
that the Group has significant influence over financial and operating policy decisions of the investee company,
but does not have control or joint control over those policies.
(3) Companies newly included as consolidation for the years ended December 31, 2015 and 2014, are as follows:
December 31, 2015
Description Reason
Interpark Qubridge Co., Ltd. Acquired control due to acquisition of share
Guardian Holdings Co., Ltd. Acquired control due to acquisition of share
Guardian Co., Ltd. Acquired control due to acquisition of share
iMarketFocus Inc. Acquired control due to acquisition of share
December 31, 2014
Description Reason Allen Care Co., Ltd. Acquired control due to acquisition of share
(4) There are no subsidiaries that have been excluded from consolidation for the year ended December 31, 2014.
Subsidiaries excluded from consolidation for the year ended December 31, 2015, are as follows:
Description Reason
iMarketEurope, s.r.o. Lost control due to disposal of share
Guardian Holdings Co., Ltd. Extinction due to merger with Guardian Co., Ltd.
- 31 -
(5) The financial information of the Group’s subsidiaries as of and for the year ended December 31, 2015, is as
follows:
Assets Liabilities Sales
Net income
(loss)
Total
comprehensive
income (loss)
(In thousands of Korean won)
Koreit, Inc. ₩ 7,981,769 ₩ 11,061,947 ₩ 17,201,265 ₩ 717,542 ₩ 634,221
Interpark International Co., Ltd. 15,658,444 9,751,651 44,031,631 (1,847,632) (1,849,631)
Interpark Logistics Co., Ltd. 3,298,500 2,282,087 21,650,561 52,836 52,836
iMarket America, Inc. 3,217,042 732,260 15,193,711 83,875 235,826
iMarket Vietnam Co., Ltd. 23,228,427 22,739,162 71,295,775 (370,249) (361,315)
iMarket Europe, s.r.o. (*1) - - - (5,669) (6,486)
iMarket Xian, Inc. 2,333,805 1,046,449 6,847,386 166,867 187,917
Allen Care Co., Ltd. 307,584,167 170,143,381 280,508,396 14,308,700 14,308,700
Interpark Qubridge Co., Ltd. (*2) 22,818,675 25,946,275 87,649,254 (2,024,106) (2,024,106)
Guardian Co., Ltd. (*2) 25,811,433 21,025,442 34,493,783 119,187 119,187
iMarketFocus Inc. (*2) 11,193,711 1,519,149 4,541,116 (359,416) (381,835)
Global M&S Co. Ltd. 1,801,514 1,511,849 6,123,186 116,973 116,240
Interpark international (HK) Ltd. 1,101,249 1,508,298 2,978,198 (272,482) (272,931)
Interpark international
(SINGAPORE) Ltd. 962,922 931,820 511,227 (146,021) (146,413)
Interpark international (CHINA)
Ltd. 1,041,684 346,451 1,190,253 (63,729) (64,153)
(*1) IMarketEurope, s.r.o. was disposed of during the current year. The above table only includes management
performance until disposal date.
(*2) They were acquired during the current year. The above table only includes management performance after
acquisition date and the balance applied the amortized cost of customer relationship that was recognized in
business combination.
(6) The financial position and non-controlling interest of the subsidiaries that have significant non-controlling
interest as of December 31, 2015, are as follows:
Koreit, Inc. Allen Care Co., Ltd.
(In thousands of Korean won)
Current assets ₩ 2,697,888 ₩ 159,996,956
Non-current assets 5,283,881 147,587,211
Total assets ₩ 7,981,769 ₩ 307,584,167
Current liabilities 6,707,528 138,166,397
Non-current liabilities 4,354,419 31,976,984
Total liabilities ₩ 11,061,947 ₩ 170,143,381
Controlling interests (1,652,558) 70,094,801
Non-controlling interests (1,427,620) 67,345,985
Total equity ₩ (3,080,178) ₩ 137,440,786
(7) The financial performance and non-controlling interest of the subsidiaries that have significant non-controlling
interest for the year ended December 31, 2015, are as follows:
Koreit, Inc. Allen Care Co., Ltd.
(In thousands of Korean won)
Sales ₩ 17,201,265 ₩ 280,508,396
Operating income 1,144,268 20,234,721
Net income 717,542 14,308,700
Other comprehensive loss (83,321) -
Total comprehensive income 634,221 14,308,700
Net income of non-controlling interest 332,571 7,297,437
Total comprehensive income of
non-controlling interest 332,571 7,297,437
- 32 -
(8) Summary of cash flows for subsidiaries for the year ended December 31, 2015, is as follows:
Cash flows
from operating
activities
Cash flows
from
investing
activities
Cash flows
from financing
activities
Increase
(decrease) in cash
and cash
equivalents
Cash and cash
equivalents,
beginning of year
Effects of
changes in
foreign exchange
rates
Cash and cash
equivalents,
end of year
(In thousands of Korean won)
Koreit, Inc. ₩ 1,071,833 ₩ (89,403) ₩ (307,181) ₩ 675,249 ₩ 57,661 ₩ 2,179 ₩ 735,089
Interpark International Co., Ltd. 80,562 (142,611) 428,390 366,341 476,503 (27,107) 815,737
Interpark Logistics Co., Ltd. (285,324) (43,843) - (329,167) 657,761 - 328,594
iMarket America, Inc. 1,600,127 23,151 - 1,623,278 366,755 - 1,990,033
iMarket Vietnam Co., Ltd. 2,677,693 (358,852) (385,893) 1,932,948 1,028,413 - 2,961,361
iMarket Xian, Inc. 428,317 (306,912) - 121,405 947,636 - 1,069,041
Allen Care Co., Ltd. 23,732,309 (823,190) - 22,909,119 5,352,807 - 28,261,926
Interpark Qubridge Co., Ltd. (318,025) (200,239) 1,605,903 1,087,639 - - 1,087,639
Guardian Co., Ltd. 1,249,281 (125,220) - 1,124,061 - - 1,124,061
iMarketFocus Inc. 628,813 211,828 - 840,641 - - 840,641
Global M&S Co. Ltd. 44,890 (9,973) - 34,917 131,991 12,074 178,982
Interpark international
(SINGAPORE) Ltd. (47,421) (464) - (47,885) 145,644 (812) 96,947
Interpark international (CHINA)
Ltd. (101,202) (17,534) 433,320 314,584 85,283 2,943 402,810
Interpark international(HK) Ltd. 101,500 (138,790) - (37,290) 102,821 12,781 78,312
14. INVESTMENTS IN ASSOCIATES:
(1) Details of investments in associates as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
Nature of
business Location
Ownership (%)
Acquisition
cost Book value
Ownership (%)
Acquisition
cost Book value
Reporting
month
(In thousands of Korean won)
Aerogel
Application
Group Inc. Heat insulation
device
manufacturing
and sale Korea 35.0 ₩ 498,000 ₩ - 35.0 ₩ 498,000 ₩ 225,777 December
Enerband
China, Co.,
Ltd. Heat insulation
device
manufacturing
and sale China 50.0 177,778 - 50.0 177,778 - December
₩ 675,778 ₩ - ₩ 675,778 ₩ 225,777
(2) Changes in investments in associates for the years ended December 31, 2015 and 2014, are as follows:
2015
Beginning balance
Loss on equity
method
investments Impairment loss Ending balance
(In thousands of Korean won)
Aerogel
Application Group
Inc. ₩ 225,777 ₩ (3,826) ₩ (221,951) ₩ -
2014
Beginning balance
Loss on equity
method
investments
Capital changes in
equity method Ending balance
(In thousands of Korean won)
Aerogel
Application Group
Inc. ₩ 260,733 ₩ (34,956) ₩ - ₩ 225,777
Enerband China, Co.,
Ltd. 79,015 (76,997) (2,018) -
₩ 339,748 ₩ (111,953) ₩ (2,018) ₩ 225,777
- 33 -
(3) Summary of financial information of the associates as of and for the years ended December 31, 2015 and 2014,
is as follows:
December 31, 2015
Assets Liabilities Sales Net loss
Total
comprehensive
loss
(In thousands of Korean won) Aerogel
Application Group Inc. ₩ 230,012 ₩ 95,434 ₩ 7,965 ₩ (109,448) ₩ (109,448)
Enerband China, Co., Ltd. 117,115 325,098 35,605 (55,925) (57,943)
December 31, 2014
Assets Liabilities Sales Net loss
Total
comprehensive
loss
(In thousands of Korean won) Aerogel
Application Group Inc. ₩ 233,256 ₩ 87,752 ₩ 347,012 ₩ (149,136) ₩ (149,136)
Enerband China, Co., Ltd. 98,897 249,785 206,868 (298,610) (300,628)
(4) The reconciliation of the Group’s share of associates’ net assets to their book value as of December 31, 2015
and 2014, is as follows:
December 31, 2015
Aerogel Application Group Inc. Enerband China, Co., Ltd.
(In thousands of Korean won)
Net assets (A) ₩ 134,578 ₩ (207,983)
Ownership in associates (B) 35.0% 50.0%
Net asset share value (AxB)(*) 47,102 -
(+) Goodwill 174,823 -
(-) Other differences 26 -
(-) Impairment (221,951) -
Book value ₩ - ₩ -
(*) The Group unrecognized the net asset share value of Enerband China, Co., Ltd. by discontinuing equity
method with negative balance of net asset.
December 31, 2014
Aerogel Application Group Inc. Enerband China, Co., Ltd.
(In thousands of Korean won)
Net assets (A) ₩ 145,504 ₩ (150,888)
Ownership in associates (B) 35.00% 50.00%
Net asset share value (A x B)(*) 50,926 -
(+) Goodwill 174,823 -
(-) Other differences 28 -
Book value ₩ 225,777 ₩ -
(*) The Group unrecognized the net asset share value of Enerband China, Co., Ltd. by discontinuing equity
method with negative balance of net asset.
(5) Accumulative unrecognized loss on equity method of associates, which comes from discontinuing equity
method, for the years ended December 31, 2015 and 2014, is as follows:
2015 2014
(In thousands of Korean won)
Unrecognized loss on equity method of Enerband China, Co., Ltd. ₩ 103,406 ₩ 75,444
- 34 -
15. INVESTMENTS IN JOINT VENTURE:
(1) Details of investments in joint venture as of December 31, 2015 and 2014, are as follows:
December 31, 2015
Nature of
business Location
Ownership (%)
Acquisition
cost Book value
Reporting
month
(In thousands of Korean won)
iMarketFocus Inc.(*) MRO business China - ₩ - ₩ - December
(*) Reclassified to investments in subsidiaries as the group achieved the control due to the additional acquisition of share
during the current year.
December 31, 2014
Nature of
business Location Ownership (%)
Acquisition
cost Book value
Reporting
month
(In thousands of Korean won)
iMarketFocus Inc. MRO business China 50.0 ₩ 5,104,500 ₩ 5,099,856 December
(2) The changes in investment in joint venture for the years ended December 31, 2015 and 2014, are as follows:
2015
Beginning balance
Loss on
equity method
investments
Capital changes in
equity method Disposal Ending balance
(In thousands of Korean won)
iMarketFocus Inc. ₩ 5,099,856 ₩ (140,277) ₩ 70,441 ₩ (5,030,020) ₩ -
2014
Beginning balance Acquisition
Loss on
equity method
investments
Changes in
accumulated
comprehensive
income Ending balance
(In thousands of Korean won)
iMarketFocus Inc. ₩ - ₩ 5,104,500 ₩ (377,011) ₩ 372,367 ₩ 5,099,856
(3) Summary of financial information of the joint venture as of and for the year ended December 31, 2014, is as
follows:
December 31, 2014
Assets Liabilities Sales Net loss
Total
comprehensive
loss
(In thousands of Korean won)
iMarketFocus Inc. ₩ 11,454,560 ₩ 1,258,492 ₩ 547,490 ₩ (754,021) ₩ (12,932)
(4) The reconciliation of the Group’s share of joint venture’s net assets to its book value as of December 31, 2014,
is as follows:
iMarketFocus Inc.
(In thousands of Korean won)
Net assets (A) ₩ 10,196,068
Ownership in joint venture (B) 50.0%
Net asset share value (A x B) 5,098,034
(+) Goodwill -
(+) Other differences 1,822
Book value ₩ 5,099,856
- 35 -
16. TRADE PAYABLES AND OTHER PAYABLES:
Trade payables and other payables as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Trade payables ₩ 724,149,156 ₩ 581,453,199
Other accounts payable 6,173,967 6,096,999
Accrued expenses 5,236,487 4,467,333
Guarantee deposits received 631,535 775,387
₩ 736,191,145 ₩ 592,792,918
17. OTHER FINANCIAL LIABILITIES:
Other financial liabilities as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
Current Non-current Current Non-current
(In thousands of Korean won)
Forward exchange contracts(*) ₩ 139,971 ₩ - ₩ 266,044 ₩ -
Finance lease liabilities 197,293 853,935 - -
₩ 337,264 ₩ 853,935 ₩ 266,044 ₩ -
(*) Forward exchange contracts are classified as financial liability at FVTPL. Changes in fair value are presented
as other non-operating income and expenses in the consolidated statement of comprehensive income.
18. BORROWINGS:
(1) Details of borrowings as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
Current Non-current Current Non-current
(In thousands of Korean won)
Short-term borrowings ₩ 14,153,678 ₩ - ₩ 8,487,639 ₩ -
Long-term borrowings - - - 9,009
₩ 14,153,678 ₩ - ₩ 8,487,639 ₩ 9,009
(2) Details of short-term borrowings as of December 31, 2015 and 2014, are as follows:
Creditor
Annual
interest rate (%) December 31, 2015 December 31, 2014
(In thousands of Korean won)
Short-term
borrowings in
Korean won Industrial bank of Korea 5.43% ₩ 500,000 ₩ 500,000
Citibank Korea 2.48%–2.57% 7,720,000 2,220,000
SiwonSRI - 35,600 35,600
Kookmin Bank 3.62% 4,841,466 4,717,507
Short-term
borrowings
in foreign
currency Woori Bank(*) 3.69% 749,677 1,014,532
iMarketXian, Inc. 4.35% 306,935 -
₩ 14,153,678 ₩ 8,487,639
(*) Land and buildings owned by Koreit, Inc., the Group’s subsidiary, are put up as collateral (amount pledged: ₩ 780,000 thousand and JPY 261,600 thousand).
- 36 -
(3) Details of long-term borrowings as of December 31, 2015 and 2014, are as follows:
Creditor
Annual
interest rate (%) December 31, 2015 December 31, 2014
(In thousands of Korean won)
Long-term borrowings in
foreign currency Shinhan Bank 0.80% ₩ - ₩ 9,009
19. BONDS:
(1) Details of bonds as of December 31, 2015 and 2014, are as follows:
Issued date Maturity date
Annual
interest rate (%) December 31, 2015 December 31, 2014
(In thousands of Korean won)
Bonds 2015.10.08 2018.10.08 3.50% ₩ 10,000 ₩ -
20. CONVERTIBLE BONDS:
(1) Convertible bonds
Koreit, Inc., the Group’s subsidiary, issued convertible bonds on August 30, 2012, and details of convertible bonds
are as follows:
Contents
Par value ₩ 1,090,200,000
Issued amount ₩ 1,090,200,000
Issued date August 30, 2012
Maturity date December 31, 2016
Coupon rate 2.50 %
Guaranteed interest on redemption 2.50 %
Exercise price per share ₩ 60,000
Exercisable period From issued date to the day before redeemable date
The fair value of the liability component of the convertible bonds is calculated using the market interest rate for an
equivalent non-convertible bond.
(2) Redeemable preferred share liabilities
Koreit, Inc., the Group’s subsidiary, issued 27,073 shares of redeemable convertible preferred share liabilities at
₩70,000 per share on August 30, 2012. Preferred shareholders can convert preferred shares to common shares
three years after the issuance date, until the tenth anniversary. Required 1% dividends are paid annually and
recorded as interest expenses.
21. OTHER LIABILITIES:
Other liabilities as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
Current Non-current Current Non-current
(In thousands of Korean won)
Advances from
customers ₩ 10,758,593 ₩ - ₩ 6,210,931 ₩ -
Withholdings 1,793,634 - 880,337 -
Provision 237,903 - 32,202 -
Deferred revenue 142,107 - 142,107
Others - 14,492 - 21,558
₩ 12,790,130 ₩ 156,599 ₩ 7,123,470 ₩ 163,665
- 37 -
22. RETIREMENT BENEFIT OBLIGATION:
(1) Defined contribution retirement benefit plans
Some subsidiaries of the Group operate defined contribution retirement benefit plans for all qualifying employees.
The total expense, recognized as loss of ₩536,522 thousand (2014: ₩527,675 thousand), represents contributions
to these plans by the Group at rates specified in the rules of the plans.
(2) Defined benefit plans
1) Net defined benefit liability recognized in the consolidated statement of financial position as of December 31,
2015 and 2014, is as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Present value of funded defined
benefit liability ₩ 19,388,708 ₩ 16,542,660
Present value of unfunded defined
benefit liability 551,097 283,995
Subtotal 19,939,805 16,826,655
Fair value of plan assets (15,365,513) (12,916,147)
Total ₩ 4,574,292 ₩ 3,910,508
2) Changes in the carrying amount of defined benefit obligations for the years ended December 31, 2015 and
2014, are as follows:
2015 2014
(In thousands of Korean won)
Beginning balance ₩ 16,826,655 ₩ 14,152,690
Current service cost 3,742,374 3,676,493
Interest expense 618,226 613,553
Remeasurements factor:
Actuarial gains and losses arising
from changes in demographic
assumptions (96,682) (570,298)
Actuarial gains and losses arising
from changes in financial
assumptions 56,466 87,410
Actuarial gains and losses arising
from experience adjustments (224,214) (444,693)
Actuarial gains and losses arising
from others - (24,071)
Benefits paid (2,894,448) (1,087,469)
Transferred in/from associates 108,659 24,944
Business combination 1,802,769 398,096
Ending balance ₩ 19,939,805 ₩ 16,826,655
3) The changes in the fair value of plan assets for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Beginning balance ₩ 12,916,147 ₩ 11,253,747
Expected return on plan assets 446,182 486,019
Remeasurement loss (159,266) (212,190)
Employer contribution 3,792,631 2,145,807
Benefits paid (1,762,589) (940,502)
Transferred in/from associates 33,408 24,944
Business combination 99,000 158,322
Ending balance ₩ 15,365,513 ₩ 12,916,147
- 38 -
The composition of costs recognized according to defined benefit plans is as follows:
2015 2014
(In thousands of Korean won)
Cost of sales ₩ 90,351 ₩ 46,800
Selling and administrative expenses 3,824,067 3,757,227
₩ 3,914,418 ₩ 3,804,027
The Group’s plan assets are composed of cash and cash equivalent, and actual return on plan assets for the years
ended December 31, 2015 and 2014, is ₩299,581 thousand and ₩273,829 thousand, respectively.
4) The amounts recognized as remeasurements of net defined benefit liability in other comprehensive income
(expense) for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Remeasurements before income tax expense ₩ 105,164 ₩ 739,463
Income tax expense (24,731) (172,857)
Remeasurements after income tax expense ₩ 80,433 ₩ 566,606
5) The principal assumptions used for the purposes of the actuarial valuations are as follows:
December 31, 2015 December 31, 2014
Discount rate(s) 2.54%–3.20% 2.80%–3.75%
Expected rate(s) of salary increase 3.85%–5.22% 4.38%–6.00%
6) When all other assumptions are maintained and in case where significant actuarial assumptions are within the
range of reasonable, possible changes, the impact of the defined benefit obligation is as follows:
2015 2014
Increase Decrease Increase Decrease
(In thousands of Korean won)
Changes of 100 basis points of
discount rate ₩ (1,322,667) ₩ 1,078,410 ₩ (1,245,744) ₩ 1,447,563
Changes of 1 % of expected
rate of salary increase 1,484,917 (1,310,217) 1,446,198 (1,267,310)
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit
obligation as it is unlikely that the change in assumptions would occur in isolation of one another, as some of the
assumptions may be correlated. Also, in the sensitivity analysis above, the present value of the defined benefit
obligation was measured using the projected unit credit method.
23. EQUITY:
(1) Details of equity as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Number of authorized shares (*1) 80,000,000 shares 80,000,000 shares
Par value per share in Korean won (*1) ₩ 500 ₩ 500
Number of outstanding shares 35,943,340 shares 35,943,340 shares
Capital stock (*2) ₩ 18,166,670 ₩ 18,166,670
(*1) In accordance with the resolution of the shareholders dated March 26, 2010, the Company carried out the stock split on
April 28, 2010, and amended the number of authorized stocks. Consequently, the par value per share of the Company’s
stock has become ₩500 from ₩5,000, and the number of authorized stock has become 80 million from 8 million.
(*2) Difference of ₩195,000 thousand occurred between face value of stocks and capital of stocks paid due to past retirement
of shares.
- 39 -
(2) Other contributed capital as of December 31, 2015 and 2014, consist of the following:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Paid-up capital in excess of par value ₩ 134,652,554 ₩ 134,652,554
Treasury stock(*) (19,945,150) (9,312,969)
₩ 114,707,404 ₩ 125,339,585
(*) The Company additionally acquired ₩10,632,181 thousand of treasury stocks (397,389 shares) for
improvement in shareholder value, and has ₩19,945,150 thousand of treasury stocks (747,215 shares) in all
as of December 31, 2015. Treasury stocks will be disposed of according to future market conditions.
The changes in treasury stocks for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In share and thousands of Korean won)
Number of shares Book value Number of shares Book value
Beginning of year 349,826 ₩ 9,312,969 10,000 ₩ 16,800
Acquisition of treasury stock 397,389 10,632,181 339,826 9,296,169
End of year 747,215 ₩ 19,945,150 349,826 ₩ 9,312,969
(3) The details of components of other capital as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Capital changes using equity method ₩ - ₩ 369,544
Foreign operation translation income (loss) 117,413 (35,108)
₩ 117,413 ₩ 334,436
(4) The changes in components of other capital for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Beginning of year ₩ 334,436 ₩ (173,240)
Changes that occurred by change of other
comprehensive income of associates and
joint ventures (369,544) 370,348
Exchange differences from conversion of foreign
operation’s net asset 152,521 137,328
End of year ₩ 117,413 ₩ 334,436
(5) Retained earnings as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Statutory reserve:
Legal reserve(*) ₩ 9,627,868 ₩ 7,575,335
Voluntary reserve:
Appropriated retained earnings for
business expansion 195,420,581 178,499,835
Other discretionary appropriated
retained earnings 270,300 -
Unappropriated retained earnings 44,752,820 40,113,247
₩ 250,071,569 ₩ 226,188,417
(*) The Commercial Code of the Republic of Korea requires the Company to appropriate as a legal reserve an
amount equal to a minimum of 10% of cash dividends paid, until such reserve equals 50% of its issued capital
stock. The reserve is not available for the payment of cash dividends, but may be transferred to capital stock or
used to reduce accumulated deficit, if any, with the ratification of the Company’s majority shareholders.
- 40 -
(6) The changes in retained earnings for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Beginning of year ₩ 226,188,417 ₩ 194,136,395
Net income attributable from the
parent company 41,590,131 40,452,095
Dividends (17,808,012) (8,983,335)
Remeasurements of defined benefit
liability 101,033 583,262
End of year ₩ 250,071,569 ₩ 226,188,417
(7) Details of payment of dividends for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
Dividend per share ₩ 500 ₩ 250
Number of outstanding shares 35,616,024 shares 35,933,340 shares
Total payment of dividends ₩ 17,808,012,000 ₩ 8,983,335,000
24. CLASSIFICATION OF EXPENSES BY NATURE:
The classification of expenses by nature for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
Cost of sales
Selling and
administrative
expenses Total Cost of sales
Selling and
administrative
expenses Total
(In thousands of Korean won)
Changes in
inventories ₩ 2,935,818,245 ₩ - ₩ 2,935,818,245 ₩ 2,557,252,913 ₩ - ₩ 2,557,252,913
Salaries 4,949,262 55,205,348 60,154,610 4,485,610 46,299,362 50,784,972
Depreciation 395,152 2,092,777 2,487,929 132,642 2,407,992 2,540,634
Amortization 2,177,774 11,826,888 14,004,662 2,177,773 9,901,347 12,079,120
Commission 2,492,091 16,865,111 19,357,202 2,426,222 12,055,959 14,482,181
Rents 966,250 9,482,572 10,448,822 180,323 6,528,373 6,708,696
Information
technology
expenses - 7,622,463 7,622,463 - 7,072,052 7,072,052
Others 13,614,853 16,709,216 30,324,069 12,331,163 13,678,058 26,009,221
₩ 2,960,413,627 ₩ 119,804,375 ₩ 3,080,218,002 ₩ 2,578,986,646 ₩ 97,943,143 ₩ 2,676,929,789
- 41 -
25. SELLING AND ADMINISTRATIVE EXPENSES:
Selling and administrative expenses for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Salaries ₩ 44,046,376 ₩ 35,927,178
Severance benefits 4,106,239 4,394,852
Employee benefits 7,052,733 5,977,332
Travel 2,772,663 2,406,568
Entertainment expenses 1,044,335 996,752
Communications 923,362 828,156
Utilities 185,176 95,949
Electricity cost 16,311 16,166
Taxes and dues 886,931 446,138
Depreciation 2,092,777 2,407,992
Amortization 11,826,888 9,901,347
Rents 9,482,572 6,528,373
Cost of repairs 44,999 44,133
Insurance premiums 1,491,748 1,139,946
Cost of car maintenance 479,583 328,041
Ordinary research and development 35,559 63,912
Transportation expense 4,382,187 2,913,440
Training expenses 328,889 488,573
Publication expenses 46,195 35,284
Packaging 115,328 163,099
Office supplies 698 244
Consumable supplies 837,246 848,098
Commission 16,865,111 12,055,959
Advertising 1,498,706 644,326
Bad debts expense (92,779) 203,058
Promotion 361,149 226,189
Service contract expenses 160,080 139,608
Stock compensation expenses 3,745 9,815
Electronic data processing service fee 7,622,463 7,072,052
Event cost 172,642 213,322
Others 1,014,463 1,427,241
₩ 119,804,375 ₩ 97,943,143
26. OTHER NON-OPERATING INCOME AND EXPENSES:
(1) Other non-operating income for the years ended December 31, 2015 and 2014, consists of the following:
2015 2014
(In thousands of Korean won)
Gain on foreign currency
transactions ₩ 6,277,885 ₩ 4,343,778
Gain on foreign currency translation 671,090 338,050
Gains on valuation of foreign
exchange forward contracts 223,661 214,646
Gains on foreign exchange forward
transaction 5,357,286 3,463,823
Gain from disposal of property, plant
and equipment 100,824 3,060
Reversal of allowance for other bad
debts 93,551 807
Gains on disposal of AFS financial assets 17 -
Gain on exemption of debts 40,000 5,000
Miscellaneous gain 2,606,587 1,131,358
₩ 15,370,901 ₩ 9,500,522
- 42 -
(2) Other non-operating expenses for the years ended December 31, 2015 and 2014, consist of the following:
2015 2014
(In thousands of Korean won)
Loss on foreign currency transactions ₩ 4,073,979 ₩ 3,932,447
Loss on foreign currency translation 627,140 319,138
Loss on valuation of foreign
exchange forward contracts 139,971 266,044
Loss on foreign exchange forward
transaction 7,434,588 4,028,852
Loss on disposal of property, plant and
equipment 20,762 7,277
Other bad debts expense 457 531,186
Impairment loss on intangible assets 550,043 1,089,914
Loss on disposal of other investments 36,075 -
Donations and contributions 278,082 6,216
Contribution to provision - 40,000
Miscellaneous loss 2,083,894 376,910
₩ 15,244,991 ₩ 10,597,984
27. FINANCE INCOME AND EXPENSES:
(1) Finance income for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Interest income on short-term bank
deposits ₩ 2,228,706 ₩ 2,471,747
Interest income on loans and
receivables 85,921 93,067
₩ 2,314,627 ₩ 2,564,814
(2) Finance expenses for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Interest expenses on borrowings and
bank overdrafts ₩ 682,298 ₩ 603,245
(3) Details of finance income and expenses by category of financial instruments for the years ended December 31,
2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Finance income:
Cash and cash equivalent ₩ 2,228,706 ₩ 2,375,143
Loans and receivables 85,921 189,671
₩ 2,314,627 ₩ 2,564,814
Finance expenses:
Financial liability at amortized cost ₩ 682,298 ₩ 603,245
₩ 682,298 ₩ 603,245
- 43 -
28. INCOME TAX:
(1) Income tax expenses for the years ended December 31, 2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Ⅰ. Income tax ₩ 18,296,559 ₩ 15,235,395
Current income tax 18,296,559 15,235,395
Adjustments in respect of prior-year taxes -
Ⅱ. Deferred income taxes (2,184,524) (2,156,889)
Decrease in deferred income tax assets (*) (2,159,793) (1,984,032)
Items directly charged to equity (24,731) (172,857)
Ⅲ. Income tax expense 16,112,035 13,078,506
(*) End of deferred income tax liabilities (32,140,040) (32,151,809)
Beginning of deferred income tax assets (liabilities) (32,151,809) 486,812
Changes due to business combination (2,148,024) (34,622,653)
Decrease in deferred income tax (2,159,793) (1,984,032)
(2) Reconciling items between income before income tax and taxable income for the years ended December 31,
2015 and 2014, are as follows:
2015 2014
(In thousands of Korean won)
Income before income tax ₩ 65,677,677 ₩ 57,218,629
Current applicable tax rate 23.50% 23.40%
Income tax expenses calculated at current applicable
tax rate 15,431,998 13,384,908
Adjustments:
Tax effect of non-deductible expense 19,254 57,696
Other (change in tax rate, etc.) 660,783 (364,098)
Subtotal 680,037 (306,402)
Income tax expense ₩ 16,112,035 ₩ 13,078,506
Effective tax rate 24.50% 22.90%
(3) The income tax directly charged to equity for the years ended December 31, 2015 and 2014, is as follows:
2015 2014
Before tax Tax credit After tax Before tax Tax credit After tax
Remeasurements of net
defined benefit obligations ₩ 105,164 ₩ (24,731) ₩ 80,433 ₩ 739,463 ₩ (172,857) ₩ 566,606
(4) The changes in deferred income tax assets (liabilities) for the years ended December 31, 2015 and 2014, are as
follows:
2015
Beginning of year Net income
Other
comprehensive
income
Business
combination End of year
(In thousands of Korean won)
I. Temporary differences to be deducted: Defined benefit
obligation ₩ 3,280,247 ₩ 558,100 ₩ (58,194) ₩ - ₩ 3,780,153
Accrued expenses
(annual debt) 492,941 6,206 - - 499,147
Deposit received 4,373 (4,373) - - -
Intangible asset 2,746 (2,350) - - 396
- 44 -
2015
Beginning of year Net income
Other
comprehensive
income
Business
combination End of year
(In thousands of Korean won)
Tangible asset ₩ 10,086 ₩ (10,737) ₩ - ₩ - ₩ (651)
Uncollectible
accounts 9,144 (8,914) - - 230
Financial guarantee
liabilities 11,552 20 - - 11,572
Membership right 253,851 84,986 - - 338,837
Investments in
associates 41,406 116,263 - - 157,669
Receivables 123,718 216 - - 123,934
Provisions 124 - - - 124
Others - 278,537 - - 278,537
Subtotal 4,230,188 1,017,954 (58,194) - 5,189,948
II. Temporary differences to be added: Accrued revenues ₩ (40,618) ₩ 25,069 ₩ - ₩ - ₩ (15,549)
Severance insurance (2,923,026) (531,031) 33,463 - (3,420,594)
Prepaid expenses (4,017) 4,017 - - -
Customer relation (33,414,336) 1,668,515 - (2,148,024) (33,893,845)
Subtotal (36,381,997) 1,166,570 33,463 (2,148,024) (37,329,988)
Total (I+II) ₩ (32,151,809) ₩ 2,184,524 ₩ (24,731) ₩ (2,148,024) ₩ (32,140,040)
2014
Beginning of year Net income
Other
comprehensive
income
Business
combination End of year
(In thousands of Korean won)
I. Temporary differences to be deducted:
Defined benefit
Obligation ₩ 2,864,528 ₩ 599,690 ₩ (222,278) ₩ 38,307 ₩ 3,280,247
Accrued expenses
(annual debt) 307,048 176,339 - 9,554 492,941
Deposit received 1,288 3,085 - - 4,373
Intangible asset 5,297 (2,551) - - 2,746
Tangible asset 37,324 (27,238) - - 10,086
Uncollectible
accounts 9,501 (357) - - 9,144
Financial guarantee
liabilities 12,003 (451) - - 11,552
Membership right - 253,851 - - 253,851
Investments in
associates - 41,406 - - 41,406
Receivables - 123,718 - - 123,718
Provisions - 124 - - 124
Gain (loss) on
foreign currency
translation 3,570 (3,570) - - -
Subtotal 3,240,559 1,164,046 (222,278) 47,861 4,230,188
II. Temporary differences to be added: Accrued revenues ₩ (30,340) ₩ (10,278) ₩ - ₩ - ₩ (40,618)
Severance insurance (2,723,407) (249,040) 49,421 - (2,923,026)
Prepaid expenses - (4,017) - - (4,017)
Customer relation - 1,256,178 - (34,670,514) (33,414,336)
Subtotal (2,753,747) 992,843 49,421 (34,670,514) (36,381,997)
Total (I+II) ₩ 486,812 ₩ 2,156,889 ₩ (172,857) ₩ (34,622,653) ₩ (32,151,809)
- 45 -
(5) Temporary differences and loss carryforward not recognized as deferred tax assets (liabilities) as of December
31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Temporary differences to be added
(investments in subsidiaries) ₩ (459,054) ₩ (499,980)
Loss carryforward 2,328,540 -
₩ 1,869,486 ₩ (499,980)
(6) The expiration of loss carryforward not recognized as deferred tax assets for the year ended December 31,
2015, are as follows:
Within 3 years More than 3 years Total
(In thousands of Korean won)
Loss carryforward ₩ - ₩ 2,328,540 ₩ 2,328,540
29. EARNINGS PER SHARE:
(1) Basic earnings per share and diluted earnings per share for the years ended December 31, 2015 and 2014, are
as follows:
2015 2014
(In Korean won)
Basic earnings per share ₩ 1,170 ₩ 1,126
Diluted earnings per share (*) 1,170 1,126
(*) As the Company has no dilutive securities outstanding, diluted earnings per share for the years ended
December 31, 2015 and 2014, are identical to basic earnings per share.
(2) Basic earnings per share for the years ended December 31, 2015 and 2014, are calculated as follows:
2015 2014
(In Korean won)
Net income attributable to owners of the parent
company ₩ 41,590,130,572 ₩ 40,452,095,267
Weighted-average number of common
shares outstanding during the year 35,533,682 shares 35,909,616 shares
Basic earnings per share ₩ 1,170 ₩ 1,126
30. RELATED-PARTY TRANSACTIONS:
(1) The Group’s related parties as of December 31, 2015, are as follows:
Related parties
Parent company Interpark Holdings Co., Ltd. (Formerly Interpark Co., Ltd.)(*)
Subsidiaries of parent
company Interpark Co., Ltd.(Formerly Interpark INT Corporation)(*), Interpark Paedea
Co., Ltd., Digitalidea Co, Ltd., Interpark Global Corporation, Livetone Co,
Ltd., Interpark Tour Co, Ltd., Interpark Theater Co., Ltd., Bookpark
Corporation(Formerly Interpark Duty-Free Co., Ltd.)(*), Circle Contents
Company Co., Ltd., Digiart Production Co., Ltd., Beijing HM and Interpark
INT Shanghai Co., Ltd.
Associates of parent company Wcompanykorea Co., Ltd., Union Global CG association of
investment, BrainMedic Co., Ltd., Jingift Co., Ltd., Interpark Bizmarket
Co., Ltd., Agriculture and Forestry association of investment, Les
Miserables Korea Co., Ltd. and Surf Inc.
Other associates Aerogel Application Group Inc. and Enerband China Co., Ltd.
(*) The name was changed during the current period.
- 46 -
(2) Transactions with related parties
Significant transactions with related parties for the years ended December 31, 2015 and 2014, are as follows: 2015
Name of a company
Sales Purchases
Sales
Rental
revenues
Other
sales
Purchase of
inventory
Commission
expenses
Other operating
expenses
(In thousands of Korean won) Parent
company
Interpark Holdings Co.,
Ltd. ₩ 4,780 ₩ 233,180 ₩ - ₩ - ₩ - ₩ 469,200
Subsidiaries of parent
company
Interpark Co., Ltd. 18,283,223 130,489 8,938 139,815 47,978 294,447 Digitalidea Co., Ltd. 720 - - - - -
Interpark Global
Corporation 433,507 - - - - - Bookpark Corporation 6,423 - - - - -
Interpark Theater Co., Ltd. 18,239 - - - - 270
Associates of parent
company
Interpark Bizmarket Co., Ltd. 839,832 - - 32,349,816 - 7,599
Surf Inc. 405 - - - - -
2014
Name of a company
Sales Purchases
Sales Rental revenues
Other sales
Purchase of inventory
Purchase of
property,
plant and equipment
Commission expenses
Other
operating expenses
(In thousands of Korean won)
Parent company
Interpark Holdings Co., Ltd. ₩ 12,797 ₩ 261,879 ₩ - ₩ 122,038 ₩ - ₩ 82,987 ₩ 131,455
Subsidiaries
of parent company
Interpark Co., Ltd. 21,058,557 94,070 13,027 187,900 481,749 106,394 270,065
Interpark HM Co., Ltd. (*) 18,024 - - 7,849 - - - Interpark Paedea Co., Ltd. 735 - - - - - -
Digitalidea Co., Ltd. 416 - - - - - -
Interpark Global Corporation 224,622 - - - - - -
Interpark Theater Co., Ltd. 19,015 - - - - - -
Interpark Home Story Co, Ltd. (*) 17,535 - - - - - -
Associates of
parent company
Interpark Bizmarket Co.,
Ltd. 15,755 - - 37,991,918 - 1,349,445 2,584 Yelopay Corporation (*) 64,320 36,517 - - - - -
Surf Inc. 405 - - - - - -
Joint venture iMarketFocus Inc. 822,746 - - - - - -
(*) Excluded from related parties and it is a transaction until the expiration date of related parties.
Dividends paid to Interpark Holdings Co., Ltd. ( parent company) are ₩6,653 million and ₩3,327 million for the
years ended December 31, 2015 and 2014, respectively.
(3) Significant account balances arising from transaction with related parities as of December 31, 2015 and 2014,
are as follows: December 31, 2015
Name of a company
Receivables Payables
Trade receivables Other receivables Trade payables Other payables
(In thousands of Korean won)
Parent company Interpark
Holdings Co., Ltd. ₩ 294 ₩ 208,202 ₩ - ₩ -
Subsidiaries of
parent company
Interpark Co., Ltd. 1,985,108 54,181 3,548 531,680
Interpark Theater Co., Ltd. 1,779 - - -
Interpark Global
Corporation
33,576 - - -
Associates of
parent company
Interpark Bizmarket Co.,
Ltd. 1,238 - 3,856,123 80,867
Associates Aerogel Application Group
Inc. 18,260 - - -
Joint venture iMarketFocus Inc. 184,139 24,600 - -
- 47 -
December 31, 2014
Name of a company
Receivables Payables
Trade receivables Other receivables Trade payables Other payables
(In thousands of Korean won)
Parent company Interpark
Holdings Co., Ltd. ₩ 358 ₩ 208,202 ₩ - ₩ 372,607
Subsidiaries of
parent company
Interpark Co., Ltd. 1,744,616 55,081 22,590 158,311
Interpark Paedea Co., Ltd. 12 - - -
Digitalidea Co., Ltd. 458 - - -
Interpark Global
Corporation 35,798 - - -
Interpark Theater Co., Ltd. 1,582 - - -
Associates of
parent company
Interpark Bizmarket Co.,
Ltd. 1,619 - 9,408,476 100,089
Surf Inc. 83 - - -
Associates Aerogel Application Group
Inc. 18,260 - - -
Joint venture iMarketFocus Inc. 822,746 - - -
The Group does not have any provision for impairment of related accounts receivable as of December 31, 2015 and
2014.
(4) Equity transactions with related parties for the years ended December 31, 2015 and 2014, are as follows:
Transaction party
Transactional
information 2015 2014
(In thousands of Korean won)
Equity acquisition iMarketFocus Inc. Cash ₩ 6,256,525 ₩ 5,104,500
(5) The Group has not provided guarantees and collateral with respect to financing to related parties as of
December 31, 2015.
(6) There have been no guarantees and collateral provided to related parties as of December 31, 2015.
(7) Compensation for key management personnel for the years ended December 31, 2015 and 2014, is as follows:
2015 2014
(In thousands of Korean won)
Salaries ₩ 2,974,088 ₩ 3,145,089
Severance benefits 865,134 736,039
₩ 3,839,222 ₩ 3,881,128
- 48 -
31. COMMITMENTS AND CONTINGENCIES:
(1) Litigation in progress
There is no litigation in progress as of December 31, 2015.
(2) Details of commitments that the Group entered into with financial institutions as of December 31, 2015, are as
follows:
Currency Credit lines Exercise amount Bank
(In thousands of Korean won, JPY, USD and RMB)
Borrowings
KRW 45,020,000 13,061,466
Shinhan Bank
and others
JPY 218,000 77,126 Woori Bank
USD 6,000 - Citibank
RMB 2,000 - Citibank
Import usance KRW 30,000,000 11,964,038 Citibank Korea
USD 63,425 2,142
Woori Bank and
others
Trade financing KRW 470,000 - Woori Bank
Secured loan of credit sales (purchase)
KRW 215,000,000 117,494,711
Shinhan Bank
and others
Secured loan of credit sales (sell)
KRW 12,510,000 -
KEB Hana Bank
and others
Foreign exchange forward transaction
contract
KRW 8,508,000 - Kookmin Bank
USD 500 - KEB Hana Bank
Losses on foreign exchange forward
transaction USD 25,200 2,108
Shinhan Bank
and others
Assurance of performance
KRW 20,207,046 20,207,046
Seoul Guarantee
Insurance
Foreign exchange forward transaction
contract USD 50 38 Industrial Bank of
Korea
KRW 331,715,046 162,727,261
USD 95,175 4,288
JPY 218,000 77,126
RMB 2,000 -
(3) The Group has entered into agreements with Samsung SDS Co., Ltd. for computer system operating assistance,
under which the Group paid operating service fees amounting to ₩6,993 million and ₩6,737 million for the
years ended December 31, 2015 and 2014, respectively.
32. FINANCIAL INSTRUMENTS:
(1) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure. Consistent with others in the industry, the Group monitors capital on the basis of the debt ratio and net
borrowings ratio. For internal management, the Group, which is not subject to capital regulation by force, examines
cost of capital and risk related to each equity item.
The debt-to-equity ratio as of December 31, 2015 and 2014, is as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Total liability (A) ₩ 817,257,184 ₩ 657,379,789
Total equity (B) 449,048,433 433,106,418
Debt-to-equity ratio (A/B) 182.0% 151.8%
- 49 -
(2) Categorizations of financial assets and liabilities as of December 31, 2015 and 2014, are as follows:
1) December 31, 2015
Assets
Assets at
FVTPL
AFS
financial assets
Held-to-
maturity
financial assets
Loans and
receivables Total
(In thousands of Korean won)
Current:
Cash and cash
equivalents ₩ - ₩ - ₩ - ₩ 49,461,553 ₩ 49,461,553
Trade
receivables - - - 844,329,408 844,329,408
Other
receivables - - - 1,566,122 1,566,122
Other financial
assets 223,661 - - 10,985,120 11,208,781
Subtotal 223,661 - - 906,342,203 906,565,864
Non-current:
Trade
receivables - - - 25,104 25,104
Other
receivables - - - 7,026,994 7,026,994
Other financial
assets - 8,869,645 197,529 62,598 9,129,772
Subtotal - 8,869,645 197,529 7,114,696 16,181,870
Total ₩ 223,661 ₩ 8,869,645 ₩ 197,529 ₩ 913,456,899 ₩ 922,747,734
Liabilities Liabilities at FVTPL
Financial
liabilities at
amortized cost Total
(In thousands of Korean won)
Current:
Trade payables ₩ - ₩ 724,149,156 ₩ 724,149,156
Other payables - 12,041,989 12,041,989
Other financial liabilities 139,971 197,293 337,264
Short-term borrowings - 14,153,678 14,153,678
Current convertible bonds - 1,090,200 1,090,200
Current redeemable
preferred share
liabilities 1,895,110 1,895,110
Subtotal 139,971 753,527,426 753,667,397
Non-current:
Bonds - 10,000 10,000
Other financial liabilities - 853,935 853,935
Subtotal - 863,935 863,935
Total ₩ 139,971 ₩ 754,391,361 ₩ 754,531,332
- 50 -
2) December 31, 2014
Assets
Assets at
FVTPL
AFS
financial assets
Held-to-
maturity
financial assets
Loans and
receivables Total
(In thousands of Korean won)
Current:
Cash and cash
equivalents ₩ - ₩ - ₩ - ₩ 135,380,306 ₩ 135,380,306
Trade
receivables - - - 652,321,787 652,321,787
Other
receivables - - - 2,821,339 2,821,339
Other financial
assets 214,646 - - 22,220,000 22,434,646
Subtotal 214,646 - - 812,743,432 812,958,078
Non-current:
Trade
receivables - - - 45,175 45,175
Other
receivables - - - 5,304,528 5,304,528
Other financial
assets - 8,633,457 137,569 21,500 8,792,526
Subtotal - 8,633,457 137,569 5,371,203 14,142,229
Total ₩ 214,646 ₩ 8,633,457 ₩ 137,569 ₩ 818,114,635 ₩ 827,100,307
Liabilities Liabilities at FVTPL
Financial
liabilities at
amortized cost Total
(In thousands of Korean won)
Current:
Trade payables ₩ - ₩ 581,453,199 ₩ 581,453,199
Other payables - 11,339,718 11,339,718
Other financial liabilities 266,044 - 266,044
Short-term borrowings - 8,487,639 8,487,639
Current convertible bonds - 1,090,200 1,090,200
Subtotal 266,044 602,370,756 602,636,800
Non-current:
Long-term borrowings - 9,009 9,009
Redeemable preferred
share liabilities - 1,873,101 1,873,101
Subtotal - 1,882,110 1,882,110
Total ₩ 266,044 ₩ 604,252,866 ₩ 604,518,910
(3) Financial risk management:
The Group is exposed to various financial risks, such as market, credit and liquidity, related to financial instruments.
The purpose of risk management of the Group is to identify potential risks related to financial performance and
reduce, eliminate and evade those risks to a degree acceptable to the Group. The Group monitors and manages the
financial risks relating to the operations of the Group through internal risk reports, which analyze exposures by
degree and magnitude of risks
1) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations.
Exposure of credit risk occurs mainly from loan activities, and partly from debt securities or derivatives. Also,
credit risk exists in financial guarantees or unexecuted loan contracts.
- 51 -
① Management of credit risk
For the purpose of credit risk management, the Group has adopted a policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral. The Group only transacts with entities that are rated the
equivalent of investment grade and above. This information is supplied by independent rating agencies where
available, and if not available, the Group uses other publicly available financial information and its own trading
records to rate its major customers.
The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate
value of transactions concluded is spread among approved counterparties.
The carrying amount of financial assets is the amount after deducting impairment losses, and an indication of the
maximum exposure to credit risk of the Group did not consider the value of the collateral obtained.
② Impairment and Allowance
According to policy of consolidated entity, financial assets that exceed the amount of materiality should be
reviewed periodically. Allowance of bad debts should be decided according to individual loan reviews, and it is
applied to all material loans and receivables. This evaluation includes guarantees (including reconfirmation of
possibilities executed) and expected receivable amount.
Allowance of bad debts evaluated by the Group is accounted for (i) group of equivalent assets that are below
materiality individually and (ii) unrecognized loss that occurred and evaluated by historical experiences or
statistical method.
1) Market risk management
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates
and interest rates. Market risk is composed of interest rate risk and foreign exchange risk.
① Interest risk
The Group is exposed to interest rate risk as it borrows funds with variable interest rates. Consolidated entity
evaluates interest risk according to 1% change in interest rate, and it reflects evaluation of board of directors in
terms of the risk of interest rate changes that may occur under rational basis.
(1) The Group’s borrowings with variable interest rates as of December 31, 2015 and 2014, are as follows:
December 31, 2015 December 31, 2014
(In thousands of Korean won)
Short-term borrowings ₩ 9,276,612 ₩ 3,734,532
(2) As of December 31, 2015 and 2014, if interest rate of borrowings with variable interest fluctuated by 1%,
while all other variables are held constant, the effects on income and equity would be as follows:
2015 2014
1% increase 1% decrease 1% increase 1% decrease
(In thousands of Korean won)
Income/equity ₩ 92,766 ₩ (92,766) ₩ 37,345 ₩ (37,345)
- 52 -
② Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate
fluctuations arise. The carrying amounts of the Group’s foreign currency-denominated monetary assets and
monetary liabilities as of December 31, 2015 and 2014, are as follows:
Monetary assets Monetary liabilities
December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
(In thousands of Korean won)
USD ₩ 24,943,470 ₩ 35,680,234 ₩ 4,393,228 ₩ 3,192,373
EUR 615,858 702,699 69,707 86,935
JPY 185,339 1,166,573 953,428 1,468,295
VND - - - 9,009
CNY 5,238 461 5,152 -
AS of December 31, 2015 and 2014, if foreign currency translation expecting changes in foreign currency by 10%,
the effects on income and equity would be as follows:
December 31, 2015 December 31, 2014
10% increase 10% decrease 10% increase 10% decrease
(In thousands of Korean won)
USD ₩ 2,055,024 ₩ (2,055,024) ₩ 3,248,786 ₩ (3,248,786)
EUR 54,615 (54,615) 61,576 (61,576)
JPY (76,809) 76,809 (30,172) 30,172
VND - - (901) 901
CNY 9 (9) 46 (46)
Exposure of risk by change in currency exchange rate is managed under the limit determined by policies of
currency forward contracts.
Details of forward contract with Woori Bank and other three banks as of December 31, 2015, are as follows:
Long position Short position
Exchange
rate
Number of
contracts
Currency Amount Currency Amount
(In thousands of foreign currency and in thousands of Korean won)
KRW 38,841,283 USD 33,110 1,139.10–1,187.95 38
KRW 938,624 EUR 740 1,227.97–1,289.10 7
USD 12,047 KRW 14,057,677 1,133.50–1,184.45 17
EUR 92 KRW 117,878 1,285.61 1
JPY 65,341 KRW 621,733 942.50–979.41 5
The Group recognized ₩224 million and ₩(-)140 million of gain on valuation of foreign exchange forward
contract and loss on valuation of foreign exchange forward contract for the years ended December 31, 2015 and
2014, respectively. Also, realized gain on foreign exchange forward transaction and loss on foreign exchange
forward transaction are ₩5,357 million and ₩(-)7,435 million for the years ended December 31, 2015 and 2014,
respectively (see Note 26).
3) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an
appropriate liquidity risk management framework for the management of the Group’s short-, medium- and long-
term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate
reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash
flows and by matching the maturity profiles of financial assets and liabilities.
- 53 -
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities
with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and
principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from
interest rate curves at the end of the reporting period.
December 31, 2015
Less than 3
months
Between 3
months and 1 year
Between 1 year
and 5 years
More than
5 years Total
(In thousands of Korean won)
Trade payables ₩ 632,990,711 ₩ 91,158,445 ₩ - ₩ - ₩ 724,149,156
Other payables 9,395,405 2,646,583 - - 12,041,988
Short-term
borrowings 1,899,407 12,499,255 - - 14,398,662
Current
convertible
bonds - 1,117,455 - - 1,117,455
Current
redeemable
preferred share
liabilities - 1,914,061 - - 1,914,061
Bonds - - 11,050 - 11,050
Other financial
liabilities 337,264 - 853,935 - 1,191,199
₩ 644,622,787 ₩ 109,335,799 ₩ 864,985 ₩ - ₩ 754,823,571
December 31, 2014
Less than 3
months
Between 3
months and 1 year
Between 1 year
and 5 years
More than
5 years Total
(In thousands of Korean won)
Trade payables ₩ 532,950,478 ₩ 48,502,720 ₩ - ₩ - ₩ 581,453,198
Other payables 9,477,121 1,862,597 - - 11,339,718
Short-term
borrowings 122,208 8,540,061 - - 8,662,269
Long-term
borrowings - - 9,061 - 9,061
Current
convertible
bonds - 1,144,710 - - 1,144,710
Redeemable
preferred share
liabilities - 18,731 74,924 1,929,294 2,022,949
Other financial
liabilities 266,044 - - - 266,044
₩ 542,815,851 ₩ 60,068,819 ₩ 83,985 ₩ 1,929,294 ₩ 604,897,949
(4) Fair value of Financial Asset
The managements consider that the carrying amounts of financial assets and financial liabilities recognized in the
consolidated financial statements approximate their fair values.
- 54 -
1) Details of financial assets/liabilities evaluated by book value, as it could not be evaluated under fair value
method because fair values could not be measured reliably, are as follows:
Description December 31, 2015 December 31, 2014
(In thousands of Korean won)
AFS financial
assets(*)
Investments in SVIC 25
partnerships ₩ 7,096,000 ₩ 8,500,000
Investments in SVIC 30
partnerships 1,640,000 -
Investments in
Specialty Contractor
Financial Cooperative 50,121 50,121
Investments in
Information & Communication
Financial Cooperative 15,166 15,166
Investments in
Electric Contractors’
Financial Cooperative - 50,000
Deposit of Information and
Communication Corporation
License 18,170 18,170
Investments in
Plant & Mechanical Contractors
Financial Cooperative of Korea 50,163 -
Others 25 -
₩ 8,869,645 ₩ 8,633,457
(*) AFS Financial assets are composed of money invested in credit unions, and these are evaluated by book value
as financial information is not available or the scope of fair value evaluation is not sustainable for evaluating
possibilities of estimates.
2) The valuation techniques and inputs used for fair value measurements
The Group determined the fair value of financial assets and liabilities as follows:
- The standard terms and conditions and the presence of an active market determine the fair value of financial
assets and liabilities using the market price.
- The fair value of derivatives is determined using market price. However, for derivatives that are not options
(estimated through the observable market interest date as of the reporting date) when market prices cannot be
used, the fair value is estimated using the yield curve to discount cash flows and the fair value of options is
estimated using the options pricing model.
- The fair value of other financial assets and liabilities, except for derivatives, has been determined according to
generally accepted pricing models based on discounted cash flow analysis.
3) The Group classified financial instruments measured at fair value according the inputs used in their fair
measurement, by a fair value hierarchy, as described below:
Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: Fair value measurements are those derived from inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e.,
derived from prices).
Level 3: Fair value measurements are those derived from valuation techniques that include inputs for the asset
or liability that are not based on observable market data (unobservable inputs).
- 55 -
The following financial instruments that are measured at fair value subsequent to initial recognition are grouped
into Level 1, 2 or 3, based on the degree to which the fair value is observable:
December 31, 2015
Level 1 Level 2 Level 3 Total
(In thousands of Korean won)
Assets at FVTPL:
Foreign exchange
forward ₩ - ₩ 223,661 ₩ - ₩ 223,661
Financial assets ₩ - ₩ 223,661 ₩ - ₩ 223,661
Liabilities at FVTPL:
Foreign exchange
forward ₩ - ₩ 139,971 ₩ - ₩ 139,971
Financial liabilities ₩ - ₩ 139,971 ₩ - ₩ 139,971
December 31, 2014
Level 1 Level 2 Level 3 Total
(In thousands of Korean won)
Assets at FVTPL: ₩ - ₩ - ₩ - ₩ -
Foreign exchange
forward ₩ - ₩ 214,646 ₩ - ₩ 214,646
Financial assets ₩ - ₩ 214,646 ₩ - ₩ 214,646
Liabilities at FVTPL: - - - -
Foreign exchange
forward ₩ - ₩ 266,044 ₩ - ₩ 266,044
Financial liabilities ₩ - ₩ 266,044 ₩ - ₩ 266,044
There is no transfer between Level 1 and Level 2 for the years ended December 31, 2015 and 2014.
4) Stated below is an explanation of input variables and method of evaluation for fair values of financial assets
that are classified in Level 2.
- Foreign exchange forward
Fair value of currency futures are evaluated by currency exchange rates reported at the end of financial year, which
matches maturity timeline of future contract. If those rates are not reported, fair values are evaluated under
estimation of currency exchange rate by the method of linear interpolation. Discount rate is determined by yield
curve derived by reported interest rates, which are reported at the end of financial year.
As stated above, input variables used for evaluation of currency futures are derived by yield curve or currency
future rates observed in the market at the end of the financial year; the Company classified this fair value of future
contract as Level 2.
There have been no changes in valuation techniques for the year ended December 31, 2015, used to measure the
fair value of financial instruments classified as Level 2 in the fair value hierarchy.
5) The parent company determines the changes in unobservable inputs that do not cause significant fluctuations
in fair value measurements to reflect reasonably possible alternative assumptions.
(5) Reclassification of financial instrument
No financial assets are reclassified due to changes in nature or purpose of the financial assets.
(6) Transfer of financial assets
There are no transferred financial assets.
- 56 -
(7) Offset between financial assets and liabilities
Details of financial assets that are under available offset contract as of December 31, 2015, are as follows:
Gross assets Gross liabilities offset
Net amounts presented in
the consolidated statement
of financial position
(In thousands of Korean won)
Trade receivables ₩ 18,792,619 ₩ (7,451,517) ₩ 11,341,102
Details of financial liabilities that are under available offset contract of December 31, 2015, are as follows:
Gross liabilities Gross assets offset
Net amounts presented in
the consolidated statement
of financial position
(In thousands of Korean won)
Trade payables ₩ 35,705,122 ₩ (7,451,517) ₩ 28,253,605
33. TRANSACTIONS NOT INVOLVING CASH FLOWS:
Investing and financing activities of non-cash transactions for the years ended December 31, 2015 and 2014, are as
follows:
2015 2014
(In thousands of Korean won)
Transfer from advance payments to tangible and
intangible assets ₩ 16,118 ₩ 5,147,190
Transfer from non-current convertible bonds to
current convertible bonds - 1,090,200
Transfer from non-current redeemable preferred
share liabilities to current redeemable preferred
share liabilities 1,895,110 -
Transfer from non-current guarantee deposits to
current guarantee deposits 372,607 372,607
34. BUSINESS COMBINATIONS:
(1) Details of business combinations that occurred for the years ended December 31, 2015 and 2014, are as
follows:
2015
Principal
operating
activities
Date of
acquisition
Acquired
shares (%)
Acquisition
price (cash) Objective
(In thousands of
Korean won)
Interpark Qubridge
Co., Ltd. and
Guardian Co.,
Ltd.
MRO business
and wholesale
in medicine 2015.04.22 100 ₩ 24,577,425
Expansion of
business and
synergy
creation
with existing
business iMarketFocus Inc.(*) MRO business 2015.08.04 100 ₩ 11,361,025
- 57 -
(*) 50% of iMarketFocus Inc.’s shares was additionally acquired for the years ended December 31, 2015
(Acquisition cost: ₩6,256,525 thousand).
2014
Principal operating
activities
Date of
acquisition
Acquired
shares (%)
Acquisition
price (cash)
(In thousands of Korean won)
Allen Care
Co., Ltd.
Wholesale in
medicine 2014.03.12 51 ₩ 75,100,000
(2) The consideration paid for business combinations and the fair value of assets acquired and liabilities assumed
at the acquisition date are as follows:
2015 2014
Interpark Qubridge Co., Ltd.
and Guardian Co., Ltd. iMarketFocus Inc. Allen Care Co., Ltd.
(In thousands of Korean won)
Fair value of the identifiable assets ₩ 38,622,298 ₩ 12,346,102 ₩ 2,720,242 Fair value of the identifiable
liabilities 42,809,325 2,289,705 457,616 Total fair value of identifiable net
asset ₩ (4,187,027) ₩ 10,056,397 ₩ 2,262,626
(3) The goodwill arising from the business combination that occurred for the years ended December 31, 2015 and
2014, is as follows:
2015 2014
Interpark Qubridge Co., Ltd.
and Guardian Co., Ltd. iMarketFocus Inc. Allen Care Co., Ltd.
(In thousands of Korean won)
Acquisition price ₩ 24,577,425 ₩ 11,361,025 ₩ 75,100,000
Plus:
Non-controlling interests - - 61,340,825
Less:
Fair value of identifiable
net assets acquired 4,187,027 (10,056,397) (2,262,626)
Less:
Customer relationship (9,763,746) - (157,593,245)
Plus:
Deferred tax liabilities 2,148,024 - 34,670,514
Goodwill ₩ 21,148,730 ₩ 1,304,628 ₩ 11,255,468
(4) Net cash outflows due to the business combination for the years ended December 31, 2015 and 2014, are as
follows:
2015 2014
Interpark Qubridge Co., Ltd.
and Guardian Co., Ltd. iMarketFocus Inc. Allen Care Co., Ltd.
(In thousands of Korean won)
Consideration paid in cash ₩ 24,577,425 ₩ 6,256,525 ₩ 75,100,000
Less: cash and cash
equivalent acquired (1,517,947) (1,045,201) (167,626)
Total deduction 23,059,478 5,211,324 74,932,374
(5) In relation to the new business operated by Interpark Qubridge Co., Ltd., Guardian Co., Ltd. and iMarketFocus
Inc., ₩(-)1,532,054 thousand is included in the net income in the consolidated statement of comprehensive
income for the year ended December 31, 2015. Sales of Interpark Qubridge Co., Ltd., Guardian Co., Ltd. and
iMarketFocus Inc. (₩126,684,153 thousand ) are included in sales in the consolidated statement of
comprehensive income for the year ended December 31, 2015.
- 58 -
If this type of business combination occurred on January 1, 2015, consolidated entity's ongoing operating sales
would have increased by ₩43,522,487 thousand, and ongoing operating consolidated net income would have
decreased by ₩2,733,208 thousand for the year ended December 31, 2015. It can be stated that such values
(numbers) on projected financial statement portray the annual projected operation profit of the combined entity
and provide standard of comparison for the future term.
35. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS:
The Group’s consolidated financial statement as of and for the year ended December 31, 2015, have been approved
by the board of directors on February 15, 2016, and final approval of the consolidated financial statements is
expected to be on March 29, 2016, during the shareholders’ meeting.